WORLD TRADE  
ORGANIZATION  G/SCM/Q2/USA/29 
19 January 2004 
 (04-0146) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
Questions Posed by the EUROPEAN COMMUNITIES  
Regarding the New and Full Notification of the UNITED STATES1 
 
  The following communication, dated 15 January 2 004, is being circulated at the request of the 
Permanent Delegation of the European Commission.  
_______________ 
 
 
FEDERAL PROGRAMMES:   
AEROSPACE & AERONAUTICS:  
Q1:  The notification makes mention of only one aerospace programme, the Spacecraft Technology 
Development Programme, specifying a total of $19.4 million in funds, but no aeronautics programme.  
It is the understanding of the European Communities that, for example in US Fiscal Year 2002, the 
US Government provided at least $806 million in  aeronautics-related programme funding through 
NASA, and at least $473 million in institutional sup port funding for aeronautics-related programmes, 
for total NASA aeronautics funding of at least $1,279 million during that 12-month period.  The 
notification, however, omits any mention of these fina ncial 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 fo r each calendar year covered by the notification.  
For each of these subsidies, was full participa tion open to both US and non-US companies?  
 
 In last year’s exercise, the US  answered to a similar question that “the relevant administering 
authorities have been contacted to determine if additional information needs to be provided.” No 
answer has been provided to date. 
 
Q2:  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 a ll applicable DoD subsidies and their contents.  In 
particular, please identify and discuss subsidies gr anted under DoD’s Research, Development, Testing 
& Evaluation (RDT&E) and Independent Research & Development (IR&D) programmes.  
 
 In last year’s exercise, the US answered to this question that: “The relevant administering authorities for these programmes have been cont acted. An answer will be provided as soon as 
possible.” To date, no answer has been received. 
 
                                                     
 
1 G/SCM/N/95/USA G/SCM/Q2/USA/29 
Page 2  
 
 Q3:  The US notification is described as a full subsidies notification for calendar year 2002.  
However, the notification omits any mention of ta x-related subsidies provided to US firms.  Please 
explain the reason for the omission of tax-related s ubsidies, including tax credits, export credits, and 
tax exemptions for investments or research, and pr ovide a list of all such tax-related subsidies and 
their contents.  
 
Q4:  The Spacecraft Technology Development Programme: 
 
 Please indicate to what extent the programme  participants shared the full costs of the 
programme, explain how assistance is provided to  industry and how technology know-how transfer 
from NASA is taken into account? 
 
Q5:  Was participation open to both US and non-US companies? 
 
AGRICULTURE (page 3-15):   
 
Q6:  Can the US please explain why the current notification does not mention all programmes that are 
notified in the Domestic support Notification 1999,  reviewed in the Committee on Agriculture (e.g. 
crop insurance premium subsidies, water subsidies, grazing "non-fee", conservation and environmental payments)? 
 
Q7:  The EC note a very significant level of tax exemption linked to " capital gains treatment of 
certain agricultural income”  (more than USD 1 billion; page 13-14). Could the US please inform 
how much of this amount was linked to the sale of unharvested crops sold together with farmland? 
Could the US also inform about the area concerned? 
 
Q8:  Export Enhancement Programme: How is the effect on non-subsidising exporters assessed?  
Does 'non-subsidising exporters' refer to countries, to  US enterprises or to non-US enterprises?  What 
safeguards are included to ensure that beneficiari es, in making a 'commercial sale' of the eligible 
commodity, do not underprice below the world market price?  If no disbursements were made in FY 
2002, can it be concluded that th e programme is now defunct? 
 
Q9:  Dairy Export Incentive Programme:  How is the effect on non-s ubsidising exporters assessed?  
Does 'non-subsidising exporters' refer to countries, to US enterprises or to non-US enterprises?  How 
is it ensured that export sales under the programme ar e in addition to and do not displace commercial 
export sales? 
 
