WORLD TRADE
ORGANIZATIONG/SCM/N/48/EEC/Add.6
20 December 1999
(99-5490)
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
EUROPEAN COMMUNITIES
Addendum
The following addendum to the notification of  the European Community relates to subsidy
programmes of Germany .G/SCM/N/48/EEC/Add.6
Page 2
GERMANY
TABLE OF CONTENTS
Page
Interest Rate Grants to Finance Orders to German Shipyards ("Werfthilfen") ............................3
1. Competition Aid for German Shipyards (Wettbewerbshilfe)...............................................4
2. Bavarian Regional Programmes in Support of Commerce and Industry ...........................5
3. Reduction to between 3 and 5 per cent of the rates payable on inheritable land-
use rights in the case of projects worthy of special promotion of manufacturing
firms depending on the degree of use of the buildings...........................................................6
4. Consolidation programme of the Land Mecklenburg-Western Pomerania on the
granting of public financial aid to small and medium-sized commercial and
industrial enterprises – special fund to support companies..................................................7
5. Joint Scheme on "Improving the Regional Economic Structure" .......................................8
6. Investment allowance for companies in the manufacturing and craft sectors in
Eastern Germany where the majority holding is in Eastern German hands
(Section 5 para. 2 of the 1996 Investment Allowance Act) ....................................................9
7. Investment allowance for small and medium-sized companies (up to 250
employees) in the manufacturing and craft sectors in Eastern Germany (Section
5, para. 3 of the 1996 Investment Allowance Act)................................................................10
8. Regional Economic Support Programme .............................................................................119. Promotion of efficient use of energy;  programme section "promotion of
technological development (REN/TE)".................................................................................11
10. Regional Aid Programme of Rhineland-Palatinate .............................................................12
11. State aid for research and development (R&D) in the sector of biotechnology ................13
12. Smart fabrication (measures in favour of micro-electronics).............................................13
13. Rational energy-consumption and use of renewable energies ............................................14G/SCM/N/48/EEC/Add.6
Page 3
Interest Rate Grants to Finance Orders to German Shipyards ("Werfthilfen")
1. Name of the subsidy scheme or ad hoc subsidy
Interest-Rate Grants to Finance Orders to German Shipyards ("Werfthilfen")
2. Form of the subsidy
Grant.
3. Subsidy per unit
Total amount of assistance provided in 1998:Support approved: DM 4.8 millionAverage level of support per ship:
From support approved in 1998: DM 0.8 million
4. Objective and/or purpose of the subsidy
The eighth shipyard assistance programme (VIII.  Werfthilfeprogramm) exists to provide
non-repayable interest-rate grants under the relevant OECD agreement regarding export credits for
ships and the relevant EC directives on shipbuilding subsidies.
Legal basis: Commitment authorizations in the Federal budget;
Guidelines from the Federal Ministry of Economics.
Modes of payment: Those receiving the grants are shipbuilding companies in the Federal
Republic of Germany.
Support is given to the construction and reconstruction of high-
technology marine vessels (merchant vessels), respecting the OECD
minimum conditions:
8.5 year term
20 per cent advance payment
Minimum interest rate of 8 per cent p.a.
In addition, grants can be given for loans at conditions more
favourable than those described above if this appears justified,
particularly in terms of development policy.
The support serves to lessen the cost of loan s to the clients of German shipyards, thus
achieving a partial adjustment towards the international market conditions.
The assistance is made available in the form of tranches in the eighth shipyard assistance
programme.G/SCM/N/48/EEC/Add.6
Page 4
5. Duration of subsidy and other time-limits attached to it
Currently: 8th tranche (for Western German shipyards) for delivery years 1993-1998
with support totalling DM 641.5 million.
8th tranche (for Eastern German shipyards) for delivery years 1991-1998 with
support totalling DM 471.0 million)
9th tranche (for Western German shipyards) for delivery years 1996-1998
with support totalling DM 350.0 million.
