WORLD TRADE  
ORGANIZATION  G/SCM/N/186/KOR 
7 May 2010 
 (10-2619) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
New and Full Notification Pursuant to Article XVI.1 of the GATT 1994 and  
Article 25 of the Agreement on Subsidies and  
Countervailing Measures  
 
REPUBLIC OF KOREA 
  
 The following notification, dated 27 April 2010, is being circulated at the request of the 
Delegation of the Republic of Korea.    
_______________ 
 
 
 The following notification is submitted fo r the purposes of transparency and without 
prejudice to the legal status and nature, including specificity, or effects of the notified programmes or measures under the ASCM and GATT 1994.    G/SCM/N/186/KOR 
Page 2  
 
  TABLE OF CONTENTS 
 
  Page
 
I. AGRICULTURE .................................................................................................................... ..3 
A. FOODGRAIN MANAGEMENT PROGRAMME ..................................................................................3  
B. VARIABLE DIRECT PAYMENT FOR RICE.....................................................................................4  
C. SUPPORT FOR MARKETING AND PROMOTION OF AGRICULTURAL AND LIVESTOCK 
PRODUCTS ............................................................................................................................... ....5 
D. SUPPORT FOR LIVESTOCK PRODUCTS .........................................................................................6  
II. FORESTRY....................................................................................................................... ........7  
A. PLYWOOD AND BOARD ASSISTANCE PROGRAMME ....................................................................7  
B. WOOD UTILIZATION ASSISTANCE PROGRAMME ........................................................................8  
III. FISHERY........................................................................................................................ ...........9  
A. SUPPORT FOR DEVELOPMENT OF DEEP-SEA FISHERY ................................................................9  
B. SUPPORT FOR FISH PRODUCTS PROCESSING DEVELOPMENT ...................................................10  
C. SUPPORT FOR FISHING ACTIVITIES ...........................................................................................11  
D. SUPPORT FOR AQUACULTURE FISHERY DEVELOPMENT ..........................................................12  
E. SUPPORT FOR OLD FISHING VESSEL AND EQUIPMENTS REPLACEMENT ..................................13  
F. SUPPORT FOR VESSEL DECOMMISSIONING ...............................................................................14  
IV. COAL INDUSTRY .................................................................................................................1 5 
A. SUPPORT FOR THE COAL INDUSTRY THROUGH THE SPECIAL ACCOUNT FOR ENERGY 
AND RESOURCES .......................................................................................................................15  
V. MANUFACTURING INDUSTRY ........................................................................................16  
A. SUPPORT FOR FOREIGN INVESTED ENTERPRISES ......................................................................16  
B. TARIFF REDUCTION ON AIRCRAFT PARTS ................................................................................18  
C. SUPPORT FOR FARM MACHINERY MANUFACTURING ...............................................................19  
VI. ENVIRONMENT, RESEARCH AND DEVELOPMENT..................................................20  
A. ENVIRONMENTAL IMPROVEMENT LOAN PROGRAMME ............................................................20  
B. SUPPORT FOR R&D  OF ENVIRONMENTAL TECHNOLOGY DEVELOPMENT PROJECTS ...............21  
C. PROJECT ON THE EMISSION REDUCTION DEVICE INSTALLATION AND "CLEANER " 
ENGINE RETROFIT FOR DIESEL VEHICLES ................................................................................22  
D. NATURAL GAS BUS SUPPLY PROJECT ......................................................................................23  
E. SUPPORT FOR RECYCLING EQUIPMENT AND TECHNOLOGY DEVELOPMENT ............................24  
F. PROGRAMME FOR R&D  OF INFORMATION AND COMMUNICATION ..........................................26  
  G/SCM/N/186/KOR 
 Page 3 
 
 
  I. AGRICULTURE  
A. FOODGRAIN MANAGEMENT PROGRAMME  
1. Title of the subsidy programme  
 
• Foodgrain Management Programme.   
 2. Period covered by the notification
 
 
 2007-2008.    
3. Policy objective and/or purpose of the subsidy
 
 
• To maintain and manage adequa te food stock of basic agro products for food security.   
 
4. Background and authority for the subsidy  
 
• Law 
9 Foodgrain Management Act (Article 4).   
9 Agro-Fisheries Marketing and Price Stabilization Act (Article 10).   
• Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   
 
5. Form of the subsidy  
 
 Grant and loan.   
 6. Recipients and terms
 
 
• Grants 
9 Recipients:  The farms that produce barley, soy bean and corn.   
9 Content of subsidy:  The government purchases a certain volume from the 
producing farms.   
• Loan 
9 Recipients:  The enterprises that purchase soybeans.   
9 Content of subsidy:  The government pr ovides the enterprises with loans so that 
they can purchase soybeans from the producing farms.   
9 Loan interests and duration:  3 per cent and 11 months.   
 7. Amount of the subsidy
 
 
  (Unit:  million KRW) 
 
 * The benefit of loan is estimated based on the diff erence between the loan rate and the market rate.  
(2007:  7.06%, 2008:  7.06%).   Item Type 2007 2008 
Barley Direct subsidy 36,519 33,138 
Direct subsidy (A) 11,602 7,803 
Loan 11,543 16,741 
Benefit of loan* (B) 430 623 Soy Bean 
Total (A+B) 12,032 8,426 
Corn Direct subsidy 25 79 G/SCM/N/186/KOR 
Page 4  
 
  8. Duration of the subsidy
 
 
• No fixed duration.   
 
