WORLD TRADE  
ORGANIZATION  G/SCM/Q2/JPN/38 
27 April 2004 
 (04-1868) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
JAPAN'S Replies to Questions  Posed by the UNITED STATES1 
Regarding the New and Full Notification of JAPAN2 
 
  The following communication, dated 23 April 2004,  is being circulated at the request of the 
Delegation of Japan.  
_______________ 
 
 
I. INDUSTRY 
 
Programme to Promote Research and Development of Regional Technology
 
 
Q1. It is our understanding that Japan has four priority areas for R&D: biotechnology, 
information technology (IT), environment-related , and nano-technology and materials.  Could 
you please explain whether the approval of funds  under this programme is based upon whether 
the application relates to th ese four priority areas?  
 Reply
 
  This programme does not relate with these four  priority areas for R&D.  The target of R&D 
under this programme is not limited to these four priority areas.  
Subsidy for Japan Small and Medium Enterprise Corporation
 
 
Q1. According to Japan’s notification, this programme provides grants to promote “the 
electronic commerce of the small enterprises of th e textile industry, the support for educational 
training, the promotion of the silk goods.”  Co uld you please provide more details regarding the 
specific types of products that can be funde d through grants from this program?  What 
percentage of funds goes to textile companies?  
 
Reply  
 
(1) Promotion of the electronic commerce of the small enterprises of the textile industry  
 Subsidy in the form of grants under this progr amme does not intend to subsidize the specified 
goods.  It subsidizes Japan Small and Medium Enterprises Corporati on to examine how to introduce 
                                                     
 
1 G/SCM/Q2/JPN/36 
2 G/SCM/N/95/JPN G/SCM/Q2/JPN/38 
Page 2  
 
 base for the electronic commerce to the small ente rprises of the textile industry in concrete and 
smooth way and to carry out training to promote introducing the electronic commerce. 
 
(2) Support for education training 
 
 Subsidy under this programme does not intend to  subsidize the specified goods.  It subsidizes 
training activities carried out by organization and the third sector which is characterized by high public interest, and selection and evaluation activiti es on training activities concerned carried out by 
Japan Small and Medium Enterprises Corporation. 
 
(3) Promotion of the silk goods 
 
 Subsidy under this programme intends to  subsidize development and trial production 
activities of silk.  It subsidizes development and trial production activities carried out by silk-related 
organization and activities to hold exhibitions carried out by Japan  Small and Medium Enterprises 
Corporation. 
 
Q2. Could you please provide more information as  to the eligibility criteria for a company to 
receive a grant through this programme?    
Reply
 
 (1) Promotion of the electronic commerce of th e small enterprises of the textile industry 
 
 Subsidy is for the activities carried out by Jap an Small and Medium En terprises Corporation, 
not for an individual enterprise.  (2) Support for education training 
 
 Subsidy is for Japan Small and Medium Enterp rises Corporation, an industrial association, a 
commercial association, a cooperative association and a specific corporation (a foundation, a 
corporation and the third sector characterized by high public interest), not for enterprise. 
   (3)   Promotion of the silk goods 
 
 Subsidy is for Japan Small and Medium Enterprises Corpora tion and Production organization 
which consists of textile minor entrepreneurs w ho perform a silk-fabrics manufacture enterprise, not 
for an enterprise. 
 
Subsidy for the Development of Information Technology which Create New Industries
 
 
Q1. Is the programme available only to small- or medium-sized enterprises, or to all 
companies? 
 Reply
 
  The programme is available to all companies.  Q2. Could you please provide more information as  to the eligibility criteria for a company to 
receive a grant through this programme?    G/SCM/Q2/JPN/38 
 Page 3 
 
 
 Reply  
  This grant is provided either to R&D activiti es in the following areas by private companies or 
to software development activities utilizing technologies for the following areas by private companies: 
 
