i. The provisions of EC Regulation 1177/2002 ("TDM Regulation") and EC Regulation 1540/98 as such, as well as the EC Member States' implementing provisions as such. The above measures provide for subsidies in favour of commercial vessels, whether directly to the shipbuilders or indirect aid, including operating aid, restructuring aid, insolvency and closure aid, aid for regional or other investment, research and development aid and aid for environmental protection;

　

ii. The EC and Member States have in particular instances, through federal, regional or local authorities and government-owned or government-controlled financial institutions, provided subsidies in direct or indirect support of commercial vessels built in the EC particularly but not exclusively in the form of (a) operating aid granted on a contractual basis in forms such as grants, export credits, guarantees or tax breaks, (b). restructuring aid, (c) regional or other investment aid, (d) research and development aid, (e) environmental protection aid and (f) insolvency and closure aid.

- the granting by authorities and financial institutions in Denmark, Finland, Germany, Italy, the Netherlands, Portugal, Spain and the UK of subsidies to beneficiary domestic yards on a vessel-specific and product-related basis;

　

- export guarantees scheduled to be granted by the Finnish export guarantee institute, Finnerva, in the form of post- and pre-delivery guarantees;

　

- export subsidies granted under the German Kreditanstalt Fur Weaderausbau Export Financing Programme ("KFW"), whether or not allegedly in conformity with the OECD Arrangement on Officially Supported Export Credits, and including, among others, subsidies resulting from German state aid to special credit institutions such as KFW;

　

- export subsidies granted under the UK Exports Credit Guarantee Department ("ECGD"), whether or not allegedly in conformity with the OECD Arrangement on Officially Supported Export Credits;

　

- export subsidies granted under the Danish Eksport Kredit Fonden ("EKF"), whether or not allegedly in conformity with the OECD Arrangement on Officially Supported Export Credits;

　

- export subsidies granted under the French COFACE regime, whether or not allegedly in conformity with the OECD Arrangement on Officially Supported Export Credits;

　

- export subsidies granted under the Swedish Export Credits Guarantee Board ("EKN") whether or not allegedly in conformity with the OECD Arrangement on Officially Supported Export Credits;

　

- export subsidies granted under the Spanish Compania Espanola de Seguros de Credito a la Exportacion ("CESCE"), whether or not allegedly in conformity with the OECD Arrangement on Officially Supported Export Credits;

　

- export subsidies granted under the Italian SACE, whether or not allegedly in conformity with the OECD Arrangement on Officially Supported Export Credits;

　

- export subsidies granted under the Dutch Gerling NCM (now "Atradius"), whether or not allegedly in conformity with the OECD Arrangement on Officially Supported Export Credits;

　

- export subsidies granted under the Portugese COSEC, whether or not allegedly in conformity with the OECD Arrangement on Officially Supported Export Credits.

　

- the guarantee by the Italian Shipbuilding Guarantee Fund for the recovery of loans for the construction and conversion of ships, granted by banks to Italian and foreign shipowners, for works carried out in Italian shipyards;

　

- the extension by Danish Ship Finance of fixed low-interest, long-term loan facilities to shipowners for the building of new ships at Danish yards;

　

- the granting by Spain, through the State holding company, Sociedad Estatal de Participaciones Industriales (SEPI) and Astilleros Espanoles (AESA) - a SEPI subsidiary - of restructuring aid through the establishment of the purchase price for publicly held yards Juliana, Cadiz, Astano, Puerta Real, Sestao, Sevilla sold to military shipbuilding group, Bazan, which later changed its name to IZAR below market price as well as through loans and capital injections by SEPI to the previously publicly-held yards and to IZAR;

　

- the granting by Spain of research and development subsidies to Spanish shipbuilders;

　

- the granting by Spain of loan guarantees to Izar through Spains industrial holdings company;

　

- the granting by Spain through the "tax lease scheme" of subsidies in the form of "tax incentives for renewing merchant fleet" indirectly in support of Spanish shipbuilders;

　

- the granting by France of subsidies to shipbuilding and industrial group Alstom under the mantle of a rescue plan of at least 2.8 billion euros;

　

- the granting by France through a tax lease scheme subsidies for Chantiers de l'Atlantique shipbuilding which also appears to receive subsidies under the TDM;

　

- the granting by France of regional aid subsidies to the Loire Region benefiting shipbuilders;

　

- the granting by the UK of regional subsidies and operating aid in favour of Kvaerner Govan for the development of its previously run Scottish shipyard;

　

- the granting by Germany of research and development and investment aid in favor of German shipbuilding;

　

- the granting by the EU Commission of research and development aid with the stated goal of enhancing competitiveness of the shipbuilding industry.

・Articles 3.1, 1 and 2 of the SCM Agreement, because measures such as for example the export guarantees scheduled to be granted by the Finnish export guarantee institute, Finnerva, in the form of post- and pre-delivery guarantees are specific subsidies within the meaning of Articles 1 and 2 of the SCM Agreement and are de jure export contingent while other measures are de facto export contingent;

　

・Articles, 1, 2, 5(a) and (c), 6.3(a),(b) or (c), 6.4 and 6.5 of the SCM Agreement, because in particular but not exclusively the subsidies referred to in Sections I(i) and (ii) above are specific subsidies within the meaning of Articles 1 and 2 of the SCM Agreement, cause injury to the domestic industry and cause or threaten to cause serious prejudice to the interests of the Republic of Korea;

　

・Articles I:1 and III:4 of GATT 1994 because the TDM Regulation and Member State implementing measures including, among others, long-term loans at subsidized interest rates extended by Danish Ship Finance to shipowners for the building of new ships at Danish yards, the guarantee by the Italian Shipbuilding Guarantee fund and, inter alia, German, Finnish, Dutch and Spanish grants to shipyards on a vessel- specific and product-related basis, adversely modify conditions of competition between Korean commercial vessels and the like vessels built in third countries, or Korean commercial vessels and the like vessels built in the EC;

　

・Article 23(1) and (2) of the DSU and Article 32(1) of the SCM Agreement, as well as Articles 4 and 7 of the SCM Agreement, because the TDM Regulation and Member States' implementing measures - which are aimed at assisting EC or Member State shipyards in those segments that are claimed to have suffered from unfair competition from Korean yards - have been effectively designed and implemented as unilateral measures seeking redress of a perceived violation of Korea's obligations under the SCM Agreement which should occur through dispute settlement and not through unilateral action. Further, the TDM Regulation and Member State implementing measures constitute specific actions against perceived subsidies of another Member not in accordance with the GATT 1994 as interpreted by the SCM Agreement.