G/SCM/Q2/CAN/62
31 October 2014
(14-6341)  Page: 1/4
Committee on Subsidies and Countervailing Measures  Original: English
 
 SUBSIDIES 
REPLIES TO QUESTIONS1 POSED BY THE UNITED STATES REGARDING THE NEW 
AND FULL NOTIFICATION OF CANADA2 
The following communication, dated 29 October 2014, is being circulated at the request of the 
Delegation of Canada.  
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  Question 1 
 
PRECARN  
According to the description, one of the program's objectives is to "boost the 
productivity, agility and global competit iveness of Canadian firms through the 
development and application of robotics an d intelligent systems-enabled solutions that 
have market demand". Please clarify whethe r access to funding under this program is 
limited to entities involved in the deve lopment and production of "robotics and 
intelligent systems-enabled solutions".  
Reply 
 
As previously mentioned in the document G/ SCM/Q2/CAN/52, the program was available to 
funding research and development projects in the areas of robotics and intelligence systems and 
the program ended in fiscal year 2010-2011. As such, this program was not included in Canada's 2013 subsidies notification. 
 
Question 2  Strategic Aerospace and Defence Initiative 
 
In December 2010, the Government of Canada announced that it had made a "repayable 
investment" of $300 million under this prog ram to Pratt & Whitney. See "Harper 
Government Announces Major Aerospace Invest ment to Create Jobs and Keep Canada 
Cutting-Edge", http://www.ic.gc.ca/eic/s ite/ic1.nsf/ eng/06147.html . Canada's 
notification states that it covers fiscal year 2009/2010, bu t does not indicate the time 
period for that fiscal year. Can Canada conf irm whether or not this investment was made 
during the notified period?   Reply 
 As previously mentioned in the document G/SCM/Q2/CAN/52, the $300 million repayable contribution is to be applied to eligible costs spent on the project described in the contribution 
agreement, from 2 July 2009 to 31 March 2015. Fiscal year 2009/2010 started on 1 April 2009 and 
ended on 31 March 2010.  
 
                                               
1 G/SCM/Q2/CAN/61. 
2 G/SCM/N/253/CAN. G/SCM/Q2/CAN/62 
 
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  Question 3 
 The description of the program indicates that  assistance is made through contributions 
of up to 40% of the eligible costs of the research. Can Canada explain how a "repayable 
investment" into research (rat her than into a company) op erates under this program? 
 Reply 
 As previously mentioned in the document G/SCM/Q2/CAN/52, under the Strategic Aerospace and Defence Initiative (SADI) program, the Government of Canada does not "invest" in a company; rather, the Government of Canada provides repayable contributions to Canadian companies for the 
purpose of undertaking research and development into aerospace, defence, space and security 
projects. Under the SADI program, the Government of Canada can reimburse a recipient for up to 40% of its eligible costs with respect to the project. A recipient's eligible costs include its non-
recurring costs and may include labour, materi al, overhead, specialized equipment and other 
costs, which are attributable to the eligible activi ties associated with the R&D project. A recipient 
submits claims for reimbursement of its eligible costs for its project, and these claims are reviewed 
by the Government of Canada which determines whether the claims are eligible for 
reimbursement. Once a recipient has completed the R&D phase of its project, it is required to begin repayment of the contribution.  
 
Question 4 
 Crédits d'impôt pour la Gaspésie et certaines régions maritimes du Québec 
 
Public information indicates that entities in the maritime industries receive higher levels 
of tax benefits under this program than en tities in other covered industries. Could 
Canada please explain how these differentia l benefits are provided under this tax 
program as well as the policy objective an d purpose of such different treatment? 
 Reply 
 As previously mentioned in the document G/SCM/Q2 /CAN/52, entities in the maritime industries 
do not receive tax benefits under this program. 
 
PROVINCIAL PROGRAMS NOT NOTIFIED  
Public sources indicate that Canada's pr ovincial governments administer several 
programs that were not included in this notification. For certain of these programs, the United States has previously asked Canada  in prior submissions to explain why the 
program was not notified pursuant to Ar ticle 25 of the Subsidies Agreement. For 
example, the Secretariat's Report in Cana da's 2011 Trade Policy Review states that 
"Federal and provincial incentiv es are available in areas such as film and TV production; 
investment; research and development; mine ral exploration; and renewable energy". 
See W/TPR/S/246 at pg. xi, para. 13. The Un ited States expresses its concern that 
Canada's current notification still does not notify such programs. Could Canada address 
why it has not notified programs that the Secretariat was able to identify? 
 