Q10:  Treatment of Loans Forgiven  Solvent Farmers as if Insolvent:  Does this provision also 
apply to loans forgiven by the public authorities, including the tax authorities?  Does the measure not 
have the same effect as increasing the amount of any loan forgiveness?  If not, please explain why 
not. 
 
Q11:  Energy Conservation Programmes, Transportation sector:  What proportion of the 
appropriations were granted to ve hicle manufacturers?  Is there any requirement for the research 
results to be made available publicly or to other companies? 
 
FISHERIES:    
Q12:  The document with the US replies (G/SCM/Q2/ 27/USA) to the additional questions posed by 
the EC (G/SCM/Q2/USA/26) on the previous notifications by the US (G/SCM/N/48/USA G/SCM/N/60/USA G/SCM/N/71/USA) included on pa ge 3 a table titled “SUMMARY OF FISHERY 
DISASTER ASSISTANCE – (updated June 2002)”. This informati on was provided in reply to 
question 6 by the EC on the “Fisheries Disaster Relief” programmes.   G/SCM/Q2/USA/29 
 Page 3 
 
 
  The EC notes that the total sum of the “Fed eral amounts” listed in the aforementioned table 
under these programmes is $113.2M. The EC also notes th at this table was not included in the latest 
“New and Full Notification” by the US (doc. G/SCM/N/95/USA)   Given the significant total amount of the above-m entioned transfers, could the US provide an 
updated version of this information,  including new programmes if any? 
 Q13:  According to publicly available information, the Agricultural Marketing Service (AMS)  of 
the Department of Agriculture (USDA) has been  making purchases of Alaska salmon products during 
the period under review. The purchased products are th en distributed to participants in food assistance 
programmes.  Concerning the amounts involved in th e purchases, the same information suggests that 
the purchases for the period under review amounted to +
 $15M 
  Also according to the information availa ble to the public, the USDA/AMS makes these 
purchases of salmon products under its authority  to “encourage domestic consumption of 
commodities by diverting them from normal channels of commerce”.  
  As stated by the USDA in its “REPORT ON POUCHED AND CANNED SALMON” prepared for submission to Congress (May 2003) “T he aim of such surplus removal purchases is to 
remove excess supplies of product from the market, thus helping to raise prices for producers while 
benefiting recipients of the commodities”. All the above suggests that these purchases could be 
construed as a “price support” programme.  
  Could the US clarify whether these purchases have been included or not in previous 
notifications? If yes, could the US provi de details about the notification?  
 
Q14:  Empowerment Zones, etc:  Please clarify if the employment tax credit is for 20 per cent of the 
first $15,000 of qualifying wages for each  employee.  Does this apply to all employees, only to new 
employees or only to net increases in employees?  Please explain which sectors are excluded from the programme?  Please specify whether any large en terprises like steel producers have benefited from 
this programme. 
 
STATE LEVEL PROGRAMMES: 
 
Q15.  Alabama: The last US notification mentioned tax incentives and other advantages totalling 
USD 35 million or higher for the TRICO Steel Co mpany with 10 – 20 years duration. Can the US 
please explain if there were any subsidies made  available to this company during the present 
notification period? 
 
Q16.  Alaska: Commercial fishing revolving loan fund:  What are the conditions of eligibility?  Is 
there any check on the creditworthiness of the beneficiar y?  What is the size of the average loan given 
and what is the maximum loan amount? 
 
Q17.  Arkansas: Econ Devt Act:  For how long can the tax credit be used?  Only in the year of the 
investment, over a number of years or indefinitely? Please clarify if the value of the credit is 50 to 100 per cent of the employer's state income tax liability, or of the total investment. 
 
Q18.  California:   Enterprise Zones and LAMBRA zones: Is the hiring credit for all new 
employees or only for net increases in employees?  Does the 15-year carryover of operating losses not 
have the same effect as a grant covering these losses at  the time they are set against later profits?  If 
not, please explain why not. 
 G/SCM/Q2/USA/29 
Page 4  
 
 Q19.  California: Recycling Mark et development Zone Programme:  What are the terms and 
conditions attached to the loans under this programme? 
 
