WORLD TRADE  
ORGANIZATION  G/SCM/Q2/CAN/35 
5 February 2010 
 (10-0647) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Questions Posed by the UNITED STATES Regarding the  
New and Full Notification of CANADA1 
 
  The following communication, dated 4 February 20 10, is being circulated at the request of the 
Delegation of the United States.    
_______________ 
 
 
Structured Financing Facility  
 Question 1 
 
Based on the description of this programme pr ovided in Canada's notification, financing 
assistance is provided to purchasers/lessors of Cana dian-built vessels.  In response to previous 
questions about this programme, Canada stated th at "any assistance provided is not contingent upon 
the use of domestic over imported goods or upon export performance".  Please further explain how 
the stated objective of this programme, "to stim ulate demand for new Canadian-built vessels produced 
in existing Canadian shipyards", is met.     
Canadian Apparel and Textiles Industries Programme  
 
Question 2 
 
One of the objectives of this programme is to help the apparel and textile manufacturing 
sectors in Canada "develop and implement global strategies".  Please explain how companies qualify for assistance under this programme.  Must recipients  be exporters in order to qualify for benefits 
under this programme?   
 
Strategic Aerospace and Defence Initiative 
 
Question 3  
 
This programme provides assistance for strategic research and development in the aerospace 
and defence (A&D) industries to foster, among othe r things, "the competitiveness of Canadian A&D 
companies".  Please explain in further detail the co nditions that must be met for a project to qualify 
for funding under this programme.   
                                                     
 
1 G/SCM/N/186/CAN.   G/SCM/Q2/CAN/35 
Page 2  
 
  PRECARN 
 
Question 4  
 
According to the description, one of the progr amme's objectives is to "boost the productivity, 
agility and global competitiveness of Canadian firm s through the development and application of 
robotics and intelligent systems-enabled solutions that have market demand".  Please explain the 
conditions that must be met for a project to  qualify for funding under this programme.   
 
Provincial Programmes not Notified 
 
 Public sources indicate that Canada's provincial governments administer several programmes that were not included in this notification.  Fo r each of these programmes, please explain whether the 
programme is still in place and, if so, why the prog ramme was not notified purs uant to Article 25 of 
the Subsidies Agreement.  Further, please conf irm that these programmes conform to Canada's 
commitments under Article 3 of the Subsidies Agreement.   
 
Investissement Quebec 
 Question 5  
The United States has previously asked Canada  about Investissement Québec, an economic 
development organization that provides financial assi stance to companies in Quebec.  Most recently, 
Canada stated that Investissement Québec (IQ) "m anages different types of assistance programmes to 
companies" but that such assistance does not constitu te a subsidy as defined by Article of the ASCM 
and is thus not subject to the notificati on requirements under Article 25 of the ASCM".
2  However, the 
public website of IQ explains that assistance under IQ includes a range of "tax assistance measures" 
for corporations engaged in "specialized activities"  or that are set-up in "a designated region of 
Quebec".  Eligible operations for some of these ta x measures appears to be limited to enterprises 
engaged in the manufacture or processi ng of wood, energy, metals or food products.  Others appear to 
condition eligibility to enterprises locat ed in certain regions of Quebec, such are the Maritime regions 
of Bas-Saint Laurent, Côte-Nord and Gaspésie.   
 
Government of Qu ébec Programme for Lab Research Inc   
 
Question 6  
  According to 2008 reports, the Québec govern ment provided more than $CN3 million in 
subsidies and loans to LAB Research Inc., to suppo rt the expansion of its Canadian facilities.  The 
Canadian-based global non-clinical contract rese arch organization also received a non-refundable 
contribution of $CN2 million.  The programme, admi nistered by the Quebec government's Minister of 
Economic Development, Innovation and Exportation, aims  to attract and retain research investments.  
LAB Research also received a $CN529,000 subs idy from the Quebec government to create 242 new 
jobs.  In addition, the corporation obtained a $C N500,000 loan from Canada Economic Development 
as part of the Business and Regional Growth Programme.   
                                                     
 
2 G/SCM/Q2/CAN/30.    G/SCM/Q2/CAN/35 
 Page 3 
 
 
  Government of Qu ébec Programme for Alcan   
 
Question 7  
 
 In 2006, the Québec government and aluminum producer Alcan signed an agreement to build 
an aluminum smelter in the Saguenay-Lac-Saint-J ean region.  Provisions of the agreement provided 
Alcan a $CN400 million interest-free loan over 30 year s; tax benefits worth $CN112 million;  a new 
block of 225 MW of electricity supplied by Hydro-Québec at the high-power L rate from 2010 to 2045;  extension of a sales contract for 342 MW delivered by Hydro-Québec at the high-power L rate from 2024 to 2045;  and extension of Alcan's rights over the waters of the Péribonka 
River from 2034 to 2058 for continuous power production of 900 MW.   
 Government of Qu ébec Aeronautical Development Strategy 
 
Question 8  
 
 According to the WTO's 2007 TPR for Canada , the Government of Québec in 2006 launched 
the Québec Aeronautical Development Strategy, a wide-ranging programme of assistance to Québec's 
aeronautical industry to support, inter alia , the "purchase of leading-edge equipment".    
 Government of Qu ébec Refundable Tax Credit for Vessels 
 
Question 9  
 
 According to the WTO's 2007 TPR of Canada, the Government of Québec offers a refundable 
tax credit for the construction of vessels, as well as  "a reduction of tax on capital on the acquisition of 
vessels made entirely in Québec".   
 
Question 10  
 
Enterprise Cape Breton Corporation Assistance 
  According to the WTO's 2007 TPR of Canada, The Enterprise Cape Breton Corporation 
promotes and assists the development of regional i ndustry through repayable contributions and other 
forms of investment to projects which support economic growth.  In the case of food processing, conditions include that "the market for the output of  this project must be import substitution or export 
orientated".   
 
Sector-Specific Provincial Programmes 
 
 Canada's 2007 WTO Trade Policy Review identified "sector-specific programmes" in shipbuilding, textiles, defence, fisheries, ener gy, film and TV, and various programmes at the 
provincial-levels, some on a cost-sharing basis with  the Federal Government.  The Report also notes 
that "no province or territory has indicated to the federal government that it has subsidies subject to 
the notification requirements of the Subsidies Agreement".    
Question 11 
  Could Canada please explain what additional provincial-level support programmes might 
exist and why these programmes at the provincial le vels should not be subject to the notification 
requirements of Article 25 of the Subsidies Agreement?     G/SCM/Q2/CAN/35 
Page 4  
 
   The 2007 TPR further states that "most provin ces offer tax incentives to  businesses that may 
take the form of tax credits, tax exemptions or tax holidays, in areas such as the film and TV industry, 
to generate employment or stimulate investme nt, manufacturing capacity ...".  Other incentives 
provided by the provinces are R&D funding and fuel ta x exemptions or rebates for certain commercial 
activities.   
 
Question 12 
 
 To the extent not already addressed elsewher e in its response, could Canada please explain 
why these programmes at the provincial levels should not be subject to the notification requirements 
of Article 25 of the Subsidies Agreement?   
   
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