Reply 
 As mentioned in the past and in document G/SCM/Q2/CAN/52, Canada supports the subsidy 
notification process as being an important tran sparency exercise and agrees that sub-federal 
subsidy programs that are determined to meet Canada's obligation under Article 25 of the ASCM should be notified.  
 
As such, the federal government is engaged in co ntinuing consultations with the provincial and 
territorial governments regarding subsidy notification requirements. During the consultation for 
the 2013 notification, five provinces and three te rritories informed the federal government of 
programs that meet the criteria for the purposes of notification. Canada has demonstrated continued improvement compared to the 2009 notification, where two provinces provided 
information, and the 2011 notification, where five provinces and one territory provided 
information.  G/SCM/Q2/CAN/62 
 
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Canada's 2013 subsidy notification represents our best efforts to notify all specific subsidy programs, at both the federal and sub-federal level, as required under Article 25 of the ASCM.  
Question 5 
 Investissement Québec; Government of Qu ébec Aeronautical Development Strategy 
 
Canada's most recent response on Inve stissement Québec (see G/SCM/Q2/CAN/38, 
9 April 2010) acknowledges that this program pr ovides "tax assistance" to a limited set 
of raw materials processing in dustries. Can Canada please ex plain why it did not notify 
this program pursuant to Article 25?  
 Reply 
 As previously mentioned in the document  G/SCM/Q2/CAN/52, Investissement Québec  is a 
development agency, not a program. The agency manages tax assistance measures for companies 
engaged in the manufacturing and processing of a wide range of products involving wood, energy, 
foodstuffs, metals, peat, slate, precious or semiprecious stones, recycling of waste and residue from development or processing of natural resource s, printing or publishing, non-metallic minerals 
and so on. Under Article 25 of the ASCM, Members are required to notify specific subsidies. Since 
Investissement Québec  is not a specific subsidy, and does not provide specific subsidies, Canada 
did not provide notification pursuant to Article 25.   
Question 6 
 Regarding Government of Quebec support for the aerospace industry, Canada's previous 
response has been to state that the Québec Aeronautical Development Strategy "is not a 
programme and therefore has no budget". See G/SCM/Q2/CAN/38. However, there 
have been numerous reports over the years th at the Quebec provincial government has 
provided loans and loan guarantees throug h Investissement Quebec to support the 
aerospace industry. For example, in December 2004, it was reported that 
Investissement Québec provided $750 million in loan guarantees to Bombardier in order 
to back sales of about 100 regional jets . In addition, in May 2005 Investissement 
Québec provided $75 million in royalty-based financing to Pratt & Whitney for research 
and development. This was to be distribute d over 3 years and repayment was reportedly 
not scheduled to begin until 2030. It has also b een reported that Investissement Québec 
has provided $118 million in financing for a plant near Montreal that will be used to 
assemble Bombardier's new C-Series aircraft . According to Quebec public documents, 
the first disbursement was made in July 2009 (FY 2009-2010), i.e. in the period covered 
by current notification. Can Canada explain why its current and previous notifications 
make no reference to these activi ties of the Quebec government?  
 Reply 
 As previously mentioned in the document G/SC M/Q2/CAN/52, the December 2004 loan guarantees 
were not provided under a program which was maintained during the period covered by this or the 
previous notification. Furthermore, the Governme nt of Québec did not provide $118 million in 
financing for a plant to be used to assemble Bomb ardier's new C-Series aircraft. This is a factual 
mistake. Rather, this represents the maximum amount of a repayable contribution to Bombardier for research and development in the CSeries program. 
 
Question 7  
Government of Quebec Program for Lab Research Inc.   
 Canada's response in G/SCM/Q2/CAN/3 8 to US questions on this program 
acknowledges that the Government of Quebec  has provided funding to a company that 
engages in commercial research and develo pment on a contract basis. Canada's 
previous response, however, does not expl ain why the program need not be notified. 
Can Canada please explain why it did not noti fy this program pursuant to Article 25?  
 G/SCM/Q2/CAN/62 
 
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  Reply 
 
As previously mentioned in the document G/SCM/Q2/CAN/52, the Government of Québec's programs which provided funding to Lab Research Inc. are not specific and do not have to be 
notified under Article 25 of the ASCM. 
 Lab Research Inc. provides pre-clinical and non-clinical contract research services in the 
pharmaceutical, biotechnology, agro-chemistry and industrial sectors. The aid was granted in the 
context of a second extension of the company's facilities. It is limited on the one hand to covering costs incurred in the expansion of premises us ed exclusively and permanently for research 
purposes in an amount of $2 million for an investment of at least $24 million, and, on the other, to 
covering expenditures relating to staff engaged solely in research activities for specialized training 
in an amount of the order of $529,000.  
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