G/SCM/Q2/USA/73  
 
13 October 2017  
(17-5539) Page: 1/10 
Committee on Subsidies a nd Countervailing Measures  Original: English  
 
SUBSIDIES  
QUESTIONS FROM CHINA  REGARDING THE  
2015 NEW AND FULL NO TIFICATION  OF THE UNITED STATES1 
The following communication, dated 13 October 2017, is being circulated at the request of the 
Delegation of China.  
 
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The Chinese Government h as noted that the 2015 subsidy notification of the United States covered 
the federal government and state governments. China has also noticed that the United States has 
not included relevant subsidy policies such as new energy vehicle subsidies and industr ial energy 
efficiency subsidies in the Notification.  
 
Meanwhile, with respect to the federal and state governmental programs that have been 
incorporated in the Notification by the United States, China has doubts about the specificity of 
specific policies, the conditions for granting subsidies and the amounts of subsidies, and hopes the 
United States make clarifications.  
 
I. On the Subsidies not included in the Notification  
 
i. On the Subsidy Policies on New Energy Vehicles  
 
1. Subsidy of the Federal Governm ent of the United States on New Energy Vehicles  
 
As far as China knows, Obama began to vigorously support the new energy vehicle sector at the 
start of his presidency. Section 205 of the Energy Improvement and Extension Act of 2008 
(P.L. 110-343)2 containe d a subsidy policy on new energy vehicles. The main form is to provide 
taxpayers who have bought new energy vehicles with federal tax credits, and the taxpayers may 
apply for deduction of the tax payable to the tax authorities with the receipts for purchas ing 
eligible new energy vehicles. The main purpose of this federal subsidy program is to provide 
consumers with the motivation to purchase new energy vehicles in the early development stage of 
the new energy vehicle sector and create the market basis for t he independent development of the 
new energy vehicle sector. According to this law, from the second calendar quarter following the 
calendar quarter in which the total number of vehicles sold by new energy vehicle manufacturers is 
at least 250,000, the Fede ral government will phase out this subsidy policy within one year. The 
subsidy amount will drop to 50% in the first half year, and then to 25% in the second half year, 
and be completely cancelled one year later.  
 
2. New Energy Vehicle Subsidies Provided by  Local Governments in the United States  
 
As for local governments, according to the statistics from non -governmental organizations in the 
United States, 37 states in the United States have introduced policies in support of new energy 
vehicles3, and the mai n forms are income tax credits and rebates. The supportive policies of all 
state governments may be applied together with the Federal Government's policy, and California is 
an example. California is one of the largest new energy vehicle markets in the Unit ed States. 
                                                
1 G/SCM/N/284/USA.  
2 https://www.gpo.gov/fdsys/pkg/PLAW -110publ343/pdf/PLAW -110publ343.pdf  
3 https://pluginamerica.o rg/why -go-plug-in/state -federal -incentives/  G/SCM/Q2/USA/73  
 
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  In 2009, the Clean Vehicle Rebate Program (CVRP)4 was established based on the state's Health 
and Safety Act, and the California Environmental Protection Agency's Air Resources Board is 
responsible for its implementation. The specific work is do ne by the Center for Sustainable Energy, 
a non -governmental organization. The funding of the program comes from the proceeds of 
California's cap -and-trade auction, and rebates will be provided to purchasers of new energy 
vehicles. Since its establishment i n 2009, the program has provided USD 349 million subsidies for 
consumers who have bought new energy vehicles, 163,109 vehicles received subsidies, and the 
average subsidy amount per vehicle was around USD 2,100.  
 
China's questions:  
 
Question 1  
 
The Notific ation of the United States contained energy vehicle subsidy programs at neither federal 
government nor state government level. Could the United States explain the reason thereof?  
 
Question 2  
 
Can the United States explain when these subsidies will be notif ied? 
 
Question 3  
 
Please provide full and complete information about the subsidy programs provided to the new 
energy vehicle sector by the Federal Government and state governments.  
 
ii. On the Subsidy Policies on Industrial Energy Efficiency  
 
Question 4  
 
As far as we know, the federal energy departments and other departments provide funds, 
personnel training and technical services to improve industrial energy efficiency through 
implementing the Industrial Technology Program (ITP), building Industrial Assess ment Centers 
(IAC) and implementing other projects. Please provide detailed information on this.  
 
