G/SCM/Q2/USA/86  
 
22 July 2022  
(22-5575) Page: 1/6 
Committee on Subsidies and Countervailing Measures  Original: English  
 
 
SUBSIDIES  
REPLIES TO QUESTIONS POSED BY  CHINA1 TO THE UNITED STATES  
PURSUANT TO ARTICLE 25.8 OF THE AGREEMENT  
The following communication, dated 18 July  2022 and received on 20 July 2022, is being circulated 
at the request of the delegation of the United States . 
  
_______________  
The United States respectfully provides the following responses to China:  
Question 1  
I. The United States  subsidy programs involved in the WTO dispute cases.  
1. European Union v. Kansas (United States) Industrial Revenue Bonds (DS353)  
2. European Union v. United States R&D Subsidies Provided to Large Civil Aircraft (DS353)  
Reply : 
Industrial Revenue Bonds (IRBs) are issued by cities in Kansas, including the City of Wichita, and 
are sold to the general public on behalf of a qualifying private entity. The proceeds are used by the 
entity on whose behalf the IRBs are issued to purchase, construct, or improve commerci al or 
industrial property (Project Property). In general, the City of Wichita acts as the "issuer" of the IRBs 
and retains legal title to the Project Property during the term of the IRB. The private entity leases 
the property, making rent payments to the h olders of the IRBs. The United States has consistently 
taken the position that this program is non -specific and is therefore not subject to notification 
pursuant to Article 25.1 of the SCM Agreement.  
For the R&D Subsidy Programs: The dispute in DS353 discu sses several different post -2006 R&D 
programs and practices. The United States maintains the position that the programs and practices 
constituting post -2006 R&D measures are not subsidies that require notification pursuant to 
Article  25.1 of the SCM Agreem ent. 
Question 2 
II. The United States  subsidy programs involved in countervailing cases initiated by 
Members against the United States  
Low Tax Rate Program for Solar Manufacturing Companies of Washington State 
(the countervailing investigation initiated by China on Solar -Grade Polysilicon imported 
from the United States)  
 
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  Reply : 
Under the provisions of RCW 82.04.294, the business and occupation tax rate of 0.275 % applies to 
every person engaging within Washington state in the business of manufact uring or processing for 
hire: 
• Solar energy systems using photovoltaic modules or stirling converters, or  
• Solar grade silicon, silicon solar wafers, silicon solar cells, thin film solar devices, or 
compound semiconductor solar wafers to be used exclusively in components of such 
systems.  
The business and occupation tax rate of 0.275 % also applies to every person engaging within 
Washington state in the business of making wholesale sales of such qualifying items when the 
qualifying items are manufactured by the  person.  
There is a requirement for taxpayers to file an annual tax performance report, and failure to submit 
a completed report by the due date will result in 35 % of the amount of the tax preference claimed 
for the previous calendar year to be immediately  due and payable and an additional 15 % if the 
taxpayer had previously been assessed for failure to submit a report for the same tax preference.  
Manufacturing,  processing  for hire, and wholesaling  activities  not assigned  a tax rate by statute  are 
taxed  at 0.484%. This rate is considered  the base rate and has been used to determine  the revenue  
forgone  under  this program.  
Question 3 
III. The subsidy programs in New York State published on website (refer to the annexed  
table)  
Please illustrate whether the program 2, 4 and 5 contained in the subsidy programs in 
New York  State are in line with relevant provisions of the SCM Agreement.  
1. New Markets Tax Credit Program  
Reply : 
The New Markets Tax Credit Program is a federal level program that is already included in the 
U.S. subsidy notification.  
2. Global NY Fund Loan Program  
Reply : 
The Global  NY Loan Fund is open to New York State  small and medium -sized business  with fewer  
than 500 employees  seeking  financing  to create  or expand  direct  exports,  or to serve  as suppliers  
to larger  exporters.  Loans  are available  to purchase  equipment,  inventory,  working  capital  to support  
foreign  accou nts receivable,  export  lines of credit,  or long-term financing.   
The Global  New York Loan Fund Program  is a partnership  with participating  commercial  lenders  to 
provide  export  financing  to eligible  New York State  small and mid-sized businesses.  The program  
has supported  the extension  of loans under  three different  formats:  
Type  A 
To encourage  commercial  lenders  to make  loans to businesses  who otherwise  may not be able to 
secure  them for a variety  of reasons,  the Global  NY Loan Fund Program  functions  as a loan loss 
reserve  that covers  10% of lender  losses.  Small  businesses  new at exporting  can apply  for loans of 
up to $100,000  subject  to the following  eligibility  criteria:  
• Small business with 100 or fewer employees, not dominant in its field;  
• Businesses must be headquartered in New York State;  G/SCM/Q2/USA/86  
 