• Mobile/wearable computing; 
• High speed networks such as 1Gb- 1Tb/s netw ork, or high function networks such as QoS 
VPN and Multi-Cast; 
• Security such as cryptography; 
• Software technologies based on new c oncepts such as agent technology; 
• Multi-modal interfaces such as information inte gration, picture or voice recognition; 
• Technologies for searching or extracting necessary information from huge multi-media data 
in the Internet or data ware houses; and, 
• System LSI technologies such as IP development. 
 Q3. During the April 2001-March 2002 reporti ng period, how many companies received 
grants under this programme?  
Reply
 
  During the period specified, METI provided the grants for 24 companies under this 
programme. 
 Real World Computing (RWC) Programme
 
 
Q1 Could you please provide further informatio n regarding the type of subsidy that is 
provided for under this programme ( i.e., grant, tax concession, loan, etc.)? 
 
Reply  
  This programme entrusted to The Real World Computing Partnership (RWCP) as a 
government project. 
 
Q2. Could Japan please explain who the members of The Real World Computing 
Partnership are?   
Reply
 
 
 Please refer to the answer to “Questions  from the UNITED STATES Regarding the 1998 
New and Full Notification of JAPAN”.  
Q33.  Could you also explain who receives the property rights to any new technology 
developed under this programme?  
 
Reply
 
  The benefits derived from this programme belonged to RWCP based on Law concerning the 
Improvement of System for Research and Developmen t in the Field of Industrial Technology, and 
Law on Special Measures for Industrial Revitalization. 
 G/SCM/Q2/JPN/38 
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 Contract for Development of Information Processing System and for Related Purposes
 
  
Q1. Could you please provide further information on the type of subsidy that is provided for 
under this programme ( i.e., grant, tax concession, loan, etc.)? 
 
Reply
 
  8 institutions are contracted with  government under this programme. 
 Q2. Could Japan please explain who are the me mbers of the Japan Information Processing 
Development Corporation, Central Academy of Information Technology and New Media 
Development Association? 
 
Reply
 
 
(1) Japan Information Processing Development Corporation   Please find the attached file in which major me mbers are shown.  In addition to that, 152 
companies also belong to this Corporation.  (homepage address :http://www.jipdec.jp/)  
(2) Central Academy of Information Technology 
  The members of this organization are the sam e as that of Japan Information Processing 
Development Corporation because it is the seconda ry organ.  In addition, the organization was 
dismantled in 31 March 2002. 
 
(3) New Media Development Association   Please find the attached file in which major members are shown. In addition to that, 71 
companies also belong to this Corporation.  (homepage address :http://www.nmda.or.jp/) 
 
Contract for Technology Developmen t of Mineral Resource Exploration
 
System Development of Energy Saving Mines  
Support to Structural Adjustment of the Coal Mining Industry  
Subsidy for Overseas Coal De velopment Feasibility Survey  
Subsidy for Promotion of Coal Production and Utilization Technology  
Subsidy for Promotion of Mine Enterprises  
 
Q1. For the above programs, do any Japan ese steel companies, including companies 
affiliated with the steel industry, receive assistance under any of these programmes? 
 Reply
 
  Steel companies don’t receive assistance under any of these programmes.  Special Deduction for Expenditure on Prospec ting for Domestic or Overseas Mineral Deposi
t 
 
Q1. Have any Japanese steel companies or their affiliates used this tax deduction? 
 
UReply  
 No.  G/SCM/Q2/JPN/38 
 Page 5 
 
 
  
Special Depreciation on Certain Machinery Used for Advanced Technology Industries in Certain 
Advanced Technology Industry Group Sites Areas  
 
Q1. Could Japan please provide a list of the advanced technology industries that qualify for 
this programme?  
 
