WORLD TRADE  
ORGANIZATION   
G/SCM/N/220/KOR 
23 September 2011 
 (11-4612) 
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 
 
KOREA 
 
 
 The following communication, dated 22 September 2011, is being circulated at the request of 
the Delegation of Korea.   
 
_______________ 
  
 The following notification is submitted fo r the purposes of transparency and without 
prejudice to the legal status and nature, including sp ecificity, or effects of the notified programmes or 
measures under the ASCM and GATT 1994.    
 
  
 G/SCM/N/220/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  ........................................................................ 9  
III. FISHERY ....................................................................................................................... .......... 10 
A.  SUPPORT FOR DEVELOPMENT OF DEEP-SEA FISHERY  .............................................................. 10  
B.  SUPPORT FOR FISH PRODUCTS PROCESSING DEVELOPMENT  ................................................... 11  
C.  SUPPORT FOR FISHING ACTIVITIES  ........................................................................................... 13  
D.  SUPPORT FOR AQUACULTURE FISHERY DEVELOPMENT  .......................................................... 14  
E.  SUPPORT FOR OLD FISHING VESSELS AND EQUIPMENT REPLACEMENT  .................................. 15  
F.  SUPPORT FOR VESSEL DECOMMISSIONING  ............................................................................... 16  
IV.  COAL INDUSTRY .................................................................................................................  17 
V.  MANUFACTURING INDUSTRY ........................................................................................ 18  
A.  SUPPORT FOR FOREIGN INVESTED ENTERPRISES  ...................................................................... 18  
B.  TARIFF REDUCTION ON AIRCRAFT PARTS  ................................................................................ 20  
C.  SUPPORT FOR FARM MACHINERY MANUFACTURING  ............................................................... 21  
VI.  ENVIRONMENT, RESEARCH AND DEVELOPMENT .................................................. 22  
A.  ENVIRONMENTAL IMPROVEMENT LOAN PROGRAMME  ............................................................ 22  
B.  SUPPORT FOR R&D  OF ENVIRONMENTAL TECHNOLOGY DEVELOPMENT PROJECTS  ............... 23  
C.  PROJECT ON THE EMISSION REDUCTION FOR DIESEL VEHICLES IN OPERATION  ...................... 24  
D.  NATURAL GAS BUS SUPPLY PROJECT  ...................................................................................... 26  
E.  SUPPORT FOR RECYCLING EQUIPMENT AND TECHNOLOGY DEVELOPMENT  ............................ 27  
F.  SUPPORT FOR THE TELE METERING SYSTEM  ............................................................................ 28  
G.  PROJECT ON THE DISTRIBUTION OF LOW NOX  BURNERS  ....................................................... 30  
H.  LOAN PROGRAMME FOR R&D  OF INFORMATION AND COMMUNICATION  ................................ 31  
 
  G/SCM/N/220/KOR 
 Page 3 
 
 
  I. AGRICULTURE  
A. FOODGRAIN MANAGEMENT PROGRAMME  
1. Title of the subsidy programme 
 
Foodgrain Management Programme.   
 
2. Period covered by the notification 
 
2009-2010.   
 
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 
- Foodgrain Management Act (Article 4).   
- Agro-Fisheries Marketing and Price Stabilization Act (Article 10). 
 Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   
 
5. Form of the subsidy 
 
 Grants and loans.   
 
6. Recipients and terms 
 
Grants 
- Recipients:  The farms that prod uce barley, soybeans, and corn.   
- Content of subsidy:  The government purchases a certain volume from the 
producing farms.   
 
Loan 
- Recipients:  The enterpri ses that purchase soybeans.   
- Content of subsidy:  The government  provides the enterprises with loans so 
that they can purchase soybeans from the producing farms.   
- 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 diffe rence between the loan rate and the market rate.   Item Type 2009 2010 
Barley Direct subsidy 25,546 14,636 
Soybeans Direct subsidy (A) 3,783 - 
Loan 13,401 12,063 
Benefit of loan* (B) 536 483 
Total (A+B) 4,319 483 
Corn Direct subsidy 261 261 G/SCM/N/220/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.   
 B. V
ARIABLE DIRECT PAYMENT FOR RICE 
1. Title of the subsidy programme 
 
Variable Direct Payment for Rice.   
 
2. Period covered by the notification 
 
2009-2010. 
 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 agrochemi cals 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 2009 2010 
Lump sum transfer  - 594,500 
  G/SCM/N/220/KOR 
 Page 5 
 
 
  8. Duration of the subsidy 
 
 No fixed period.    
9. Trade effects of the subsidy 
 
There will be a minimal effect on trade because the 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 
 
 2009-2010. 
 
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 
- exporters of fruits, flowering plants , Kimchi, vegetables, ginseng, and 
livestock products.   
 
