RESTRICTED
WORLD TRADE G/SCM/Q2/KOR/7
3October 1996
ORGANIZATION(96-4012)
Original: English Committee onSubsidies andCountervailing Measures
SUBSIDIES
Questions from theUNITED STATES Regarding theNew
andFullNotification ofKOREA1
Thefollowing communication, dated 27September 1996, hasbeenreceived fromthePermanent
Mission oftheUnited States.
_______________
I. QUESTIONS ONNOTIFIED PROGRAMMES
A. Forthefollowing notified programmes, please provide:
(i) theperiod covered bythenotification; and
(ii) theduration ofthesubsidy and/or anyother timelimits attached toit,including date
ofinception/commencement.
1. Foodgrain Management Programme
2. Livestock Support Programme
3. Sericulture Development Programme
4. Government purchase ofrapeseed
5. Marketing Improvement Programme forFruits andFlowers
6. Plywood andBoard Assistance Programme
7. Forest Products Utilization Assistance Programme
8. Support fordevelopment ofdeep-sea fishery
9. Support forfishproducts processing development
10. Fund forsupporting fishing activities
1G/SCM/N/3/KOR+Rev.1.G/SCM/Q2/KOR/7
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11. Support fordeveloping aquaculture fishery
12. Reduction inlocaltaxation onbuilding andacquisition ofvessels fordeep-sea fishery
13. Support programme forthecoalindustry
14. Reserves forexport losses
(Note: TheUnited States hasfound thissubsidy tobecountervailable inthreeCVD proceedings
concerning certain steelproducts, oilcountry tubular goods andcertain stainless steelcooking
warefromKorea. However, inthese cases, Articles 22,23and24oftheTaxExemption and
Reduction Control Actwerecitedasthelegalbasisfortheprogramme. InKorea 'snotification,
however, Articles 14-17 were citedasthelegislative authority. Could Korea please clarify
this?)
15. Reserves foroverseas market development
16. Facility investment loans provided bytheSMEs Foundation Formation Fund
17. Taxcredit forinvestment infacilities
18. Taxreduction andexemption forforeign invested enterprises
19. Reduction incustoms dutyonparts ofaircraft andvessels
20. Support programme formaintenance offarmmachinery
21. Assistance programme topromote thespread ofdomestically produced mini-computers
22. Supporting fundforstone industry
23. Research anddevelopment activities forlowemission autovehicles
24. ResearchanddevelopmentactivitiessupportedbytheInformationandCommunicationPromoting
Fund
25. Environmental Engineering andTechnology Development Programme
26. Promotion Fund forScience andTechnology
B. Agricultural Programmes
1. WenoteKorea 'sreference tothe"Marketing Programme forFruits andFlowers" andwould
appreciate further description oftheprocessing andtransportation subsidies paidbytheAgriculture
andFishery Marketing Corporation.
2. Regarding the"Food Grain Management Programme", wequestion theassertion thatthe
Government 'sintervention inthegrain market hasinsignificant effects ontrade. Inthecaseofrice,
Korea 'scurrent stocks drawdown (tounprecedented lowlevels) inresponse tofalling production appears
tobedesigned toreduce orpreclude imports. Could Korea explain whyithasnotconsidered other
lesstrade distorting measures torespond totheshortfall?G/SCM/Q2/KOR/7
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3. With respect tothe"Government Purchase ofRapeseed" Programme, wenotetheabsence
ofKorea 'sanalysis oftheprogramme 'seffects ontrade. Could Korea confirm thatthisprogramme
hasnonegative effect ontrade?
4. Regarding the"Livestock Support Programme", wequestion Korea 'sassertion thattheeffect
ontrade ofthepigmeat production subsidy isinsignificant. Wenotethattheprogramme costrose
significantly during the1992-1994 reporting period. What wasthecostin1995andwhatisthebudget
for1996?
5. Inrecent years, Korea hasproduced surpluses ofleaftobacco asaresult ofhighguaranteed
prices paidbytheKorean Tobacco &Ginseng Corporation, themonopoly producer ofcigarettes.
Although Korean prices haveremained stable since 1992, domestic prices stillexceed world prices.
Exports, while declining, appear tomove intointernational tradeatprices below those paidtofarmers.
Please explain whythiswasnotincluded inthenotification.
C. Other
1. Could Korea clarify thedifference between theprogrammes identified as"reserves forExport
Losses" and"Reserves forOverseas Market Development"?
2. Could Korea clarify thedifference between theprogrammes identified as"Facility Investment
LoansProvidedbytheSMEsFoundationFormationFund"and"TaxCreditforInvestmentinFacilities"?
3. Could Korea clarify thecriteria fordetermining theaward oftaxcredits under itsprogramme
"Tax Credit forInvestment inFacilities"?
4. Could Korea clarify through explanation andillustration thebasisandcriteria fordistinguishing
"industrialresearch"and"pre-competitivedevelopmentactivities"referredtoinitsprogramme"Research
andDevelopment Activities Supported bytheInformation andCommunication Promoting Fund"?
5. Could Korea clarify thedistinction between "environmental engineering" and"technology
development" astheyrelate tothe"Environmental Engineering andTechnology Development
Programme"?
6. Could Korea explain thebasisonwhich ithasdetermined thatthe"Promotion Fund forScience
andTechnology" doesnothaveanysignificant trade effect?
II. QUESTIONS ONPROGRAMMES NOT REPORTED INTHE NOTIFICATION
A. Please indicate whether thefollowing programmes have been reported aspartofanother
programme. Ifso,please indicate under which reported programme itfalls. Forthose programmes
listed below which were notnotified, please provide theinformation requested intheapproved
notification format orexplain thebasisonwhich Korea determined thatthesubsidy wasnotnotifiable.
(Note: TheUnited States hasfound certain ofthefollowing programmes toprovide countervailable
subsidies inavariety ofCVD proceedings, including certain steelproducts; certain stainless steel
cookingware; offshore platform jackets andpiles; andoilcountry tubular goods.)
1. Government equity infusions inasteelcompany
Legal basis: Supplied through theMinistry ofFinance andtheKorea Development BankG/SCM/Q2/KOR/7
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2. Loans inconsistent withcommercial considerations/Preferential access toforeign loans forthe
steelindustry
3. Government infrastructure assistance atKwangyang Bay
4. Reserve forinvestment
5. Unlimited deduction ofoverseas entertainment expenses
Legal basis: Article 18-2oftheCorporation TaxAct
6. Export credit financing andguarantees from theExport-Import Bank ofKorea
Legal basis: Export-Import Bank ofKorea Act(Law No.2122; 28July1969)
7. Accelerated depreciation
Legalbasis:Article25ofthe"ActConcerningtheRegulationofTaxReductionandExemption"
8. Taxincentives forexporters
Legal basis: Articles 22,23and24ofthe"ActConcerning theRegulation ofTaxReduction
andExemption"
9. Exception from theacquisition tax
Legal basis: LawforthePromotion ofIncome Sources inRural Areas
10. Loans topromising small andmedium enterprises
11. Short-term export financing
12. Preferential utility rates
13. FreeExport Zone Programme
14. Foreign Capital Inducement Law
15. Tariff reductions onplant andequipment
Legal basis: Article 28oftheCustoms Law
16. Export credit insurance
17. Subsidies under Biotech 2000
18. TheIndustrial Technology Development Fund
19. TheSoftware Industry Start-Up andCultivation Centre
20. TheSoftware Export Consulting CentreG/SCM/Q2/KOR/7
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21. TheCombined Software Industry Support Centre
22. TheHighly Advanced National Project
* TheProduct Technology Development Project
* TheFundamental Technology Development Project