Reply  
  The list is as follows (according to the Mi nistry of Finance Notification no.165 of 
31 March 2003): 
 1. High performance cyclic intermediates,  synthetic dyes and organic pigments 
 2. Engineering plastics 
 
3. High performance drugs and medicines  4. Ultra precise industrial plastic products and foamed and reinforced plastic products 
 5. Miscellaneous primary smelti ng and refining of non-ferrous metals and non-ferrous metal 
products, n.e.c. (especially, semiconductor base plate manufacturing industry) 
 6. Rolling and drawing of copper and copper allo ys; rolling of aluminium and aluminium alloys, 
including drawing and extruding; and miscellaneous  rolling of non-ferrous metals and alloys, 
including drawing and extruding 
 
7. High performance machinists' precision t ools, except powder metallurgy products 
 8. High performance machine manufacturing indu stry for special industry (food processing 
machinery and equipment; woodworking mach inery; printing, bookbinding and paper 
converting machinery; foundry equipment; plastic working machinery and accessories) 
 
9. High performance office machines  10. Precision moulds and dies, parts and accessories  
11. Industrial robots 
 12. Generators, motors and other rotating electri cal machinery (especially, servo-motor and micro 
miniature motor) 
 13. Relay switches, switchboards and electrical c ontrol equipment (especially, Advanced breech 
operating mechanism, switchboard, and pow er control unit manufacturing industry) 
 14. Radio communication equipment  15. Electronic data processing machines, digital and analogue computer, equipment and 
accessories and electronic equipment 
 16. Electronic parts and devices  17. Motor vehicles, including motorcycles; motor vehicles parts and accessories G/SCM/Q2/JPN/38 
Page 6  
 
  
18. Precision measuring machines and instruments; analytical instruments; testing machines 
(especially, advanced precise measurement equi pment, instrument for analysis, and test 
equipment manufacturing industry) 
 
19. Physical and chemical instruments (especia lly, advanced optical machine instrument lens 
manufacturing industry) 
 20. Information recording materials, except newspapers, books, other printed products, etc. 
(Especially, multimedia information record thing manufacturing industry) 
 
21. Computer programming and other software services  22. Industrial Design services  
23. Mechanical design services 
 24. Professional services, n.e.c. (engineering)  
II. FINANCE 
 Special Depreciation on Certain Machinery Used for Advanced Technology Industries in Certain 
Advanced Technology Industry Group Sites Areas  
  
Q1. Could you please explain in more detail which companies qualify as “corporations 
engaging in the qualified advanced technology industries?” 
 
Reply  
  The enterprises which engage in one or more  of the 24 industries listed above in this 
document are qualified.  
Special Depreciation on Machinery (Related to th e Law of Special Measure to Revitalize Industry)
 
 
Q1. Please define more clearly how it is evalua ted whether an enterprise’s productivity has 
decreased “in response to diverse and structural changes in the domestic and international 
economic environment” 
 
Reply  
  (Note:  This programme was abo lished in April 2003 by amendment) 
  The condition to apply this programme is that the productivity of the "type of industry" (not 
that of an enterprise) has decreased significantly due to the change in internal or international 
economic environment (The list of industries to be included is published every year in the official 
gazette.  An enterprise engages in one of the industr ies specified in the list is  able to apply to the 
programme).  
 The decrease in productivity of “the type of industry” is decided in accordance with the rules 
below, based on statistics.  G/SCM/Q2/JPN/38 
 Page 7 
 
 
  
-The type of industry corresponding to any of (A) to (C) below (the article 28 of the Enforcement 
Rule of the Law of Special Measure to Rev italize Industry (before the amendment in 2003)  
(A) The employee has decreased compared to 5 years ago, and production has decreased more 
than 5% compared to 5 years ago.  
(B) The employee has decreased compared to 3 years ago, and production has decreased more 
than 10% compared to 3 years ago.  
(C) The employee has decreased compared to 1 year, 3 years and 5 years ago respectively, and 
production has decreased compared to 1 year a go and also decreased compared to either 3 
years or 5 years ago.  
 
