WORLD TRADE G/SCM/N/16/EEC/Suppl.2
15May1997
ORGANIZATION(97-2032)
Original: English Committee onSubsidies andCountervailing Measures
SUBSIDIES
Updating Notification Pursuant toArticle XVI:1 oftheGATT 1994
andArticle 25oftheAgreement onSubsidies and
Countervailing Measures
EUROPEAN COMMUNITIES
Supplement
Thefollowing communication, dated 5May1997, hasbeenreceived from thePermanent
Delegation oftheEuropean Commission.
_______________
Thefollowing pages should beattached totheendofdocument G/SCM/N/16/EEC -page670.G/SCM/N/16/EEC/Suppl.2
Page2
UNITED KINGDOM
CONTENTS
Page
1. Selective financial assistance -Industrial development loans .................3
2. Selective financial assistance -Acquisition ofshare capital ..................3
3. Selective financial assistance -Industrial development grants .................4
4. Regional selective assistance .....................................5
5. Energy efficiency bestpractice scheme ...............................5
6. Civil aircraft research anddemonstration programme ......................6
7. Linkinitiative ..............................................7
8. EUREKA .................................................8
9. Advanced technologies programme .................................9
10 Home shipbuilding credit guarantee scheme ...........................9G/SCM/N/16/EEC/Suppl.2
Page3
1. SELECTIVE FINANCIAL ASSISTANCE -INDUSTRIAL DEVELOPMENT LOANS
(a) Form ofsubsidy
Loans.
(b) Period covered bynotification
1995-1996.
(c) Policy objective
Theaimofthescheme istoassist industry inaseverely depressed areaoftheUKtoexpand
andthuscreate employment.
(d) Background authority forthescheme
TheIndustrial Development (Northern Ireland) Order 1982 Section 30.
(e) Towhom andhowthesubsidy isprovided
Thesmall business agency forNorthern Ireland (LEDU) actsasasecond lender andrarely
lends without thepresence ofprimary commercial funds. Careful consideration isgiven tothereasons
fortheinability ofthecompany toraisethefunds required from abankorother lending institution
before LEDU agrees toactasthesolelender. Normally loans arerequired tohaveadequate security
fromthecompany orfromasuitable guarantor butunsecured loans ofupto£10,000 maybeoffered.
Theperiod oftheloanisnegotiated witheachindividual company andnormally reflects thecompany 's
ability torepay. Asageneral ruleLEDU provides medium-term (3-10 years) loans although shorter
terms areconsidered.
(f) Total amount budgeted
£2,064,000.
(g) Duration ofprogramme
Indefinite.
(h) Assessment oftrade effects
None. Theobject ofthescheme istohelpcompanies inseverely deprived areasandonlythose
companies which havenoother means ofobtaining aloanareconsidered forthisscheme.
2. SELECTIVE FINANCIAL ASSISTANCE -ACQUISITION OFSHARE CAPITAL
(a) Form ofsubsidy
Acquisition ofshare capital.
(b) Period covered bynotification
1995-1996.G/SCM/N/16/EEC/Suppl.2
Page4
(c) Policy objective
Topromote thecreation ofmore start-up businesses capable ofsurvival.
(d) Background authority forthescheme
TheIndustrial Development (Northern Ireland) Order 1982 Section 30.
(e) Towhom andhowthesubsidy isprovided
Withanupper limitof£250,000 investment isnormally restricted totheredeemable preference
shares ofacompany foratermoffiveyears. LEDU willusually seekaminimum rateofreturn on
itsshareholdings which equates withtheBroadly Commercial Rateofinterest which itcharges for
itsloans. Theterms andconditions attached toaLEDU investment intheshare capital ofthecompany
arenegotiated witheachcompany anddocumented inalegally binding share agreement.
(f) Total amount budgeted
£1,072,000.
(g) Duration ofprogramme
Indefinite.
(h) Assessment oftrade effects
None. Thescheme isdeliberately designed tohelpsmall companies butcareistaken toensure
thatthere isnodisplacement.
3. SELECTIVE FINANCIAL ASSISTANCE -INDUSTRIAL DEVELOPMENT GRANTS
(a) Form ofsubsidy
Capital Grants.
(b) Period covered bynotification
1995-1996.
(c) Policy objective
Capital grants forSMEs.
(d) Background authority forthescheme
TheIndustrial Development (Northern Ireland) Order 1982 Section 30.
(e) Towhom andhowthesubsidy isprovided
Thisscheme isaimed primarily atsmall andmedium-sized enterprises. Capital grants ata
maximum rateof30%maybeavailable towards thecostofnewbuildings, machinery andequipment
whether purchased orleased.G/SCM/N/16/EEC/Suppl.2
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(f) Total amount budgeted
£74,387,000.
