RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q2/EEC/17
27 July 1999
(99-3159)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Questions from the UNITED STATES Regarding the
New and Full Notification (1998) of the EUROPEAN COMMUNITIES1
The following communication, dated 26 July 1999, has been received from the Permanent
Mission of the United States.
_______________
EUROPEAN COMMUNITIES
The following are questions regarding the notification of the European Communities 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/38/EEC.
Part I:  Structural Actions
(i) European Regional Development Fund
1. Could you please specify to whom the assistance is paid?
(ii) European Social Fund
1. How is the Fund used in a manner that renders "...the employment of workers easier..." under
heading number three?
(iii) European Agricultural Guarantee and Guidance Fund (EAGGF) - Guidance Section
1. Could you please clarify, with regards to the ‘Policy Objective’ of the programme, what is
meant by "speeding up " and "adjustments"?
2. Please provide a detailed explanation of how the “multi-annual operational programmes” are
administered and whom they benefit.
                                                     
1 G/SCM/N/38/EECG/SCM/Q2/EEC/17
Page 2
Part III:  Industry Sectors
Community Framework programmes
1. Under each of the community framework programmes listed, could you please provide
information on who receives benefits from these programmes as well as the amount of the subsidy
given to each unit?
(ii) Aid to the Coal Industry
1. Please provide  information concerning the beneficiaries of the programmes and the amount
given to each unit.
Part IV:  Other Programmes
Common Organization of Markets in Fishery and Aquaculture Products
1. Please provide an explanation of the information provided with respect to the duration of this
programme.
Information Society Initiative in Standardisation
1. Please provide additional information on the types of “partners” that receive this subsidy.
What is the estimated amount per unit?
2. Please provide more detailed information on each of the initiatives.  We would also appreciate
a full explanation of why, in the Community’s view, each of these initiatives should be not beconsidered a separate programme for which of the requisite information stipulated under Article 25
would be provided.
SPRITE - S
1. Please provide additional information on the types of “partners” that receive this subsidy.
What is the estimated amount per unit?
2. Please provide more detailed information on each of the initiatives.  Again, we would also
appreciate a full explanation of why, in the Community’s view, each of these initiatives should be not
be considered a separate programme for which of the requisite information stipulated under Article 25
would be provided.
We are also aware of the following programmes and measures in the European Communities
that may meet the Agreement’s notification requirements.  Please explain why the European
Communities determined that the following measures or activities did not fall within the notification
requirements of GATT Article XVI:1 and Article 25.5 of the Agreement on Subsidies andCountervailing Measures, or if they are covered by one of programmes already notified, could you
please so indicate and provide information about the indicated activities.
1. Resider Programme, Resider II, and Successors
This programme was intended to assist in the reconversion in the iron and steel sector.
According to Commission publications, its objective is to support efforts to create alternative jobs to
replace those lost during the restructuring and to develop appropriate opportunities for new
employment in other sectors in the affected regions.G/SCM/Q2/EEC/17
Page 3
2. RECHAR
This programme was intended to assist in the economic reconversion of the coalfields and is
intended to assist in the worst affected regions  by restoring the environment, promoting new
economic activities and developing the potential of the workforce.  Areas eligible for support are
regions in which the decline of coal mining will lead to serious economic problems and a large
increase in unemployment.
3. European Investment Bank Loans
The European Investment Bank (EIB) is a European Community (EC) financial institution
which offers loans to designated depressed areas for EC member states.
4. ECSC Article 56(2)(b) Retraining Grants5. BRITE/EuRAM II
BRITE/EuRAM II is a European Community-wide research and development policy under
Article 130 of the European Economic Community (EEC) Treaty.  The programme aims to revitalize
European industry by reinforcing its scientific and technological base through research and
development. Assistance is only awarded for multi-sectoral, multi-disciplinary, multi-companyresearch and development projects.  The programme usually funds 25 per cent to 30 per cent of
research costs, and companies must fund at least 50 per cent.  Please indicate whether this programme
replaces BRITE/EuRAM which expired in 1994.