Additional Depreciation on Fishing Boat (Related to  the Plan for Structural Improvement of Small-  
and Medium-sized Fishing Enterprises Under the Scheme of Extraordinary Law on the 
Reconstruction of Fishing Industry)  
 
Q1. Could you please explain whether this progr amme takes into consideration overcapacity 
in a fishery when providing tax benefits under this programme?  Q2. Could you please provide more information regarding the eligibility criteria used by the 
Minister of Agriculture, Forestry and Fisheries in approving plans for structural improvements 
by small- and medium-sized fishing enterprises? 
 
Q3. Is the assistance under this programme gea red towards coastal or deep-sea fishing?  
 
Reply for 1, 2 and 3 above
 
 
 The additional depreciation under the Plan for the Structural Improvement of Small- and 
Medium-size Fishing Enterprises was abolished when  the Extraordinary Law on the Reconstruction of 
Fishing Industry was revised in 2002.   
 Regardless of this measure, Japan has fisher ies management policy to limit the number of 
fishing vessels.  Therefore, this measure did not contribute to increase the number of fishing vessels. 
 
III. AGRICULTURE, FORESTRY AND FISHERIES 
 Measures for Sugar 
 
 
Q1. It is noted that the Sugar Price Adjust ment Law and the Selling and Purchasing Scheme 
by the ALIC have been abolished.  Have ei ther of these programmes been replaced by other 
programmes that provide similar benefits?  If so, please explain. 
 Reply 
  By the enforcement of the Sugar Price Adju stment Law, which replaced the Sugar Price 
Stabilization Law in October 2000, selling and purch asing scheme of domestically produced sugar has 
been abolished.  Under the new scheme, the G overnment provides payments to domestic sugar 
producers through the ALIC. 
 Farming Modernization Fund interest Subsidy
 
 
Q1. To what extent do the subsidized int erest rates differ from the normal commercial 
interest rates? G/SCM/Q2/JPN/38 
Page 8  
 
  
Reply
 
  At the end of March 2001, the normal loan rate  of commercial financial organization towards 
farmers was 2.85% while the subsidized rate under th is programme was 1.6%, so the interest subsidy 
rate was 1.25%. 
 
Q2. Can you please provide the general terms and conditions of the loans that are being 
extended? 
 Reply
 
  This programme generally aims to finance towards farmers who hope to expand agricultural 
scale of management and acquire agricultural mechan ization in order to change their management.  
That requires the approval of the prefectual governor. 
 
 The general terms and conditions of the loans are decided under the Agricultural Modernization Fund Law.  They are as follows:   Interest Rate:   1.7% (valid as of 21 April 2004)  Amount of Lending Limits:  Individual   18 million yen 
     Corporation and organization  200 million yen 
 Rate of Lending Limits:  Usually up to 80%  Repayment Periods:   7 to 18 years (varying according to types of loans) 
 Grace Periods:   2 to 7 years  (varying according to types of loans)  Q3. What percentage of the expenses does the central government provide to the prefectural 
governments to fund this programme? 
 
Reply
 
  The government provides up to half of the expenses which prefectural governments provide 
as the interest subsidy to financing organizati ons including agricultural co-operatives under this 
programme.  
Q4. Please explain the extent to which the fish ing industry benefits fr om this programme.  Is 
the assistance under this programme geared  towards coastal or deep-sea fishing? 
 
Reply   The assistance is geared only toward agriculture.  Agriculture, Forestry and Fisheries Finance Cooperation Subsidy
 
 
Q1. To what extent do the subsidized int erest rates differ form the normal commercial 
interest rates? 
 