6. Statistical data permitting an assessment of the trade effects of a subsidy
Figures in DM million
1992 1993 1994 1995 1996 1997
Production 4,178 4,863 4,686 5,282 5,361 4,954
Imports from outside EC 305 477 333 158 75 111
Exports to outside EC 2,929 3,018 2,411 2,231 1,369 1,965
Figures for 1998 :  Production 5,026  Imports 196   Exports 1,911
1. Competition Aid for German Shipyards (Wettbewerbshilfe)
1. Name of the subsidy scheme or ad hoc subsidy
Competition Aid for German Shipyards (Wettbewerbshilfe)
2 . Form of the subsidy
Grant
3. Subsidy per unit
Total amount of assistance provided in 1998:Support approved: DM 319.2 million
Average level of support per ship:
From support approved in 1998: DM 3.7 million
4. Objective and/or purpose of the subsidy
The assistance is intended to facilitate the restructuring being undertaken by the shipyards.
Grant towards production costs are given, where they are permissible under the relevant EC shipyard
subsidies directive.
The programme is funded jointly by the Federal and the Länder Governments.
Legal basis: Commitment authorizations in the Federal and Länder budgets.
Guidelines from the Federal Ministry of Economics.G/SCM/N/48/EEC/Add.6
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Modes of payment: Those receiving the grants are shipbuilding companies in the Federal
Republic of Germany.
Support is given to the construction and conversion of high-
technology marine vessels (merchant vessels).  From 1 January 1994,
the support rate is 7 per cent of the price in the contract, for ships
with a contract price of below 10 million ECU and for conversion
work, the rate is 4.7 per cent.
5. Duration of subsidy and other time-limits attached to it
The assistance has been provided over the following period and to the following extent:For acquisition years:1987-1990 (Western German shipyards) DM 1,000 million
1991-1992 (Western German shipyards) DM 538 million
Up to 1993 (Eastern German shipyards) DM 803 million
1993-1994 (Western German shipyards) DM 166 million
1994-1996 (Western German shipyards) DM 291 million
1995-1996 (All German shipyards) DM 580 million1997 (All German shipyards) DM 270 million
1998 (All German shipyards) DM 240 million
For orders given after the OECD agreement has come into force, no further assistance will be
granted.
6. Statistical data permitting an assessment of the trade effects of a subsidy
Figures in DM million
1992 1993 1994 1995 1996 1997
Production 4,178 4,863 4,686 5,282 5,361 4,954
Imports from outside EC 305 477 333 158 75 111
Exports to outside EC 2,929 3,018 2,411 2,231 1,369 1,965
Figures for 1998 :  See programme 1
2. Bavarian Regional Programmes in Support of Commerce and Industry
(Responsible level of administration:  Free State of Bavaria.)
1. Name of the subsidy scheme or ad hoc subsidy
Bavarian programme in support of commerce and industry (as promulgated by the Bavarian
Ministry of Economics, Transport and Technology on 30 May 1997, No. 3540 – III/3a – 52180V).
2. Form of the subsidy
Investment grant.
Interest rate subsidy (to subsidize loans).G/SCM/N/48/EEC/Add.6
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3. Subsidy per unit
Total support 1997 1998 (DM Million)
Investment grant  95.0 210.4
Interest rate subsidy  13.8  26.5
Assisted investment volume 904.6          2,409.5
Number of assisted companies 177 364
4. Objective and/or purpose of the subsidy
Aid to finance investments in trade and  industry to create and secure jobs and training places
in assisted areas.
Objective: Improving regional economic structures;
Increasing the economic strength of structurally weak areas.
5. Duration of subsidy and other time-limits attached to it
Unlimited;  review before the end of 1999.
6. Statistical data permitting an assessment of the trade effects of a subsidy
Not available.  Outside the assisted areas pursuant to the Joint Federal Government/Laender
Scheme for the Improvement of Regional Economic Structures, support is restricted to small andmedium-sized enterprises (SMEs) within the meaning of the Community Framework on State Aid to
SMEs (EC OJ 213/04 of 23 July 1996).