6. Electric Arc Furnace Programme
This programme, which funds the use of electric arc furnaces in the steel industry, is believed
to have provided grants to both Usinor in France and ARBED in Luxembourg.
Though the following programmes were partially explained in your 20 February 1997 replies
(G/SCM/Q2/EEC/10) to questions from the United States, please explain why the European
Communities again determined that the following measures or activities did not fall within thenotification requirements of GATT Article XVI:1 a nd Article 25.5 of the Agreement on Subsidies and
Countervailing Measures.  Please provide full notifications of the programmes listed.
ECSC Article 54 Loans and Interest Rebates
ECSC Article 56 Programmes
Article 56(2)(b) of the Treaty of Paris, which created the European Coal and Steel
Community (ECSC), authorizes the ECSC aid to "activities capable of reabsorbing redundant ECSC
workers into productive employment."
1. Conversion Loans (2a)
European Coal and Steel Community decision published in the Official Journal of the
European Communities, No. C 178 of July 27, 1977, authorized conversion loans for projects thatinvolve, or are likely to involve, reemployment of  redundant ECSC workers.  An applicant must be a
small- or medium-sized enterprise, defined as an enterprise that: (1) employees less than 500 people;
(2) has net fixed assets of less that 75 million European Currency Units ("ECUs"); (3) has no parentG/SCM/Q2/EEC/17
Page 4
enterprise that owns more than one-third of its share capital. A qualifying project must create new
positions that are capable of being filled by coal and steel industry.
2. Interest Rebates
For firms located in "priority " regions that ha ve suffered high unemployment in the coal and
steel industries, the interest rebate is granted whether or not a qualifying firm actually employs
redundant ECSC workers.  A 5 per cent interest rebate is granted for the portion of loan principal
equal to (a) the number of new positions created, multiplied by (b) two-thirds, multiplied by (c)
20,000 ECU's per worker. In contrast, firms located outside "priority" regions must hire redundant
ECSC workers. Their 5 per cent interest rebate applies only to a portion of the loan equal to the
proportion of newly-created positions actually filled by redundant ECSC workers multiplied by20,000 ECU's.
AUSTRIA
The following are questions regarding the notification of Austria 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/38/EEC.
1. For the vast majority of programmes, the notification contain insufficient information
regarding to whom and how the subsidy is provided.  For those notifications in which the subsidyrecipients are vaguely identified as “individual enterprises,” “industrial enterprises,” or “producers,”
please clarify which types  of industrial enterprises or producers are eligible (i.e., to which industry
sector(s) they belong).
2. For the following programmes, please explain what is meant by “steel industry which is not
subject to ECSC Treaty.”  Are these subsidies avai lable to enterprises in the steel industry or to
enterprises not involved in the steel industry?
* Guidelines on Aid to Industry for Environmental Protection Measures (Programme #7)
* Aid for Waste Water management in Industrial Enterprises (Programme #17)
3. For the following programmes, please indicate the manner in which the subsidy is provided
(e.g. grant, loan).
* Aid Programme for the Establishment of New Enterprises and the Expansion of Existing
Enterprises (Programme #34)
* Aid Programme for Small and Medium-Sized Enterprises (Programme #37)
* Promotion of Environmental Protection Measures in Upper Austria (Part 1) (Programme #54)
4. For the following programmes, please indicate the subsidy per unit, total amount of subsidy,
or annual amount of subsidy budgeted.
* Focal Point:  Regional Planning Relocation (Programme #40)
* Establishment and Creation of Key Industries Programme (Programme #47)
* Scheme for the Development of Industrial Sites (Programme #48)
* Aid under Section 4 Paragraph 5 of the Economic Assistance fund Act (Programme #59)
5. For Programme #44, Special Programme for Strengthening the Tyrolean Economy (Tyrolean
Impulese Programme), please elaborate regarding which enterprises are of special regional or public
interest.G/SCM/Q2/EEC/17
Page 5
6. For Programme #47, Establishment and Creation of Key Industries Programme, please
identify the key industries and discuss the criteria for being designated a key industry.