(g) Duration ofprogramme
Indefinite.
(h) Assessment oftrade effects
Thisaidisintended topromote theeconomic development ofaregion where there issevere
under employment. Itisavailable exclusively toSMEs.
4. REGIONAL SELECTIVE ASSISTANCE
(a) Period covered bynotification
1995-1996.
(b) Policy objective
Toassist economic development inareas ofspecial hardship.
(c) Background authority forthescheme
TheIndustrial Development Act1982.
(d) Towhom andhowthesubsidy isprovided
RSAisawardedtocompaniesinareaswhichtheUKconsidertobeinneedofadditionalsupport.
These arecalled Assisted Areas andhavediffering levels ofsupport -Intermediate Areas attract 20%
support. Development Areas attract 30%support. TheUKauthorities mustsubmit amapshowing
those areas ofthecountry thattheywishtoaccord assisted areas status tothecompetition directorate
oftheECCommission atregular intervals.
(e) Duration ofprogramme
Indefinite.
(f) Assessment oftrade effects
Thisscheme isdesigned tohelpareas ofspecial difficulty tocompete onlevelterms withmore
advantaged regions.
5. ENERGY EFFICIENCY BEST PRACTICE SCHEME
(a) Period covered bynotification
1995-1996.G/SCM/N/16/EEC/Suppl.2
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(b) Policy objective
Theaimofthescheme istoencourage thedevelopment andtake-up ofenergy efficient
technologies andtechniques. Thebulkofthescheme involves theappraisal anddissemination of
information onenergy efficiency measures. Under theR&D element ofthescheme support isoffered
forbasic R&D leading totheacquisition ofbasic knowledge required forsubsequent development of
energy efficiency measures which doesnotleaddirectly toanynewproduct orprocess asanimmediate
outcome.
(c) Background authority forthescheme
Science andTechnology Act1965.
(d) Towhom andhowthesubsidy isprovided
Support ofupto49%isoffered totwoormore companies working together except where
theEuropean Union hasagreed lower limits. Upto100% mayalsobemade available forfundamental
research toincrease scientific knowledge orprovide generic background information tounderpin
subsequent basic research. Such support forfundamental research isonly offered toresearch
organizations andnottomanufacturers.
(e) Duration ofprogramme
Until theyear2000.
(f) Total amount budgeted
£3.6million.
(g) Assessment oftrade effects
None since theprogramme isaninformation transfer scheme.
6. CIVIL AIRCRAFT RESEARCH AND DEMONSTRATION PROGRAMME
(a) Form ofsubsidy
Grant.
(b) Period covered bynotification
1995-1996.
(c) Policy objective
Scheme designed tosupport theshaping oftheresults ofindustrial research intoaplan,
arrangement ordesign fornewaltered orimproved products, processes orservices, wether theyare
intended tobesoldorused, including thecreation ofaninitial prototype which could notbeused
commercially. Thismayalsoinclude theconceptual formulation anddesign ofotherproducts, processes
orservices andinitial demonstration projects, provided thatsuchprojects cannot beconverted orused
forindustrial applications orcommercial exploitation.G/SCM/N/16/EEC/Suppl.2
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(d) Background authority forthescheme
Civil Aviation Act1982.
(e) Towhom andhowthesubsidy isprovided
Support ofupto25%ofeligible costsforprojects forsingle firms intheairframe andpropulsion
systems technology areas, upto50%ofeligible costs forcollaborative projects inallcivilaircraft
technology sectors. Beneficiaries include universities, research establishments andsingle companies.
(f) Annual amount budgeted (1996-1997)
£22.7 million.
(g) Duration ofprogramme
Until 1999.
(h) Other points
CARAD doesnotform partoftheAirbus programme.
7. LINK INITIATIVE
(a) Period covered bynotification
1995-1996.
(b) Policy objective
Scheme encourages collaborative research between industry andacademia. Thescheme covers
nanotechnology,molecularelectronics,advancedsemiconductormaterial,industrialmeasurementsystems
andeukaryotic genetic engineering.
(c) Background authority forthescheme
Science andTechnology Act1965.
(d) Towhom andhowthesubsidy isprovided
Aidof50% ofeligible costs isgiven toavariety ofrecipients which include industrial
organizations, research associations, government bodies andindividual companies.
(e) Total amount budgeted
£30million.