Contents of the Subsidy:   
- Partial support for costs in sorting, packaging, and transporting.   
 
7. Amount of the subsidy 
   
 (Unit:  million KRW) 
Type 2009 2010 
Lump sum transfer (A) 39,743 39,373 
Loan - - 
Benefit of loan (B) - - 
Total (A+B) 39,743 39,373 
 G/SCM/N/220/KOR 
Page 6 
 
 
  8. Duration of the subsidy 
 
No fixed time period.    
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, Production Cost Reduction and Stabilization of the 
Hanwoo Production Base (Korean native cow).    
2. Period covered by the notification 
 
 2009-2010. 
 
3. Policy objective and/or purpose of the subsidy 
 
- To improve the competitiveness and income of Hanwoo farmhouses by 
cutting down production costs. 
- To secure the Hanwoo production base th rough stabilization of calf breeding 
and management. 
- To produce high-quality beef and reduce production costs by improving 
facilities in cowsheds.  
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 
 
(a) Calf Breeding Stabilization Schedule 
Recipients 
- Cow raising farmers who joined the Calf Breeding Stabilization Schedule.   
 
Contents of the Subsidy 
- Support is provided to compensate for the loss in case the average market 
price of calves is lower than the standard price of the schedule.   
 
(b) Quality Improvement Program  G/SCM/N/220/KOR 
 Page 7 
 
 
  Recipients 
- Cow raising farmers.  
 Contents of the Subsidy 
- Provide consulting services to cow raising farmers, support fees for a grading 
test and engage in beef  promotion. 
 
(c) Modernization of livestock production facilities 
Recipients 
- Cow raising farmers who are members of a producers’ cooperation for the 
promotion and marketing of Hanwoo. 
 Contents of the Subsidy 
- Support is provided to improve facilities for cow raising. 
(d) Support to produce high-quality beef 
Recipients 
- Producers’ cooperation for the prom otion and marketing of Hanwoo, 
livestock farming management  bodies and corporations.  
Contents of the Subsidy 
- Support is provided to improve f acilities for  livestock production. 
7. Amount of the subsidy 
   
  (Unit:  million KRW)
 Type 2009 2010 
Calf breeding stabilization schedule Direct Payment 29,505 1,780 
Quality Improvement Program Direct Payment - 1,352 
Modernization of livestock 
production facilities Direct Payment 7,979 9,222 
Support to produce high-quality beef Direct Payment 1,000 2,000 
 
8. Duration of the subsidy 
 
No fixed time period.   
 
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. P
LYWOOD AND BOARD ASSISTANCE PROGRAMME  
1. Title of the subsidy programme  
 
Plywood and Board Assistance Programme. 
 G/SCM/N/220/KOR 
Page 8 
 
 
  2. Period covered by the notification:  
 
 2009-2010. 
 
3. Policy objectives and /or purpose of the subsidy 
  To facilitate the use of called-out trees, sma ll unmarketable trees and recycling waste wood 
materials.  
4. Background and authority for the subsidy  
 
 Law:  Act on the Promotion of Forest ry and Mountain Villages (Article 10) 
 Authority: Korea Forest Service. 
 5. Form of the subsidy  
  Loan 
- Source of funding:  Special Account for the Structural Improvement of Rural 
Areas. 
6. Recipient and terms 
 
 Recipient:  plywood and board producers. 
  Conditions: Interest rate of  4.0 per cent. 
 
 Terms of the loan:  10 years (7-year repayment period with a 3-year grace period). 
 
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2009 2010 
Lump sum transfer (a) - - 
Loan 10,000 13,000 
Benefit of loan*(b) 300 390 
Total (a+b) 300 390 
* The subsidy effect is estimated based on the diffe rence 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 presumed to be insignificant. 
  G/SCM/N/220/KOR 
 Page 9 
 
 
  Production, Consumption and Trade 
 
  (Unit: 1,000m3) 
 2009 2010 
Production 3,082 3,204 
Imports 2,148 2,275 
Exports 18 15 
Consumption 5,212 5,464 
 
B. WOOD UTILIZATION ASSISTANCE PROGRAMME  
1. Title of the subsidy programme  
 
Wood Utilization Assistance Programme. 
 
2. Period covered by the notification 
 
 2009-2010. 
 
3. Policy objectives and /or purpose of the subsidy 
  
 To provide financial assistance for the modern ization of forestry machinery and facilities. 
 
4. Background and authority for the subsidy  
 
 Law: Act on the Promotion of  Forest ry and Mountain Villages (Article 10). 
 Authority: Korea Forest Service. 
 