7. For Programme #51, Tyrolean Credit Guarantee Company, please elaborate on the
information pertaining to the subsidy recipients.  Specifically, describe the contents of  §§ 35-40 of
the Chamber of Commerce’s regulations.
8. For Programme #68, Guideline of the Vienna Credit Guarantee Company Ltd., please clarify
the policy objective/purpose of the subsidy.
BELGIUM
The following are questions regarding the notification of Belgium 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/38/EEC.
1. Please provide the background and authority for the programmes listed under section 2.2.
We are aware of the following programmes and measures in Belgium that may meet the
notification requirements of the Agreement.  Please explain why the EuropeanCommunities/Government of Belgium determined that the following measures or activities did not
fall within the notification requirements of GATT Article XVI:1 and Article 25.5 of the Agreement on
Subsidies and Countervailing Measures.  Please provide full notifications of the programmes listed.
*S N C I  L o a n s  - provides long-and medium-term financing to encourage the development and
growth of industrial and commercial enterprises in Belgium.
* Belfin Loans - provides financing for the restructuring and development of various Belgian
sectors.
DENMARK
The following are questions regarding the notification of Denmark 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/38/EEC.
Export Credit and Insurance Programme
1. Though this programme was partially explained in the 20 February 1997 response
(G/SCM/Q2/EEC/10) to questions posed by the Un ited States, please explain why this programme
was not included in the new and full notification of subsidies.  In addition, please give a fullnotification of the programme as required under Article 25.5 of the Agreement on Subsidies and
Countervailing Measures.G/SCM/Q2/EEC/17
Page 6
We are also aware of the following programmes and measures in Denmark that may meet the
notification requirements of the Agreement.  Please explain why the European
Communities/Government of Denmark determined that the following measures or activities did not
fall within the notification requirements of GATT Article XVI:1 and Article 25.5 of the Agreement on
Subsidies and Countervailing Measures.  Please provide full notifications of the programmes listed.
Export Training Programme
Assistance for Export Groups
International Tender Programme
FINLAND
The following are questions regarding the notification of Finland made pursuant to
Article XVI:1 of the GATT 1994 and Article 25 of the Agreement on Subsidies and CountervailingMeasures, in document G/SCM/N/38/EEC.
State Aid for the Internationalization of SMEs
1. Please provide the name of the law, act, or other legal authority under which this aid is
provided.
Loan Programme for SMEs (Kera Ltd.)
1. Please explain what is meant by the “aid intensity of loans”.Aland:  Grant for Technical Consulting and Promotion;
State Aid to Developing Businesses; and
Grant for Research and Development
1. Please explain whether these programmes are fi nanced by the local government of Aland, by
the national government of Finland, or by some combination thereof.
Operational Conditions Aid
1. Please explain whether this subsidy was provided as a fixed amount to each recipient or
whether the amount is fluctuating.  Also, please provide the average amount per recipient.
Waste Oil Management
1. Please provide the name of the law, act, or other legal authority under which this aid is
provided.
FRANCE
We are aware of the following programmes and measures in France that may meet the
notification requirements referenced above.  Please explain why the European
Communities/Government of France determined that the following measures or activities did not fall
within the notification requirements of GATT Article XVI:1 and Article 25.5 of the Agreement on
Subsidies and Countervailing Measures.  Please provide full notifications of the programmes listed.G/SCM/Q2/EEC/17
Page 7
1. DATAR programmes
The French government provides a series of tax and non-tax regional incentives to French and
foreign businesses to establish new, or to expand existing, businesses in certain regions of France.The Delegation a l’Amenagement du Territoire et l’Action Regionale  (DATAR) coordinates the
programmes of various government agencies and ministries. DATAR programmes are limited to
companies located in certain regions.
* Regional Development Grants (PATs):
Though this programme was partially explained in your 11 August 1998 response
(G/SCM/Q2/EEC/16) to questions by the United States, please explain why the programme was not
fully notified and please provide a full notification of the programme.
