G/SCM /Q2/USA/72  
 
24 April 2017  
(17-2235) Page: 1/7 
Committee on Subsidies and Countervailing Measures  Original: English  
 
SUBSIDIES  
REPLIES TO QUESTIO NS FROM CANADA1 REGARDING  THE NEW AND  
FULL NOTIFICATION  OF THE UNITED STATES2 
The following communication, dated 24 April 2017 , is being circulated at the request of the 
Delegation of the United States . 
 
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FEDER AL PROGRAMS  
 
Question 1 
 
According to the Catalog of Federal Domestic Assistance, there are about 2,360 Federal 
assistance programs in the form of grants, loan, loan guarantees, etc. Some programs 
provide social support, but several other programs appear t o meet the notification 
requirements under the Article 25 of the Agreement on Subsidies and Countervailing 
Measures. Could the United States address why it has not notified such programs, 
including for example, the Biorefinery Assistance Program, Fishermen 's Contingency 
Fund, and the Beginning Farmer and Rancher Development Program?  
 
Reply  
 
We will consider including the Biorefinery Assistance Program in our next subsidy notification. The 
Fisherman 's Contingency Fund is funded by private industry to compens ate fishermen for damage 
to their equipment caused by oil and gas drilling equipment. There is no government financial 
contribution. The Beginning Farmer and Rancher Development Program is not specific. If there are 
other specific programs with which Canad a is concerned, please specifically identify them and we 
would pleased to address your concerns.  
 
Question 2  
 
1.1.1  The Dairy Export Incentive Program (DEIP)  
 
Could the United States clarify whether the repealed programs have been replaced with 
any altern ative programs under the 2014 Act during the reporting period?  
 
Reply  
 
There are no new or alternative programs to replace the DEIP program.  
 
Question 3  
 
1.2 Agricultural Domestic Support Programs  
 
Could the United States provide examples of 'other policy  instruments ' (6 – Trade 
Effects) that impede the determination of trade effects?  
                                                
1 G/SCM/Q2/USA/67.  
2 G/SCM/N/2 84/USA. G/SCM/Q2/USA/72  
 
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  Reply  
 
We are simply referring to the broad range of trade -distorting measures used by many WTO 
members that may also affect trade.  
 
Question 4  
 
Disaster Assistance and Risk Management Assistance for Agricultural Producers  
(j) Disaster payments  
 
Could the United States clarify how many counties received a disaster payment?  
 
Reply  
 
580 counties received payments under the Livestock Indemnity Program; 18 counties received 
paymen ts under the Tree Assistance Program; and 535 counties received payments under the 
Livestock Forage Program.   
 
Question 5  
 
Other Programs  
(m) Grazing Livestock on Federal Land  
 
Could the United States provide more information on the allocation  of public r ange land 
to the 16  Western states?  
 
Reply  
 
Any U.S. citizen or validly licensed business can apply for a Bureau of Land Management (BLM) 
grazing permit or lease. To do so, one must either:  
 
 Buy or control private property known as base property (property that has been legally 
recognized by the BLM as having preference for the use of public land grazing privileges), 
or 
 
 Acquire property that has the capability to serve as base property and then apply to the BLM 
to transfer the preference for grazing privile ges from an existing base property to the 
acquired property.  
 
All applicants for grazing permits or leases must meet the qualifications for public land grazing 
privileges that are specified in the BLM 's grazing regulations.  
 
Question 6  
 
5.1 Capital Gains T reatment of Certain Timber Income  
 
Could the United States provide more information on who are the actual users of this 
program and how it works?  
 
Reply  
 
Under Section 631, taxpayers who own or have a contract right to cut timber can elect to treat cut 
timber as a sale or exchange of a capital asset eligible for treatment under capital rules. A 
taxpayer making this election must apply this treatment to all sales of timber in the current and all 
future taxpayers unless the Secretary of Treasury allows the t axpayer to revoke the election for 
undue hardship. C corporate taxpayers would generally not benefit from this provision because 
capital gains are taxed at the same rate as other income and capital losses can only be used to 
offset capital gain or carried forward to future years. Individual taxpayers would be eligible for the 
preferential rates on capital gains provided that the one -year holding period requirement is met.  
 