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  • Business exporting operations in place, or has a new exporting initiative to be deployed 
within a year, or expanding into new export markets;  
• Includes the following types of enterprises:  
o Start-ups shippi ng goods abroad;  
o Third party ecommerce platform -based business operator selling globally;  
o New York State direct exporters or large suppliers to exporters;  
o Real estate acquisition or improvement for exporting use;  
• Funding Details:  
o Can be used for the development of export business plan or product adaptation for 
exporting;  
o Term loans and Lines of Credit are eligible;  
o Interest rate for this Program is set by the commercial lender.  
Results : 
• 1 loan totalling $100,000 has been supported since inception of t he program in 2019.  
Type  B 
For more seasoned  exporters,  loans of up to $500,000  are also available  under  the program  from 
participating  commercial  lenders  under  the same  10% loan loss reserve  model,  subject  to the 
following  eligibility  criteria:  
• Small  and medium -sized business  with fewer  than 500 employees  with primary  business  in 
New York State; 
• New York State  direct  exporters  or large suppliers  to exporters;  
• The commercial  lender  determines  loan terms  (fees,  interest  rates,  repayment  schedules,  
etc.);  
o Term loans and Lines of Credit  are eligible;  
• Financing  up to $500,000  for each transaction;  aggregate  of $1,000,000  per eligible  
business;  
• No loans can exceed  10 years.  
Results : 
• 3 loans totalling $203,000 have been supported, issued in the year(s) 2014 -2020.  
• Type B loans are not currently being offered as the Program sunset in 2021.  
Type  C 
New York State  also offers  interest -free direct  loans of up to $50,000  for distilled  and fermented  
beverage  industry  businesses  to promote  New York State' s beverage  industry.  No loans were funded  
under  this program  and the program  has now been terminated.  Eligibility  for these  loans is subject  
to the following  criteria:  
• For-profit business located in New York State, with 500 or fewer employees;  
• Be in existe nce for at least three years by date of application;  
• Be licensed by the New York State Liquor Authority to produce distilled and/or fermented 
beverages;  
• Export to foreign markets or plan to start exporting to foreign markets in the next year;  
• Have a plan t o utilize a zero -interest loan to increase export capacity (could include 
purchasing machinery and equipment, developing export marketing plans, website 
translation, product adaptation and market  certification).  G/SCM/Q2/USA/86  
 
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  Results : 
• No loans have been provided  under  this format.  
• Type C loans are not currently  being  offered,  as the Program  sunset  in 2021.  
3. Photonics Attraction Fund  
Reply : 
New York State has dedicated $30 million for a Photonics Attraction Fund (PAF) to encourage 
companies to set  up or expand their manufacturing operations for integrated photonics technologies 
in the Greater Rochester area. Eligible applicants include businesses that manufacture products using 
integrated photonics technologies or provide services to the integrated photonic industry . 
4. Global NY Grant Fund Program  
Reply : 
The Global NY Grant Fund makes up to $2 million  in grants  available per year to help New York 
State 's small and medium -sized businesses  to export their products and services . This program is 
similar in structure to programs maintained by other Members . However, in the interest of  
transparency,  we provide the information below regarding this program . 
The Global NY Grant  Fund Program is open to New York State companies and non -profit organizations 
seeking to create or expand direct exports. The fund will also support economic development 
organizations with expenses related to foreign direct investment attraction activities.  
The program provides grants of up to $25,000 to help co mpanies start exporting or increase their 
global exports according to the following eligibility  criteria : 
• The company must be located in  New York State,  have 500 or fewer employees , and have 
at least 51 % of product value added in New York State  
• Intend to begin exporting or expand export sales in foreign markets  
• Business is viable and in existence for at least one year by the date of application  
• Demonstrated need for grant assistance   
• Demonstrated understanding of costs associated with exporting and doing business with 
foreign buyers, including costs of freight forwarding, customs brokers, packing, shipping, 
marketing, etc.  
Grants of up to $100,000 are available to not -for-profit organizations that provide export assistance 
and trade education to New York State companies subject to the following relevant criteria : 
• The non -profit  economic development  organization must be located in New York State  
• Have a demonstrated history of helping New York State businesses export and/or contribute 
to state or regional economic development through the promotion of international trade  
Approved export activities New York State companies and not -for-profit organizations can be 
awarded grant funding to complete include : 
• Trade Shows/Trade Missions  
• Market Customizatio n and International Marketing  
• Product Adaptation  
• Market Certification  
• Export Education  
• Export Training  
For-profit businesses may receive grant awards covering up to 50 % of total project costs. 
Not-for-profit organizations may receive grant awards covering up to 75 % of total project costs.  G/SCM/Q2/USA/86  
 