9. Trade effects of the subsidy  
 
• The government is implementing the purchase syst em of foodgrain with a view to achieving 
the food security of basic agro products.  It is estimated that the support of foodgrain purchase 
has a minimal effect on trade because of  Korea's low food self-sufficiency.   
 
B. VARIABLE DIRECT PAYMENT FOR RICE 
1. Title of the subsidy programme  
 
• Variable Direct Payment for Rice.   
 2. Period covered by the notification
 
 
 2007-2008.    3. Policy objective and/or purpose of the subsidy
 
 
• To stabilize the income of rice producing farmers against the price fall of rice.   
 
4. Background and authority for the subsidy  
 
• Law:  the Act on Payment Programme for Rice Income, Etc (Article 11).   
• Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   
 5. Form of the subsidy
 
 
 Grants.   
 6. Recipients and terms
 
 
• Recipients:  The farmhouses whose use of agrochemicals and chemical fertilizers meets the 
standard, among those who produce rice by storing water in the rice fields that were used for 
rice farming from 1998 to 2000.   
• Contents of the Subsidy:  Partial support for the difference in amount between the goal price 
and the average price during the harvesting season of the year.   
 
7. Amount of the subsidy  
 
(Unit:  million KRW) 
Type 2007 2008 
Lump sum transfer  437,038 279,122 
 8. Duration of the subsidy
 
 
• No fixed period.    G/SCM/N/186/KOR 
 Page 5 
 
 
  9. Trade effects of the subsidy  
 
• There will be minimal effect on trade because th e program is being implemented in order to 
stabilize the income of domestic rice producing farmhouses.   
 C. S
UPPORT FOR MARKETING AND PROMOTION OF AGRICULTURAL AND LIVESTOCK PRODUCTS  
1. Title of the subsidy programme  
 
• Support for Marketing and Promotion of Agricultural and Livestock Products.   
 
2. Period covered by the notification  
  2007-2008.   
 
3. Policy objective and/or purpose of the subsidy
 
 
• To improve the quality and reduce the logisti cal costs of agro-livestock products (fruits, 
flowering plants, Kimchi, vegetables,  ginseng and livestock products).   
 
4. Background and authority for the subsidy  
 
• Law:  Agricultural and Rural Basic Act (Article 35).   
• Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   
 5. Form of the subsidy
 
 
 Grants.   
 6. Recipients and terms
 
 
• Recipients 
9 Exporters of fruits, flowering plants, Ki mchi, vegetables, ginseng, and livestock 
products.   
• Contents of the Subsidy 
9 Partial support for costs in sorting, packaging, and transporting.   
 
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
Type 2007 2008 
Lump sum transfer (A) 28,882 32,684 
Loan - - 
Benefit of loan (B) - - 
Total (A+B) 28,882 32,684 
 
8. Duration of the subsidy  
 
• No fixed time period.   G/SCM/N/186/KOR 
Page 6  
 
  9. Trade effects of the subsidy
 
 
• The impact of the program on trade is expected  to be minimal, though this program supports 
the partial cost of packaging and transporting.   
 D. S
UPPORT FOR LIVESTOCK PRODUCTS  
1. Title of the subsidy programme  
 
• Support for Quality Improvement and Stabili zation of the Hanwoo Production Base (Korean 
native cow).   
 
2. Period covered by the notification  
 
 2007-2008.   
 3. Policy objective and/or purpose of the subsidy
 
 
• To improve the competitiveness and the inco me of Hanwoo farmhouses through the 
improvement of quality.   
• To secure the Hanwoo production base from the con tinuous decline in the number of cattle 
and calf.   
 4. Background and authority for the subsidy
 
 
• Law:  Livestock Act (Artic le 3 and Article 26).   
• Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   
 
5. Form of the subsidy  
  Grants.   
 
6. Recipients and terms
 
 
Calf Breeding Stabilization Schedule 
• Recipients 
9 Cow raising farmers who joined the Calf Breeding Stabilization Schedule.   
• Contents of the Subsidy 
9 Support is provided to compensate for the lo ss in case the average market price of 
calf is lower than the standard price of the schedule.   
 
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
  Type 2007 2008 
Calf breeding stabilization schedule Lump sum transfer 4,059 13,184 
 
8. Duration of the subsidy  
 
• No fixed time period.    G/SCM/N/186/KOR 
 Page 7 
 
 
  9. Trade effects of the subsidy  
 
• The impact of the program on trade is expect ed to be minimal because the purpose of the 
program is to stabilize the income of farmers.   
 
II. FORESTRY 
A. PLYWOOD AND BOARD ASSISTANCE PROGRAMME  
1. Title of the subsidy programme  
 
• Plywood and Board Assistance Programme.   
 
2. Period covered by the notification  
 
 2007-2008.   
 3. Policy objectives and /or purpose of the subsidy
 
 
• To facilitate using called-out trees, small un marketable trees and recycling waste wood 
materials.   
 
