WORLD TRADE
ORGANIZATIONG/SCM/N/48/ISL
23 June 1999
(99-2552)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Updating Notifications Pursuant to Article XVI:1 of
the GATT 1994 and Article 25 of the Agreement
on Subsidies and Countervailing Measures
ICELAND
The following communication, dated 14 June 1999, has been received from the Permanent
Mission of Iceland.
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The Agricultural Sector
A. NAME OF PROGRAMME
1.1 Agricultural Agreements;  Payments for sheep and milk production
(Budget item no: 04-801 & 04-805)
B. RESPONSIBLE AUTHORITY
Ministry of Agriculture
C. POLICY OBJECTIVE
Icelandic agricultural policy is implemented in pursuit of objectives which include self-
sufficiency for the country's major commodity production;  using domestic inputs to the extentpossible;  increasing efficiency in the agricultural food sector;  using export opportunities to the extent
feasible; securing an equitable income for farmer s; and integrating environmental issues with the
agricultural policy.
D. F
ORM OF SUBSIDY
As of 1993, direct payments to producers have been replaced consumer subsidies for sheep
meat and milk respectively.  Allocations for the Agricultural Agreements are made under item no. 04-
801 and 04-805 of the Budget (Ministry of Agriculture).G/SCM/N/48/ISL
Page 2
E. AMOUNT OF SUBSIDY
The amount of support measured by total costs budgeted for 1997 are listed in the tables
below.
TABLE 1
Budget item no. 04-801, Agricultural Agreements, Million ISK
1997
Agricultural Productivity Fund 274.0
Market Regulation 429.3
Price Support (direct payments) 4206.4
TABLE 2
Budget item No. 04-805, Price Support, Million ISK
1997
Subsidies, wool 275.1
F. RULES AND CONDITIONS
Implementation of the agricultural policy revolves around Agricultural Agreements
negotiated between the Government and the Farmer's Union. Under Act No. 99/1993 on Production,
Pricing and Sales of Agricultural Products, the Minister of Agriculture is given the authority tonegotiate with the Farmer's Union on behalf of the Government of the quantity of milk and sheepmeat
for which the State will guarantee administered prices.
Support is provided for milk, sheepmeat, wool and market regulation.
(i) The milk sector
Milk producers receive direct payments from the Government on produced quantity within
individually allocated quantity-limiting quotas.  The amount of monetary support for each litre of milk
delivered the dairies is equal for all producers in Iceland.
(ii) The meat sector
Producers of sheepmeat receive direct payments form the Government on produced quantity
within individually allocated quantity-limiting quotas.  The amount of monetary support for each
kilogramme of sheepmeat delivered to the slaughterhouses is equal for all producers in Iceland.
(iii) Wool
Wool scouring plants receive a support, which maintains the Icelandic producer price for
wool above the world market price level.
(iv) Market regulation
Market regulation funds are used to pay for stockholding costs, marketing efforts and
withdrawal of quota of sheepmeat.  Due to the relati vely short slaughter period (on average about six
weeks in the months of September and October) accumulation and holding of stocks of sheepmeat
between slaughter periods is necessary as a safety measure to ensure supply.  Specific marketingG/SCM/N/48/ISL
Page 3
efforts geared towards sheepmeat are included under this heading along with costs associated with
permanent withdrawal of quota of sheepmeat.
Of the above-mentioned programmes, direct payments to dairy producers and sheepmeat
producers are granted directly to farmers.  The rest to the programmes are market regulation schemes.
G. DURATION
The agreements will terminate at the end of 1998 (dairy farmers) and at the end of 2000
(sheep farmers).
H. LEGAL BASIS
Act No. 99/1993 on Production, Pricing and Sale s of Agricultural Products.  The Budget.
I. TRADE EFFECTS
An assessment of the trade effects of the subsidies is not available.  Below, in Tables 3 and 4
there is however, presented statistics on production, consumption and exports of the pertinent
agricultural commodities.
TABLE 3
Quantity of milk received by dairies and calculated consumption by fat content
of milk-derived products (1000 litres)
Year Milk
received  by
dairiesCream Yoghurt
products, etc.Butter Cheeses Skimmed
milk
powder, etc.
1996    101,643   16,134        2,791   25,339     20,846      1,973
1997 101,945 16,029 2,531 24,786 21,697 1,341
TABLE 4
Quantity of sheepmeat (in 1000 kilogrammes)
Year Production Export Consumpti
on
1996 8,131 2,942 6,941
1997 7,903 1,046 6,717G/SCM/N/48/ISL
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2. Support for R&D and Technological Innovation
A. NAME OF PROGRAMME
2.1. Technology fund
B. R ESPONSIBLE AUTHORITY
Icelandic Research Council which is under the supervision of the Ministry of Culture and
Education.
C. P OLICY OBJECTIVES
The objective of the Technology Fund is to facilitate innovation through supporting research
and technological development.
