WORLD TRADE
ORGANIZATIONG/SCM/Q2/USA/23
12 September 2002
(02-4810)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Questions from the EUROPEAN COMMUNITIES Regarding the
Updating and New and Full Notification of the UNITED STATES1
The following communication, dated 9 September 2002, has been received from the
Permanent Delegation of the European Commission.
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AEROSPACE & AERONAUTICS:
General Remarks:
.
Q1. The notification omits any mention of financial expenditures by the US Department of
Defence that provides benefit to commercial entities ( e.g., US producers of civilian aircraft).  Please
explain the reason for this omission and provide a list of all applicable DoD subsidies and their
contents.  In particular, please identify a nd discuss subsidies granted under DoD’s Research,
Development, Testing & Evaluation (RDT&E) a nd Independent Research & Development (IR&D)
programmes.
Q2. The notification makes mention of only five aerospace and aeronautics programmes, four of
which, the US notes, were discontinued during the notification period.  It is the understanding of the
European Communities that, for example in US Fiscal Year 2001, the US Government provided at
least $747.6 million in aeronautics-related funding through the Office of Aerospace Technology, at
least $419.4 million in funding for aeronautics-related Research & Programme Management, and atleast $50.6 million in funding for aeronautics-related Construction of Facilities, for total NASA
aeronautics funding of at least $1,217.6 million during that 12-month period.  The notification,
however, omits any mention of these financial expenditures, which are focused, primarily or
exclusively, on civilian ventures.  Please explain the reason for this omission and provide a list of all
applicable NASA subsidies and their contents for each calendar year covered by the notification.
Advanced Subsonic Technology Programme:
Q3. As regards NASA’s Advanced Subsonic Technology programme, the notification states:  This
programme was discontinued at the end of fisc al year 1999 as NASA refocused its programme
activities from an emphasis on strengthening industrial competitiveness to research investments
focused on the public good.
                                                     
1G/SCM/N/48/USA, G/SCM/N/60/USA, G/SCM/N/71/USAG/SCM/Q2/USA/23
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Please explain what this statement means and specify how this re-focusing was accomplished.
Please explain whether “research investments” of NASA will be made in US firms only and whether
the “public goods” NASA hopes to create will be freely available to the general public or rather will
be available only to US firms.
Q4. Please describe in detail all elements of the AST programme that have been transferred to
other programmes at NASA (or elsewhere in the US Government) as a result of the termination of the
programme in FY 1999.
Q5. Please indicate how many companies have benefited from the programme and specify in
percentage of the total the three biggest recipients of the benefits granted:
High-Speed Research:
Q6. With regard to the high-speed research programme, the notification states:  Due to the nature
and focus of the R&T activity, these contracts, grants and other cooperative-type agreements were
awarded to large civil aircraft and engine manufacturers, advanced aerospace material manufacturers,and other major subsystem developers for aircraft, engine and air traffic management systems.  How
many firms did receive subsidies under this programme during the notification period?
Q7. What was the total expenditure concerning the development of a high speed civil
transportation plane?
Q8. On average how many projects were funded and how many firms received subsidies under
this programme?  Do enterprises have to re-submit a new application every year?  What are the
criteria that enterprises must meet in order to receive the benefits from this programme?
Q9. Why was the programme ended?
Q10. In light of the US’s notification that “the High Speed Research Programme had the specific
aim of improving, by 2005, the technology base for the possible future development of an
economically viable and environmentally friendly high speed civil transport by private aerospace
companies,” please describe what benefits principal HSR/HSCT contractors received from this
programme.
Q11. Please describe in detail all elements of the HSR/HSCT programme that have been transferred
to other programmes at NASA (or elsewhere in the US Government) as a result of the termination of
the programme in FY 1999.
The X-33 Programme:
Q12. Could the United States explain whether this programme is for the sole use of non-
commercial aerospace activities?  Are commercial activities benefiting from this programme, and if
so, what industries are the main beneficiaries?
Q13. Please indicate what percentage of X-33 programme participants were non-US companies or
organizations.
Q14. Please indicate to what extent the programme participants shared the full costs of the
programme.
Q15. What was the total budgeted amount for the X-33 during the programme’s life (FYs 1995–
2000)?G/SCM/Q2/USA/23
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The X-34 Programme:
Q16. Please describe the inter-relation of the X-33 and X-34 programmes and subsidies conferred
by the programmes.
Q17. Please identify who was “the” participating company in this programme.