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  5. Global NY State Trade Expansion Program (STEP)  
Reply : 
This program is similar in structure to programs maintained by other Members . However, in the 
interest of transparency we provide the following information regarding this program:  
Currently, a ll funding for the STEP program has been expended. When funds exist, the funds can be 
used to assist New York State businesses with:  
• Participation in programmed foreign trade missions  
• Subscription to services provided by the Department of Commerce  
• Trade show exhibition (international and qualified domestic trade shows)  
• Participation in export training workshops  
• Qualified foreign market sales trips  
• Website Content/Foreign Language Translation  
• Development of International Marketing Campaign(s)  
• Virtual Services  
• Compliance Testing  
Companies must meet the following eligibility criteria:  
• Headquarters in New York State  
• Manufacture, assemble and/or distribute a product, or provide an exportable servic e 
• In business for at least one year  
• Qualify as an "eligible small business concern "  
• Have access to sufficient resources to bear the costs associated with trade  
• Have a product or service for export that contains at least 51 % United States content  
6. Entrep reneurship Navigator  
Reply : 
Through the Entrepreneurship Navigator, New York State provides customized services and 
streamlined access to programs to help incubate entrepreneurs, with an emphasis on minority and 
women founders. As a generally available and widely used small business program , the United States 
considers this program to be non -specific  
7. Innovate NY Fund  
Reply : 
This fund is fully invested and not currently open. The Innovate NY Fund was a fund -of-funds 
designed to provide investment capital to managers across the state  to invest in seed -stage 
businesses supporting innovation, job creation , and high -growth entrepreneurship throughout New 
York State. The Empire State Development Corporation invests alongside other private sector 
investors on the same terms that they recei ve or through private sector partners (as our managers) 
who then invest funds at market rates. As a generally available and widely used small business 
program,  the United States considers this program to be non -specific.  
8. Center for Advanced Technology  
Reply: 
New York State funds 15 Centers for Advanced Technology (CATs) to encourage greater collaboration 
between private industry and universities in the development and application of new technologies. 
The CAT program, created in 1983, facilitates a contin uing program of basic and applied research, 
development and technology transfer in multiple technological areas, in collaboration with and 
through the support of private industry. CATs play a critical role in spurring technology -based applied 
research and economic development in the state; promoting national and international research G/SCM/Q2/USA/86  
 
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  collaboration and innovation; and leveraging New York's research expertise and funding with 
investments from the federal government, foundations, businesses, venture capital f irms and other 
entities. Funding is not provided to businesses themselves, but is typically used for staffing to work 
with companies to address their needs.  
Funding for each center in 2021 -2022 was nearly $1,000,000 annually.  
This is a program for applied research at universities and is not a financial contribution to a producer 
of goods and therefore , is not subject to notification under Article 25.1.  
9. Centers of Excellence  
Reply : 
New York State funds 1 4 Centers of Excellence to foster collaboration between the academic research 
community and the business sector to develop and commercialize new products and technologies, 
to promote critical private sector investment in emerging high -technology fields in N ew York State, 
and to create and expand technology -related businesses and employment. This program was created 
to enhance and accelerate the centers ' operations, facilitating joint university -industry research and 
development, product commercialization and  workforce training.  Funding is not provided to 
businesses themselves, but is typically used for staffing to work with companies to address their 
needs.  
Funding for each of the 14 centers in 2021 -2022 ranged from $250,000 to $1,000,000 annually.  
This is a program for partnerships between businesses and universities and is not a financial 
contribution to a producer of goods and therefore is not subject to notification under Article 25.1.  
10. New York Manufacturing Extension Partnership  
Reply : 
The New York Ma nufacturing Extension Partnership is a network of organizations that provide growth 
and innovation services to small and mid -sized manufacturers in every corner of the state to help 
them create and retain jobs, increase profits, and save time and money. As  it is a generally available 
and widely used small business program , the Un ited States considers this program to be 
non-specific. 
 
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