G/SCM/Q2/AUS/52  
 
25 March 2014  
(14-1841)  Page: 1/5  
Committee on Subsidies and Countervailing Measures  Original: English  
 
SUBSIDIES 
REPLIES TO QUESTIONS FROM MEXICO1 REGARDING THE NEW 
AND FULL NOTIFICATION OF AUSTRALIA2 
The following communication, dated 21 March 2014, is being circulated at the request of the 
delegation of Australia.  
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  Question 1 
 
Automotive Transformation Scheme : As regards the objectives of the ATS, it is stated 
that the programme "encourages competitive in vestment". In this respect, Australia is 
requested to describe the criteria used to  determine whether an investment can be 
considered competitive. 
Please would Australia also provide info rmation on the amounts that have been 
allocated and the enterprises th at have benefited from them? 
Reply 
Australia refers to the full quotation in its subsidy notification describing the Automotive 
Transformation Scheme. This scheme "encourages competitive investment and innovation in the 
Australian automotive industry in a way that will provide improved environmental outcomes and 
promote the development of workforce skills".  
The Scheme provides assistance to participants for investment in eligible research and 
development. The terms and conditions for receiving assistance under the Automotive Transformation Scheme (ATS) are set out in the following legislation: the ATS Act 2009 , the ATS 
Regulations 2009  and the ATS Order 2010 . Copies of the relevant ATS legislation can be found on 
ComLaw at the following link: http://www.comlaw.gov.au/  
 
The ATS Regulations 2010 contain the detail of what constitutes allowable investment in plant and 
equipment (Regulation 1.17), and allowable research and development (Regulation 1.20). 
Regulations 2.4 to 2.7 set out the eligibility requirements for firms to register for assistance under the ATS.  
 
The details of what constitutes eligible investment, as provided in the ATS Regulations, were previously outlined by Australia at page 13 of Australia’s replies to the European Union in 
document G/SCM/Q2/AUS/45/Rev.1 dated 16 April 2012 but are repeated below for ease of 
reference.  Eligible investment  is defined in the relevant legislation. 
 
Eligible investment  is investment by a participant in the Scheme in allowable plant and 
equipment or allowable research and develo pment. Allowable plant and equipment is: 
                                               
1 G/SCM/Q2/AUS/50.   
2 G/SCM/N/253/AUS. G/SCM/Q2/AUS/52 
 
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  (a) plant and equipment for the manufacture, asse mbly, design, development or engineering of 
motor vehicles, engines, engine components, automotive components, automotive machine tools or automotive tooling;  
(b) plant and equipment directly supporting the manufacture, assembly, design, development or 
engineering of motor vehicles, engines, engine components, automotive components, automotive machine tools or automotive tooling; 
 
(c) plant and equipment required to comply wi th a law of the Commonwealth, a State or a 
Territory relating directly to the manufacture, assembly, design, development or engineering of motor vehicles, engines, engine components, automotive components, automotive machine tools 
or automotive tooling; 
 (d) plant and equipment for the activation of manuf acturing processes for the production of motor 
vehicles, engines, engine components, automotive components, automotive machine tools or 
automotive tooling;  
(e) plant and equipment facilitating the provision of automotive services or allowable research and 
development;  (f) plant and equipment indirectly supporting function s that are integral to the production of motor 
vehicles, engines, engine components, automotive components, automotive machine tools or 
automotive tooling.  
Allowable research  and development  is research and development activities that are: 
 (a) directly related to the design, development,  engineering or production of motor vehicles, 
engines, engine components, automotive components, automotive machine tools or automotive 
tooling; and  (b) undertaken for the purpose of: (i) acquiring ne w knowledge; or (ii) creating new or improved 
materials, products, devices, production processes or services. 
 And includes the following activities: 
 
(a) basic and strategic research;  
(b) industrial and engineering design; 
 (c) production engineering;  
(d) development activities relating to the building and testing of prototypes; 
 (e) re-engineering and modification of existing products and processes; 
 
(f) development and installation of purpose-de signed systems for: (i) quality assurance and 
process control; or (ii) materials or movement control; 
 
(g) testing and modification of new production systems (either purpose-built or interchangeable) to achieve repeatability within specified tolerances;  
(h) obtaining industrial property rights, including:  (i) the preparation and lodging of applications 
and other documents that are required to be lodged, in Australia or elsewhere, for the initial grant or registration of the rights; and (ii) the initial grant or registration of the rights, in Australia or 
elsewhere; 
 (i) activities conducted at the ATS participant’s own expense that are aimed at improving a 
product or process of an engine or component supplier to the ATS participant. 
 Regulations 6.5 and 6.6 of the ATS limits the publication of information in relation to the ATS. The Department of Industry may only release aggregate information through its annual report. As a 
result, information in respect of the 2011 ATS year can be found in the Department’s 2011/12 G/SCM/Q2/AUS/52 
 
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  annual report and the information on the 2012 ATS year can be found in the Department’s 
2012/13 annual report.   The following information has been taken from these annual reports. 
 
