RESTRICTED
WORLD TRADE G/SCM/Q2/JPN/11/Suppl.1
20November 1997
ORGANIZATION(97-5106)
Original: English Committee onSubsidies
andCountervailing Measures
SUBSIDIES
Replies toQuestions from theUNITED STATES1andtheEUROPEAN COMMUNITY2
regarding theNewandFullNotification ofJAPAN3
Supplement
Thefollowing communication, dated 24October 1997, hasbeenreceived fromthePermanent
Mission ofJapan.
_______________
Uponinstructionsfrommyauthorities,IamsendingyouherewithJapan'srepliestothequestions
fromtheUnited States andtheEuropean Communities regarding theJapanese newandfullsubsidies
notifications.
Please notethattheattached isnotexhaustive andthatwearestillexamining thequestions
which havenotyetbeenreplied to.
REPLIES TOQUESTIONS POSED BYTHE UNITED STATES
Q.I. Please provide information concerning thefollowing programmes which didnotappear
tobeincluded within Japan 'snotification, yetmay meet thenotification requirements of
GATT 1994 and/or theSCM Agreement. Please include information relevant totheelements
requested inthenotification format, orexplain thebasis onwhich Japan determined thateach
programme didnotmeet thenotification requirements referenced above.
Subsidy topromote andfoster newcompanies oftheresearch anddevelopment typeor
knowledge pooling type.
Answer
Japan isgoing tonotify thesubsidy. Thepolicy objective ofthesubsidy istopromote venture
business andknowledge-intensive business ofSMEs.
1G/SCM/Q2/JPN/7.
2G/SCM/Q2/JPN/4 &G/SCM/Q2/JPN/10.
3G/SCM/N/3/JPN +Rev.1, Corr.1 &Suppl.1.G/SCM/Q2/JPN/11/Suppl.1
Page2
Q. Interest subsidy ofmedium andsmall sized company disaster restoration fund.
Answer
Thepolicy objective ofthesubsidy istosupport theSMEs struck byserious disasters such
astheGreat Hanshin-Awaji Earthquake, which hitKobe in1995.
Thesubsidy iseligible toalltheSMEs struck byserious disasters.
Q. Subsidies totheCentre forDevelopment ofPower Supply Region (CPR).
Answer
Thesubsidies seem tocorrespond tothefollowing twoprogrammes:
1. ThePromotion oftheEstablishment ofEnterprises inDepopulated Power Supply Regions.
Thepolicyobjectiveofthisprogrammeistopromotethelocationofenterpriseswhichcontribute
tothesound development ofpower supply regions which meetanyoftheconditions asfollows:
(1) depopulated regions
(2) industrial coalregions
(3) nuclear power sitesregions, etc.
2. TheSupport forImprovement oftheLiving Environment intheRegions Surrounding Nuclear
Power Plant Facilities.
Thepolicy objective ofthisprogramme istopromote thelocation ofenterprises inandaround
theareas where nuclear power plants arelocated, through theassistance totheprojects thatinstall
commercial-use facilities, accommodation, etc.
Q. "Sunshine"and"Moonlight"Projects-concernedwithdevelopingalternativeenergysources,
e.g.solar power andenergy conservation. Arethefollowing programmes partoftheSunshine
andMoonlight Projects?
Development ofNewandPractical Technology forPower Generation (MITI)
Development ofPractical Technologies related toEnergy Rational Use
Development ofPractical Technologies related toOil-Substitute Energy (MITI)
Answer
TheSunshine Project andtheMoonlight Project wereterminated in1993. Theprogrammes
which theUSlisted above werenotpartofthese twoprojects. Theprogrammes which theUSlisted
above werenotpartofthese twoprojects. Theprogramme which hasreplaced these twoprojects is
the"New Sunshine Programme". Japan isgoing tonotify theprogramme.