Question 5  
 
As far as we know, California and other states have adopted a series of supportive policies to 
promote alternative energy sources and improve ener gy efficiency. In addition to the tax 
deductions and exemptions mentioned in the Notification, there are also direct subsidies, credit 
supports and loan risk compensation mechanisms. Please give detailed information on those 
above.  
 
II. On Federal Program s of the United States in the Notification  
 
i. Program 1. Agricultural Domestic Support  
 
1. Program 1.2.1 Agriculture Income Support and Marketing Assistance for Covered 
Commodities  
 
In "To whom and how is subsidy provided", the description of "Counter -Cyclical Payments are 
available to covered commodities whenever the effective price was less than the target price. The 
effective price is equal to the sum of 1) the higher of the national average farm price for the 
marketing year, or the national loan rate f or the commodity and 2)  the direct payment rate for the 
commodity" indicates that the effective price of the counter -cyclical payments program is related 
to the current market price, but "Payments were not tied to current or future production of specific 
crops, the amount of production, or the price of the crop. Eligible producers were not confined to 
producing crops for which they were receiving payments, and could choose not to produce any 
crop." later indicates that the counter -cyclical payments program is not related to current crop 
prices.  
 
                                                
4 http://energycenter.org/program/clean -vehicle -rebate -project ; https://cleanvehiclerebate.org/eng  G/SCM/Q2/USA/73  
 
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  Question 6  
 
Please explain whether the program is tied to current prices.  
 
2. Program 1.3.2 Treatment of Loans Forgiven Solvent Farmers as if Insolvent  
 
Question 7  
 
As far as we know, 40% of US farmers' incomes are g overnment subsidies or loans from financial 
institutions and businesses. Does the "loans" in this program refer to government appropriations 
or loans borrowed by farmers from financial institutions or businesses? What is the specific content 
of "loan forgi veness treatment"?  
 
ii. Program 2 Energy & Fuels  
 
1. The "To whom and how assistance is provided" of Programs 2.1, 2.2, 2.3 and 2.4 
all mentioned "Participation in the program is determined through various competitive 
procedures, which are open to all elig ible private parties".  
 
Question 8  
 
Please introduce in detail the competitive procedures and the conditions of eligible private parties 
mentioned here.  
 
Question 9  
 
Please brief on the industries and businesses that have already benefited from the above -
mentioned subsidy programs.  
 
2. Program 2.7 Advanced Technology Vehicles Manufacturing Loan (ATVM)  
 
Question 10  
 
Please introduce which businesses have received financial assistance since the beginning of this 
program, and what are the advanced technologi es assisted?  
 
iii. Program 3 Other Energy and Fuels  
 
1. Program 3.4 Energy Efficient Appliance Credit  
 
Question 11  
 
A tax credit is provided to manufacturers for the production of energy efficient dishwashers, 
clothes washers and refrigerators, and the ob jects of this program are confined to manufacturers 
for dishwashers, clothes washers and refrigerators. Please specify the conditions for enterprises to 
enjoy tax credit under this program, the annual list of the said enterprises and the amounts of tax 
credit. 
 
2. Program 3.6 Biodiesel and Renewable Diesel Credit  
 
Question 12  
 
Small -scale biodiesel production involves many stages and needs to be completed by cooperation 
among different producers. The producers can enjoy 10 cent per gallon income tax credit.  Please 
indicate the income tax credit refer to corporate income tax or personal income tax? Is the 10 cent 
per gallon credit enjoyed by the producers in each stage or shared by the producers of all the 
stages? In the case of the latter, what is the credit  percentage and credit amount enjoyed by the 
producers in each stage?  
 G/SCM/Q2/USA/73  
 
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  3. Program 3.9 Advanced Energy Property Credit  
 
Question 13  
 
Please brief on the industries and sectors that have already benefited from the above -mentioned 
program and the proportion i n exports of the products benefited from this program.  
 