(f) Duration ofprogramme
Programme renotified onanannual basis.G/SCM/N/16/EEC/Suppl.2
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(g) Assessment oftrade effects
CollaborativeR&DschemeswereestablishedtoassistUKindustryinmaintainingandimproving
itscompetitive position byundertaking pre-competitive innovative R&D projects which would after
DTIsupport ended, leadtothedevelopment ofimproved processes andproducts.
8. EUREKA
(a) Form ofsubsidy
Grant.
(b) Period covered bynotification
1995-1996.
(c) Policy objective
EUREKA aimstoencourage andassist collaborative research anddevelopment projects between
European companies, research organizations andhigher education institutes. Eureka 'soverall aim
istoenhance theproductivity andcompetitiveness inworld markets. EUREKA hasnorigidprogramme
andprojects canbeinanytechnology area, buteachproduct aimstoachieve asignificant advance
inproducts, processes orservices forthemarket through themechanisms ofEuropean cooperation.
(d) Background authority forthescheme
EUREKA ispartofanEUwideR&D initiative setinplace bytheCommission.
(e) Towhom andhowthesubsidy isprovided
EUREKA isnotinitself afunding mechanism forsupporting EUREKA projects. However,
incommon withmost other EUREKA Member States theUKprovides funding support toproject
participants insome instances. However, many projects goahead without public funding.
SMEs, research organizations anduniversities areeligible forfunding upto50%ofeligible
costs. Large companies arealsoeligible forsupport. Thegrant levelisnegotiable upto25%ofeligible
costs uptoamaximum of£250,000 percompany. Large companies aremore likely tobeoffered
funding iftheyarepartnering anumber ofUKSMEs inacluster project. Alltypes oforganizations
areeligible for50%ofputting projects together e.g.researching potential partners andvisiting them
todiscuss collaboration.
(f) Total amount budgeted
£13million.
(g) Duration ofprogramme
Nofixed cut-off date.
(h) Assessment oftrade effects
Thisisalsoacollaborative scheme therefore thecomments forLINK arealsovalid.G/SCM/N/16/EEC/Suppl.2
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9. ADVANCED TECHNOLOGIES PROGRAMME
(a) Form ofsubsidy
Grant.
(b) Period covered bynotification
1995-1996.
(c) Policy objective
Support ofpre-competitive, collaborative research inkeyenabling technologies toenable the
accelerated application ofthese keytechnologies toproducts andprocesses. Programmes within the
scheme havetypically included Speech andLanguage Technology, Superconductivity andInformation
engineering. Support wasintheform ofgrants paidasaproportion ofeligible project costs.
(d) Background authority forthescheme
Science andTechnology Act1965.
(e) Towhom andhowthesubsidy isprovided
TheATPscheme encouraged small andmedium-sized enterprises andacademia toparticipate
inprojects. Industrial collaborators wereexpected tobecapable ofexploiting theresults ofprojects
unaided. TheResearch Councils supported some oftheprogrammes, usually where higher education
institutions were involved. Thescheme wasclosed inAugust 1993.
(f) Total amount budgeted
£13million.
(g) Duration ofprogramme
Programme closed August 1993.
(h) Assessment oftrade effects
Seeprevious entries forcollaborative programmes.
10. HOME SHIPBUILDING CREDIT GUARANTEE SCHEME
(a) Form ofsubsidy
Loan guarantee atfixed rateofinterest.
(b) Period covered bynotification
Thescheme isexpected tocontinue incurrent formuntilanOECD Agreement onShipbuilding
Subsidies isratified.G/SCM/N/16/EEC/Suppl.2
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(c) Policy objective
Under theHome Shipbuilding Credit Guarantee Scheme theSecretary ofStateforTrade and
Industry mayguarantee therepayment ofloans (andthepayment ofrelated interest) made tobodies
forthepurpose offinancing theconstruction, completion oralteration ofships andmobile offshore
installations atayardfirstapproved bytheSecretary ofState.
(d) Background authority forthescheme
Section 10oftheIndustry Act1972 (asamended bytheIndustry Act1979).
(e) Towhom andhowthesubsidy isprovided
Shipowners, bywayofafixed rateofinterest (7.5% onloanrepayment periods ofupto8.5
years, Commercial Interest Reference Rateforloanrepayment periods ofbetween 8.5and12years)
andinterest equalization arrangements withthebanks.
(f) Subsidy perunit
Varies according tolength ofloan, loanamount andfluctuating baserates.
(g) Total amount budgeted
£844,000.
(h) Duration ofprogramme
Seeabove.
(i) Assessment oftrade effects
TheaimoftheschemeistoensurethatUKbuyersofshipshavefinancingarrangementsavailable
tothemwhich areasgoodasinother countries which aresignatory totheOECD Understanding, and
hence thatUKyards arenotdisadvantaged.