Q18. The notification states that since 1996 the programme has been “limited to the construction of
a flight demonstrator that would test a number of new launch vehicle technologies including
composite structures and advanced thermal protection systems”.  Does “the” participating company in
the X-34 programme obtain use of the flight demonstrator at less than arm’s length fair market price?Is use of this flight demonstrator open to all competitors of “the” participating company on equal
terms and conditions?
Q19. What was the total budgeted amount for the X-34 during the programme’s life (FYs 1995–
2001)?
The Spacecraft Technology Development Programme
Q20. Please indicate to what extent the programme participants shared the full costs of the
programme, explain how assistance is provided to industry and how tech nology know how transfer
from NASA is taken into account?
Q21. Was participation open to both US and non-US participants?
AGRICULTURE
Q22. It is mentioned that several programmes (EEP,DEIP) had been authorized in the Uruguay
Round Agreement Act of 1994 until the year 2001.  Since the notification mentions the extension of
fundings through the year 2002, will there be  any further extensions after the end of this year?
Q23. On page 11 of the notification "Mandated Export Sales of Dairy Stocks" the US indicate
under "Amount" that there were no export sales of CCC owned dairy products during fiscal years
1998, 1999, 2000, 2001.  Then under "trade effects" the document refers to attachment I for statistics.
In attachment I the document shows the value of selected commodities exported by the US.  These
values concern poultry and, indeed, dairy products.  Can the US explain the relation between the
statement under "amount" and the contents of "Attachment I"?  Do the values in Attachment I not
contain any CCC dairy sale?  Why does attachment I not include export values of other commodities
than poultry and dairy products?
Q24. Where did the US include food aid in the form of wheat, wheat flour and other commodities
subsidized under "art 416 (b)" and the "PL 480" programmes in the current notification?
Q25. Where did the US include export credit guarantees in the current notification?
Q2. Where did the US notify subsidies for crop insurance payments in the current notification?
Q27. Where did the US notify in the current notification the tax exemption for agricultural products
for Foreign Sales Corporations?G/SCM/Q2/USA/23
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ENERGY AND FUELS
Partnership for a New Generation of Vehicles PNG:
Q28. It is mentioned that the PNG commenced in 1993 and will end in September 2002.  Will there
be any follow-up programmes?  Please explain in more detail the role of the USAR in the various
mechanisms through which assistance is provided and participants are selected.
Solar and Renewable Energy Resources Technologies:
Q29. Please explain in more detail the functioning of partnerships including industry co-
investment.  Does industry have to repay any amounts after a successful commercial launch of aproduct?
Energy Conservation Programmes – Transportation Sector:
Q30. Please explain which companies are eligible for various competitive procedures to participate
in this programme?  How and by whom is the selection made?
Energy Conservation – Industry Sector:
Q31. Please explain what are „other forms of cooperation“ in the context of assistance under these
programmes.
Industries of the Future:
Q32. Please explain how cost-shared RD&D works, which companies are eligible and how
„industry who lack funds and/or know how“ are defined.  After having „moved successfully their
technologies from the research bank to the market place“ do companies have to pay back part or total
of the assistance received through this programme.  Does the integrated delivery programme provide
the new technologies to the receiving industrial firms free of charge?
Oil Programme:
Q33. Please describe in more detail who benefited from this programme.  How much, in percentage
of the total amounts, was attributed to major petroleum companies?
Excess of Percentage Over Cost Depletion for Oil, Gas and Other Fuels:
Q34. Please specify how „small scale producers“ are defined.
Alternative Fuel Production Credit:
Q35. Please describe the qualifying production of fuels eligible for credit.
Capital Gains Treatment of Royalties on Coal:
Q36. Please explain who benefited from this programme and what were the criteria for eligibility.
Was the tax concession only allocated to the royalties received or also on the sales of coal.G/SCM/Q2/USA/23
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FISHERIES
Various Fishing Vessel and Permit Buyback Programmes:
Q37. Please indicate what happened to the bought back vessels.  Were they wrecked or sold again?
Have any of the bought back permits been sold again?
LUMBER & TIMBER
Capital Gains Treatment of Certain Timber Income:
Q38. Please specify which kind of timber is meant by „certain timber“.  What are the criteria for
being eligible for those tax concessions?
Expanding of Multiperiod Timber Growing Costs
Q39. Please explain which timberowners are eligible to benefit from this tax concession and which
deductions they can expense?
METALS, MINERALS AND EXTRACTION (NON-FUEL)
Expanding of Exploration and Development Costs for Non-fuel Minerals:
Q40. Please specify which capital outlays are qualified to benefit from this tax concession.  What
are the criteria for eligibility?
Emergency Steel Loan Guarantee Programme:
Q41. Please explain the criteria of eligibility for this programme?
