WORLD TRADE  
ORGANIZATION  G/STR/Q1/KOR/10 
15 November 2010 
 (10-6113) 
Working Party on 
State Trading Enterprises Original:   English 
 
 
 
STATE TRADING 
 
Replies to Questions Posed by the UNITED STATES1 Concerning the  
New and Full Article XVII Notification of KOREA2 
 
  The following communication, dated 5 November 2010, is being circulated at the request of the Delegation of Korea.    
_______________ 
 
 
I. MINISTRY OF AGRICULTURE & FORESTRY, MAF 
 
Question 1 
 
 In Section 1, Korea lists 16 affected pro ducts;  however, Table I and III provide data 
on 1006.20.1000.    
• Can Korea clarify why there is no data on other 14 products?   
 Reply
 
  - Only that tariff item (1006.20.1000) was traded.  
 * Please refer to the Quota Administration Method for Agricultural Products 
(G/AG/N/KOR/1, 31 May 1995) notified to WTO. 
 
Question 2 
  In Section F, Korea mentions "other econo mic factors" that may influence domestic 
sales prices of rice.   
 
• What were these "other" economic fa ctors that came into play?   
 
Reply
 
 
 - "Other economic factors" include cons umer preference and competition rate among 
auction companies.  
  
                                                     
 
1 G/STR/Q1/KOR/9. 
2 G/STR/N/7/KOR and G/STR/N/10/KOR.   G/STR/Q1/KOR/10 
Page 2  
 
  Question 3  
 
 In Table I, for years 1998, 1999, and 2000, Average Representative Domestic Sales Price 
and Mark-up are not disclosed.    
• Can Korea explain the missing data?   
• Can Korea explain how the mark-up is calculated?   
 
Reply
 
   - At the time of notification, the data for the first three years were not available due to 
technical difficulties.  The subsequent notification covering the period from 2004 
to 2009 (G/STR/N/11, G/STR/N/12, G/STR/N/13) contains such data. 
 
 - The mark-up is calculated by subtracti ng the product price, transportation fees, 
storage fees, insurance premium, other expenses and taxes from the profits generated in domestic sales, after the importation of rice.  
 II. AGRICULTURAL AND FISHERY MARKETING CORPORATION, AFMC 
 
Question 1  
 
 In Section 1, for garlic, Korea lists four pr oducts that are affected;  however, Table I 
does not provide data for 0703.20.0000.    
• Can Korea confirm that there was no acti vity for Garlic HS 0703.20.0000?   
 
Reply
 
 
 - Garlic HS0703.20.0000 was divided into two HS lines in the year 2000:  
HS0703.20.1000 and HS0703.20.9000.  
 
 - Prior to the year 2000, the import volume (HS0703.20.0000) was :   
  (Unit:  ton):  25,6 33 (1998), 14,355 (1999) 
  The "total quantity imported" column  in Table I includes those volumes.  
 
Question 2  
 
 In Section C, Korea states that open bi dding are allowed for sesamum seeds, ginger, 
buckwheat, and ground nuts.    
• Can Korea explain how this open bidding wo rks?  Can Korea explain why open bidding 
is allowed for only these four products?   
 
Reply
 
  - The opening bid process is open to all app licants and quotas are allocated in the order 
of highest auction payment (mark-up) offered.  G/STR/Q1/KOR/10 
 Page 3 
 
 
   - Korea has decided to apply this form of importation for the four products in an effort 
to improve the ability to adjust to market  opening, and is making further efforts to 
expand the system to other products.  
 
Question 3  
 
 In Table I:   
 
• For Ginger, can Korea explain why data for 1999 and 2003 are missing?   
• For Ground Nuts, can Korea explain why 1999 and 2002 are missing?   
 
Reply  
  - Both were not imported by state trading enterprises in those periods. 
 
Question 4  
 
 For Table II:   
 
• For Small Red Beans, Genus Capsicum, Garlic , Onions, Ginger, and Sesamum Seeds?   
• For Ginger and Ground Nuts, data for only  four years are published.  Can Korea 
explain this?   
• Can Korea explain how the mark-up is calculated?   
 
Reply
 
  - The products were not imported by state trading enterprises in those periods. 
 
 - The mark-up is calculated by subtracti ng the product price, transportation fees, 
storage fees, insurance premium, other expenses and taxes from the profits generated 
in domestic sales, after the importation.  
 
III. LIVESTOCK PRODUCTS MARKETING ORGANIZATION, LPMO 
 
Question 1  
• Can Korea explain why Korea provided data on only 1998, 1999, and 2000?   
• Can Korea explain how the mark-up is calculated?   
 
Reply
 
 
 - Beef is excluded from state trading as it is opened at a single tariff rate since 
1 Jan. 2001 based upon Korea's WTO sc hedule for agricultural products. 
  - The mark-up is not relevant anymore in the beef imports. 
 
Question 2  
 
 In Section C, Korea states that the private importers known as SBS super group are 
able to purchase beef directly from overseas exporters within an annual quota amount.   
 
• Can Korea provide a schedule of past annual quota amounts?   G/STR/Q1/KOR/10 
Page 4  
 
  • Can Korea provide more details re this SBS s uper group (i.e. composition, guidelines, 
etc.)   
• Can Korea explain how the mark-up is calculated?   
 
Reply
 
 
 - Beef is excluded from state trading as it is opened at a single tariff rate since 
1 Jan. 2001.  
  - The SBS super group was a system that distributed some portions of the basic quota 
to domestic consumers, allowing them to  import products without government or 
livestock distributors interference.  It has operated until 2000.  
 
 - The mark-up is not relevant anymore in the beef imports. 
 