Thepolicy objective oftheproject istheefficient andaccelerative promotion oftheinnovative
technology development tosupport sustainable economic growth andtosolve energy andenvironmental
issues.G/SCM/Q2/JPN/11/Suppl.1
Page3
Q. - "Large Scale Project" -research anddevelopment ofnewtechnologies.
- Project onBasic Technologies forFuture Industries -developing innovative basic
technologies intheareas ofsuperconductivity, newmaterials, biotechnology,
electronics andsoftware.
Answer
These projects wereterminated in1993, when theywereintegrated intothe"Industrial Science
andTechnology Frontier Programme". (Please refertotheanswer tothequestion ontheIndustrial
Science andTechnology Frontier Programme).
Inaddition, thecorrect titlesoftheLarge Scale Project andtheProject onBasic Technologies
forFuture Industries were the"National R&D Programme" andthe"R&D Programme ofBasic
Technologies forFuture Industries".
Q. Micromachine Technology Project (added totheLarge Scale Project in1991).
Answer
Theproject isapartofthe"Industrial Science andTechnology Frontier Programme". (Please
refertotheanswer tothequestion ontheIndustrial Science andTechnology Frontier Programme).
Q. TheLawofTemporary Measures toFacilitate Industrial Structural Adjustment, 87-96.
Answer
Japan isgoing tonotify thesubsidies provided under thelaw. Thesubsidies wereterminated
when thelawwasabolished inMay1996. Thepolicy objective ofthelawwastopromote economic
development ineconomically distressed areas byfacilitating industrial structural adjustment.
Q. Facilitation Fund forIndustrial Structural Adjustment (FFISA).
- Financial assistance forfacilitating adjustment isprovided byconcessional loan, loan
guarantees andequity capital infusions.
Answer
Japan isgoing tonotify theFacilitation Fund. TheFacilitation Fund isoneofthesubsidies
providedundertheLawofTemporaryMeasurestoFacilitateIndustrialStructuralAdjustment.Itconsists
ofthe"Fund forEquity Capital Infusions forIndustrial Structural Adjustment" andthe"Facilitation
Fund forIndustrial Structural Adjustment".G/SCM/Q2/JPN/11/Suppl.1
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Q. Industrial Science andTechnology Frontier Programme (ISTF) -Initiated in1993, the
programme isbasically arestructuring ofthree previous MITI programmes: theNational R&D
Programme; R&D Project ofBasic Technologies forFuture Industries; andNational R&D
Programmes forMedical andWelfare Apparatus.
Thisnewprogramme promotes fundamental andcreative research anddevelopment for
purposes ofcontributing toconstruction offuture industry andtechnology.
Answer
Japan isgoing tonotify theprogramme.
Thepolicy objective oftheprogramme istocontribute tothesustainable development ofnot
onlyJapan, butalsointernational economy andsociety, through fundamental andcreative R&D, etc.
Q. MITI Research andDevelopment Subsidies totheBase Technology Research Promotion
Centre inthefollowing areas:
Large-surface thinpanel image display devices forcomputers
Optional photoengraving systems
Two-dimensional image sensors
Ultra-thin photocopying system
Book-size computers
Optical computers
Large-surface thin-film solar cells
Large-surface thin-profile flatlightsources
Large-surface precision glass substrate technology
Large-surface high-fidelity thinfilm,technology (ultra thinfilmforhigh-density recording
ofdigital sounds)
High functional liquid crystal materials technology
Large-surface precision assembly technology
Answer
Thecorrect name oftheCentre isthe"Japan KeyTechnology Centre". Japan isgoing tonotify
theprogramme conducted bytheCentre.
Thepolicy objective oftheprogramme istocontribute totheprogress ofkeytechnologies
intheprivate sector. Inaddition, theprojects which theUSmentioned inthequestion arenotprojects
under theprogramme.
Q. Development expenditure subsidies forthecommercialization ofenergy-related technology.
Answer
Japan isgoing tonotify thesubsidies.