3. Reduction to between 3 and 5 per cent of the rates payable on inheritable land-use rights
in the case of projects worthy of special promotion of manufacturing firms depending on
the degree of use of the buildings
 (Berlin)
1. Name of the subsidy scheme or ad hoc subsidy
Reduction to between 3 and 5 per cent of the rates payable on inheritable land-use rights in
the case of projects worthy of special promotion of manufacturing firms depending on the degree of
use of the buildings
2. Form of the subsidy
Cutting land costs by granting a reduced rate on land-use rights.
3. Subsidy per unit
Payments: DM 297,332.01 in 1998G/SCM/N/48/EEC/Add.6
Page 7
4. Objective and/or purpose of the subsidy
Reducing land acquisition costs for the manufacturing industry for regional promotion
purposes.
5. Duration of subsidy and other time-limits attached to it
Unlimited.
6. Statistical data permitting an assessment of the trade effects of a subsidy
The effects of the subsidy in accordance with WTO standards cannot be assessed due to the
low financial resources.
4. Consolidation programme of the Land Mecklenburg-Western Pomerania on the
granting of public financial aid to small and medium-sized commercial and industrialenterprises – special fund to support companies
1. Name of the subsidy scheme or ad hoc subsidy
Consolidation programme of the Land Mecklenburg-Western Pomerania on the granting of
public financial aid to small and medium-sized commercial and industrial enterprises – special fund tosupport companies
2. Form of the subsidy
Loans of up to DM 5 million at market conditions.  Usually restricted to SMEs within the
meaning of the Community Framework.
3. Subsidy per unit
Approved loans in 1998: DM 17,650 million;
Disbursed loans in 1998: DM 14,649 million.
4. Objective and/or purpose of the subsidy
Liquidity aid for enterprises that are important for a region in Mecklenburg-Western
Pomerania in terms of labour-market policy and structural policy.
5. Duration of subsidy and other time-limits attached to it
The loans have a maximum duration of ten years.
6. Statistical data permitting an assessment of the trade effects of a subsidy
Statistics are not available to assess the trade effects of the subsidy.  Most of the assisted
enterprises operate on regional markets only.G/SCM/N/48/EEC/Add.6
Page 8
5. Joint Scheme on "Improving the Regional Economic Structure"
1. Name of the subsidy scheme or ad hoc subsidy
Joint Scheme on "Improving the Regional Economic Structure".
2. Form of the subsidy (i.e. grant, loan, tax concession, etc)
Regional assistance in the form of investment grants to industry and parts of commerce.  The
purpose of promotion under the Joint Scheme is a selective regional strengthening of land economic
promotion programmes in the fields of advice, schooling, human capital formation as well as research
and development;  this allows greater precision in the use of funds.
Paragraph 3 of Article 72 of the Basic Law requires living conditions to be equal throughout
the Federal territory.  Regional structural policy contributes to this end.  According to paragraph 1 of
Article 91 a of the Basic Law, it is the common task of the Federal and the Land Governments to
improve the regional economic structure.  The basis of promotion is the Act on the Joint Scheme on
"Improving the Regional Economic Structure", dated 6 October 1969.
3. Annual amount budgeted for the subsidy
In 1998 a budget of the Federal and the Land Government an amount of DM 6,779 billion
was granted for commerce and industry.  This amount may be split into DM 556 million for the
original federal laender and DM 6,223 billion for the new federal laender.
4. Policy objective and/or purpose of the subsidy
The primary regional policy objective is to enable structurally weak regions to keep pace with
general economic development by offsetting locational disadvantages and reducing regional
development differentials.  Regional structural policy focuses on supporting regional development
activity with a view to raising the levels of employment and income in problem areas in this way.
Eligible for subsidies under this scheme are commercial and industrial firms.
Investments in commerce and industry are eligible for promotion if they generate additional
income to the region so that the region's total level of  income is raised to a not insignificant extent in
the long run (primary effect).  This is deemed to be the case if the company applying for subsidy
payment sells the better part of its products or services on a supraregional basis.  The investment
projects concerned must create new jobs in the assisted areas or secure existing ones.
Assisted areas are redefined at multiannual intervals on the basis of regional indicators (level
of income, unemployment, infrastructure).  Assist ed areas in the original laender including Berlin
(West) cover 20.8 per cent of the West German population in the period from 1997 to 1999.  The new
federal states and Berlin (East) represent assisted areas in their entirety till 1999.  Moreover, these
areas have been recognized as objective-1 areas wi thin the framework of the EC structural Funds until
the end of 1999.
