Here are the questions put by the US and the corresponding replies by Korea. The WTO document reference is G/SCM/Q2/KOR/37, of 15 October 2010.
Reading through the replies I was struck by the fact that Korea is planning subsidies for the construction of "long range" fishing vessels.
Question 1
According to publicly available sources, the Korea Fisheries Association said the fuel subsidy provided by the government to the fishing industry is the most important program, accounting for up to 50 per cent of total fisheries subsidies. Please describe the nature and operation of this program, and the amounts provided under the program during the period covered by the new and full notification.
Reply
The following information is without prejudice to whether the program is covered by Article 25.2 of the SCM Agreement. For the nature and operation of the program, Article 106-2 of the Act on the Restriction of Special Tax Treatment provides as follows.
Article 106-2 (Abatement or Exemption of Value-Added Tax, etc. on Petroleum Products for Agriculture, Forestry, Fisheries, and Coastal Passenger Ships)
(1) Among the following petroleum products (referring to the petroleum products under the Petroleum and Petroleum Substitute Fuel Business Act; hereafter referred to as "tax-free petroleum" in this Article), the value-added tax on the supplies delivered on or before June 30, 2012 and the individual consumption tax, the traffic, energy and environment tax, the education tax, and the driving tax on the supplies released from a manufacturing place or a bonded area on or before the afore-stated date shall be reduced or exempted as prescribed by Presidential Decree, while the value-added tax on the supplies delivered during the period between July 1, 2012 and December 31, 2012 and the individual consumption tax, the traffic, energy and environment tax, the education tax, and the driving tax on the supplies released from a manufacturing place or a bonded area during the afore-stated period shall be abated by 75/100 of each tax under the conditions as prescribed by Presidential Decree:
1. Petroleum products required by a farmer, a forestry person, or a fishery person specified by Presidential Decree (hereafter referred to as "farmer, forester, or fisherman" in this Article) for the purposes of agriculture, forestry, or fisheries, which are prescribed by Presidential Decree; and
2. Petroleum products supplied directly to the Korea Shipping Association established pursuant to the Korea Shipping Association Act for the use in passenger ships operating on coastal waters.
(2) In cases where certain petroleum products delivered to a petroleum distributor (hereafter referred to as a "petroleum distributor" in this Article) prescribed by Presidential Decree, including a gas station, with the value-added tax, the individual consumption tax, the traffic, energy and environment tax, the education tax, and the driving tax already levied thereon and supplied to a farmer, forester, or fisher falls under paragraph (1) 1, the petroleum distributor may file an application under the conditions as prescribed by Presidential Decree to have the refund of the tax amount otherwise exempted or have the tax amount payable or collectible reduced by the amount.
(3) A farmer, forester, or fisherman who desires to have tax-free petroleum supplied shall file a report on the current status of agricultural machines, forestry machines, or ships and facilities prescribed by Presidential Decree in possession (hereafter referred to as "agricultural machines, etc." in this Article) and the fact that the person has engaged in agriculture, forestry, or fisheries, under the conditions as prescribed by Presidential Decree, with a cooperative under the Agricultural Cooperatives Act Agricultural Cooperatives Act, a cooperative under the Forestry Cooperatives Act Forestry Cooperatives Act, or a cooperative under the Fisheries Cooperatives Act Fisheries Cooperatives Act(hereafter referred to as a "cooperative acting as an institution responsible for control of tax-free petroleum" in this Article), and shall also file a report on a change within 30 days from the day on which such a change occurs, if any change in the reported matters occurs, such as the acquisition or transfer of an agricultural machine, etc., the death of the farmer, forester, or fisher, and giving up the agricultural, forestry, or fishery business.
(4) A farmer, forester, or fisher who desires to have tax-free petroleum supplied shall obtain a card for purchasing tax-free petroleum or a delivery order prescribed by the Presidential Decree and issued by a cooperative acting as an institution responsible for control of tax-free petroleum (hereafter referred to as "tax-free petroleum purchase cards, etc." in this Article).
The total amount of fuel subsidy provided to the fishing industry was 788 billion won in 2007 and 614 billion won in 2008.
Question 2
The Korean press has reported that Korea plans to allocate 7.09 trillion won (US$6.24 billion) in investment funds and loans to the Korean fisheries industry. The Ministry for Food, Agriculture, Forestry and Fisheries stated that it would also launch 38 new long-range fishing vessels to replace old boats and that up to 1,085 fishing boats will be given light-emitting diodes as fish-luring lights. Please provide further details on these plans and the proposed terms and conditions on the investment funds and loans.
Reply
The following reply contains information for the period not covered by 2009 new and full subsidy notifications which had been circulated in the G/SCM/N/186 … series.
Total amount of funds and loans for the five-year period between 2010 and 2014 was set at 7.12 trillion won including 1.39 trillion won in 2010 (fixed), 1.39 trillion won for 2011, 1.44 trillion won for 2012, 1.44 trillion won for 2013 and 1.46 trillion won for 2014 (estimated and subject to change depending on the final national budget plan of each year).
Under the Old Fishing Vessel Replacement Program, the Korean government provided 16.4 billion won of loan for replacing two vessels in 2010 with condition of 4 per cent interest rate and repayment for seven years after a lapse of three years. The limit of loan was set at 70 per cent of the total construction cost. The other 36 vessels are planned to be replaced during 2011-2014.
"The Program to Support Vessels to Install LED Lights" aims at energy saving and carbon emission reduction. In the program, it is planned to grant 6.5 billion won to 1,085 vessels which will be equipped with LED lights from 2009 to 2013. Each year 1.3 billion is granted to 217 vessels. The government grant is provided to cover 40 per cent of the total installing cost.
Posts