* DATAR 50 per cent Taxing Scheme:
Grants provided by DATAR for the purchase of fixed assets are taxed at a rate of only 50 per
cent of the normal tax rate, because the depreciation basis for these assets is increased by exceptional
depreciation equal to 50 per cent of the grant.
* Tax Exemption for Industrial Expansion
DATAR also administers a programme that exempts certain companies located in
development regions from the business tax (" taxe professionelle ") for up to five years.
* Tax Credit for Companies Located in Special Investment Zone:
Companies located in the Nord-Pas-de-Calais region, which has been designated a special
investment area (ZIP), are eligible to receive a tax credit of 22 per cent of the pre-tax manufacturing
cost for industrial investments.
* Work/Training Contracts and Internships:
The "Worker/Training Contract" programme cons ists of two parts: 1) employers are exempt
from social security contributions, and 2) the employer is permitted to pay employees lower salaries.
The employer is only eligible for participation in the programme if he or she agrees to hire employees
aged 16 to 25 with no work experience under a work/training contract for six to 36 months.
In addition to the worker/training contract, another part of the programme consists of
internships where the French government pays intern salaries as well as all or part of training
expenses for the interns.
* Tax Credits for Research:
The DATAR Tax Credit for Research programme provides commercial or industrial firms
with a "tax credit break amounting to 50 per cent of research expenses which have increased in
comparison with the average for the 2 previous years."  The tax credit can be applied to depreciation
of assets used in research, personnel costs, operating costs, cost of R&D operations, expenses relatingto submission and registration of patents, depreciation on patents, and 50 per cent of certification
costs.G/SCM/Q2/EEC/17
Page 8
GREECE
The following are questions regarding the notification of Greece 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/38/EEC.
Law 260/98
Could you please provide information concerning  the amount of funding provided under this
programme?
We are also aware of the following programme that may meet the notification requirements of
the Agreement.  Please explain why the European Communities/Government of Greece determined
that it did not fall within the notification requirements of GATT Article XVI:1 and Article 25.5 of the
Agreement on Subsidies and Countervailing Measures.  Please provide full notifications of the
programmes listed.
Reduction in Excise Tax for Greek Ouzo
Greek Ouzo (distilled spirit) receives a tax reduction over imported spirits.
ITALY
The following are questions regarding the notification of Italy 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/38/EEC.
We are aware of the following programmes and measures in Italy that may meet the notification
requirements of the Agreement.  Please explain why the European Communities/Government of Italy
determined that the following measures or activitie s did not fall within the notification requirements
of GATT Article XVI:1 and Article 25.5 of the Agreement on Subsidies and Countervailing
Measures.  Please provide full notifications of the programmes listed.
Export Marketing Grants under Law No. 304/90
Provides grants to food and agricultural companies to increase market share in non-
Community markets.
Social Security Reductions and Exemptions, including Fiscalizzazione Benefits
This nationwide programme, with higher benefits in the south of Italy, provides deductions on
payments for health care and insurance:  Law No. 407/90, which provides a two-year exemption from
social security benefits for hiring employees that were previously unemployed for two years; and LawNo. 863, which provides a social security reduction for workers who are in training.
NETHERLANDS
We are aware of the following programmes and measures in the Netherlands that may meet
the notification requirements of the Agreement.  Please explain why the European
Communities/Government of the Netherlands determined that the following measures or activities did
not fall within the notification requirements of GATT Article XVI:1 and Article 25.5 of theG/SCM/Q2/EEC/17
Page 9
Agreement on Subsidies and Countervailing Measures.  Please provide full notifications of the
programmes listed.
Stimulation for the Innovation of Electric Energy (SES)
The goal of this programme is to stimulate energy conservation by encouraging the
installation of co-generation equipment.  It provid es payments of up to 25 per cent of the equipment
cost with a certain cap per project.
Investment Incentive (WIR)-Regional Programme
The WIR investment incentive is granted as a reduction of income tax due, or if no tax is due,
as a cash payment at rates ranging from 8 per cent to 14 per cent of the investment cost, based on the
nature of the structure or investment (e.g., sea vessels-12 per cent; new non-residential buildings-
14 per cent; existing non-residential buildings-8 per cent; etc).