Question 14  
 
The document pointed out that "the credit reduces federal income taxes for taxpayers investing in 
qualified projects". Please specify the scope of "qualified projects", and confirm whethe r the 
qualified projects must be produced in the United States. Besides, do the taxpayers investing in 
advanced domestic and imported facilities enjoy the same preferential tax policies?  
 
4. Program 3.13 Energy Grant in Lieu Of the Energy Production Credit  or the Energy 
Investment Credit  
 
Question 15  
 
Please brief on the relationship between this program and Energy Production Credit 
(Program  3.12) and Energy Investment Credit (Program 3.12), and the actual operations.  
 
iv. 10 Regional Programs  
 
1. Program 1 0.1 Empowerment Zones  
 
Question 16  
 
This policy expired on 31 December 2014. As the program has expired, has it been extended? The 
document mentioned "a credit for 20 percent of the first $15,000 of qualifying wages paid to 
employees who live and work in t he empowerment zone". In order to enjoy this policy, should an 
employee both live and work in the employment zone, or he just needs to meet either of the 
conditions? Are incomes other than wages not eligible to the credit?  
 
2. Program 10.2 New Markets Tax Credit  
 
Question 17  
 
Which types of equity investment are eligible to enjoy the tax credit? What is a competitive 
application process? Is the policy currently still effective?  
 
v. Other questions  
 
Question 18  
 
Please explain whether subsidy programs involv ing corporate income tax are equally applicable to 
non-resident businesses? Are there any other requirements and thresholds for non -resident 
companies to enjoy these preferential treatments?  
 
III. On Sub -Federal Programs  
 
i. Integrated Questions  
 
We have d iscovered from the 2015 Notification of the United States that there are many "specific" 
subsidy policies in the states in the United States that are only targeted at part of industries or 
businesses, such as the Innovation Accelerator Fund Program in Ariz ona, the Targeted Business 
Incentive in Arkansas, the Targeted Jobs Incentive Fund (TJIF) Program of Miami -Dade County, 
the Capital Investment Tax Credit, the High Impact Business Performance Incentive (HIPI), the 
Qualified Target Industry Tax Refund Progr am (QTI), and the Semiconductor, Defense, or Space 
Technology Sales and Use Tax Exemption (SDST) in Florida, the Broadband Telecom Tax Credit in 
Idaho, the High Technology Investment Tax Credit in Maine, the Enterprise Investment Fund in 
Maryland and the D ata Center Incentive Program in Mississippi.  G/SCM/Q2/USA/73  
 
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Question 19  
 
How do the state governments in the United States ensure that these subsidy policies are fairly 
applicable to domestic and foreign -invested enterprises, and are there any foreign -invested 
companies  that are eligible for these subsidy programs? If there are foreign -funded enterprises 
that have received these subsidies, please provide the company names, the subsidy programs, the 
subsidy amounts and other details. If no foreign -funded enterprises have received these subsidies, 
please explain the reason.  
 
ii Questions Relevant to Notified Sub -Federal Programs  
 
Arizona  
 
--Foreign Trade Zones  
 
Question 20  
 
Arizona authorizes Arizona Department of Commerce to provide an 80% reduction in state real 
estate t ax and personal property taxes for businesses located in a foreign trade zone or a sub -
zone, but the notification did not mention the required eligibility criteria on the businesses in the 
zones that may enjoy tax reductions or exemptions. Please explain.  
 
--Renewable Energy Tax Incentive Program  
 
Question 21  
 
This program also provides reduction or exemption in individual income taxes. How are individual 
income taxes reduced or exempted, and what are the specific conditions?  
 
--Defense Restructuring Progr am  
 
Question 22  
 
The "Policy Objective" and the "Amounts" columns show that it mainly provides a credit for 
corporate income taxes. However, it also contains "… individual income tax credits for increases in 
net employment above an established baseline". May newly employed people enjoy individual 
income tax credits? What is the main objective of this policy?  
 
California  
 
--Sales and Use Tax Exclusion (STE) Program  
 
Question 23  
 
Can the United States provide a list of the main sectors benefiting from this  policy? For example, 
what do the "advanced manufacturers and manufacturers of alternative source energy and 
advanced transportation products, components or systems" mentioned in the "To Whom" column 
specifically refer to?  
 
