RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q2/ISR/10
23 March 2001
(01-1436)
Committee on Subsidies and Countervailing Measures Original:  English
SUBSIDIES
Questions Posed by the UNITED STATES Regarding the 1998 New
and Full Notification of ISRAEL1 and Concurrent Updating
Notifications for 1996, 1997, 1998, and 1999
The following communication, dated 19 March 2001, has been received from the Permanent
Mission of the United States.
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The following are questions regarding the notification of Israel made pursuant to Article
XVI:1 of the GATT 1994 and Article 25 of the Agreement on Subsidies and Countervailing
Measures, in document G/SCM/N/25/ISR, G/SCM/N/38/ISR, G/SCM/N/48/ISR, and
G/SCM/N/60/ISR, da ted 10 October 2000.
Research and development
Research and development:  The Law for the Encouragement of
Industrial Research and Development, 5744-1984
1. Is the aid granted under this programme available to all industries in Israel?  Are the results of
the research for which aid is granted made public?
2. Under what conditions are the grants repaid?  How is the percentage of royalties used to repay
the grant determined?
3. If no revenue is generated as a result of the aid for research, is the grant still repaid?
4. When was the law for this programme promulgated?
Magnet Research and Development Programme
1. When did this programme begin?
2. Is the aid granted in a single instalment?  Or is it granted over a period of time?
3. Are there any other limitations to receive the aid?  (i.e,. limits to the duration of the research,
limits to which companies can receive the aid, limits to how much aid one corporation can receive,
even though it may be part of several research consortia, limits to who has access to the results of the
research, or any other limits?)
                                                     
1 G/SCM/N/25/ISR, G/SCM/N/38/ISR, G/SCM/N/48/ISR and G/SCM/N/60/ISR.G/SCM/Q2/ISR/10
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The Incubators Programme
1. Under what criteria is the project deemed successful and over what amount of time must the
aid be repaid if the programme is successful?
2. What are the criteria under which the aid is granted?  (How are recipients selected?)
3. Is this aid available to all start-up companies in all sectors of the economy?
4. There seems to be some confusion when examining the “policy objective” and the “form of
the subsidy”.  Under the policy objective, it states that the purpose of the programme is to aid
“companies which are in need of infrastructure and administrative and managerial guidance.”However, under the “form of the subsidy,” it says that the programme is intended to aid research and
development expenses.  Can you please explain more fully the policy objective of the programme?
How is the policy objective achieved in accordance with the form of the subsidy?
5. When did this programme begin?
Beta sites
1. When did this programme begin?
2. Are the ‘instructions’ under which the legal basis for the programme is established publicly
available?  Have these instructions been made into a law or official statement?
3. Is this programme equally available to all sectors of the economy?
4. Under what specific criteria are projects approved for grants and then deemed successful for
repayment?  Over what period of time must repayment occur and how are the terms of repayment
determined?
Feasibility studies
1. When did this programme begin?
2. Are the ‘instructions’ under which the legal basis for the programme is established publicly
available?  Have these instructions been made into a law or official statement?  If so, what is the exact
name of the law or official statement or decree?
3. If the programme is not successful, must the grant be repaid?
4. Who absorbs the loss if the programme is not successful?
Support for employment and training
Introduction of advanced managerial systems
1. When did this programme begin?
2. Are the “instructions” under which the legal basis for the programme is established publicly
available?  Have these instructions been made into a law or official statement?  If so, what is the exact
name of the law or official statement or decree?G/SCM/Q2/ISR/10
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On the job training – Aimed at aiding th e training of new employees at work site
1. Since the legal basis for this programme is “Criteria determined by an interministerial
committee,” do the criteria for this programme change often?  Are the criteria specific for specificindustries?
2. What are the necessary requirements that employees must meet in order to be eligible for this
programme?
3. Is this programme available to all industries and all parts of the economy on an equal basis?
Enhancement of human resources
1. When did this programme begin?
2. Are the “instructions” under which the legal basis for the programme is established publicly
available?  Have these instructions been made into a law or official statement?  If so, what is the exact
name of the law or official statement or decree?
3. Can you please provide more information on what is determined to be a “development area”?
4. Is the only criteria for the programme that industries must be located in the so-called
“development areas”?
5. You stated that the rate of refund for the industry is  determined by the size of the plant.  If the
rates are determined on a proportion basis, what are those proportions?  How, specifically, are the
rates affected by the size of the plant?
Environment
Assistance for the financing of investment aimed at the reduction of
environmental hazards at existing industrial plants
1. Are funds still being paid to companies who made investments before the programme was
discontinued?
Other Forms of Subsidies
The Encouragement of Marketing Fund
1. Are the “instructions” under which the legal basis for the programme is established publicly
available?  Have these instructions been made into a law or official statement?  If so, what is the exact
name of the law or official statement or decree?
2. Are all grants received repaid by the exporter?
3. When did this programme begin?G/SCM/Q2/ISR/10
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The Import Liberalization Fund
1. You stated in your notification that this programme was going to be abolished at the end of
2000.  Was this programme abolished?
2. If the subsidy is granted to businesses who formed rehabilitation plans, does this mean that
these businesses, without this aid, would potentially have been bankrupt?
3. How was it decided whether a grant or a state guaranteed loan would be provided to a
recipient?
4. What were the terms under which the state guaranteed loans were provided?
The encouragement of capital investment
1. What are determined to be “approved investments”?  What procedures must a company or
industry follow to obtain “approved” status?  What are the criteria that must be met for a
company/industry to be “approved”?
2. Within the disadvantaged regions to which the aid is granted, are there specific industries
which receive this aid?  Are there differences between regions in the amount of aid granted?
Unreported subsidies
Israel failed to notify (1) the Exchange Rate Risk Insurance Scheme (also called Insurance
from Israel Foreign Trade Risk Insurance Corporation), (2) the Infrastructure Grant Programme,
(3) the Long-Term Industrial Development Loans Programme, and (4) the Rebate of Wharfage Fees
programme.  Please explain why these programmes were not notified.  If these programmes have been
eliminated, please indicate the date of elimination or termination as well as the correspondinglegislation which eliminated or terminated the programmes.
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