POSCO

The Fair Trade Act aims to promote balanced development of the national economy by stimulating free and fair competition among companies, improving creative business activities and protecting consumers.

The Compliance Program varies in operation depending on the features of the company and the industry. However, the following 7 key requisites shall be satisfied to ensure effective operation of the Compliance Program.

1. Declaration of management's will on the voluntary compliance

2. Appointment of Compliance Managers

3. Preparation and distribution of compliance guidebook

4. Execution of education program

5. Implementation of monitoring system

6. Disciplinary action against the employees violating the regulations related to Fair Trade

7. Implementation of document management system

For companies under the Compliance Program, if they accidentally violate the Fair Trade Act, legal restraints such as penalties, publication of notices in newspapers and criminal prosecutions will be alleviated by classifying the introduction and operation status of the Compliance Program into the following two categories.

CP grading (grade A or better)	Relief Standard
Grade A or A above	10% within
Grade AA or AA above	15% within
Grade AAA or AAA above	20% within
Grade AAA or AAA above	Voluntary Applying the general clauses to the relief by the voluntary readjustment (20% before the outset report, 10% after the report)

The Fair Trade Law encourages fair and liberal competition of companies and also promotes creative sales activities, protects customers, and induces the balanced development of public economies. POSCO published and distributed its Fair Trade Guidelines in order to ensure strict behavioral standards are followed by its employees in their observation of Fair Trade laws. POSCO has also put forth efforts to eliminate existing customs that violate Fair Trade laws. POSCO has been executing the Compliance Program since 2002 in order to comply with the policies of local authorities and to prevent any disadvantages to the company caused by violations by strengthening the preventive actions against viola

June, 2003 : Proclamation of POSCO’s ethical standards (proclaiming the fair trade commitment)
March, 2004 : Establishing the internal transaction commission under the board of directors
March, 2006 : The highest award from Korea Fair Competition Federation’s evaluation
Dec, 2006 : The external evaluation about the CP operation
(acquiring the grade AA by the Fair Trade Commission’s CP evaluation)
April, 2007 : Opening the learning club, ‘Fair Trade Academy’ to improve the consultation ability of
those who are responsible for the fair trade in affiliated companies

POSCO has been carrying out tasks for the Compliance Program since its introduction in 2002.

Recommendations	The promotion accomplishment of our compliance program
1. CEO’s declaration of the commitment to compliance	CEO’s declaration of the commitment to compliance and its notification to all employees when ethical standards were proclaimed (June, 2003) Reconfirmation of the commitment to the fair and transparent trade (Oct, 2007) * Contributing as the profit-maker for the customer through the fair competition Sending out the 5th anniversary message in commemoration of the proclamation of ethical standards for pan-POSCO’s executives and employees (June, 2008) * The fair and transparent business to all interested people, respectful communication, and the practical actions are in need
2. Appointment and management of the compliance manager	Alteration of the compliance manager in the fair trade according to the decision of the board of directors (April, 2008)
3. Framing and distribution of the compliance handbook	First preparation of the handbook for the commitment to compliance (1996) and its revision (2004, 2005, and 2007) Publishing the 2006 casebook for each section (purchase, enterprise conjunction, sales) Publishing the 2007 guideline for the commitment action to compliance in marketing Publishing the 2008 guideline for the commitment action to compliance in purchase
4. Operating educational programs	Improving the e-running fair trade education program (Oct, 2002) and creating the reformed (Nov, 2005) & added programs (Aug, 2001) Administering the education for staffs in charge by the specialists outside the company
5. Establishing the internal monitoring system	Operating the self monitoring system of each department by the compliance checklist Operating consultation/counseling and monitoring for the vulnerable parts at the same time Appointment and management of the executive leader for each area (Sept, 2004)
6. Establishing the sanction system about the lawbreaker	Operating the punishment rules about the gravity of the offence Administering the prompt sanction against the lawbreaker
7. Managing the fair trade-related documents	Systematic management of the compliance program-related documents (using KMS)
8. Organizing the compliance council	Operating ‘the compliance council’ with 14 fair trade-related department managers
9. The evaluation of the operation	Acquiring the grade AA (valid for two years) by the Fair Trade Commission’s CP evaluation in 2008 Surveying the employees to evaluate the internal recognition

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