Connecticut  
 
-- Small Business Express Program  
 
Question 24  
 
The program provides loans and grants to Connecticut's small businesses to improve employment 
and growth, and Department of Economic and Community Development has been authorized to 
provide loans and matching grants to the bu sinesses with operations in Connecticut, registered to 
conduct business for no less than twelve months, in good standing with all state agencies, and 
employing no more than 100 employees. Please explain what "in good standing with the 
government" is.  G/SCM/Q2/USA/73  
 
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--Manufacturing Assistance Act  
 
Question 25  
 
The Manufacturing Assistance Act provides businesses in Connecticut with financing and loan 
services, and State of Connecticut Department of Economic and Community Development has 
been authorized to provide financi ng and loan services to any business that is part of an economic 
cluster, or any establishment or auxiliary or operating unit thereof, as defined in the North 
American Industrial Classification System Manual prescribed by the Manufacturing Assistance Act. 
But the notification did not specify the qualification requirements for businesses to meet the 
conditions. Please specify.  
 
--Information Technology Projects Grants  
 
Question 26  
 
This program authorizes Connecticut Development Authority to provide grants and subsidies to 
companies engaged in information technology projects and located within an enterprise zone, 
urban communities, or distressed areas. But the notification did not clarify the qualification 
conditions of "companies" and the Amounts column sho ws "the amount varies". Please explain.  
Delaware  
 
--Non-targeted industry locating in a targeted area  
 
Question 27  
 
The program is implemented by Department of Finance of Delaware. In order to encourage 
commercial and retail activities in targeted areas,  designated commercial and retail enterprises are 
provided with tax reductions and exemptions. Who is empowered to designate? And what are the 
conditions to be met?  
 
Colorado  
 
--Community Development Block Grant Program  
 
Question 28  
 
The program authoriz es Office of Economic Development and International Trade to provide 
loans/guarantees for businesses in certain regions. But the notification did not specify the 
qualification conditions of "businesses" and the Amounts column shows "the amount varies". 
Please explain.  
 
Florida  
 
--High Impact Business Performance Incentive  
 
Question 29  
 
This program authorizes Office of Tourism, Trade and Economic Development of Florida to provide 
local high -impact businesses with performance grants. But the notification d id not specify the 
objective standards or conditions of the subsidy amount, and the Amounts column shows "the 
amount varies". Please explain.  
 
Louisiana  
 
-- Customized Computer Software Development Tax Credit  
 
Question 30  
 
Please specify which specific cu stom computer software companies are the main beneficiaries of 
this taxation policy. The program has a four -year period, and should have expired after 2005. Has G/SCM/Q2/USA/73  
 
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  the program been extended within the period of this notification, and are there any changes of the 
policy?  
 
-- New Markets Tax Credit  
 
Question 31  
 
May state governments in the United States reduce or exempt individual income taxes?  
Maine  
 
-- Sales Tax Exemptions – Biotechnology  
 
Question 32  
 
In order to enjoy sales tax exemption, which conditions  should businesses engaged in a 
biotechnology application meet? May foreign -invested businesses enjoy the same preferential 
treatment?  
 
Michigan  
 
--The Michigan Next Energy Authority (MNEA)  
 
Question 33  
 
How the "Alternative energy technology companies lo cated in the AEZ may also be eligible for a 
refundable payroll credit on their SBT." described in the document is operated?  
 
Minnesota  
 
--Farm Machinery Sales and Use Tax Exemptions  
 
Question 34  
 
What is the scope of farm machinery that may enjoy sales an d use tax exemptions? How to define 
whether farm machinery is used principally in agricultural production? How should used farm 
machinery obtain the subsidy?  
 
Mississippi  
 
--Motion Picture Production Incentive Program  
 
Question 35  
 
The document mentioned  that "This program provides a cash rebate equal to 25% of the 
production company's base investment expended in the state, 25% of non -resident payroll and 
30% of state resident payroll". Please explain why the rebate rate for non -resident payroll is lower 
than that for the resident payroll. Would these provisions result in unequal preferential treatments 
between residents and non -residents?  
 
Nevada  
 
--Property Tax Abatement  
 
Question 36  
 
What are the provisions on the basis of exempting personal property taxes and on the tax rates?  
 