D. A MOUNT AND FORM OF SUBSIDY
The amount of subsidy and number of projects in 1997
TF Scheme Million ISK No. of projects
General project support 168 121
Transfer of knowledge 12 10
Cooperation 19 69
Grants are awarded through three different schemes, general projects, transfer of knowledge
and cooperation projects.
General projects are RTD projects.  The fund contributes on average 30-40 per cent of the
total cost of the projects.  The participants pay the rest from industry and RTD institutions.
Transfers of knowledge projects are granted to companies lacking technical know-how but
planning to initiate RTD activities to increase th eir technological competence.  The grant is intended
to pay half the labour cost of one technician.
Cooperation projects are both preprojects to investigate and plan future RTD projects and
travel grants for companies and RTD institutions interested in European multinational projects.
E. R ULES AND CONDITIONS
Subsidies are granted only on the basis of project applications and all projects are cofinanced.
There is not formal upper limit for support, but the average support granted is around 30 per cent of
total project expenses.  There are only matching grants and applicants finance the remaining costs by
own funding.  Support is granted to universities, public research institutes business enterprises and
individual scholars. All categories of applicants regardless of the branch of industry are eligible.
F. L EGAL BASIS
Act no. 61/1994 on the Icelandic Research Council, as amended by Act No. 44/1995.G/SCM/N/48/ISL
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G. T RADE EFFECTS
The support is granted to a variety of small projects and sectors, therefore it is difficult to
present statistical data permitting an assessment of trade effects.
H. D URATION
There is no time limit but the Act governing the operation of the fund is due for revision in
1999.
A. N AME OF PROGRAMME
2.2. Support for R&D in marine aquaculture
B. R ESPONSIBLE AUTHORITY
Ministry of Fisheries.
C. P OLICY OBJECTIVE
To enhance scientific knowledge in marine aquaculture.
D. F ORM OF SUPPORT
Grants.
E. A MOUNT OF SUPPORT
1997
Million ISK    19
F. R ULES AND CONDITIONS
Grants are awarded on the basis of applications evaluated by a special committee.
G.  D URATION
There is no time limit, but each programme is decided on for a year at a time.
H. L EGAL BASIS
The Budget  item 05-190.
I. T RADE EFFECTS
There is no trade effect due to limited support.G/SCM/N/48/ISL
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3. Support to Small and Medium-Sized Companies.
A. N AME OF PROGRAMME
3.3. Job Creation Initiative
(Budget item 11-299-148)
B. R ESPONSIBLE AUTHORITY
IceTec, under the auspices of the Ministry of Industry and Commerce
C. P OLICY OBJECTIVE
The objective is, to increase the knowledge and competence of entrepreneurs and small and
medium-sized enterprises such as in managing, financing, product development, marketing andinnovation.
D. F
ORM OF SUPPORT
Cost items incurred for consultants, product development, marketing and innovation are
eligible for grants.  Support shall in general not co ver more than 30 per cent of eligible expenses and
must not exceed 50 per cent.
E. A MOUNT OF SUPPORT
1997
Million ISK 81
F. R ULES AND CONDITIONS
Firms and individuals having a registered domicile in Iceland can apply for a grant.
Individuals who apply for grants according to these rules must declare that they have not received a
grant from the Government amounting to more than ISK 8.4 million (100,000 ECU) last 3 years, the
grant applied for included. In this context, special grants for investment are not included. Some ISK
33 Million of the amount is allocated to firms and individuals located in rural areas not enjoying the
ongoing development of hydropower an d related industrial development.
G. D URATION
There is no time limit, but each programme is decided on for a year at a time.
H. L EGAL BASIS
The Budget.
I. T RADE EFFECTS
There are no trade effects of the support due to the general framework of the scheme and
limited support.G/SCM/N/48/ISL
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4. Support for Employment and Training
A.  N AME OF PROGRAMME
4.1 Vocational Training Fund.  Support for Vocational Training
B. R ESPONSIBLE AUTHORITY
Ministry of Social Affairs, Directorate of Labour.
C.  P OLICY OBJECTIVE
The main purpose of this programme is to maintain and develop vocational skills, in most
cases for people already employed.
D.  F ORM OF SUBSIDY
Grants.
E. A MOUNT OF SUBSIDY
Actual total expenditure in 1997: ISK 17.9 million.Through the programme 31 recipients have received 69 different vocational training courses.
Most of these recipients are non-profit or public organizations
F. R
ULES AND CONDITIONS
Grants to organizations on application to the Vocational Training Fund mainly to make
curriculum or other teaching materials for the vocational training courses.
G.  D URATION
The programme started in 1992.  Duration has not been specified.
H.  L EGAL BASIS
Act No.19/1992 on Vocational Training, the Budget, item No.07-984.