SPAIN
The following are questions regarding the notification of Spain 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/38/EEC.
Fisheries
1. You said in your 11 August 1998 response  (G/SCM/Q2/EEC/16) to our question about
Structural Aid to Fisheries, Aquaculture, and the Processing and Marketing of Fish Products that “part
of the financial aid, up to a maximum of 50 per cent, may be used to reduce the interest on loans
granted to owners of new fishing vessels by the various loan bodies.”  However, you did not clarify in
this new notification the form in which this financial aid was granted under the various programmes
listed under the Fisheries section of your notification.  Please clarify for each programme in what
form the subsidies are provided (e.g. loans, grants).
2. What is the duration of the various fisheries programmes?3. Who are the recipients of the seven types of fishery subsidies listed on page 3?4. Please explain whether these subsidies are provided as a fixed or fluctuating amount for each
recipient.  Also, please provide an estimated average amount received per recipient.
Special Economic Aid to Ship-Owners and Cr ews Affected by the Stoppage of Fishing
1. Please clarify whether all ship-owners and crew s receive the same amount of aid or whether
the amounts fluctuate.
Promotion of the Economic and Social Sectors of the Agri-Food Industry
1. Please explain what is mean by the “economic and social sectors” of this industry.
2. Please develop your answer to question 8 (“Duration of Subsidy”).G/SCM/Q2/EEC/17
Page 10
Support Initiative for Technology, Quality and Industry Safety (ATYCA)
1. Please explain whether these subsidies were provided as a fixed or fluctuating amount for
each recipient.  Also, please provide an estimated average amount received per recipient.
R&D Plan for the Aeronautical Sector
1. Please explain what form these subsidies take in addition to being “repayable advances.”  For
example, is the interest rate subsidized and/or are the recipients granted certain grace periods?
Aid Under Technological Programmes Connected With the SEAT Modernization Plan
1. Please indicate whether any subsidies were granted in 1998 and, if so, details about those
subsidies including amounts, recipients and dates.
2. In your subsidies notification, you stated that subsidies may be granted in the years 1995 to
1998.  Has this programme been terminated?  If so, please indicate the legislation terminating theprogramme and when that legislation became effective.  If this programme is continuing, please
indicate the new legislation authorizing the continuation of the programme.
ARTE/SME Programme
1. Please explain what the letters “ARTE” represent.Regional Economic Incentives Scheme
1. Please identify the type of recipient of this subsidy (e.g., private businesses or regional
government authorities).
2. Please explain whether this subsidy was provided as a fixed or fluctuating amount for each
recipient.  Also, please provide an estimated average amount received per recipient.
Autonomous Communities
1. Please explain whether the amounts listed under each subsidy programme for the autonomous
communities are provided by the central government, by regional governments, or by some
combination thereof.
Catalonia :  Aid Under Technological Programmes Connected With the SEAT Modernization
Plan
1. Please explain whether this subsidy was provided in addition to the SEAT subsidy discussed
on page 13 of your notification document.
Galicia:  Non-Repayable Subsidies to Cooperation Among Enterprises
1. Please provide the total amount budgeted for or disbursed in 1997.G/SCM/Q2/EEC/17
Page 11
UNITED KINGDOM
The following are questions regarding the notification of the United Kingdom 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/38/EEC.
Business Connect Wales
1. What type of support is provided under this programme?  In addition, please explain how the
funding contracts work.
Business Links
1. It is not clear who actually receives these grants. Do the Trade and Enterprise Councils (TEC)
receive these grants from Government Office contracts and then distribute them to other entities such
as Chambers of Commerce, Enterprise Agencies, etc. - or do these grants stay with the TECs?
Civil Aircraft Research and Demonstration Programme (Carad)
1. How are eligible costs determined and how are the levels of eligible costs on projects
established?
Cardiff Bay Development Corporation
1. What type of investment costs are eligible and how are the levels of eligible costs on projects
established?