5. Form of the subsidy  
 
 Loan. 
- Source of funding:  Special Account for the Structural Improvement of Rural 
Areas. 
6. Recipient and terms 
  
 Recipient:  
- plywood and board producers  
 
 Conditions  
- Interest rate of 3.0~ 4.0 per cent  
 
 Terms of the loan 
- 5 years (2-year repayment period with a 3-year grace period) or 10 years 
(7-year repayment period with a 3-year grace period).  G/SCM/N/220/KOR 
Page 10 
 
 
  7. Amount of the subsidy  
   
  (Unit:  million KRW) 
 2009 2010 
Lump sum transfer (a) - - 
Loan 2,500 3,400 
Benefit of loan*(b) 75 102 
Total (a+b) 75 102 
* The subsidy effect is estimated based on the diffe rence between the loan rate and the market rate.  
 
8. Duration of the subsidy 
 
 No fixed time period 
 9. Trade effects of the subsidy 
 
 The effect on trade is presumed to be insignificant. 
 
Export and Import 
                     
(Unit: 1,000m3) 
  2009 2010 
Export Round wood - - 
Sawn wood 10 9 
Fibreboard 26 20 
Particleboard 1 3 
Import Round wood 5,014 4,227 
Sawn wood 916 1,200 
Fibreboard 184 226 
Particleboard 678 805 
 
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 
  2009-2010.   G/SCM/N/220/KOR 
 Page 11 
 
 
  3. Policy objectives and /or purpose of the subsidy 
 
To support the stable production and management of deep-sea fishery.  
 
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 the grants 
- Government provides grants to a cooper ative 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) 
 2009 2010 
Lump sum transfer (A) 6,531 8,381 
Loan - - 
Benefit of loan (B) - - 
Total (A+B) 6,531 8,381 
 
8. Duration of the subsidy 
 
No fixed time period.   
 9. Trade effects of the subsidy 
 
It is difficult to estimate the trade effect  because the program is not based on trade-
conditioned support.  
 
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 
 
 2009-2010.   
 G/SCM/N/220/KOR 
Page 12 
 
 
  3. Policy objectives and /or purpose of the subsidy 
 
To ensure food safety of fishery products a nd provide high quality products to 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.   
 
5. Form of the subsidy 
 
 Grants and loans. 
 6. Recipient and terms 
 
Recipient 
- Companies and people engaged in th e handling, storing and processing of 
fishery products.   
Terms of the grant 
- 30 to 50 per cent of the expenses.   
Terms of the loan 
- 1 to 10 year loan at an annual in terest rate of 3 to 4 per cent.   
7. Amount of the subsidy 
 
  (Unit:  million KRW) 
 2009 2010 
Lump sum transfer (A) 37,630 36,655 
Loan 29,600 29,600 
Benefit of loan* (B) 742 740 
Total (A+B) 38,372 37,395 
* 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 
 
 It is difficult to estimate the trade eff ect because the program is not based on trade-
conditioned support and it is to the discretion of the beneficiary whether to sell the products in a 
foreign market or domestic market.  
 
Also, the impact on trade, if any, is likely to be minimal because most beneficiaries operate 
small scale businesses and most of the products are presumed to be consumed in domestic markets. 
  G/SCM/N/220/KOR 
 Page 13 
 
 
  C. SUPPORT FOR FISHING ACTIVITIES  
1. Title of the subsidy programme 
 
Support for fishing activities.   
 
2. Period covered by the notification 
  2009-2010.    
3. Policy objectives and /or purpose of the subsidy 
 
To relieve financial burdens and support stable fishing business operations by providing low 
rate loans.   
 4. Background and authority for the subsidy 
 
Law:  Article 84 of the Fisheries Act.    
Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   
 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 an annual inter est rate of 3 percent for coastal and offshore 
fishery and deep-sea fishery.   
 7. Amount of the subsidy 
   (Unit:  million KRW) 
 2009 2010 
Lump sum transfer (A) - - 
Loan 1,481,781 1,524,752 
Benefit of loan* (B) 57,327 55,636 
Total (A+B) 57,327 55,636 
* 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  because the program is not based on trade-
conditioned support and it is to the discretion of the beneficiary whether to sell the products in a 
foreign market or domestic market.  
 G/SCM/N/220/KOR 
Page 14 
 
 
  Also, the impact on trade, if any, is likely to be minimal because most beneficiaries operate  
small scale businesses and most of the products are presumed to be consumed in domestic markets. 
 D. S
UPPORT FOR AQUACULTURE FISHERY DEVELOPMENT  
1. Title of the subsidy programme 
 
Support for Aquaculture Fishery Development.   
 2. Period covered by the notification 
  2009-2010.    
3. Policy objectives and /or purpose of the subsidy 
 
To have a stable supply of fishery products by supporting the development of aquaculture 
fishery under the changing circumstances of the domestic and overseas fisheries production 
environment.    
4. Background and authority for the subsidy 
 
 Law : Article 79 and 86 of the Fisheries Act.   
 
 Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.    
5. Form of the subsidy 
  Grants and loans.   
 6. Recipient and terms 
  Recipient:  Aquaculture fishermen.   
 
Terms of the grant:  30 to 100 per cent of the expenses depending on business type.   
 Terms of the loan:  2 to 10 year loan at an annual interest rate of 3 to 4 per cent.   
 
7. Amount of the subsidy 
 
  (Unit:  million KRW) 
 2009 2010 
Lump sum transfer (A) 13,606 22,242 
Loan 6,955 7,699 
Benefit of loan* (B) 142 162 
Total (A+B) 13,748 22,404 
 * 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.   
  G/SCM/N/220/KOR 
 Page 15 
 
 
  9. Trade effects of the subsidy 
 
It is difficult to estimate the trade effect  because the program is not based on trade-
conditioned support.  
 
E. SUPPORT FOR OLD FISHING VESSELS AND EQUIPMENT REPLACEMENT  
1. Title of the subsidy programme 
 
 Support for Old Fishing Vessels and Equipment Replacement.   
 
2. Period covered by the notification 
 
 2009-2010.   
 3. Policy objectives and /or purpose of the subsidy 
 
To ensure navigational safety through the replace ment of old vessels and vessel equipment.   
 
4. Background and authority for the subsidy 
 
Law:  Article 11 of the Special Act for th e Development of Agricultural and Fishing 
Communities.   
 Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   
 
5. Form of the subsidy 
  Loan.    
6. Recipient and terms 
 
Recipient:  Fishermen.   
 
Terms of the loan:  15 year loan at an annual interest rate of 4 per cent.   
 
7. Amount of the subsidy 
 
  (Unit:  million KRW) 
 2009 2010 
Lump sum transfer (A) - - 
Loan 4,000 16,358 
Benefit of loan * (B) 100 404 
Total (A+B) 100 404 
 * 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.   
 G/SCM/N/220/KOR 
Page 16 
 
 
  9. Trade effects of the subsidy 
 
It is difficult to estimate the trade effect  because the program is not based on trade-
conditioned support.  
 
F. SUPPORT FOR VESSEL DECOMMISSIONING  
1. Title of the subsidy programme 
 
Support for Vessel Decommissioning.   
 
2. Period covered by the notification 
 
 2009-2010.   
 3. Policy objectives and /or purpose of the subsidy 
 
To support vessel decommissioning to maintain fleet  size at a sustainable level for coastal and 
offshore fishery.   
 
4. Background and authority for the subsidy 
 
 Law:  Article 75 of the Fisheries Act.   
 Authority:  Ministry for Food, Agriculture, Forestry and Fisheries.   
 
5. Form of the subsidy 
  Grants.    
6. Recipient and terms 
 
Recipient:  Coastal and offshore fishermen.   
 
Terms of the grant:  100 percent of the expe nses paid in the form of vessel buy-back   
 
7. Amount of the subsidy 
 
  (Unit:  million KRW) 
 2009 2010 
Lump sum transfer (A) 108,646 77,500 
Loan - - 
Benefit of loan* (B) - - 
Total (A+B) 108,646 77,500 
 *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 su bsidization will continue until 2016.   
  G/SCM/N/220/KOR 
 Page 17 
 
 
  9. Trade effects of the subsidy 
 
It is difficult to estimate the trade effect  because the program is not based on trade-
conditioned support.  
 
IV. COAL INDUSTRY 
1. Title of the subsidy programme  
 
 Coal Industry Support  in  the special account  for Energy and Resources 
 
2. Period covered by the notification   
 
 2009-2010. 
  
3. Policy objectives and /or purpose of the subsidy 
 
 To support restructuring of the coal i ndustry such as abandoning mines and reducing 
production in the inefficient anthracite manufacturing business. 
 
 To support the margin between the production co st and selling price of coal and briquette 
price control. 
 
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. 
 
5. Form of the subsidy  
 
 Grants.  
6. Recipient and terms 
 
 The subsidy is provided to coal mine operato rs, briquette manufacturers, and colliers in the 
form of a production stabilization support fund, an occupational health and safety insurance premium, 
briquette manufacturing cost s, and school expenses. 
 
7. Amount of the subsidy  
 
                                                                                                                  (Unit:  milli on KRW) 
 2009 2010 
Lump sum transfer (a) 266,561 167,333 
Loan   
Benefit of loan*(b)   
Total (a+b) 266,561 167,333 
* The subsidy effect is estimated based on the diff erence between the loan rate and the market rate. 
 
8. Duration of the subsidy 
 
No fixed time period.  G/SCM/N/220/KOR 
Page 18 
 
 
   
9. Trade effects of the subsidy  
 
 None. 
 