A. N AME OF PROGRAMME
4.2.  Employment Opportunities for Women in Rural Areas.
B.  R ESPONSIBLE AUTHORITY
Ministry of Social Affairs, Directorate of Labour.
C. P OLICY OBJECTIVE
The main purpose of this programme is to create new jobs among women.  Areas where high
unemployment is among women will especially be considered.G/SCM/N/48/ISL
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D. F ORM OF SUBSIDY
  Grants, up to 50 per cent of primary R&D cost s, innovation costs and cost of new products,
process and systems for industrial production.  Directorate of Labour pays the grants and controls
their disposition.
E. A MOUNT OF SUBSIDY
Actual total expenditure in 1997: ISK 3.5 million.It is difficult to give exact information on how many jobs have been created or maintained, as
many of these new jobs are just part time jobs.
F. R
ULES AND CONDITIONS
Grants to women on application to the Directorate of Labour mainly to new product
developing and marketing.  The grant can also be given to companies, which have been established by
women.
G. D URATION
The programme started in 1990.  Duration has not been specified.
H. L EGAL BASIS
Governmental decision from 1990, the Budget item no.07-984.
A. N AME OF PROGRAMME
4.3. Vocational Rehabilitation and Employment of Disabled Persons
B. R ESPONSIBLE AUTHORITY
Ministry of Social Affairs.
C. P OLICY OBJECTIVE
The main purpose of this programme is to rehabilitate disabled persons.
D. F ORM OF SUBSIDY
Gross wage subsidy to rehabilitation centres.
E. A MOUNT OF SUBSIDY
Actual total expenditure in 1997: ISK 103 million.G/SCM/N/48/ISL
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F. R ULES AND CONDITIONS
The rehabilitation centres must have an operating licence from the Ministry of Social Affairs
to apply to the Ministry for subsidies.  Mainly subsidies for salaries to disabled persons.
G. D URATION
The new programme started in 1992.  Duration has not been specified.
H. L EGAL BASIS
Act No.59/1992, Affairs of the Handicap Act and financed by the Budget item nos.  07.701,
07.702, 07.703, 07.706, 07.707, 07.708 and 07.711.
A. N AME OF PROGRAMME
4.4 Vocation Training in the Fishing Industry
(Budget item 05-190)
B. RESPONSIBLE AUTHORITY
Ministry of Fisheries
C. POLICY OBJECTIVE
The aim of the programme is to promote the quality awareness and the quality of the working
life within the industry with the aim to create better products and make the workers more pleased.
D. FORM OF SUBSIDY
Subsidy is in the form of grants, based on administration costs of seminars and training
programmes concerning training, quality, working conditions etc.  The aid is paid to consultant
companies concerned for general administration cost of the programme, such as salaries, travels,materials etc.
E. A
MOUNT OF SUBSIDY
Actual total expenditure in 1997: ISK 10 million.
F. RULES AND CONDITIONS
The programme is available to all domestic fish processing companies.
G. DURATION
No time limit, the amounts are decided on in the Budget each year.
H. LEGAL BASIS
The Budget item no. 05-190.G/SCM/N/48/ISL
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I. TRADE EFFECTS
It is not possible to measure trade effects.
5. Regional Support
A. N AME OF PROGRAMME
5.1. Assistance to Development ProjectsB. R
ESPONSIBLE AUTHORITY
Institute of Regional Development
C. P OLICY OBJECTIVE
The objective of the programme is to assist the economic development of the nationally
assisted areas of Iceland.  The assisted projects are very small and cover mostly product development,
marketing, training and feasibility studies.
D. F ORM OF SUBSIDY
Grants, up to around 40 per cent of project costs.  The institute has legal provisions for other
types of support.
E. A MOUNT OF SUBSIDY
Actual total expenditure in 1997: ISK 120 Million.
F. R ULES AND CONDITIONS
The programme is available to individuals, private companies, local development companies
and municipalities.
G. D URATION
The programme has no time limit, the amount is decided on in the Budget each year.
H. L EGAL BASIS
Act no. 64/1985 on the Institute of Regional Development, the Budget, item no. 01-221.
A. N AME OF PROGRAMME
5.2. Assistance to Local Economic Development
B. R ESPONSIBLE AUTHORITY
Institute of Regional DevelopmentG/SCM/N/48/ISL
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C. P OLICY OBJECTIVE
The objective of the programme is to assist local economic development companies in
providing counselling for small business in their area.
D. F ORM OF SUBSIDY
Grants of up to 50 per cent of specified running costs of counselling operations.
E. A MOUNT OF SUBSIDY
Actual total expenditure in 1997: ISK 45 Million.
F. R ULES AND CONDITIONS
The programme covers special counselling services to tourism in addition to counselling and
general economic development.
G. D URATION
The programme has no time limit, the amounts are decided on in the Budget each year.
H. L EGAL BASIS
Act no. 64/1985 on the Institute of Regional Development, the Budget, item no. 01-221.
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