Development Board for Rural Wales
1. How is it determined whether eligible businesses qualify for whole or partial rent waiver and
how is the eligible time period determined?  Are there any fixed amounts of rent determined per
project and, if so, how are these amounts determined?
Energy Efficiency Best Practice Programme
1. What costs are eligible under this programme and how are the levels of eligible costs on
projects established?  Is there any fixed amount determined per project and, if so, how are these
amounts determined?
Environmental Technology Best Practice Programme
1. What eligible technology transfer costs and R&D costs are covered by the programme and
how are the levels of eligible costs on projects esta blished?   Is there any fixed amount determined per
project and, if so, how are these amounts determined?
Environmental Technology Innovation Scheme
1. Who is eligible for assistance under this programme?
2. Were grants provided under this programme at a fixed amount or did the amount of the grant
fluctuate?  How was the total fixed amount (or fluctuating amount) level of grant determined for each
project?G/SCM/Q2/EEC/17
Page 12
Eureka (UK)
1. What costs are eligible under this programme and how are the levels of eligible costs on
projects established?
General Industrial Collaborative Projects (GICP)
1. What costs are eligible under this programme and how are the levels of eligible costs on
projects established?   Is there any fixed maximum amount determined per project and, if so, how are
these amounts determined?
Launch Aid
1. For each project, is there a maximum amount  of government investment established?
2. How are the levels of government assistance determined for each project?
LEDU-Selective Financial Assistance
1. How does LEDU determine the total amount and type of assistance (i.e., grant, loan, equity)
each project receives?
LEDU- R&D
1. How does LEDU determine the level of funding provided to each project?
LEDU- Local Enterprise Programme
1. How does LEDU determine the level of funding provided to each project?Offshore Supplies and Service Company Assistance for Research
1. Under which government authority or legislation is this subsidy granted?
2. How is the level of funding provided determined for each project?
Scottish Enterprise
1. How does Scottish Enterprise determine the total amount and type of assistance (i.e., grant,
loan, guarantees) each project receives?
Single Regeneration Budget
1. How is the total amount and type of assistance (i.e., grant, loan, guarantees) each project
receives determined under this programme?
Small Firms Loan Guarantee Scheme
1. What business activities and what types of small businesses are eligible for loan guarantees
under this programme?
2. How are the 70 per cent and 85 per cent loan guarantee levels determined for each project?G/SCM/Q2/EEC/17
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UK Coal R&D Programme
1. How is the level for eligible research costs determined for each project?
UK New and Renewable Energy Programme
1. How is the level for eligible costs determined for each project?Use of Discretionary Resources by Training and Enterprise Councils (TECs) In Wales
1. How is the total amount and type of assistance (i.e., grant, loan) each project receives
determined under this programme?
Fisheries Subsidies
Please provide the background and the authority that authorizes the following programmes:
* Grants Towards the Acquisition of Freshwater Fishing Vessels and Engines (NI)
* Grants Towards Fish Farming (Northern Ireland)
* Highland Prospect Limited: Fish Processing and Fish Farming Loans
* Highland Opportunity Limited: Fishing Vessel, Fish Processing and Fish Farming Loans
* Safety Improvements on Fishing Vessels
* The Borders Enterprise Fisheries Aid Programme
Industrial Development Board- Selective Financial Assistance
1. How is the total amount and type of assistance (i.e., grant, loan, shares) each project receives
determined under this programme?
The Borders Enterprise Fisheries Aid Programme
1. How is the total amount and type of assistance (i.e., grant, loan) each project receives
determined under this programme?
We are also aware of the following programmes and measures in the United Kingdom that
may meet the notification requirements referenced above.  Please explain why the European
Communities/Government of the United Kingdom determined that the following measures or
activities did not fall within the notification requirements of GATT Article XVI:1 and Article 25.5 of
the Agreement on Subsidies and Countervailing Measures.  Please provide full notifications of theprogrammes listed.
1. Regional Development Grants - Under Industry Act of 1972 and Industry Development Act
of 1982.
2. National Loan Fund -section 3 of the Iron and Steel Act of 1981
__________