5. Duration of the subsidy
Regional assistance consists of a non-recurring payment and is granted to investment projects
in assisted areas.  The programme is under no time-limit.G/SCM/N/48/EEC/Add.6
Page 9
6. Statistical data permitting an assessment of the trade effects of the subsidy
Regional promotion is aimed at offsetting domestic investment disadvantages of certain
regions and contributes to raising the levels of in come and employment in structurally weak areas.
Promotion under the Joint Scheme therefore is neutral in terms of competition and has no effect oncompetition in international trade.
6. Investment allowance for companies in the manufacturing and craft sectors in Eastern
Germany where the majority holding is in Eastern German hands (Section 5 para. 2 of
the 1996 Investment Allowance Act)
1. Name of the subsidy scheme or ad hoc subsidy
Investment allowance for companies in the manufacturing and craft sectors in Eastern
Germany where the majority holding is in Eastern German hands (Section 5 para 2. of the 1996
Investment Allowance Act).
2. Form of the subsidy
Tax allowance of up to 20 per cent for up to DM 1 million of investment.
3. Subsidy per unit
The maximum amount under figure 3 applies per company and per year; the subsidies
actually granted to the individual companies are not known.
In the budgetary year of 1998, investment allowances totalling DM 1,262 million were
disbursed, DM 45 million thereof in Berlin (W).
Further statistical data are not yet available.According to the latest figures published by the Ifo Institute:- the manufacturing industry and all crafts account for 35 per cent of investments in
plant and equipment, with companies with up to 250 employees accounting for about
60 per cent thereof;
- the manufacturing industry (excl. the crafts) accounts for 30 per cent, with companies
with more than 250 employees accounting for 45 per cent thereof.
4. Objective and/or purpose of the subsidy
To boost the ability to invest by promoting the equity capital base of small and medium-sized
manufacturing and craft enterprises in the area.
5. Duration of subsidy and other time-limits attached to it
Investment begun before 31 December 1994;
Investment completed before 31 December 1998.G/SCM/N/48/EEC/Add.6
Page 10
6. Statistical data permitting an assessment of the trade effects of a subsidy
Trade accounts for 8.5 per cent of investments in plant and equipment, with companies with
up to 50 employees accounting for 30 per cent thereof.
7. Investment allowance for small and medium-sized companies (up to 250 employees) in
the manufacturing and craft sectors in Eastern Germany (Section 5, para. 3 of the 1996
Investment Allowance Act)
1. Name of the subsidy scheme or ad hoc subsidy
Investment allowance for small and medium-sized companies (up to 250 employees) in the
manufacturing and craft sectors in Eastern Ge rmany (Section 5, para.3 of the 1996 Investment
Allowance Act)
2. Form of the subsidy
Tax allowance of up to 10 per cent for up to DM 5 million of investment.
3. Subsidy per unit
The maximum amount under figure 3 applies per company and per year;  the subsidies
actually granted to the individual companies are not known.
In the budgetary year of 1998, investment allowance totalling DM 1,262 million was
disbursed, DM 45 million thereof in Berlin (W).
Further statistical data are not yet available.
According to the latest figures published by the Ifo Institute:- the manufacturing industry and all crafts account for 35 per cent of investments in
plant and equipment, with companies with up to 250 employees accounting for about
60 per cent thereof;
- the manufacturing industry (excl. the crafts) accounts for 30 per cent, with companies
with more than 250 employees accounting for 45 per cent thereof.
4. Objective and/or purpose of the subsidy
To boost the ability to invest by promoting the equity capital base of small and medium-sized
manufacturing and craft enterprises in the area.
5. Duration of subsidy and other time-limits attached to it
Investment begun before 1 July 1994;
Investment completed before 31 December 1998
6. Statistical data permitting an assessment of the trade effects of a subsidy
See programme 7.G/SCM/N/48/EEC/Add.6
Page 11
8. Regional Economic Support Programme
(Land North-Rhine-Westphalia.)