4. Background and authority for the subsidy  
 
• Law:  Act on Promotion of Forestry and Mountain Villages (Article 10).   
• Authority:  Korea Forest Service.   
 5. Form of the subsidy
 
 
 Loan.    
• Source of fund:  Special Account for Structural Improvement of Rural Areas.   
 6. Recipient and term
 
 
• Recipient:  plywood and board producers.   
• Conditions:  Interest rate of 4.0 per cent.   
• Terms of loan:  10 years (7-year repayment period with a 3-year grace period).   
 
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (a) - - 
Loan 13,216 14,044 
Benefit of loan* (b) 404 430 
Total (a+b) 404 430 
 
* The benefit of loan is estimated based on the diff erence between the loan rate and the market rate.   G/SCM/N/186/KOR 
Page 8  
 
  8. Duration of the subsidy
 
 
• No fixed time period.   
 
9. Trade effects of the subsidy  
 
• Most of these products are used to meet the dom estic demand.  Therefore,  the trade effect is 
presumed to be insignificant.   
 
Production, Consumption and Trade  
 
  (Unit:  1,000m3) 
 2007 2008 
Production 3,371 3,239 
Imports 2,556 2,476 
Exports 44 38 
Consumption 5,883 5,677 
 
B. WOOD UTILIZATION ASSISTANCE PROGRAMME  
1. Title of the subsidy programme  
 
• Wood Utilization Assistance Programme.   
 2. Period covered by the notification
 
 
 2007-2008.    
3. Policy objectives and /or purpose of the subsidy
 
 
• To provide financial assistance for modernizati on of forestry machinery and facilities.   
 
4. Background and authority for the subsidy  
 
• Law:  Act on Promotion of Forestry and Mountain Villages (Article 10).   
• Authority:  Korea Forest Service.   
 5. Form of the subsidy
 
 
 Loan.    
• Source of fund:  Special Account for Structural Improvement of Rural Areas.   
 6. Recipient and term
 
 
• Recipient:  plywood and board producers.   
• Conditions:  Interest rate of 3.0~4.0 per cent.   
• Terms of loan:  5 years (2-year repayment peri od with a 3-year grace period) or 10 years (7-
year repayment period with a 3-year grace period).    G/SCM/N/186/KOR 
 Page 9 
 
 
  7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (a) - - 
Loan 15,930 15,192 
Benefit of loan*(b) 487 465 
Total (a+b) 487 465 
 
* The benefit of loan is estimated based on the diff erence between the loan rate and the market rate.   
 
8. Duration of the subsidy  
 
• No fixed time period.   
 
9. Trade effects of the subsidy  
 
• Most of the domestic wood production is used to  meet the domestic demand.  Therefore, the 
effect on trade is presumed to be insignificant.   
 
Export and Import  
  (Unit:  1,000m3) 
  2007 2008 
Round wood - 1 
Sawn wood 18 14 
Fibreboard 35 26 Export 
Particleboard 2 1 
Round wood 6,643 5,267 
Sawn wood 961 939 
Fibreboard 434 468 Import 
Particleboard 763 773 
 
III. FISHERY 
A. SUPPORT FOR DEVELOPMENT OF DEEP-SEA FISHERY  
1. Title of the subsidy programme  
 
• Support for development of deep-sea fishery.   
 2. Period covered by the notification
 
  2007-2008. 
 
3. Policy objectives and /or purpose of the subsidy
 
 
• To support stable production and management of deep-sea fishery.   G/SCM/N/186/KOR 
Page 10  
 
  4. Background and authority for the subsidy
 
 
• Law:  Article 87 of the Fisheries Act.   
• Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   
 5. Form of the subsidy
 
 
 Grants.    6. Recipient and terms
 
 
• Recipient:  Deep-sea fishing companies, overseas resource development companies.   
• Terms of grants:  Government provides grants  to a cooperative fund to compensate for its 
loan at a lower interest rate provided to deep-sea fishing companies or overseas resource 
development companies.   
 
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (A) 2,995 4,590 
Loan - - 
Benefit of loan (B) - - 
Total (A+B) 2,995 4,590 
 
8. Duration of the subsidy  
 
• No fixed time period.   
 9. Trade effects of the subsidy
 
 
• It is difficult to estimate the trade effect.   
 
B. SUPPORT FOR FISH PRODUCTS PROCESSING DEVELOPMENT  
1. Title of the subsidy programme  
 
• Support for fishery products processing development.   
 
2. Period covered by the notification  
  2007-2008.    3. Policy objectives and /or purpose of the subsidy
 
 
• To ensure food safety of fishery products and provide high quality products to the consumers.   
 4. Background and authority for the subsidy
 
 
• Law:  Article 15 and 16 of the Fisher ies Products Quality Control Act.   
• Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   
  G/SCM/N/186/KOR 
 Page 11 
 
 
  5. Form of the subsidy  
  Grants and loan.    6. Recipient and terms
 
 
• Recipient:  Companies and people engaged in handling, storing and processing of fishery 
products.   
• Terms of grants:  30 to 50 per cent of the expenses.   
• Terms of loan:  10 to 15 years' loan at the annual interest rate of 3 to 4 per cent.   
 