Thepolicyobjectiveofthesubsidiesistocontributetotheestablishmentofthestableandrational
structure insupply anddemand ofenergy, thereduction oftheoil-dependence proportion andthestable
supply ofelectric power.G/SCM/Q2/JPN/11/Suppl.1
Page5
Q. Research andDevelopment Association forFuture Electron Devices.
Answer
TheAssociation isconducting theQuantum Functional Devices Project under theIndustrial
Science andTechnology Frontier Programme. (Please refer totheanswer tothequestion onthe
Industrial Science andTechnology Frontier Programme.)
Q. Subsidization ofIntegrated CoalGasification Combined Cycle (ICGCC), power generation
technology bytheNew Energy andIndustrial Technology Development Organization and,
specifically, theEngineering Research Association forIntegrated Coal Gasification Combined
Cycle Power System.
Answer
Japan isgoing tonotify thesubsidization.
Thepolicy objective ofthesubsidization istoassist theactivities ofthe"New Energy and
Industrial Technology Development Organization (NEDO)" which isapublic body, fordeveloping
integrated coalgasification combined cycle power generation technology.
Thecooperation ofelectric power industry forIntegrated CoalGasification Combined Cycle
PowerSystemisconductingtheR&Doftheintegratedcoalgasificationcombinedcyclepowergeneration
technology, which wasentrusted byNEDO.
Q. TheRealWorld Computing (RWC) Programme.
Answer
Japan isgoing tonotify theprogramme.
Thepolicy objective oftheprogramme istoestablish aseries offundamental information
processing technologies suchasinnovative computing technologies.
Q. TheMicromachine Centre (MMC).
Answer
TheCentre isaR&D institute, andconducting apartoftheMicromachine Technology Project
under theIndustrial Science andTechnology Frontier Programme. (Please refertotheanswer tothe
question ontheIndustrial Science andTechnology Frontier Programme).G/SCM/Q2/JPN/11/Suppl.1
Page6
REPLIES TOQUESTIONS POSED BYTHE EUROPEAN COMMUNITY
Q. II-9. Incentives under theIndustrial Structure Improvement Fund (ISIF)
- Pursuant totheLawofTemporary Measures toFacilitate Industrial Structural
Adjustment, theISISgrants interest ratesubsidies, equity capital and/or loan
guarantees toindustries located ineconomically depressed areas. Theinterest
rateis4.2%; theequity capital infusion isupto¥0.5billion andtheloanguarantee
covers upto100% oftheloan.
- TheCommunity requests Japan tonotify thisprogramme under Article 25.Could
Japan provide thecriteria foreconomically distressed areas?
Answer
Japan isgoing tonotify theIncentives under theISIF. TheLawwasabolished inMay1996,
andtheincentives provided intheLawwere terminated accordingly.
Thepolicy objective oftheLawwastofacilitate theindustrial structural adjustment in
economically distressed areas. Thecriteria foreconomically distressed areas were asfollows:
1. Thetotalvalue oftheindustrial shipments ofcertain enterprises intheareaexceeds thefixed
ratio(generally 40%) ofthetotalindustrial shipments ofthearea.
2. Thetotalvalue oftheindustrial shipments ofenterprises intheareaislessthanfixed ratio
(generally 15%) ofthetotalvalue ofthepreceding year.
3. Thetotalvalue oftheindustrial shipments ofenterprises intheareaexceeds thegiven amount,
suchasgenerally ¥30billion fortheareawhose population isunder 30,000, ¥10billion and
fortheareawhose population isunder 10,000, ¥5billion.
4. Therateoftheeffective demand forlabour intheareaislessthantwo-thirds ofthenational
average.
FOLLOW-UP QUESTION FROM THE EUROPEAN COMMUNITY
Q. C3. Central Government -subsidy forcommercialization ofenergy-saving technology.
Once again, thecriteria areframed insuchawaythataccess willinevitably be
limited tocertain types ofenterprises.
Answer
Japan isgoing tonotify thesubsidies.
Thepolicyobjectiveofthesubsidiesistocontributetotheestablishmentofthestableandrational
structure insupply anddemand ofenergy, thereduction oftheoil-dependence proportion andthestable
supply ofelectric power.