Question 3 
 
 In Section H, Korea describes the market structure.   
 
• Can Korea explain in detail how the market st ructure differs for domestic and imported 
beef?   
 
Reply
 
 
 - Beef is excluded from state trading and as it is opened at a single tariff rate since 
1 Jan. 2001.  For now, there are no market structure differences for domestic and imported beef.   
 
IV. NATIONAL LIVESTOCK COOPERATIVES FEDERATION, NLCF 
 
Question 1  
 
 In Table III, Korea does not provide data on National Consumption.   
 
• Can Korea explain why there is no data for these years?   
 
Reply
 
  - Official data for national consumption was not made. 
 
Question 2  
 
 In Section H, Korea notes that imported pr oducts are sold to consumers either directly 
or through bidding.   
 
• Can Korea explain what percentage is sold directly through bidding?  If through direct 
sales, how is this coordinated?    
 
Reply
 
 
 - Prior to 2001, the total in-quota volume of Natural Honey imported by the NLCF was 
sold directly to consumers.  G/STR/Q1/KOR/10 
 Page 5 
 
 
   - After 2001, all imports were carried out by private companies, and there was no state 
trading. 
 Question 3  
 
 In Section 6, NLCF was merged with NACF.   
 
• Since the merger, have there been any significant changes?   
• Can Korea explain how the mark-up is calculated?   
 Reply
 
  - The National Agricultural Cooperative Federation took over the role for state trading 
of natural honey from the National Livest ock Cooperative Federation.  The merger 
between the NLCF and the NACF did not generate significant changes in state 
trading. 
 
 - Since 2001, all imports within in-quota  volumes have been operated by private 
companies alone through quota auction.  Th ere is therefore no need to calculate a 
mark-up for natural honey.  
 V. CHEJU CITRUS GROWER'S AGRICULTURAL COOPERATIVE, CCGAC 
 
Question 1  
 
In Tables I and III:   
 
• For Oranges, data for 2002 and 2003 are not published.  Can Korea explain this?   
• For Mandarins, data for only 1998 and 2000 are published.  Can Korea explain this?   
• Can Korea explain how the mark-up is calculated?   
 
Reply
 
 
 - All imports of Oranges in 2002 and 2003 were carried out by private companies, and 
there was no state trading. 
 
 - As for Mandarins, all the in-quota volumes were imported by private companies 
since 2001. 
 
VI. KOREA GINSENG COOPERATIVE FEDERATION, KGCF 
 
Question 1 
  In Section 1, Korea lists 1211.20.9100;  however, no data is provided for this in either Table I or III.   
 
• Can Korea explain this?   
 In Table I, Korea lists 1211.20.1000;  ho wever, this is not under Section 1.   
 
• Can Korea explain this?   G/STR/Q1/KOR/10 
Page 6  
 
  Reply
 
  - It was a typographical error.  The correct item number is 1211.20.9100, not 
1211.20.1000. 
 
Question 2  
 
 In both Tables I and III, Korea only  provides data for two years.   
 
• Can Korea explain why only data for 1998 and 1999 are provided?   
 
Reply
 
  - All the imports within in-quota volume  were carried out by private companies 
since 2001, and there was no state trading.   
 
Question 3  
 
 In Section F, Korea states that resale pric es are determined through an open bidding 
system.    
• Can Korea explain the factors involved in calculating the resale prices?   
 
Reply
 
 
 - The factors associated with price calcu lation are determined through supply and 
demand situations.  
 Question 4  
 
 In Section H, Korea states that products imported by NGCF a re sold to consumers 
through wholesale markets.    
• Can Korea explain whether or not these cu stomers are individual customers or retail 
(commercial) customers?   
 
• Can Korea explain how the mark-up is calculated?   
 
Reply
 
  Consumers are either individual clients, gi nseng product processing companies or ginseng 
retailers.   
 
VII. NATIONAL FORESTRY COOPERATIVES FEDERATION, NFCF 
 
Question 1  
  In Tables I and III, data for 2000 are not published.    
• Can Korea explain this?    G/STR/Q1/KOR/10 
 Page 7 
 
 
  Reply  
  - No quantity was imported by state trading enterprises in 2000.   Question 2  
 
 In Section F, Korea states that resale pri ces are determined by operational costs.   
 
• Can Korea provide more detail regarding what  these operational costs were for the past 
years?   
• Can Korea explain how the mark-up is calculated?   
 
Reply
 
  - The operation cost incurred during import and sales processes include tariff, customs 
clearance costs, transportation and travel expenses.  
  - The mark-up is calculated by subtracti ng the product price, transportation fees, 
storage fees, insurance premium, other expenses and taxes from the profits generated 
in domestic sales, after the importation.  
 
VIII. GENERAL 
 
Question 1  
 
 Regarding MAF, Korea states that this S TE is set up to primarily address the difference 
between domestic and import prices due to "su dden influx of imported rice".  Recent trends 
depict domestic consumption level playing a critical factor in influencing prices.  Will Korea 
revise the "reason or purpose" to identify other key factors like domestic consumption, besides 
singling out imports?   
 
Reply
 
 
 - STE, as the name suggest, is mainly con cerned about trade (imports/exports) rather 
than domestic consumption. 
 Question 2   We request that Korea please (1) provide specific information with regard to the 
number of sales outlets for imported beef as  compared to those for domestic beef, and 
(2) explain the extent to which imported beef is required to be retailed in shops that do not also 
sell domestic beef.   
 
Reply
 
  - Beef was excluded from state trading in 2001 and for now, there are no market 
structure differences for domestic and imported beef. 
  
__________