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (A) 11,390 26,159 
Loan 34,050 25,356 
Benefit of loan* (B) 1,294 1,014 
Total (A+B) 12,684 27,173 
 
* The benefit of loan is estimated based on the diff erence between the loan rate and the market rate.   
 
8. Duration of the subsidy  
 
• No fixed time period.   
 9. Trade effects of the subsidy
 
 
• It is difficult to estimate the trade effect.   
 C. S
UPPORT FOR FISHING ACTIVITIES  
1. Title of the subsidy programme  
 
• Support for fishing activities.   
 2. Period covered by the notification
 
  2007-2008.    3. Policy objectives and /or purpose of the subsidy
 
 
• To relieve financial burden and support stable  fishing business operation by providing lower 
rate loans.   
 4. Background and authority for the subsidy
 
 
• Law:  Article 84 of the Fisheries Act.   
• Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   G/SCM/N/186/KOR 
Page 12  
 
  5. Form of the subsidy
 
  Loan.    
6. Recipient and terms
 
 
• Recipient:  Fishermen duly licensed under the relevant domestic fisheries legislation.   
• Terms:  One year loan with the annual interest  rate of 3 per cent for coastal and offshore 
fishery and deep-sea fishery.   
 
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (A) - - 
Loan 1,391,249 1,421,643 
Benefit of loan* (B) 58,710 71,082 
Total (A+B) 58,710 71,082 
 
* The benefit of loan is estimated based on the diff erence between the loan rate and the market rate.   
 
8. Duration of the subsidy  
 
• No fixed time period.   
 9. Trade effects of the subsidy
 
 
• The trade effect is minimal, if any, because the loan is small amounts provided to about 
71,000 fishermen.   
 
D. SUPPORT FOR AQUACULTURE FISHERY DEVELOPMENT  
1. Title of the subsidy programme  
 
• Support for Aquaculture Fishery Development.   
 
2. Period covered by the notification  
  2007-2008.    3. Policy objectives and /or purpose of the subsidy
 
 
• To have stable supply of fishery products by supporting the development of aquaculture 
fishery under the changing circumstances of domestic and overseas fisheries production environment.   
 4. Background and authority for the subsidy
 
 
• Law 
9 Article 87 of the Fisheries Act, Article 6 of the Cultivation Fishery Promotion 
Act.   
9 Article 19 of the Special Act for the S upport of the Fishermen According to the 
Conclusion of the Fisheries Agreements.    G/SCM/N/186/KOR 
 Page 13 
 
 
  • Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   
 5. Form of the subsidy
 
  Grants and loan.   
 
6. Recipient and terms
 
 
• Recipient:  Aquaculture fishermen.   
• Terms of grants:  40 to 100 per cent of the expenses.   
• Terms of loan:  2 to 10 years' loan at the annual interest rate of 3 to 4 per cent.   
 7. Amount of the subsidy
 
   (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (A) 10,684 11,508 
Loan 15,459 12,047 
Benefit of loan* (B) 648 554 
Total (A+B) 11,332 12,062 
 
 * The benefit of loan is estimated based on the diff erence between the loan rate and the market rate.   
 
8. Duration of the subsidy  
 
• No fixed time period.   
 9. Trade effects of the subsidy
 
 
• It is difficult to estimate the trade effect.   
 E. S
UPPORT FOR OLD FISHING VESSEL AND EQUIPMENTS REPLACEMENT  
1. Title of the subsidy programme  
 
• Support for Old Fishing Vessel and Equipment Replacement.   
 2. Period covered by the notification
 
  2007-2008.   
 
3. Policy objectives and /or purpose of the subsidy
 
 
• To ensure navigational safety through replaceme nt of old vessels and vessel equipments.   
 4. Background and authority for the subsidy
 
 
• Legal background:  Article 11 of the Special Act for the Development of Agricultural and 
Fishing Communities.   
• Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   G/SCM/N/186/KOR 
Page 14  
 
  5. Form of the subsidy
 
  Loan.    
6. Recipient and terms
 
 
• Recipient:  Fishermen.   
• Terms of loan:  15 years' loan at the annual interest rate of 4 per cent.   
 
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (A) - - 
Loan 8,428 3,152 
Benefit of loan * (B) 269 117 
Total (A+B) 269 117 
 
 * The benefit of loan is estimated based on the diff erence between the loan rate and the market rate.   
 
8. Duration of the subsidy  
 
• No fixed time period.   
 9. Trade effects of the subsidy
 
 
• It is difficult to estimate the trade effect.   
 F. S
UPPORT FOR VESSEL DECOMMISSIONING  
1. Title of the subsidy programme  
 
• Support for Vessel Decommissioning.   
 2. Period covered by the notification
 
  2007-2008.    
3. Policy objectives and /or purpose of the subsidy
 
 
• To support the vessel decommissioning to maintain  fleet size at sustai nable level for coastal 
and offshore fishery.   
 4. Background and authority for the subsidy
 
 
• Law:  Article 11 of the Special Act for the Development of the Agricultural and Fishing 
Communities.   
• Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   
 5. Form of the subsidy
 
 
 Grants.    G/SCM/N/186/KOR 
 Page 15 
 
 
  6. Recipient and terms  
 
• Recipient:  Coastal and offshore fishermen.   
• Terms of grants:  100 per cent of the expenses paid in the form of vessel buy-back for a 
fisherman to leave the fishing industry.   
 
