RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q2/JPN/22
22 January 1999
(99-0237)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Questions from the UNITED STATES
Regarding the New and Full Notification of JAPAN1
The following communication, dated 18 January 1999, has been received from the Permanent
Mission of the United States.
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1. Throughout the notification, "assistance by budget" is  the term most often used to indicate the
type of assistance provided (i.e. form of the subs idy).  Please elaborate further on the meaning of the
term "assistance by budget".
2. Under "Subsidy to Promote and Foster New Ente rprises of the Research and Development Type
of Knowledge-Intensive Type":
(a) Under which legislation is the subsidy granted?(b) Are the results of the funded enterprises' re search made available to all industries?  Is
this grant primarily for producers, exporters, or others?
3. Regarding "Support for Business Innovation":
(a) Under what terms is the loan granted?
(b) How are the sectors chosen?
4. Under "The Real World Computing (RWC) Programme":
(a) How does the contract provide the subsidy?  What type of contract is written to provide
aid?  Does the Contract provide for tax conc essions, grants, loans or other forms of aid?
(b) Who is a member of the Real World Com puting Partnership?  Is this membership
available to every business which wishes to join?
5. In the section, "Subsidy for the Development of Support System for Nuclear Electric Power
Generation":
(a) Under which legislation is the subsidy provided?
                                                     
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(b) Is the subsidy provided to manufacturer s only producing equipment for nuclear power
plants?  Do the manufacturers also produce other machinery?
6. Under "The Commission about the Resear ch and Development of Next Generation
Aeroplanes", what is meant by "contract" as the form of the subsidy?  Please elaborate on how such
contracts are structured and implemented, a nd how assistance is provided through them.
7. Regarding "The Commission about the Res earch and Development of Remote Sensing
Technology to be applied to Exploration for Oil Resources":
(a) Under which legislation is the subsidy provided?
(b) What is meant by "contract" as the form of the subsidy?
(c) Is the subsidy provided only to the public sector or the private as well?  If it is provided
to the private sector, how are those receiving funds chosen?
8. Regarding "The Industrial Science and Technology Frontier Programme", under what
legislation is the subsidy provided?
9. Under "Capital Investment and Loan for R&D Projects Concerning Key Technology":
(a) Are the applicants required to make k nown publicly the results of their research?
(b) Is the Japan Key Technology Centre a public institution?(c) Under what terms is a loan made to an applicant?
10. Regarding "Subsidy for Exploration of Unde rground Non-Ferrous Metal Resources", do the
owners of the mining rights in the studied areas pay for the results for their areas?  Are they able to use
these results to profit in the market?
11. Under "Subsidy for Exploration of Natural Gas", is  the subsidy available to all owners of natural
gas mining rights?
12. Regarding "Tax Credit for Increased Expense of Research", and "Special Depreciation on
Machinery", the notification states that compan ies presenting the Business Innovation Plans to a
Competent Minister can qualify for a tax credit.  Ho wever, the response is unclear as to who can submit
a Business Innovation Plan.  Can any company submit a plan and apply for a tax credit?
13. Under "Tax Measures to Strengthen the Management of Small and Medium-Sized
Corporations", SMEs "under the influence of the st ructural changes of the economy" are eligible to
apply for a tax credit.  However, the response is uncl ear as to which industrial sector of SMEs can apply.
Which industries are under the influence of the structural changes of the economy?
14. Regarding "Special Depreciation on Machinery for Business Innovation", the notification states
that SMEs belonging to industries in the Area to Activate Accumulation of Creative Skills can qualify
for special taxation measures.  Is the Area to Activate Accumulation of Creative Skills industry-
specific?
15. Regarding "Special Depreciation on Machiner y", the notification states that businesses
engaging in those areas that are qualified as "n ecessary for immediate structural improvement" areG/SCM/Q2/JPN/22
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eligible for special taxation measures.  Which sect ors or industries have been targeted as needing
"immediate structural improvement"?
16. Regarding "Special Depreciation on the Paymen t to Specific Association", the notification
states that a "member of the specific association" can qualify for special taxation measures.  However,
the "specific association" is not name d.  What is the specific association?
17. For the following programmes, there is no time- limit attached nor duration clearly specified for
the subsidy:
• Grant for Promotion of Research and Development of Future Ships
• Measures for Rice, Wheat and Barley
• Measures for Soybean and Rapeseed
• Measures for Sugar
• Measures for Milk and Dairy Products
• Measures for Bovine Meat and Pigmeat
• Measures for Eggs
• Measures for Vegetables
• Measures for Fruits
• Resource Propagation Programme for Salmon
• Measures for Cocoons
• Farmers' Pension Fund Subsidy
• Farming Modernization Fund Interest Subsidy
• Fisheries Modernization Fund Interest Subsidy
• Agriculture, Forestry and Fisher ies Finance Corporation Subsidy
• Fisheries Trust Fund Subsidy
• Wood Industry Upgrading Funds
18. Finally, please explain why the following s ubsidy programmes were not included in your
subsidy notification:
Association of Super-Advanced Electronics Technologies (ASET)
The Government of Japan has provided a total of ¥15 million by the end of fiscal year 1997 to
the Association of Super-Advanced  Electronics Technologies (ASET) .  ASET is an R&D organization
that runs front-edge projects that are directly finan ced and supervised by MITI.  It was reported that a
private group of semiconductor makers called Semiconductor Leading Edge Technologies Inc.(SELETE) took over a national semiconductor project spearheaded by ASET.G/SCM/Q2/JPN/22
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Business Reform Law (or "Law on Special Measur es to Facilitate Business Reform by Specially
Designated Businesses"/Law No. 61 of 1995)
Japan's Business Reform Law grants various types of assistance to businesses which fit certain
categories that are affected by the structur al changes in the domestic/international economic
environment.  Numerous companies in various industr ial categories receive government assistance in the
form of low interest loans, reduction in company registration tax, tax reduction for R&D, special
depreciation, and tax reduction for real estate acquisition and replacement of long-term assets.  This law
is to be effective until 30 June 2002.
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