1. Name of the subsidy scheme or ad hoc subsidy
Regional Economic Support Programme
2. Form of the subsidy
Grants towards investment projects of trade and industry and local infrastructure.
3. Subsidy per unit
The total amount budgeted for 1998;  scheme of the Land:  DM 186.0 million.
4. Objective and/or purpose of the subsidy
Improving the regional economic structure and supporting small and medium-sized
businesses.
5. Duration of subsidy and other time-limits attached to it
No time-limit.
6. Statistical data permitting an assessment of the trade effects of a subsidy
Given the objectives of the programme, trade effects cannot be assessed.
9. Promotion of efficient use of energy;  programme section "promotion of technological
development (REN/TE)"
1. Name of the subsidy scheme or ad hoc subsidy
Promotion of efficient use of energy;  programme section "promotion of technological
development (REN/TE)".  State subsidy N 497/94.
2. Form of the subsidy
Grant
3. Subsidy per unit
About DM 5,672.000Total number of recipients:  21
4. Objective and/or purpose of the subsidy
The promotion section "technological development" supports companies in the fields of
energy technology, the energy industry and commercial and industrial energy users in North-G/SCM/N/48/EEC/Add.6
Page 12
Rhine/Westphalia.  The subsidy is granted for the development of new products and processes for the
efficient use of energy and raw materials and for the use of renewable energies that have a pilot
character beyond individual companies.
5. Duration of subsidy and other time-limits attached to it
The duration is two to three years for projects that were granted subsidy in 1998.
6. Statistical data permitting an assessment of the trade effects of a subsidy
The above-mentioned subsidy programme is based on the European Community’s R&D
framework.  The assisted projects all comprise only development stages prior to competition in themarket.
10. Regional Aid Programme of Rhineland-Palatinate
 (Rhineland-Palatinate)
1. Name of the subsidy scheme or ad hoc subsidy
Regional aid programme of Rhineland-Palatinate.
2. Form of the subsidy
Investment grant
3. Subsidy per unit
Up to 7.5 per cent for medium-sized industries, 15 per cent for small-sized industries.Total budget:  DM 17 million, disbursement in 1998:  DM 11.7 million.
4. Objective and/or purpose of the subsidy
Promotion of investment in small- and medium-sized industries.
5. Duration of subsidy and other time-limits attached to it
Unlimited.
6. Statistical data permitting an assessment of the trade effects of a subsidy
In 1998:
- creation of 75 jobs by providing financial assistance to 23 individual promotional
cases;
- subsidy of 10 measures to promote the economic-related infrastructure.G/SCM/N/48/EEC/Add.6
Page 13
11. State aid for research and development (R&D) in the sector of biotechnology
1. Name of the subsidy scheme or ad hoc subsidy
State aid for research and development (R&D) in the sector of biotechnology.
2. Form of the subsidy
Reward of grants.
3. Subsidy per unit
During 1998 grants to industry totalled  DM 73.9 million.
4. Objective and/or purpose of the subsidy
The programme "Biotechnology 2000" is aimed at strengthening research in biotechnology,
one of the most important key technologies.  It constitutes a part of the overlapping research andtechnological policy targets of the Federal Government:
Maintaining a broadly based fundamental research while promoting top-level research;Promoting preventive research in the areas of environment, health, nutrition and energy and
raw material supply;
Improving the framework conditions for research and development of the commercial sector,
especially by supporting small and medium enterprises and strengthening the cooperation
between the commercial sector and science;
Strengthening the research structure for fundamental research in biology.
5. Duration of subsidy and other time-limits attached to it
The programme "Biotechnology 2000" is the framework for the promotion up to the
year 2000.
6. Statistical data permitting an assessment of the trade effects of a subsidy
No statistical data available.
12. Smart fabrication (measures in favour of micro-electronics)
1. Name of the subsidy scheme or ad hoc subsidy
Smart fabrication (measures in favour of micro-electronics).
2. Form of the subsidy
Non-refundable grants.G/SCM/N/48/EEC/Add.6
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3. Subsidy amount
1998:  DM 21 million.