This is a long -standing provision in the Internal Revenue Code enacted originally  as a simplification 
provision.  Without this section, individual owners of timber lots would have to sell the land with G/SCM/Q2/USA/72  
 
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  the timber on it in order to benefit from the provision and then repurchase the land after the 
timber had been cut in order to continue in t he timber business.  
 
Question 7  
 
5.2 Expensing of Multi -period Timber Growing Costs  
 
Could the United States provide more information about who are the beneficiaries of this 
program? Do they belong to any trade group?  
 
Reply  
 
As is common in most countries , such information is not releasable . 
 
Question 8  
 
10.1 Empowerment Zones  
 
How are the "distressed areas " under this program determined? Is there a benchmark – 
spatial or temporal – to which the status of a distressed area is compared?  
 
Reply  
 
Empowerment Zones (EZs) were designated in three rounds: Round I in 1994, Round II in 1998, 
and Round III in 2002. Each round involved a competitive application process in which eligible 
areas were chosen based on the effectiveness of the strategic plan and other crit eria specified by 
the designating agency. To be eligible, areas must be one of pervasive poverty, unemployment, 
and general distress. The relevant poverty criteria were given in the statute while the 
unemployment and general distress indicators were define d by regulation. For Round I EZs, each 
census tract in a nominated area must have a poverty rate of at least 20 %, 90% of the tracts 
must have a poverty rate of at least 25 % and 50 % of the tracts must have a poverty rate of at 
least 35 %. For Round II and Ro und III EZs, each census tract in a nominating area must have a 
poverty rate of at least 20 %, and 90 % of the tracts must have a poverty rate of at least 25 %. In 
addition, each eligible area must meet population and size restrictions.  
 
Question 9  
 
10.2 New Markets Tax Credit  
 
Could the United States provide more information about the Community Development 
Entities that are the recipients of this tax credit?  
 
Reply  
 
A Community Development Entity (CDE) is a domestic firm that is an intermediary vehicle for the 
provision of loans, investments, or financial counselling in low -income communities. To become a 
CDE, a firm must have a primary mission of serving low -income communities, maintain 
accountability to residents of low -income communities, and be certified  by the U.S. Department of 
the Treasury. For more information, including a list of allocation amounts, see :  
https://www.cdfifund.gov/programs -training/Programs/new -markets -tax-
credit/Pages/default.aspx . 
 
Question 10  
 
Programs not reported  
 
Could the United States explain how the Export Credit Guarantee Program (GSM -102) 
program is consistent with the United States ' obligations under Articl e 3 of th e 
SCM Agreement?  
 G/SCM/Q2/USA/72  
 
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  Reply  
 
The Nairobi Ministerial Decision on Export Competition sets forth internationally agreed disciplines 
to govern the provision of export credits, export credit guarantees or insurance programs. The 
GSM-102 program provides export cr edit guarantees in conformity therewith.  
 
SUB-FEDERAL PROGRAMS  
 
Question 11  
 
Programs not reported  
 
Canada appreciates the United States ' efforts to notify sta tes subsidies. Could the 
United  States address why it has not notified programs for the state of Kansas, including 
for example, StartUp Kansas and Kansas High Performance Incentive Program?  
 
Reply  
 
StartUp Kansas provides gap financing to help entrepreneurs start or grow a business in Kansas. 
The loan program matches up to 150% of other public sources  of capital and/or funds from a 
financial institution such as a bank. Up to $45,000 can be provided per project. Funds are flexible 
and can be used for a variety of business purposes, including equipment, inventory, and working 
capital. Entrepreneurs work with a NetWork Kansas resou rce partner to apply for funds.  
 
StartUp Kansas was launched in August of 2006 to provide funding for startups and expansions of 
existing businesses in  rural (population less than 50,000) and  distressed  Kansas communities in 
the form of matching loans. This program does not appear to be limited according to industry type.  
 
Kansas High Performance Incentive Program encourage companies to expand their capital 
investment and raise employee wage and training levels through Kansas inco me tax credits and 
sales tax project exemptions. To qualify, a company must: 1) be a for -profit company subject to 
state taxes; 2) pay above -average wages (as compared to other similar firms in the same 
geographical area with matching NAICS codes); 3) make  a significant investment in eligible 
employee training and 4) be either a manufacturer or able to document that most of its sales are 
to Kansas manufacturers and/or out -of-state businesses or government agencies. A business in 
any NAICS code can qualify i f it is a headquarters or back -office operation of a national or multi -
national corporation. HPIP can offer three state tax benefits: investment tax credits, employee 
training tax credit and sales tax project exemptions. This program does not appear to be limited to 
certain industries.  
 