Total assistance paid to ATS participants for the 12-month period ending 31 March 
 2012 2013 
Motor vehicle producers $256,028,201 $232,019,742 
Automotive component producers $127,979,414 $121,410,396 
Automotive machine tool producers $2,896,529 $2,790,485 
Automotive service providers $302,387 $315,729 
Total $387,206,532 $356,536,353 
 
Links to the annual report are:  
2011/12:  
http://www.industry.gov.au/AboutUs/CorporatePub lications/AnnualReports /Pages/AnnualReport20
1112.aspx  
 
2012/13:  http://www.industry.gov.au/AboutUs/CorporateP ublications/AnnualReports/AnnualReport201213/
wp-content/uploads/annual-report-2013-part-c.pdf  
 
Question 2 
Automotive New Markets Program : With reference to the objective of the programme, 
which is to assist companies to "broaden their customer and product base", Mexico 
requests that Australia explain in greater detail how enterprises achieve this broader 
base. 
Reply 
The Automotive New Markets Program (ANMP) is a competitive grants program. The terms and 
conditions for receiving a grant under the ANMP are set out in the ANMP Ministerial Guidelines. Section 9 of the Guidelines sets out the merit criteria that must be met before an applicant can 
receive an offer of a grant, while section 11 sets out the scope of projects and activities supported 
by the program.   
Each application is assessed against the following merit criteria: 
 
(a) whether the project outcome will meet the objective of the ANMP to assist Australian 
automotive supply chain companies broaden their customer and product base, both 
domestically and internationally, by either:  
(i) supplying new products or services to customers in the domestic or 
international automotive industry; or 
(ii) supplying products or services to new customers in international or domestic 
non-automotive industries; and 
 
(b) the capacity and capability of the applicant to undertake the project; and 
 
(c) the contribution of the project to the econ omic sustainability of the applicant; and 
 
(d) the contribution of the project to the economic sustainability of the Australian 
automotive supply chain and the broader economy. 
 
A project under the Program must involve one or  more of the following eligible activities: 
 
a) research and development activities undertaken in Australia;  
 
b) re-tooling activities undertaken in Australia;  G/SCM/Q2/AUS/52 
 
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  c) proof-of-concept activities undertaken in Australia;  
 
d) early-stage commercialisation activities undertaken in Australia;  
 
e) pre-production development activities undertaken in Australia;  
 
f) improving employee capabilities, including leadership and management capabilities, 
undertaken in Australia;  
 
g) imbedding of Australian automotive design  and engineering employees with customers 
or joint venture partners to develop manufacturing or engineering solutions for a 
project that is to lead directly to increasing the applicant’s Australian based 
capabilities;  
 
h) other activities that the ANMP Assessment Panel regards as being necessary for 
broadening a company’s customer or product base. 
 
Additional information on the ANMP, including the Ministerial Guidelines can be found at: 
http://www.industry.gov.au/industry/automotive/In itiativesandAssistance /ANMI/Pages/ANMP.aspx  
 
Question 3 
 
Clothing and Household Textile (Building I nnovative Capability) Scheme (BIC Scheme) : 
Would Australia please provide further inform ation on the eligibility criteria used to 
assess potential beneficiaries? 
Reply 
To be eligible for this scheme, an entity must show that it is undertaking or proposes to undertake 
eligible activities as defined in the scheme. Eligible activities are limited to clothing and household 
textile manufacturing and/or design for manufacturing in Australia, activities listed in Parts B and C of Schedule 1 (i.e. knitting mills manufacturing and clothing manufacturing) or that result in a household textile product listed in Schedule 2 of the BIC Scheme (i.e. curtains, towels, bed linen). 
The following activities are not eligible under the BIC Scheme: textile floor covering 
manufacturing, footwear manufacturing, leathe r manufacturing, made-up textile and leather 
product manufacturing, and technical textile manufacturing. Textile fibre, yarn and fabric 
manufacturing activities (Part A Schedule 1) are in general not eligible under the scheme. 
However, it is an eligible activity if it is a wholly and mutually interdependent activity to clothing and household textiles manufacturing activities. 
 
Innovation grants are available on an entitlement basis in relation to research and development including innovative product design activities, innovative process improvements, market research and some industrial property rights expenditure. Grants fund up to 50 per cent of eligible 
expenditure. Grants are capped at five per cent of the sales of the eligible products manufactured 
in Australia and modulated to ensure they do not exceed the legislated annual cap.  
The entity must incur eligible expenditure in excess of AUD200,000 to receive their first grant. All 
grants are paid annually and in arrears.  
The following website provides further details: 
http://ausindustry.gov.au/programs/manufacturing/bic-scheme/Pages/default.aspx  
 
Question 4 
 
Steel Transformation Plan : Since one of the programme objectives is to encourage 
competitiveness, would Australia please elab orate on the parameters taken into account 
in considering that the beneficiaries will be come more competitive as a result of the 
implementation of the STP? Mexico would al so like to know how many enterprises have 
benefited from the programme so far. 
 G/SCM/Q2/AUS/52 
 
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  Reply 
 
T h e  S t e e l  T r a n s f o r m a t i o n  P l a n  i s  s c h e d u l e d  f o r  r e p e a l  a s  p a r t  o f  t h e  r e p e a l  o f  t h e  C a r b o n  P r i c e  legislation. The Plan contains contains two elem ents. The first is a $300 million entitlement (self-
assessment) scheme that operates over the five  years from 2012-13 and the second provides for 
competitiveness assistance advance payments ut ilised from the $300 million, with competitive 
advancements of $164 million made in 2011-12. 
 
An applicant must report the extent to which the applicant has taken measures, or plans to take measures, to reduce its emissions and improve the environment; the extent to which the applicant 
is promoting the development of its workforce’s skills as well as on eligible investment and 
innovation. Such eligible activities for example include research and development on the 
production of steel, acquiring new knowledge, creating new or improved materials, products, devices, production or processes.  
 
Further details relating to the plan ca n be found on the following website: 
http://www.ausindustry.gov.au/programs/ manufacturing/STP/Pages/default.aspx 
 
To date, two companies are beneficiaries.   
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