TEXTILES
The AMTEX Programme:
Q42. Please explain in more detail CRADA in context with this programme.  Is the technology
transfer for the receiving or participating company free of charge?
QUESTIONS CONCERNING ATTACHMENT III: NOTIFICATION OF STATE-LEVEL
MEASURES
Q43. We note that in some cases no programme authority is mentioned, in many cases the
information on the amounts of the subsidy is missing, in particular for tax subsidies no total revenue
loss figures are given.  Please complete this information where missing.
Alabama – Trico Steel Company:
Q44. Please explain this assistance in more detail.  Who was the programme authority?  What was
the amount and nature of grant?  What is the nature of tax incentive and what determines its duration?
California – Employees in Economic Incentive Areas:
Q45. Please give more details on this credit.  What are the criteria for benefiting from this
programme, conditions of repayment, amounts?G/SCM/Q2/USA/23
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Delaware – Enterprise Zones:
Q46. Please specify policy objective, which form of assistance, what are the criteria of eligibility,
amounts, repayment conditions?
Florida – High Impact Performance Incentive Grant:
Q47. Please give more details on qualification for high impact business.  What are the criteria of
eligibility?  How is high impact business certified?
Idaho – Rural Community Block Grant:
Q48. Please specify the criteria of eligibility for the grant.  What is the average grant awarded?
How many companies have benefited?
Illinois – Coal Demonstration Programme:
Q49. Please specify what is mixed financing?  Do the firms have to repay any amounts?
Illinois - Railfreight Programme:
Q50. Please specify in percentage of the total how much of the programme consisted in grants and
how much in loans?  Were there any special conditions for the loans?
Indiana – De Calb and Spencer Counties - Steel Dynamics:
Q51. Please give more details on this assistance.  How much of the amount was grants how much
other assistance?  Please specify the rate of tax credit and the duration, indicate conditions of tax
abatement and interest rates on bonds.
Iowa – New Plate Mill Ipsco:
Q52. Please specify the details of the state incentive packet for this company, in particular form,
rate, conditions and duration.
Kentucky – Coal Income Tax Credit:
Q53. Please explain what is meant by „Kentucky coal“?  Does imported coal also fall under this
description and if not, can you please explain how this reconciles with Art 3.1.b of the WTO
Subsidies Agreement?  Please specify the annual tax loss budgeted by the state.
Maryland – Smart Growth Economic Development Infrastructure and Assistance Fund:
Q54. Please specify which companies are eligible, what are the criteria?
What are the amounts involved?  Please provide information on loan conditions, equity
investments and amount of grants.
Maryland – Bethlehem Steel Corporation:
Q55. Please give the exact details of this grant, whether these are one-off grants and if any further
grants will be given to this project.G/SCM/Q2/USA/23
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Massachusetts – Seafood Revolving Loan Fund:
Q56. Please give more details on the loan conditions.
New York – Energy Products Centre:
Q57. Please specify more details on eligibility for the programme.  Please explain marketing and
financial assistance.  Does this consist in grants or repayable favourable loans, what are the
conditions?
Ohio – Steel Development Initiative:
Q58. Please specify how many companies benefited from this initiative?  What are eligible project
costs?  How much in total was provided sofar in loans?  Please explain Infrastructure Grants.  What
was the exact amount granted?  Conditions for the grant?  How many companies have benefited?
Oklahoma – Enterprise Zones, Former Military Base and High Impact Quality Jobs:
Q59. Please specify the totals of amounts involved.  What are the conditions for grants and mixed
financing.  What was the biggest amount granted to one single company?
Tennessee – Economic Development Loan Fund:
Q60. Please specify details on eligibility for this low interest loan.  What are the conditions.  Does
the notified maximum investment refer to one single project, or is this the total amount of
programme?  How many companies have benefited?
Texas – Capital Fund Real Estate Development and Small Business Incubator Programme:
Q61. Please specify the criteria of eligibility, conditions of grant, what are the maximum amounts
granted to single companies?
Texas – Rural Economic Development Fund:
Q62. Please specify the conditions of loan guar antee, which areas were concerned, how many
companies benefited from the programme, what are the amounts?
Utah:  Industrial Assistance Fund:
Q63. Please specify the amounts and conditions.  How much of it is loans, how much grants,
maximum amount for one single company?
Washington – Industrial Machinery and Equipment, Industrial Fuels and Raw Materials, Ships
and Vessels under Construction, Prototype of Aircraft Parts:
Q64. Please explain these tax exemptions in more detail, what are the amounts involved (total state
tax loss) ?
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