. /.WORLD TRADE
ORGANIZATIONTN/RL/W/96
5 May 2003
(03-2384)
Negotiating Group on Rules Original:  English
QUESTIONS FROM KOREA ON THE UNITED STATES' PAPER
ON SUBSIDIES DISCIPLINES
Submission from Korea
The following communication, dated 4 May 2003, has been received from the Permanent
Mission of Korea.
_______________
Korea thanks the United States for its submission on “Subsidies Disciplines Requiring
Clarification and Improvement” (TN/RL/W/78) a nd wishes to ask the following questions for
clarification of meaning of the submission wit hout prejudice to Korea’s position on the subjects.
Prohibited Subsidies
The United States listed “dark amber” subsidies of Article 6.1 as the first candidates for the
expansion of the category of prohibited subsidies - large domestic subsidies, subsidies to cover
operating losses by a company, and direct forgiveness of debt.  Is there any special reason for the
omission of the subsidies to cover operation losses by an industry in Article 6.1(b)?  Or, by the
wording of “losses by a company”, did the United States mean to cover both the losses by an industryin Article 6.1(b) and the losses by an enterprise in Article 6.1(c)?
Serious Prejudice
The United States stated that as a remedy after the finding of serious prejudice, “to remove
the adverse effects” is too vague and impractical to implement in a straightforward and meaningful
manner.  Given that few WTO disputes have been brought regarding serious prejudice and that the
remedy was seldom tested, how did the United St ates conclude that the remedy was impractical?
Additionally, what remedies does the United States consider appropriate to cure other types of adverse
effects, that is, injury to the domestic industry and nullification or impairment of benefits to otherMembers?
The United States continued and proposed to establish the withdrawal of the subsidy as the
exclusive remedy for the serious prejudice.  Does it believe that the meaning of withdrawal of subsidy
is clear throughout the SCM Agreement?  Could it compare its meanings in Articles 4.7, 7.8 and 19.1?
4.7   If the measure in question is found to be a prohibited subsidy, the panel shall
recommend that the subsidizing Member withdraw the subsidy without delay.  In this
regard, the panel shall specify in its recommendation the time-period within whichthe measure must be withdrawn.TN/RL/W/96
Page 2
7.8   Where a panel report or an Appellate Body report is adopted in which it is
determined that any subsidy has resulted in adverse effects to the interests of another
Member within the meaning of Article 5, the Member granting or maintaining such
subsidy shall take appropriate steps to remove the adverse effects or shall withdraw
the subsidy.
19.1   If, after reasonable efforts have been made to complete consultations, a
Member makes a final determination of the existence and amount of the subsidy and
that, through the effects of the subsidy, the subsidized imports are causing injury, it
may impose a countervailing duty in accordance with the provisions of this Article
unless the subsidy or subsidies are withdrawn.
Natural Resource and Energy Pricing
The United States stated that dual pricing in natural resource and energy sectors might give
unfair advantage to domestic producers, and that further clarification and improvement of the rules
and remedies in this area are warranted.  What is the view of the United States regarding the guidance
of Annex I (d) on the dual pricing matter?  If it is an insufficient rule, for example, due to the reason
that Annex I applies only to the prohibited subsidy, what feature of the SCM Agreement would the
United States like to see improved regarding natural resources and energy pricing?  Does the
United States consider that new rules particularly on natural resources and energy pricing are
necessary, rather than approaching this matter fr om general point of view by studying the dual
pricing?
Annex I (d)   The provision by governments or their agencies either directly or
indirectly through government-mandated schemes, of imported or domestic products
or services for use in the production of exported goods, on terms or conditions more
favourable than for provision of like or directly competitive products or services foruse in the production of goods for domestic consumption, if (in the case of products)
such terms or conditions are more favourable than those commercially available on
world markets to their exporters.
__________