4. Objective and/or purpose of the subsidy
The aim of the promotion is to realize the scientific foundations for future-oriented
conceptions and semi-conductor manufacturing.  These conceptions are characterized by:
- high flexibility
- high diversity of processes
- leading-edge processes
as well as
- short set-up times
- short turnaround times- low batch size
at medium as well as at small manufacturing units.5. Duration of subsidy and other time-limits attached to it
From 1995 to 1999.
6. Statistical data permitting an assessment of the trade effects of a subsidy
Minimal trade impact.
13. Rational energy-consumption and use of renewable energies
1. Title of the programme
Rational energy-consumption and use of renewable energies
2. Period covered by the notification
1998.
3. Policy objective and/or purpose of the subsidy
To achieve a bigger and stable demand for goods linked to the rational use of energy and
environmentally-friendly generation of energy on the basis of renewable energies.  In this way theunit price of plants and goods can be reduced by higher output figures in plant engineering and an
increase in efficiency as a result of automated production process.  This leads to an increase in
demand for such goods and energy technology.G/SCM/N/48/EEC/Add.6
Page 15
4. Background and authority for the subsidy (including identification of the legislation under
which it is granted).
Decree of the Ministry of Housing and Construction Nordrhein-Westfalen of 29.10.1998 –
IIB5-950.50.
The promotion-programme is managed by the Landesinstitut für Bauwesen NRW/Aachen
5. Form of the subsidy (i.e., grant, loan, tax concession, etc.).
Grants and loans
6. To whom and how the subsidy is provided (whe ther to producers, to exporters, or others;
through what mechanism; whether a fixed or fluctuating per unit; if the latter, how
determined).
Investor or owner, who buys and operates the subsidized plant.
7. Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount
budgeted for that subsidy (indicating, if possible, the average subsidy per unit in the previous
year).
Different plant engineering and the averaged subsidy per unit in each sector :
measurement, control and storage systems: grant, 15 per cent of the investment plants
recovering waste heat: grant, 15 per cent of the investment
heat pumps: grant, 20 per cent of the investmentsolar collector plants: grant, about 15 per cent of the investment
networked linked biomass and biogas plants: grant, 25 per cent of the investment
networked-linked hydraulic power plants: grant, 25 per cent of the investment
networked-linked wind power plants: subsidized loan, about 10 per cent of the
investment
networked-linked photovoltaic plants: grant, 40 per cent of the investment
The averaged subsidy per unit is about 20 per cent of the investment.
Budget for the programme:
Year Budget –Mio.EUR Part of the budget to
SME – Mio. EUR-Number of subsidized
SME
1999 25,510 1,695 353
1998 24,710 5,477 279
1997 23,808 7,127 193
SME:  Small and medium enterprise
The other part of the budget is for private investors.G/SCM/N/48/EEC/Add.6
Page 16
8. Duration of the subsidy and/or any other time limits attached to it, including date of
inception/commencement
There is no time-limit at the moment.  According to the efficiency the terms of the
programme and the subsidy per unit is annually controlled.
9. Statistical data permitting an assessment of the trade effects of the subsidy.
The programme is designed to promote energy efficiency and has little effect on trade.
List of subsidized SME in the last three years:
Year Part of the budget to
SME – Mio. EURNumber of subsidized
SMEAmount of Investment
Mio. EUR
1999 1,695 353  8,467
1998 5,477 279 21,908
1997 7,127 193 33,496
Examples:
811 wind energy plants with a capacity of 359 MW and 2900 photovoltaic plants have been
erected in the last three years.
The price of solar power plants has been halved since 1992.  Similar price reduction have
been seen by wind plants, solar thermic plants etc., so that the average subsidy per unit could be
reduced from 24 per cent of the investment in 1995 to 20 per cent of the investment in 1998.  For
Wind plants the subsidy has been dropped from 25 per cent of the investment in 1993 to 10 per cent in
1998.
The whole turnover of the market for solar-, wind-, etc. plants is about 378 Mio. Eur a year. It
is growing market with an annual increase of 20 per cent.  The programme is the basis for aninnovative energy industry and an environmentally-friendly generation of energy.
__________