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (A) 129,417 368,500 
Loan - - 
Benefit of loan* (B) - - 
Total (A+B) 129,417 368,500 
 
 * The benefit of loan is estimated based on the diff erence between the loan rate and the market rate.   
 
8. Duration of the subsidy  
 
• For coastal and offshore fishery, the subsidization will continue until 2012.   
 9. Trade effects of the subsidy
 
 
• It is difficult to estimate the trade effect.   
 
IV. COAL INDUSTRY 
A. SUPPORT FOR THE COAL INDUSTRY THROUGH THE SPECIAL ACCOUNT FOR ENERGY AND 
RESOURCES  
1. Title of the subsidy programme  
 
• Support for the Coal Industry through the Special Account for Energy and Resources.   
 2. Period covered by the notification
 
 
 2007-2008.    
3. Policy objectives and /or purpose of the subsidy
 
 
• To support the restructuring of the coal industry, such as the shutdown of uneconomical coal 
mines and reduction in coal production.   
• To compensate for the difference between pr oduction cost and retail price of coal and 
briquettes.   
 
4. Background and authority for the subsidy  
 
• Law:  Article 26 and Enforcement Ordinance No. 22 of the Coal Industry Act.   
• Authority:  Ministry of Knowledge Economy.   G/SCM/N/186/KOR 
Page 16  
 
  5. Form of the subsidy
 
  Grants.   
 
6. Recipient and term
 
 
• Briquette producers and coal miners are granted subsidy in the form of direct payment and 
premium for industrial accident compensation insurance and education fees.   
 
7. Amount of the subsidy  
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (a) 339,000 296,526 
Loan   
Benefit of loan* (b)   
Total (a+b) 339,000 296,526 
 
8. Duration of the subsidy  
 
• No fixed time period.   
 
9. Trade effects of the subsidy  
 
• None.   
 V. MANUFACTURING INDUSTRY 
A. S
UPPORT FOR FOREIGN INVESTED ENTERPRISES  
1. Title of the subsidy programme  
 
• Support for Foreign Invested Enterprises.   
 2. Period covered by the notification
 
 
 2007-2008.    
3. Policy objectives and /or purpose of the subsidy
 
 
• To stimulate the attraction of foreign direct investment (FDI). 
9 Tax reduction:  promote foreign investment by reducing the tax burden. 
9 Cash grant:  support the development of less-advanced areas. 
 
4. Background and authority for the subsidy  
 
(a) Tax reduction 
 
• Laws:  Article 121-2 and 121-3 of  Special Tax Treatment Control Law, Article 13 and 14-2 of 
Foreign Investment Promotion Act, Regulation of each municipality.   
• Authority:  Ministry of Strategy and Finance,  Ministry of Knowledge Economy, Ministry of 
Public Administration and Security.   
  G/SCM/N/186/KOR 
 Page 17 
 
 
  (b) Cash grant 
 
• Law:  Article 14-2 of Foreign Investment Promotion Act.   
• Authority:  Ministry of Knowledge Economy.   
 5. Form of the subsidy
 
 
(a) Tax reduction:  tax reduction ( acquisition tax, registration ta x, and property tax on land and 
buildings) and reduction in the rental fee of state-owned properties.   
(b) Cash grant:  grants.   
 
6. Recipient and term  
 
(a) Tax reduction 
 
• Recipients 
9 Foreign-investment enterprises involve d in businesses related to advanced 
technologies or engaged in the service sector supporting other industries.   
9 Foreign-investment enterprises that operate in the Foreign Investment Zone, Free 
Economic Zone, Free Trade Zone, Industrial Complex Exclusively for Foreign Companies, Jeju Investment Promotion Zone and Development District of 
Enterprise New Town.   
• Terms 
 
Requirement 
taxes Industry support service and high-tech 
industry business, Firms in Foreign 
Investment Zone (FIZ) Firms in the Free Economic Zone, 
Free Trade Zone and Jeju 
Investment Promotion Zone 
Corporate tax and 
income tax A full exemption is granted for the first 
5 years after income is generated 
following the commencement of 
operation and a 50 per cent reduction for 
the next 2 years. A full exemption is given for the first 
3 years after income is generated 
following the commencement of 
operation and a 50 per cent reduction 
for the next 2 years 
Acquisition tax, registration tax, and 
property tax on land 
and buildings A full exemption is granted 
for the first 5 years after the 
commencement of operation 
and a 50 per cent reduction for 
the next 2 years. A full exemption is given for the first 
3 years after the in itiation of operation 
and a 50 per cent reduction for the 
next 2 years. 
Customs duty, individual consumption 
tax, value- added 
tax(VAT)
1 A full exemption is granted Custom duties are exempted. 
 
