RESTRICTED
WORLD TRADE G/SCM/Q2/JPN/10
2December 1996
ORGANIZATION(96-5055)
Original: English Committee onSubsidies andCountervailing Measures
SUBSIDIES
Follow-up Questions from theEUROPEAN COMMUNITY Regarding theNew
andFullNotification ofJAPAN1
Thefollowing communication, dated 26November 1996, hasbeenreceived fromthePermanent
Delegation oftheEuropean Commission.
_______________
A. REGIONAL AID
1. Japan hasnotnotified anumber ofregional aidprogrammes e.g."Special depreciation on
corporate income taxtopromote employment anddevelopment inunderdeveloped areas" (Question 12,
page4ofdocument G/SCM/Q2/JPN/4), onthegrounds thatsuchprogrammes arenon-specific.
2. TheCommunity considers thatsuchprogrammes, theeligibility ofwhich islimited tocertain
regions, areclearly specific under Article 2,since thegranting authority explicitly limits access to
thesubsidy tocertain enterprises (Article 2.1(a)). Although Article 2.1(b) states thatspecificity does
notexistifeligibility forthesubsidy isgoverned byobjective criteria, footnote 2specifies thatsuch
criteria mustbe"horizontal inapplication "i.e.eligibility (within thecriteria laiddown) mustcover
thewhole oftheterritory ofthegranting authority. Thecriteria forgranting regional aidsubsidies,
which bydefinition andpurpose arelimited inadvance tocertain regions, arenothorizontal in
application. Evenifregions which meetthecriteria areautomatically eligible foraid,itisknown when
thecriteria arebeing drawn upthatsome regions willbeexcluded.
Footnote 2alsodefines that"objective criteria" asthose which donotfavour certain enterprises
overothers. Inaregional aidscheme, anenterprise located inaneligible region canreceive asubsidy,
while anidentical enterprise situated outside theeligible regions cannot. Consequently, thecriteria
forregional aidsubsidies arenot"objective" according tothedefinition inArticle 2.
3. Furthermore, ifregional aidweretobenon-specific under Article 2,thewhole ofthe"green
light" exception forregional aidunder Article 8.2(b) would become irrelevant, sinceregional aidwould
alreadybenon-actionableunderArticle8.1(a).However,Article8.2(b)existspreciselybecauseregional
aidisspecific, otherwise there would benoneedforthegreen lightcriteria.
4. WillJapan notify allregional aidsubsidies, given thatsuchsubsidies arespecific andtherefore
subject tonotification under Article 25.2?
1G/SCM/N/3/JPN+Rev.1.
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Page2
B. SUBSIDIES TOINDUSTRIAL PARKS AND ZONES
WillJapannotifyallsuchsubsidiese.g.TottoriPrefecture-subsidyforestablishmentinTakeuchi
Industrial Park, Niigati -subsidy toenterprises located inToko Industrial Zone? They arespecific
within theterritory oftheprefectures concerned, being available onlytoenterprises situated within
theindustrial zones.
C. SECTOR SPECIFIC SUBSIDIES
WillJapan notify allsubsidies which arespecific, inlaworinfact,tocertain sectors? Examples
are:
1. Iwate -wood industry stable management fund. Thisisonlyavailable, inlaw,tothewood
industry, andistherefore specific.
2. Ishikawa -subsidy forthelocation ofhightechnology. Thecriteria foreligibility, involving
theuseofhightechequipment, willclearly inpractice limit access tocertain enterprises.
Therefore, itispossible tosay,inadvance ofthegranting ofsubsidies, thatthescheme is
specific infact.
3. Central Government -subsidies forcommercialization ofenergy-saving technology. Once
again, thecriteria areframed insuchawaythataccess willinevitably belimited tocertain
types ofenterprises.
D. SUBSIDIES PAID VIAPUBLIC BODIES
WillJapan notify allsubsidies paidviapublic bodies? During thereview, Japan frequently
denied theexistence ofasubsidy, claiming thatthemoney hadbeentransferred fromtheGovernment
toanother public body. Anexample istheInformation Technology Promotion Agency (Question 8,
page4ofdocument G/SCM/Q2/JPN/4).
Intheopinion oftheCommunity, Japan should notify thesubsidies paidtosuchbodies, or
thesubsidies which therecipient bodies themselves disburse toenterprises, totheextent thattheyare
derived from public funds.
E. SUBSIDIES PAID VIALOCAL GOVERNMENT
WillJapan notify allsubsidies paidvialocalgovernment? During thereview, Japan frequently
denied theexistence ofasubsidy onthegrounds thatthemoney hadbeentransferred from central
tolocalgovernment. Anexample isthesubsidy torevitalize regional technology (MITI).
Intheopinion oftheCommunity, Japan should notify suchsubsidies paidvialocalgovernment
inJapan.
F. SMEs
Could Japan provide thevarious definitions ofsmall andmedium-sized enterprises initssubsidy
programmes?