Reply  
 
 The finance system of Agriculture, Forestry and Fisheries Finance Cooperation (AFC) intends 
to extend long-term loans at low interest-rates in the case that the normal commercial financial 
organization finance is difficult, in the light of the f act that agriculture, forestry and fisheries have the 
characteristics of small-size management and low prof itability.  The interest-rates of AFC’s loans are  G/SCM/Q2/JPN/38 
 Page 9 
 
 
 generally lower than the procurem ent rates in order to serve the purpose of Japan’s agricultural, 
forestry and fishery policy.  AFC Subsidy, whic h has the purpose of compensating the costs resulting 
from the differentials between the loan rates a nd the procurement rates, is provided by the 
governmental general account.  
 Thus, this subsidy has the characteristics of  compensation for the costs resulting from the 
differentials between the loan rates and the procur ement rates, which is generally collected through 
loan from the governmental special accounts.  Since this subsidy is aimed at compensating not for the 
differentials between the normal commercial interest ra tes and the subsidized interest rates, but for the 
costs relating to their loan and procurement,  there is no comparison between the two. 
 
Q2. Is 25,536 Million yen the total amount of th e subsidy or total amount of loans given 
under the programme in fiscal year 2000?  Is th e assistance under this  programme geared 
towards costal or deep-sea fishing? 
 Reply
 
  The total amount of the subsidy, which was reported as the policy excluded from the subject of reduction towards WTO subsidy committee, was 23,568 million yen. 
  Part of the assistance programme is provided to the small-and medium sized coastal or deep-
sea fishing. 
 Fisheries Modernization Fund Interest Subsidy
 
 
Q1. Please describe in greater detail the meaning of the phase “advanced fisheries-
management for structural adjustment.”  
Reply
 
  “Advanced fisheries-management for structural improvement” means, for example, renewal of vessels and equipments for their safety at sea. 
 
 This programme does not contribute to deve lopment of overfishing capacity because Japan 
limits the numbers of its fishing vessels and their size.  In fact, eligible fishing activities for the 
programmes have been decreasing in terms of the numbers of fishing vessels.  Q2. Could Japan please explain whether the assistance under this programme is geared towards the coastal or deep-sea fishing?   
 
Reply
 
  The assistance programme is employed in small and medium scale coastal or deep-sea 
fisheries. 
 Fund for the Projects Implemented by the Regional Governments for Promoting Sustainable Fisheries
 
 
Q1. Is the support for this programme provided through loans or grants? 
 
Reply  
  The support is provided to local governments through grants.  G/SCM/Q2/JPN/38 
Page 10  
 
 Q2. How are sustainable fisheries promoted under this programme? 
 
Reply
 
  The comprehensive programmes implemented by lo cal governments ensure utilization of fish 
stock in a sustainable manner, for example, by way of promoting stock enhancement activities and 
conserving marine environment.  
Q3. Could Japan please explain whether the assistance under this programme is geared 
toward the coastal or deep-sea fishing? 
 Reply
 
  The assistance programme is geared toward coastal or deep-sea fishing with small and 
medium scales. 
 
Fisheries – General
 
  First of all, it should be noted that Japan’s fisheries subsidies described above and below do 
not contribute to development of  over-fishing capacity because Japan limits the number of fishing 
vessels and their size.  In fact, eligible fishing activities for the programmes have been decreasing in 
terms of the number of their fishing vessels. 
 
Q1. Please explain why several of the fishery subsidy programmes relate to fiscal year 2001, 
while subsidy information for most other progr ammes is for fiscal year 2002.  Please provide 
fiscal year 2002 information for all programmes. 
 
Reply
 
  The total amount of some subsidies, which is  reported based on fiscal year 2000 activities, is 
updated as follows;  
• Fisheries Modernization Fund Interest Subsidy 
  1,292 million yen (fiscal year 2001) 
• Fisheries Trust Fund Subsidies 
  7 million yen (fiscal year 2001)  
Q2. Please explain the legal basis for those pr ogrammes for which there in no legislation yet 
“assistance is provided by the budget”.    
 