9 Tax reduction in the rental fee of state-owned properties for foreign-invested 
companies 
 
(b) Cash grant 
 
• Cash grants are available for projects in wh ich investments exceed the required minimum, 
and will be awarded in instalments on a performance basis.  
                                                      
1 Tax exemption or reduction for customs duty, individual consumption tax or value-added tax is 
offered on capital goods introduced into Korea by foreign-invested enterprises for the purpose of operation of 
businesses which are eligible for tax exem ption or reduction within 3 years.   G/SCM/N/186/KOR 
Page 18  
 
  7. Amount of the subsidy
 
 
(a)  Tax reduction 
  (Unit:  million KRW) 
Requirement taxes  2007 2008 
Corporate tax and income tax No statistics available  No statistics available  
Acquisition tax, registration tax, 
and property tax on land and 
buildings 7,242 13,482 
Customs duty, individual 
consumption tax, value- added 
tax (VAT) No statistics available No statistics available 
 
(b) Cash Grant 
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (a) 4,500 none 
Loan   
Benefit of loan* (b)   
Total (a+b) 4,500  
 
 * The benefit of loan is estimated based on the di fference between the loan rate and the market rate. 
 
8. Duration of the subsidy  
 
• No fixed time period.   
 
9. Trade effects of the subsidy  
 
• Tax reduction:  The tax reduction system is aime d at promoting foreign investment, and thus 
it has neither export requirements nor a trade impact.   
• Cash Grant:  Cash Grant is aimed at supporting regions that are at a disadvantage in relation 
to more advantaged regions and do es not have any trade effects.   
 
B. TARIFF REDUCTION ON AIRCRAFT PARTS  
1. Title of the subsidy programme  
 
• Tariff Reduction on Aircraft Parts.   
 2. Period covered by the notification
 
 
 2007-2008.    
3. Policy objective and/or purpose of the subsidy
 
 
• To reduce production cost by encouraging the importation of aircraft parts that is not 
produced domestically. 
 4. Background and authority for the subsidy
 
 
• Laws:  Article 89 of Customs Act.    G/SCM/N/186/KOR 
 Page 19 
 
 
  • Authority:  Ministry of Strategy and Finance.   
 5. Form of the subsidy
 
 
 Tariff reduction.    
6. Recipient and terms
 
 
• Those designated as aircraft manufacturers or repairers in accordance with the Promotion Act 
for the Development of Aircrafts and Space Industries.   
 7. Amount of the subsidy
 
 
  (Unit:  billion KRW) 
  2007 2008 
Amount of Duty Reduction 34.2 50.2 
 
8. Duration of the subsidy  
 
• No fixed time period.   
 
9. Trade effect of the subsidy  
 
• The duty abatement is aimed at promoting the importation of aircraft parts, and therefore 
there's no effect on trade.   
 
C. SUPPORT FOR FARM MACHINERY MANUFACTURING  
1. Title of the subsidy programme  
 
• Support for Farm Machinery Manufacturing.   
 
2. Period covered by the notification  
 
 2007-2008.   
 3. Policy objective and/or purpose of the subsidy
 
 
• To assist off-season manufacturing of farm machinery and to help machinery manufactures to 
meet the high demand for farm machinery in the farming seasons.   
• To promote manufacturing and supply of high-quality agricultural machinery made in Korea, 
by providing financial resources for production facility establishment of machinery required 
for automatization and modernization of agricultural facilities and machinery.   
 4. Background and authority for the subsidy
 
 
• Law:  Farm Mechanization Pr omotion Law (Article 4).   
• Authority:  Ministry of Agriculture and Forestry.   
 
5. Form of the subsidy  
  Loan.   G/SCM/N/186/KOR 
Page 20  
 
  6. Recipients and terms
 
 
• Recipients 
9 Farm machinery manufacturers and developers of new-tech machinery.   
 
• Contents of the Subsidy 
9 To provide financial assistance for pr oducing agricultural machinery and for 
establishing and constructing agricultural machinery production facilities.   
 
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 
 * The benefit of loan is estimated based on the diff erence between the loan rate and the market rate.   
 
8. Duration of the subsidy  
 
• No fixed time period.   
 
9. Trade effects of the subsidy  
 
• Its effect on trade is expected to be almost non-existent since the amount of the subsidy 
accounts only for 0.06 to 0.07 per cent of the total value of farm machinery production.   
 
Statistics on farm machinery prod uction, consumption and trade  
 
  (Unit:  1000 US$) 
 
VI. ENVIRONMENT, RESEARCH AND DEVELOPMENT 
A. ENVIRONMENTAL IMPROVEMENT LOAN PROGRAMME  
1. Title of the subsidy programme  
 
• Environmental Improvement Loan Programme.   
 2. Period covered by the notification
 
 
 2007-2008.   
 3. Policy objectives and /or purpose of the subsidy
 
 
• To encourage and promote private sector investment in environmental facilities.   
 Type 2007 2008 
Direct subsidy (A) - - 
Loan 40,000 40,000 
Benefit of loan* (B) 600 600 
Total (A+B) 600 600 
Year Total sales amount (b illion KRW) Export Import 
2007 850 399,650 422,245 
2008 995 402,246 470,149  G/SCM/N/186/KOR 
 Page 21 
 
 
  4. Background and authority for the subsidy  
 
• Laws:  Article 34 of Framework Act on Environmental Policy.   
• Authority:  Ministry of Environment.   
 5. Form of the subsidy
 
 
 Loan.   
9 Source of Fund:  Public Capital Management Fund.   
 