V. MANUFACTURING INDUSTRY 
A. SUPPORT FOR FOREIGN INVESTED ENTERPRISES  
1. Title of the subsidy programme 
 Support for Foreign-Invested Enterprises 
 
2. Period covered by the notification 
2009-2010 
3. Policy objective and /or purpose of the subsidy 
 To stimulate foreign direct investment(FDI) attraction. 
 
 Tax reduction:  To promote foreign investment by reducing the tax burden. 
 Cash Grants:  To support development of less-advanced areas.  
4. Background and authority for the subsidy 
(a) Tax reduction 
- Laws:  Articles 121-2 and 121-3 of the Special Tax Treatment Control Law, 
Article 9 of the Foreign Investment Promotion Act, Regulation of each 
municipality 
- Authority:  Ministry of Strategy and Finance, Ministry of Knowledge 
Economy, Ministry of Public Administration and Security 
(b) Cash Grant 
- Law:  Article 14-2 of the Foreign Investment Promotion Act 
- Authority:  Ministry of Knowledge Economy 
5. Form of the subsidy 
(a) Tax reduction:  Tax reducti on and reduction in the rental fee of state-owned 
properties. 
(b) Cash Grant:  Grants 
 
6. Recipient and terms 
(a) Tax reduction   G/SCM/N/220/KOR 
 Page 19 
 
 
  Recipients 
- Foreign-invested enterprises which are involved in businesses related to 
advanced technology or engaged in the service sector supporting other 
industries. 
- Foreign-invested 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 (Towns?). 
Terms 
 
Requirement 
taxes Industry support service and 
high-tech industry business, 
Firms in Individual type FIZ 
(Foreign Investment Zone) Firms in the Free Economic 
Zone, Jeju Investment 
Promotion Zone, Complex 
type FIZ, and Free Trade 
Zone, Developers in the Free 
Economic 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 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 
initiation of operation and a 
50 per cent reduction for the 
next 2 years. 
Customs duty, individual 
consumption tax, value- 
added tax(VAT) on capital 
goods introduced into 
Korea by foreign-invested 
enterprises for the purpose 
of operation of businesses 
which are eligible for tax 
exemption or reduction 
within 3 years A full exemption is granted. Custom duties are exempted. 
 
- 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. 
 
 G/SCM/N/220/KOR 
Page 20 
 
 
  7. Amount of the subsidy 
(a) Tax reduction 
 No statistics available.  
  
(b) Cash Grant  
                                                                                                                  (Unit:  milli on KRW) 
 2009 2010 
Lump sum transfer (a) 15,000 8,300 
Loan   
Benefit of loan*(b)   
Total (a+b) 15,000 8,300 
* The subsidy effect 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 effect of the subsidy 
(a) Tax reduction :  The tax reduction system is  aimed at promoting foreign investment, 
and thus, it has neither export requirements nor a trade impact. 
(b) Cash Grant : Cash Grant is aimed at supporting regions that are at a disadvantage in 
relation to competing with more advantag ed regions  and does 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 
2009-2010. 
3. Policy objective and/or purpose of the subsidy 
 To reduce production costs by encouraging the importation of aircraft parts that are not 
produced domestically. 
 4. Background and authority for the subsidy 
 Laws:  Article 89 of the Customs Act. 
  Authority:  Ministry of Strategy and Finance. 
  G/SCM/N/220/KOR 
 Page 21 
 
 
  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:  million KRW) 
  2009 2010 
 Amount of Duty Reduction 43,014 33,103 
 
8. Duration of the subsidy  
 No fixed time period. 
 
9. Trade effect of the subsidy 
 The duty abatement is aimed at promoting the im portation of parts of ai rcrafts and therefore, 
there is no adverse 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 
 
 2009-2010.   
 
3. Policy objective and/or purpose of the subsidy 
  To assist off-season manufacturing of farm machinery and to help machinery manufacturers meet the high demand for farm m achinery during farming seasons.  
  
 To promote manufacturing and supply of high-quality agricultural machinery made in Korea, by providing financial resources to production f acility establishments 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 for Food, Agriculture, Forestry and Fisheries.  
 G/SCM/N/220/KOR 
Page 22 
 
 
  5. Form of the subsidy 
 
 Loan.    
6. Recipients and terms 
 
Recipients 
- Farm machinery manufacturers and developers of new-tech machinery.   
 Contents of the Subsidy 
- To provide financial assistance for prod ucing 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 
 
 The impact of the program on trade is expected  to be almost non-existent since the amount of 
the subsidy accounts only for 0.02 per cent of the total value of farm machinery production.   
 