New Jersey  
 
--Edison Innovation Clean Energy Manufacturing Fund (CEMF)  
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  Question 37  
 
The document pointed out that the objects of this program are "are qualified manufacturers of 
Class I renewable energy or energy efficiency systems, products or technologies". Please explain 
how to obtain relevant "qualifications". Are there any differences between provisions on American 
businesses and foreign -funded businesses? Please provide the list of companies that have already 
benefited from this subsidy program.  
 
New Mexico  
 
--New Mexico Property Tax Abatement  
 
Question 38  
 
Please explain which businesses have benefited from this subsidy program? To which sectors do 
these businesses belong?  
 
Pennsylvania  
 
Keystone Opportunity Zone (KO Z)  
 
Question 39  
 
Where are the KOZs? Which businesses and sectors may benefit from this subsidy program?  
 
Texas  
 
--Product Development Fund & Small Business Incubator Fund  
 
Question 40  
 
The document pointed out that "The program will support, through fi nancing, the development of 
small businesses or eligible products with a statutory preference to be given in the advanced 
technology areas of semiconductor, nanotechnology, biotechnology and biomedicine". Please 
explain how to determine whether a product i s "eligible" or not. Can products of foreign -funded 
businesses be determined as being "eligible"? Are there any differences among American 
businesses? Please provide the list of companies that have already benefited from this subsidy 
program.  
 
--Property T ax Abatement  
 
Question 41  
 
What are the specific conditions for property tax exemption?  
 
Utah  
 
--Sales and Use Tax Exemption (59 -12-104(55))  (59-12-104(55)) and Sales and Use Tax 
Exemption (59 -12-104(56))  
 
Question 42  
 
Renewable energy production factory  or waste energy production factory enjoys sales and use tax 
exemption when buying certain machinery or equipment. Is there a scope or list of tax 
exemptions? If not, would the purchased machinery or equipment be exempted from sales and use 
tax no matter i t is applied in renewable or waste energy production?  
 G/SCM/Q2/USA/73  
 
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  Virginia  
 
--Common -wealth's Development Opportunity Fund  
 
Question 43  
 
The program authorizes Virginia Economic Development Partnership to provide subsidies to 
industrial development projects that c reate new jobs and investment. But the notification did not 
specify the objective standards or conditions of the subsidy, and the Amounts column shows "the 
amount varies". Please explain.  
 
Washington  
 
--Distressed Area Sales and Use Tax Deferral/Exemption  program  
 
Question 44  
 
The program authorizes Department of Revenue of Washington to provide subsidies for new or 
remodelled building and/or equipment used in manufacturing or research in rural countries or 
economically distressed areas. But the notificat ion did not specify the objective standards or 
conditions of the subsidy, and the Amounts column shows "the amount varies". Please explain 
them.  
 
--Fishing Boat Fuel  
 
Question 45  
 
The program authorizes Department of Revenue of Washington to provide subsi dies for local 
vessels engaged in commercial deep sea fishing or in the operation of commercial chartered 
fishing boats. But the notification did not specify the objective standards or conditions of the 
subsidy, and the Amounts column shows "the amount var ies". Please explain.  
 
--High Technology Sales and Use Tax Deferral/Exemption Program  
 
Question 46  
 
Please provide the list of main sectors that benefit from this policy.  
 
--Rural County Business and Occupation (B&O) Tax Credit for New Employees  
 
Questio n 47 
 
Please explain what conditions should be met to enjoy this tax subsidy.  
 
--B&O Tax Credit for Biodiesel Sellers and Distributers  
 
Question 48  
 
Are foreign -funded businesses also entitled to enjoy this tax subsidy program?  
 
West Virginia  
 
--Coal Lo ading Facilities Credit  
 
Question 49  
 
Please further explain which facilities "coal loading facilities" specifically refer to? Are there any 
similar subsidy programs for petroleum, natural gas or other fossil fuel energies?  
 G/SCM/Q2/USA/73  
 
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  iii Other Que stions  
 
Question 50  
 
Please explain which qualifications criteria should be met for a business to be approved to receive 
a property tax related subsidy? Are there any thresholds for foreign -invested businesses?  
 
 
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