Question 12  
 
Arkansas - Quick Action Closing Fund  
 
Could the United States identify the sectors or industries that benefitted from this fund 
and identify the job and investment guidelines that must be met by a recipient for  
eligibility? Could the United States provide the value and number of the grants provided 
by this fund in the 2013 and 2014 fiscal years?  
 
Reply  
 
Established by Arkansas Code 19 -5-1231 The Quick Action Closing Fund is comprised mainly of 
funding transferr ed from the General Revenue Allotment Reserve Fund. Quick Action Closing Fund 
(deal closing) is Arkansas ' discretionary deal closing fund. Funds are provided directly to a 
company to be used for eligible uses, to include building upfit, site preparation, i nfrastructure, and 
training. The Governor must first approve any proposed use of the funds by the Arkansas 
Economic Development Committee. The funds provided directly to a company for eligible uses 
include: building upfit, site preparation, infrastructure,  and training. The Governor must first 
approve any proposed use of the funds by the AEDC. Upon approval of the Governor submits the 
proposed use of the fund for review by the Legislative Council. Originally established as a 
$50 million fund, FY 2014 approv ed amount was $20 million (biennial). The Fund was not funded G/SCM/Q2/USA/72  
 
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  in the latest session of legislature. This program does not appear to be limited to certain 
industries.  
 
Question 13  
 
Delaware - Delaware Strategic Fund  
 
Could the United States identify the se ctors or industries that benefitted from this fund? 
Could the United States provide the value and number of the grants provided by this 
fund in the 2013 and 2014 fiscal years?  
 
Reply  
 
Various industries and sectors such as: aerospace & aviation, general m anufacturing, computer, 
electronic, electrical, appliance, component manufacturing, agribusiness business, financial 
services chemicals & advanced material, healthcare & life sciences and leisure & hospitality have 
benefitted from the Delaware Strategic fu nd. Consequently, the program does not appear to be 
specific.  
 
Question 14  
 
Florida - Quick Action Closing Fund  
 
Could the United States identify the sectors or industries that benefitted from this fund 
and identify the requirements a recipient must meet  for eligibility? Could the United 
States provide the value and number of the grants provided by this fund in the 2013 and 
2014 fiscal years?  
 
Reply  
 
Quick Action Closing is a tool used to finalize negotiations for highly competitive projects. This 
"deal-closing " fund awards cash grants to major relocation projects. Closing fund awards are paid 
out after the business has made a substantial capital investment toward tangible personal property 
ties to the project. The program does not appear to be limited by industry. There are sanctions 
and penalties included in each contract to protect taxpayer investments. Grant approval amounts 
for fiscal year 2014 and 2013 are $44,655,440 and $43,724,500 respectively.  
 
Question 15  
 
Illinois - Large Business Development Pr ogram  
 
Could the United States identify the sectors or industries that benefitted from this 
program and identify the requirements a recipient must meet for eligibility? Could the 
United States provide the value and number of the grants provided by this pr ogram in 
the 2013 and 2014 fiscal years?  
 
Reply  
 
Eligibility for this program does not appear to be limited by industry.  Grants made in the 2013 
and 2014 fiscal years by the Large Business Development Progra m can be found by 
searching  the Illinois Departm ent of Commerce & Economic Opportunity 's website at 
http://granttracker.ildceo.net/ .   
 