Statistics on farm machinery sales and trade 
   (Unit:  1000 US$) 
 
VI. ENVIRONMENT, RESEARCH AND DEVELOPMENT 
A. E
NVIRONMENTAL IMPROVEMENT LOAN PROGRAMME  
1. Title of the subsidy programme 
 
Environmental Improvement Loan Programme.   
 
2. Period covered by the notification 
 
 2009-2010.   
 Type 2009 2010 
Direct subsidy (A) - - 
Loan 56,972 52,918 
Benefit of loan* (B) 203 202 
Total (A+B) 203 202 
Year Total sales amount (billion KRW) Export Import 
2009 958 375,457 362,205 
2010 1,051 433,557 419,125  G/SCM/N/220/KOR 
 Page 23 
 
 
  3. Policy objectives and /or purpose of the subsidy 
 
To promote investment in facilities to preven t environmental pollution and to contribute to 
environmental preservation. 
 
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.   
- Source of Fund:  Public Capital Management Fund.   
6. Recipient and terms 
 
 Recipient:  firms that install and operate  pollution prevention devices and facilities.   
 
Terms of the loan:  4-year equal repayment period with a 3-year grace period at an annual 
interest rate of 3.52-5.07 per cent (floating interest rate).   
 
7. Amount of the subsidy 
  (Unit:  million KRW) 
 2009 2010 
Lump sum transfer (A) - - 
Loan 60,000 45,700 
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 
  2009-2010.    G/SCM/N/220/KOR 
Page 24 
 
 
  3. Policy objectives and /or purpose of the subsidy 
 
To improve the domestic environment by developi ng cutting-edge environmental technology.   
 
4. Background and authority for the subsidy 
 
Laws:  Development of and Support for Envi ronmental Technology Act (Article 5).   
 
Authority:  Ministry of Environment.   
 
5. Form of the subsidy 
 
 Grants.   
- Source of funding:  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) 
 2009 2010 
Lump sum transfer (A) 105,256 114,256 
Loan - - 
Benefit of loan (B) - - 
Total (A+B) 105,256 114,256 
 
8. Duration of the subsidy 
  No fixed time period.    
9. Trade effects of the subsidy 
 
 The trade effect of this subsidy is expected  to be insignificant because it is focused on the 
support for R&D of fundamental technology in  order to improve the environment.  
 C. P
ROJECT ON THE EMISSION REDUCTION FOR DIESEL VEHICLES IN OPERATION  
1. Title of the subsidy programme 
 
Subsidy for the emission reduction device (D PF, DOC) installation and "cleaner" engine 
retrofit and for the early scrappa ge of superannuated vehicles. 
 
2. Period covered by the notification 
 
 2009-2010. 
 
3. Policy objectives and /or purpose of the subsidy 
 
To improve air quality in the metropolitan area including five metropolitan cities.  G/SCM/N/220/KOR 
 Page 25 
 
 
   
4. Background and authority for the subsidy 
 
Laws:   
- Special Act on Metropolitan Air Quality Improvement (Paragraph 6 of 
Article 25 and Article 27)  
- Clean Air Conservation Act (Paragraph 2 of Article 58)  
Authority:  Ministry of Environment.   
 
5. Form of the subsidy 
 
 Grants.   
- Source of funding: Special Account for Environmental Improvement.    
6. Recipient and terms 
 
Recipient:   
- Diesel vehicles that fail the emission test on designated diesel vehicles* 
under Paragraph 1, Article 25 of the Special Act on Metropolitan Air Quality 
Improvement. 
- Diesel vehicles other than designated diesel vehicles* that fail the emission 
test on automobiles in operation under Article 57 of the Clean Air 
Conservation Act. 
- Diesel vehicles past their exhaust gas guarantee period that fail the emission 
test on manufactured vehicles. 
* designated diesel vehicles: diesel vehicles designated by the Special Act on Metropolitan Air 
Quality Improvement.  
 
Terms:  to provide part of the costs (90 pe r cent) for installing emission reduction devices, 
retrofitting with "cleaner" engines or early scrapping of vehicles (50 per cent each from central 
government and local government expenditures).   
 7. Amount of the subsidy 
   (Unit:  million KRW) 
 2009 2010 
Lump sum transfer (A) 128,062 129,079 
Loan - - 
Benefit of loan (B) - - 
Total (A+B) 128,062 129,079 
 
8. Duration of the subsidy 
 
 2004 ~ 
 G/SCM/N/220/KOR 
Page 26 
 
 
  9. Trade effects of the subsidy 
 
This subsidy provides the total cost for a diesel  vehicle owner who installs emission reduction 
devices or retrofits with "cleaner" engines.  Ther efore, it does not differentiate between a domestic 
and an imported device, which means that a di scriminatory trade barrier does not exist.   
 