Reply
 
  The Law that established the Ministry of Ag riculture, Forestry and Fisheries gives the 
Fisheries Agency the legal authority to create or continue grants or other assistance programmes 
within the limits of existing laws. 
  A budget, which is not a law but a binding ru le made annually by the Cabinet and approved 
by the Diet, provides necessary fund s for the Agency to implement th e programmes in the fiscal year. 
 
Q3. Does Japan maintain any subsidy programs, not fully described in its notification, 
administrated by either the central or sub-na tional governments, for any of the types of  G/SCM/Q2/JPN/38 
 Page 11 
 
 
 assistance below?  If so, please provide all the relevant information in accordance with 
Article 25 of the Subsidies Agreement. 
 
Reply  
 
 This information is reported to WTO to answer  the questions raised by the United States, in 
terms of transparency.  Therefore, the informati on does not harm Japan’s position on whether this is 
required notification to the WTO.  
• Fishing port infrastructure enhancement (i ncluding, but not limited to, support for 
construction of fishing ports, landing/wareh ouse/distribution facilities, artificial reefs 
and aquaculture)  
 
Reply
 
  Japan has programmes to support constructing/ma intaining fishing ports or installing their 
related facilities, or conserving/ rehabilitating marine environment.  These programmes are part of 
development of public infrastructure.  The program mes are provided to local government, not directly 
to fishers.  
• Restructuring/improvement/consolidation of specific fisheries or regional fishing 
industries 
 Reply
 
  Japan used to have the scheme for improving th e structure of small-and medium-sized fishing 
sector, which aimed at coping with changes in econom ic conditions and international regulations in 
fishery sector.  The scheme, however, terminated in 2002. 
 
• Fisheries development grants (including, but not limited to, support for the introduction 
of new vessels and gear and production, distribution, processing and marketing 
improvement) 
 
Reply 
 
 Japan has programmes for promoting sustainable fisheries development.  
• Fishing vessel and reinsurance programmes 
 
Reply
 
 
 Japan has fishing vessel insu rance and reinsurance scheme, which compensates for part of 
losses incurred by the natural disaster and other happ enings.  The scheme reinsures the fishing vessel 
insurance run by insurance associations.  Any type of fishing is eligible. 
 
• Price stabilization for fish products 
 Reply
 
  While Japan does not have a programme to stabilize fish and fishery products’ prices by way of providing any types of compensation to fishers, Japan has a programme, as a safety net in term of stable fish supply, to support fisheries organizati ons in stocking their members’ catches, which are G/SCM/Q2/JPN/38 
Page 12  
 
 subject to great deal of fluctuation in productio n and price.  This programme aims at neither 
regulating prices nor artificially raising their level.  
• Exemption from fuel taxes for the fishing industry 
 Reply
 
  Japan has measures to reduce or reimburse fu el taxes for fishing industry.  These measures 
are not provided for fishermen, but provided for the organizations that supply fuel.  
• Fishery research and development (including , but not limited to, programmes to develop 
new fishery technologies and fishing gear) 
 
Reply
 
  Programmes for fishery research and development for promoting sustainable fisheries are provided to public organizations. 
 
• Fishing vessel buyback programmes (including , but not limited to, payments for fleet 
reduction) 
 
Reply
 
 
 Japan has programmes to fund scrapping of ex isting fishing vessels.  As these programmes 
are designed to completely scrap the vessels wit hout allowing resale of the vessels, no over-fishing 
capacity is exported to any other countries.  In addition, all fishing licenses of those vessels are 
revoked.  Thus, the programmes contribute to the reduction in the capacity.  
• Construction; repair or rehabilitation of fishing vessels 
 Reply
 
  Japan has an interest subsidy programme to  assist fisher, for those who borrow funds for 
obtaining their fishing vessels under specific requirements.  
• Assistance to fishing villages and communities 
 
Reply
 
  Japan has programmes for rural developmen t, including fishing communities.  These 
programmes are parts of the development of public infrastructure, and do not provide any types of 
subsidies to fishers. 
 
__________