Question 16  
 
Michigan - Border County Incentives  
 
Could the United States identify the sectors or industries that recei ved assistance from 
this program? Could the United States provide the value and number of tax abatements 
provided by this program in the 2013 and 2014 fiscal years?  
 G/SCM/Q2/USA/72  
 
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  Reply  
 
This program was included in our notification. Eligible businesses that locate in a  county that 
borders another state or Canada may qualify for special tax incentives under PA 198 of 1974 (as 
amended) and PA 328 of 1998 (as amended). The administering authority for this program  does 
not keep records of companies that are eligible based o n the border county incentive program. 
Companies can qualify under other provisions that are not related to the border county incentives, 
and the majority of applications processed are not related to the border county incentive program.  
Particular "PA 198 " certificates and applications can be found using an online query tool, which can 
be found at: https://treas -secure.state.mi.us/ife/ . Yearly activity reports for "PA 328 " exemptions 
can be found at: http://www.michigan.gov/taxes/0,1607,7 -238-43535_43925 -164518 --,00.html . 
It is possible to see what exemptions have been granted in specific counties using both of these 
tools, but it is not possible to tell which exemptions were granted because of the company 's border 
county status as opposed to qualifying under other provisions of the statute.  
 
Question 17  
 
Ohio - Other programs not reported  
 
Could the United States expl ain why the Ohio Job Creation Tax Credit is not among the 
programs by the state of Ohio included in this notification? Could the United States 
identify the sectors or industries that benefitted from  this program? Could the 
United  States provide the value a nd number of the grants provided by this program in 
the 2013 and 2014 fiscal years?  
 
Reply  
 
Under the Ohio Job Creation Tax Credit, companies with at least $660,000 in annual payroll, that 
pay at least 150 % of the federal minimum wage and create at least 1 0 new jobs within a 3 -year 
period are eligible for the refundable tax credit. Eligibility does not appear to be limited by 
industry. For additional information, please see:  
https://development .ohio.gov/summary_43jctc.htm  
and http://jobs -ohio.com/why -ohio/incentives/ . 
 
Question 18  
 
Puerto Rico - Puerto Rico Trade and Export Company  
 
Based on information on the Puerto Rico Trade and Expor t Company website, the 
program offers a number of specialized services that facilitate the expansion of local 
companies to international markets. Could the United States clarify whether there is any 
export performance or import substitution requirements as sociated with this fund? Can 
the United States explain how these requirements are consistent with Articles 3.1(a) 
and (b) of the Agreement on Subsidies and Countervailing Measures?  
 
Reply  
 
The export -related services provided by this program consist of gen eral informational activities 
that do not promote particular products over others, such as information concerning export 
opportunities. (Many Members have similar programs.) The Company does provide certain 
assistance to SMEs establishing businesses in Pue rto Rico, but such assistance is neither 
contingent on exporting from Puerto Rico nor specific under Article 2.1(b).  
 
Question 19  
 
Texas - Texas Enterprise Fund  
 
Could the United States identify the sectors or industries that benefitted from this fund 
and identify the requirements a recipient must meet fo r eligibility? Could the 
United  States provide the value and number of the grants provided by this fund in the 
2013 and 2014 fiscal years?  
 G/SCM/Q2/USA/72  
 
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  Reply  
 
Eligibility requirements for the Texas Enterprise Fund rel ate to the ability of the project to create 
or retain jobs in the state of Texas. Eligibility is not limited by industry.   
 
Question 20  
 
Utah - Industrial Assistance Fund  
 
Could the United States identify the sectors or industries that benefitted from th is fund? 
Could the United States provide the value and number of the grants provided by this 
fund in the 2013 and 2014 fiscal years?  
 
Reply  
 
Eligibility requirements for the Industrial Assistance Fund are related to creation of jobs in the 
state of Utah. T he basic requirements are as follows: 1) enter into an incentive agreement with the 
Governor 's Office of Economic Development; 2) create new hi gh-paying jobs in the state; 
3) demonstrate company stability and profitability; and 4) demonstrate competition w ith other 
locations. Funding is set aside from the General Fund Surplus in years where there is a surplus. 
There is no limitation on the type of industries eligible .  
 
Question 21  
 
Virginia - Commonwealth 's Development Opportunity Fund  
 
Could the United S tates identify the sectors or industries that benefitted from this fund? 
Could the United States provide the value and number of the grants provided by this 
fund in the 2013 and 2014 fiscal years?  
 
Reply  
 
The Commonwealth 's Opportunity Fund (COF), formerl y known as the Governor 's Opportunity 
Fund (GOF), is an incentive available to secure a business location or expansion project for 
Virginia. Grants are awarded to localities on a local matching basis with the expectation that the 
grant will result in a fav orable location decision for the Commonwealth. This program does not 
appear to be limited by industry.  
 
 
 
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