D. NATURAL 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 
  2009-2010.    
3. Policy objectives and /or purpose of the subsidy 
 
To replace diesel engine buses and garbage tr ucks, with frequent operation and higher 
exhausts, into low-emission and cleaner vehicles to  expedite 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 funding:  Special Account for Environmental Improvement.   
6. Recipient and terms 
 
Recipient:  
- In accordance with the Clean Air Con servation Act, grants for natural gas 
vehicle procurement are provided to a person that purchases a natural gas 
vehicle. 
- In accordance with the Clean Air Conser vation Act, grants for fuel expenses 
are provided to a person that intends to supply natural gas for a vehicle that 
uses natural gas as fuel. 
7. Amount of the subsidy 
 
  (Unit:  million KRW) 
 2009 2010 
Lump sum transfer (A) 60,042 41,734 
Loan - - 
Benefit of loan (B) - - 
Total (A+B) 60,042 41,734 
  G/SCM/N/220/KOR 
 Page 27 
 
 
  8. Duration of the subsidy 
 
 2000 ~    
9. Trade effects of the subsidy 
 
Trade effects of this subsidy are expected to  be insignificant since it is intended to support 
purchasers of natural gas buses and garbage trucks, without differentiation between a domestic and 
imported vehicle, as well as natural gas suppliers to  those vehicles, for the improvement of air quality 
in metropolitan areas.   
 E. S
UPPORT FOR RECYCLING EQUIPMENT AND TECHNOLOGY DEVELOPMENT  
1. Title of the subsidy programme 
 
Loan Programme for Recycling Industry Promotion.   
 
2. Period covered by the notification 
 
 2009-2010.   
 3. Policy objectives and /or purpose of the subsidy 
 
To promote and encourage recycling, recycling industries and the management of distribution 
and sales, by offering long-term and low interest rate  loans to private firms engaged in the recycling 
business for the development of recycling equipment and related technology.   
 
4. Background and authority for the subsidy 
 
Laws:   
- Article 31 of the Act on the Promo tion of Saving and Recycling of 
Resources.   
- Article 4 of the Act Relating to Special Accounting for Environmental 
Improvement.   
Authority:  Ministry of Environment.   
 
5. Form of the subsidy 
 
Loan.   
- Source of Fund:  Special Account for Environmental Improvement 
6. Recipient and terms 
 
Recipient:   
- A person or business organization, under the Act on the Promotion of Saving 
and Recycling of Resources, engaged in  the recycling business that intends to 
install recycling equipment.   
- A person that intends to be engaged in R&D activities related to resource 
saving and recycling under the Act on the Promotion of Saving and 
Recycling of Resources.   G/SCM/N/220/KOR 
Page 28 
 
 
  - A person that intends to install waste reduction equipment under the Wastes 
Control Act.   
- A person, under the Act on the Promo tion of Saving and Recycling of 
Resources, engaged in recycling, re pairing and sales business of second-hand 
electric appliances, furniture, etc.   
- A person, under the Act on the Promo tion of Saving and Recycling of 
Resources, engaged in recycled products  sales handling a volume of general 
manufactures no more than 30 per cent in monetary units and a person engaged in the repair and sales of se cond-hand electric appliances, furniture, 
etc.   
Terms:  
- 7-year repayment period with a 3-year grace period at an annual interest rate 
of 3.85 per cent (floating interest rate) for recipients of (a), (b), (c). 
- 3-year repayment period with a 2-year grace period at an annual interest rate 
of 3.85  per cent (floating interest rate) for recipients of (d), (e). 
7. Amount of the subsidy 
   
  (Unit:  million KRW) 
 2009 2010 
Lump sum transfer (A) - - 
Loan 65,000 65,000 
Benefit of loan* (B) 1,021 1,193 
Total (A+B) 1,021 1,193 
 * The benefit of loan is estimated based on the difference between the loan rate and the market rate: 
[SME annual average lending rate (source: Bank of Kore a)-annual average lending rate of funds to foster the 
recycling industry] × yearly loan amount 
 
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 due to the following reasons:  
 
- First, it is a loan programme that does not restrict foreign investment or 
foreign participation rather than being a direct subsidy to the recycling 
industry.   
- Second, considering the inferior quality of  recycled products in general, they 
would hardly have a consequentia l competitive edge against general 
products.   
F. SUPPORT FOR THE TELE METERING SYSTEM  
1. Title of the subsidy programme  
 
Subsidy for the costs of installation and management of the Tele Metering System.  G/SCM/N/220/KOR 
 Page 29 
 
 
   
2. Period covered by the notification 
 
 2009-2010. 
 
3. Policy objectives and /or purpose of the subsidy 
 
To support the costs of installation and ma nagement of metering systems installed and 
managed for air quality improveme nt through constant metering of air pollutants emitted from 
business sites.    
 4. Background and authority for the subsidy  
 
Laws:  Clean Air Conservation Act (Article 81).   
 