6. Recipient and terms  
 
• Recipient:  firms that install and operate pollution prevention devices and facilities.   
• Terms of loan:  7-year equal repayment period with a 3-year grace period at an annual interest 
rate of 4.79-5.91 per cent (floating interest rate).   
 
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (A) - - 
Loan 50,000 50,000 
Benefit of loan (B)*   
Total (A+B)   
 
* The benefit of loan is estimated based on the diff erence between the loan rate and the market rate.   
 
8. Duration of the subsidy  
  No fixed time period.   
 
9. Trade effects of the subsidy
 
 
• None.   
 B. S
UPPORT FOR R&D  OF ENVIRONMENTAL TECHNOLOGY DEVELOPMENT PROJECTS  
1. Title of the subsidy programme  
 
• Support for R&D of Environmental Technology Development Projects.   
 
2. Period covered by the notification  
  2007-2008.   
 
3. Policy objectives and /or purpose of the subsidy
 
 
• To improve the domestic environment by  developing cutting-edge environmental 
technologies.   G/SCM/N/186/KOR 
Page 22  
 
  4. Background and authority for the subsidy
 
 
• Laws:  Development of and Support for E nvironmental Technology Act (Article 5).   
• Authority:  Ministry of Environment.   
 5. Form of the subsidy
 
 
 Grants.   
 
• Source of Fund:  Special Account for Environmental Improvement.   
 6. Recipient and terms
 
 
• Recipient:  Government-invested research ins titutions, universities, research institutions and 
private enterprises that participate in the E nvironmental Technology Development Project.   
 
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (A) 102,123 105,759 
Loan - - 
Benefit of loan (B) - - 
Total (A+B) 102,123 105,759 
 
8. Duration of the subsidy  
 
• No fixed time period.   
 
9. Trade effects of the subsidy  
 
• This subsidy is focusing on the support for fu ndamental and original technology, considering 
the demand for environmental industry in the futu re.  Therefore, the trade effect of this 
subsidy is expected to be insignificant.   
 
C. PROJECT ON THE EMISSION REDUCTION DEVICE INSTALLATION AND "CLEANER " ENGINE 
RETROFIT FOR DIESEL VEHICLES  
1. Title of the subsidy programme  
 
• Subsidy for the emission reduction device (D PF, DOC) installation and "cleaner" engine 
retrofit.   
 
2. Period covered by the notification  
  2007-2008.   
 
3. Policy objectives and /or purpose of the subsidy
 
 
• To reduce emissions from operating diesel vehicles in metropolitan areas.    G/SCM/N/186/KOR 
 Page 23 
 
 
  4. Background and authority for the subsidy  
 
• Laws:  Special Act on Metropolitan Air Quality Improvement (Paragraph 6 of Article 25).   
• Authority:  Ministry of Environment.   
 5. Form of the subsidy
 
 
 Grants.   
 
• Source of Fund:  Special Account for Environmental Improvement.   
 6. Recipient and terms
 
 
• Recipient:  A diesel vehicle owner who installs an emission reduction device or retrofits with 
"cleaner" engines if the vehicle fails the em ission test under the Special Act on Metropolitan 
Air Quality Improvement.   
• Terms:  to provide part of the costs (90 per cent) for installing emission reduction devices or 
retrofitting with "cleaner" engines (50 per cen t each from the central government and local 
government expenditures).   
 
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (A) 222,659 174,269 
Loan - - 
Benefit of loan (B) - - 
Total (A+B) 222,659 174,269 
 
8. Duration of the subsidy  
 
 2004-2014.   
 9. Trade effects of the subsidy
 
 
• This subsidy provides the total costs for a di esel vehicle owner who installs emission 
reduction devices or retrofits with "cleaner" e ngines.  Therefore, it does not differentiate 
between a domestic and an imported device, which means that there exists no discriminatory 
trade barrier.   
 D. N
ATURAL GAS BUS SUPPLY PROJECT  
1. Title of the subsidy programme  
 
• Subsidy for the natural gas bus procurement and fuel expenses.   
 
2. Period covered by the notification  
 
 2007-2008.   G/SCM/N/186/KOR 
Page 24  
 
  3. Policy objectives and /or purpose of the subsidy
 
 
• To replace diesel engine buses with frequent ope ration and higher exhaus t and garbage trucks 
into low-emission and cleaner vehicles to e xpedite air quality amelioration in metropolitan 
areas.   
 
4. Background and authority for the subsidy  
 
• Laws:  Clean Air Conservation Act (Article 58).   
• Authority:  Ministry of Environment.   
 5. Form of the subsidy
 
 
 Grants.   
 
• Source of Fund:  Special Account for Environmental Improvement.   
 