Q20.  Colorado: Enterprise Zones:  Are there any limitations on sector s eligible for this programme?  
Is there any limit on the 3 per cent tax credit for R&D expenditures?  
Q21.  Connecticut: Connecticut Growth Fund:  On what basis does the authority determine 
working capital requirements?  Given that the pur pose is to make finance available to businesses 
unable to maintain conventional finance, is the pr ogramme open to loss-making enterprises?  On what 
terms are the loans given?  
Q22.  Connecticut: Electronic Data Processing etc:  Please explain the reason for a sectoral 
programme in this sector. 
 
Q23.  Connecticut: Enterprise Zones:  Are there any sectoral limitations on this programme?  Is 
there any maximum level of benefit under the 50 per cent tax credit?  What has been the total revenue 
forgone under this programme?  Have any en terprises from the steel sector benefited? 
 
Q24.  Connecticut: Manufacturing Assistance Act: What are the terms of the loans?  Is there any 
maximum amount?  Are any sectors excluded?  Have enterprises in any of the following sectors benefited: steel?  
Q25.  Connecticut:  Manufacturing Credits:  Are these credits additional to those available under 
other programmes? 
 
Q26.  Florida: Capital Investment Tax Programme:  This programme appears to give higher 
(indeed possibly total) tax exemption for large projects than for smaller ones.  Wh at is the justification 
for this?  How many large projects (i.e. over 100m  USD) have benefited from this programme?  For 
how long has the tax exempti on been granted in these cases? 
 
Q27.  Florida: High Impact Business Performance Incentive: What is the average level of grant 
under this programme?  
Q28.  Florida: Qualified Target Industry Tax refund:  Does “primary/fabricated metals” include 
the steel sector? 
 
Q29. Florida:  Semiconduct Defence or Space Technology:  Please specify the rate of sales tax 
which would otherwise apply were it not exempted under this programme. 
 
Q30.  Georgia: Head Quarters tax credit:  Please explain the sentence:  ‘The company must elect 
not to take the job or investment tax credit’. 
 
Q31.  Georgia: Sales tax exemption: Please specify the rate of sal es tax which would otherwise 
apply were it not exempted under this programme. 
 
Q32.  Idaho: Sales Tax Production Exemption:  Please specify the rate of sales and use taxes which 
would otherwise apply were it not exempted under this programme. 
 
Q33.  Indiana: DeKalb and Spencer Counties:  Please explain the justification for subsidies of 
$160m for the creation of new steel-making capacity. 
 
Q34.  Iowa: Ipsco:  Please explain the justification for s ubsidies of $73m for the creation of new 
steel-making capacity.  G/SCM/Q2/USA/29 
 Page 5 
 
 
  
Q35.  Kentucky: KIDA/KREDA:  Is there any limit on the size of enterprise or project that can 
benefit under these programmes?  What are th e largest projects to benefit to date? 
 
Q36.  Michigan: Job creation tax credits:  Please specify the number and size of projects that have 
benefited under this programme, and the sectors involved.   
 
Q37.  Mississippi: State Port Income Tax Credit: Is this tax credit only applicable for charges 
related to export cargo? 
 
Q38.  New Mexico: Property Tax Abatement:  Please specify the range of ad valorem tax rates 
which are exempted by this programme. 
 
Q39.  Ohio: Steel Development Initiative:  Please specify how it is determined that a job has been 
‘retained’.  Does it imply that the job would have be en lost in the absence of the subsidy?  Are loss 
making enterprises eligible? 
 
Q40.  Utah: Corporate Loan Programme: Does this programme consist of loans or grants? What 
are the maximum amounts involved, how many companies benefited from this programme? 
 
Q41.  Washington: Ships and Vessels under Construction: What are the average amounts of tax 
exemptions granted? Does the tax exemption concern the property tax of the shipyard as such or the 
vessel?  
 
 
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