Authority:  Ministry of Environment.   
 5. Form of the subsidy  
 
 Grants.   
- Source of funding:  Special Account for Environmental Improvement.   
6. Recipient and terms 
 
 Recipient:  SMEs under Article 3 of the Enfo rcement Decree of the Framework Act on Small 
and Medium Enterprises that installed metering devi ces according to the regulations of Article 17 of 
the Enforcement Decree of Clean Air Conservation Ac t and Article 18 of the Enforcement Decree of 
Special Act on Metropolitan Air Quality Improvement, and which its business sites transmit the 
metered results to a Clean SYS control centre.   
Terms:  Support for the costs of installation and management of the Tele Metering System 
(40 per cent from the central government and 20 per cent from the local government).   
7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2009 2010 
Lump sum transfer (a) 2,660 2,360 
Loan - - 
Benefit of loan*(b) - - 
Total (a+b) 2,660 2,360 
 
8. Duration of the subsidy 
 
 2009-2010. 
 
9. Trade effects of the subsidy  
 
There is no discriminatory trade barrier because th is subsidy supports the costs of installation 
and management of the Tele Metering System a nd does not differentiate between a domestic and 
imported measurement device.  
 G/SCM/N/220/KOR 
Page 30 
 
 
  G. PROJECT ON THE DISTRIBUTION OF LOW NOX  BURNERS  
1. Title of the subsidy programme  
 
Project on the Support for Low NOX Burner Installation.   
 
2. Period covered by the notification 
 
 Continuing project.  
3. Policy objectives and /or purpose of the subsidy 
 
To support the installation of low NOX burners to small and medium business sites to 
improve air quality in areas of high con cern in metropolitan and rural areas.  
  4. Background and authority for the subsidy  
 
Laws:   
- Clean Air Conservation Act (Article 81). 
- Special Act on Metropolitan Air Quality Improvement (Article 34). 
- Act on the Budgeting and Management of Subsidies. 
- Notifications No. 2009-13 (Subsidy project to support low NOX burner 
installation, delegated affairs*) a nd No. 2009-26 (Subsidy project under the 
Ministry of Environment, delegated affa irs*) of the Ministry of Environment. 
* delegated affairs: affairs entrusted to local governments 
Authority:  Ministry of Environment.   
 
5. Form of the subsidy  
 
Grants.   
- Source of funding:  Special Account for Environmental Improvement.   
6. Recipient and terms 
 
 Recipient: SMEs under Article 3 of the Enforc ement Decree of the Framework Act on Small 
and Medium Enterprises, non-profit corporations, commercial buildings and apartment houses (with 
the exception of public facilities) replacing regul ar burners to low NOX burners on regular boilers, 
water chillers/heaters and drying facilities (limited to indirect heating facilities).  
Terms: Fixed support according to volume (local governments support an additional 
40 per cent of the central government’s support).   G/SCM/N/220/KOR 
 Page 31 
 
 
  7. Amount of the subsidy  
 
  (Unit:  million KRW) 
 2009 2010 
Lump sum transfer (a) 10,380 10,077 
Loan   
Benefit of loan*(b)   
Total (a+b)   
* The subsidy effect is estimated based on the diff erence between the loan rate and the market rate. 
 
8. Duration of the subsidy 
 
 Continuing  project. 
 9. Trade effects of the subsidy  
 
Trade effects of this subsidy ar e expected to be insignificant because it supports the costs of 
replacing regular burners to low NOX burners on re gular boilers, water chillers/heaters and drying 
facilities (limited to indirect heating facilities) in stalled in SMEs, non-profit corporations, commercial 
buildings and apartment houses for the improvement of air quality.  
 
H. LOAN PROGRAMME 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  
 
 2009-2010. 
 
3. Policy objectives and /or purpose of the subsidy 
 
 To provide loans for large-scale R&D proj ects on information and communication that 
involve high risks and would otherwise plac e undue burdens on businesses wishing to pursue  
technology development. 
 
4. Background and authority for the subsidy  
 
Law:  Information Technology Industry Promotion Act 
 
 Authority: Ministry of Knowledge Economy 
 5. Form of the subsidy  
 
 Loan.  
6. Recipient and terms 
 
 Recipients:  private firms 
 
 Terms:  Floating interest rate G/SCM/N/220/KOR 
Page 32 
 
 
   
7. Amount of the subsidy  
 
                                                                                                                  (Unit:  milli on KRW) 
 2009 2010 
Lump sum transfer (a)   
Loan 70,000 50,000 
Benefit of loan*(b)   
Total (a+b)   
* The subsidy effect 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.  
__________