6. Recipient and terms  
 
• Recipient:  
9 Grants for natural gas vehicle procurement are provided to a person that 
purchases natural gas vehicles in accordan ce with the Clean Air Conservation 
Act. 
9 Grants for fuel expenses are provided to  a person that intends to supply natural 
gas for vehicles that use natural gas as fuel in accordance w ith the Clean Air 
Conservation Act. 
 7. Amount of the subsidy
 
 
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (A) 33,049 59,672 
Loan - - 
Benefit of loan (B) - - 
Total (A+B) 33,049 59,672 
 
8. Duration of the subsidy  
 
 2000-2010.    
9. Trade effects of the subsidy
 
 
• Trade effect of this subsidy is expected to be insignificant since it is intended to support 
purchasers of natural gas buses and garbage truc ks and the natural gas suppliers to those 
vehicles.   
 
E. SUPPORT FOR RECYCLING EQUIPMENT AND TECHNOLOGY DEVELOPMENT  
1. Title of the subsidy programme  
 
• Loan Programme for Recycling Industry Promotion.    G/SCM/N/186/KOR 
 Page 25 
 
 
  2. Period covered by the notification  
  2007-2008.   
 
3. Policy objectives and /or purpose of the subsidy
 
 
• To promote and encourage recycling and the recycling industry by offering long-term, low 
interest loans to private firms engaged in the recycling business for the development in 
recycling equipment and related technology, and the management of distribution and sales.   
 
4. Background and authority for the subsidy  
 
• Laws:   
9 Article 31 of Act on the Promotion of Saving and Recycling of Resources.   
9 Article 4 of Act Relating to Special Acc ounting for Environmental Improvement.   
 
• Authority:  Ministry of Environment.   
 5. Form of the subsidy
 
 
 Loan.   
 
9 Source of Fund:  Special Account for Environmental Improvement 
 
6. Recipient and terms  
 
• Recipient:   
9 Equipment:  A person or business organi zations engaged in the recycling 
business under the Act  on the Promotion of Saving and Recycling of Resources 
that intends to install recycling equipment.   
9 Technology development:  A person that in tends to be engage d in R&D activities 
related to resource recycling under th e Act on the Promotion of Saving and 
Recycling of Resources.   
9 Waste reduction equipment:  A person th at intends to install waste reduction 
equipments  under the Waste Control Act.   
9 Management stabilization:  A person, under the Act on the Promotion of Saving 
and Recycling of Resources,  engaged in recycling, re pairing and sales business of 
second-hand electric appliances, furniture, etc.   
9 Distribution and sales support:  A person, under the Act on the Promotion of 
Saving and Recycling of R esources, engaged in recycled products sales handling 
a volume of general manufactures no more th an 30 per cent in monetary units and 
a person engaged in the repair and sa les of second-hand electric appliances, 
furniture, etc.   
• Terms:  
9 Equipment, (b) Technology development & (c) Waste reduction equipment:  
9 7-year repayment period with a 3-year grace period at the annual interest rate of 
5.60 per cent (floating interest rate) 
9 Management stabilization & (e) Distribution & sales support:   
9 3-year repayment period with a 2-year gr ace period at an annual interest rate of 
5.60 per cent (floating interest rate) G/SCM/N/186/KOR 
Page 26  
 
  7. Amount of the subsidy
 
 
  (Unit:  million KRW) 
 2005 2006 
Lump sum transfer (A) - - 
Loan 68,849 70,000 
Benefit of loan* (B) 1,149 1,111 
Total (A+B) 1,149 1,111 
 
 * The benefit of loan is estimated based on the diff erence between the loan rate and the market rate.   
 
8. Duration of the subsidy  
 
• No fixed time period.   
 
9. Trade effects of the subsidy  
 
• Trade effect of this subsidy is expected to be insignificant for the following reasons:  
9 First, rather than being a direct subsid y to the recycling industry, it is a loan 
programme that does not restrict foreign investment or foreign participation;   
9 Second, considering the inferior quality of recycled products in general, they would 
hardly have a consequential competitiv e edge against general products.   
 F. P
ROGRAMME FOR R&D  OF INFORMATION AND COMMUNICATION  
1. Title of the subsidy programme  
 
• Loan Programme for R&D of Information and Communication.   
 
2. Period covered by the notification  
 
2007-2008.   
 
3. Policy objectives and /or purpose of the subsidy  
 
• To provide loans for large-sc ale R&D projects on information and communications that 
involve high risks and would otherwise place undue  burdens on businesses wishing to pursue 
technology development. 
 
4. Background and authority for the subsidy  
 
• Law:  Framework Act on Informatization Promotion.   
• Authority:  Ministry of Knowledge Economy.   
 5. Form of the subsidy
 
 
 Loan.    
6. Recipient and term
 
 
• Recipients:  private firms.   
• Term:  interest rate changeable depe nding on market interest rates.   
  G/SCM/N/186/KOR 
 Page 27 
 
 
  7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2007 2008 
Lump sum transfer (a)   
Loan 162,000 143,000 
Benefit of loan* (b)   
Total (a+b)   
 
 * The benefit of loan is estimated based on the diff erence between the loan rate and the market rate.   
 
8. Duration of the subsidy  
 
• No fixed time period.   
 
9. Trade effects of the subsidy  
 
• None.   
   
__________