WORLD TRADE  
ORGANIZATION  G/SCM/Q2/JPN/48 
29 March 2010 
 (10-1700) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
Replies to Questions Posed by the UNITED STATES1 
Regarding the New and Full Notification of JAPAN2 
 
  The following communication, dated 26 March 2010, is being circulated at the request of the Delegation of Japan.    
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Regional Specificity
 
 
Question 1 
 
 In its Communication of 8 July 2009 (Replies to Follow-up Questions from the United States Regarding the New and Full Noti fication of Japan, G/SCM/Q2/JPN/44), Japan 
stated its position that subsidy programmes li mited to certain regions are not necessarily 
specific.  The reason for this, in Japan's view, is that under Article 2.2 of the Subsidies 
Agreement to be specific a programme's benefits must be limited to enterprises located within a 
designated geographical region and
 also limited to certain enterprises.  Could Japan explain 
how this interpretation does not render Article 2.2 s uperfluous, in light of Article 2.1, the terms 
of which already render a measure specific if it is "limited to certain enterprises"?   
 
Reply  
 
 As explained in G/SCM/Q2/JPN/44, Japan thinks it's obvious that "specificity" is not automatically determined only from the fact that re levant subsidies are granted to a region, because 
elements to determine "specificity " is not only "located within a designated geographical region" but 
also "limited to certain enterprises" in accordan ce with Article 2.2 of the SCM Agreement.   
 
 Japan does not
 think such interpretation render Article 2. 2 superfluous, in light of Article 2.1, 
because, in our interpretation, the purpose of Article 2.2 is to make it clear that a subsidy granted by a 
local government, if it is regarded  as "specific", should be dealt with in the same way as a subsidy 
granted by a central government.   
                                                      
1 G/SCM/Q2/JPN/45.   
2 G/SCM/N/186/JPN.   G/SCM/Q2/JPN/48 
Page 2  
 
  Notified Programmes
 
 
Eligibility Requirements  
 
Question 2 
 
 For each of the following notified pr ogrammes, would Japan please describe the 
eligibility requirements for participation in the programme:   
 
Reply  
 
• Assistance for Development of Civil Aircraft 
 
 Participants in internationa l cooperative developments, which are provided for in the Law of 
Aircraft Industry Promotion are eligible for this programme.   
 
• Subsidy for the Leather and Leather Goods Industries 
 
 Local governments or non-profit associations wh ich contribute to the sound development of 
SMEs in the leather and leather goods industries in Japan are eligible for this programme.   
 
• Subsidy for Supporting the Manufacture of Traditional Craft Products 
 
 This subsidy is provided to manufacturing co-operatives and their members that produce 
traditional Japanese crafts, and to enterprises, groups , individuals, etc. that are engaged in the 
promotion of the traditional Japanese craft industry.    
• Subsidy for Promoting the Manufacture of Traditional Craft Products 
  This subsidy is provided to the Association fo r the Promotion of Traditional Craft Industries, 
which is engaged in the promotion of traditional Japanese craft industries.  This association is a 
private and incorporated non-profit organiza tion, and is provided for in the law.   
 
• Subsidy to Promote Action to Improve Energy Efficiency of Buildings under the 
Leadership of Energy Suppliers 
 
 Energy suppliers, local gove rnments, building-owners etc. who are capable of carrying out 
projects in accordance with the purpose of the pr ogramme and meeting the following requirements are 
eligible for this programme.    
 (i) The project is implemented based on the action plan to improve energy efficiency of 
buildings under the leadersh ip of energy suppliers. 
 
 (ii) The project of public relations activitie s is implemented based on the action plan to 
improve energy efficiency of buildings u nder the leadership of energy suppliers. 
 
• Subsidy for Promoting Biofuel 
 
 Entities which are capable of carrying out proj ects in accordance with  the purpose of this 
programme and meeting the following requireme nts are eligible for this programme.   
 
 (i) High technical ability to perform the project appropriately  G/SCM/Q2/JPN/48 
 Page 3 
 
 
   (ii) Sufficient accurate accounting and offi ce management systems to handle the project 
under the programme 
 
 (iii) Ability to conduct promotional activities and evaluation analysis regarding the project 
 
• Subsidies for Small and Medium-scale Hydropower Development 
  This subsidy is provided to the New Ener gy and Industrial Technology Development 
Organization (NEDO) as defined in the outline for gr ant, pursuant to the Act on the Promotion of the 
Development and Introduction of Alternative En ergy, which allows NEDO to subsidize the 
development of non-oil based energy sources.  Eligib le applicants for this subsidy are entities which 
develop small and medium –scale hydro power.    
• Geothermal Energy Programme 
 
 This subsidy is provided to NEDO as defined in  the outline for grant, pursuant to the Act on 
the Promotion of the Development and Introduction of Alternative Energy, which allows NEDO to 
subsidize the surveys of geothermal resources.   
 
• Subsidy for the Technology Development of In tegrated Coal Gasification Combined 
Cycle Power Generation Plant 
 
 This subsidy is provided to Clean Coal Powe r R&D Co., Ltd., which was established by ten 
electric power companies to conduct tests and research  on the Integrated Coal Gasification Combined 
Cycle (IGCC) in Japan, pursuant to the subsidy ou tline.  The purpose of this programme is to 
encourage technological development of IGCC.   
 
• Subsidies to Offset the Costs of Convertin g Old Coal-fired Thermal Power Generations 
to Natural Gas 
 
 This subsidy aims to establish a stable  and appropriate energy supply and demand 
corresponding to the domestic and international economic and social situation.  Electric power 
suppliers that plan to convert their coal fi red thermal power genera tion facilities operating over 
35 years into natural gas power genera tions are eligible for the programme. 
 
• Subsidy for the Innovative and Viable Nucl ear Energy Technology Development Project 
 
 This subsidy is provided to a domestic priv ate entity or a domestic research institute which 
has both technological and managerial abilities to pro ceed with the subsidy progr amme appropriately.   
 
• Grant for the Technical Development of a Full-MOX ABWR Plant System 
 
 This subsidy is provided to a specific compan y as prescribed in the outline for grant.   
 
• Subsidy for Research and Development of Next Generation Technology 
 
 The entity eligible for this programme is su ch as small and medium enterprises and public 
institutions which focus on R&D for the new technology.   G/SCM/Q2/JPN/48 
Page 4  
 
  Subsidy of Expense to Investigate the Deve lopment of Next Generation Airplanes  
 
Question 3 
 
 Please explain whether funds provided under th is programme were used to assist in the 
development of the Mitsubishi Regional Jet?    
Reply
 
  Funds provided under this programme were not  used to assist in the development of the 
Mitsubishi Regional Jet.   
 
Assistance for Development of Civil Aircraft 
 
Question 4 
 
 Please explain whether funds provided under th is programme were used to assist in the 
development of the Mitsubishi Regional Jet?   
 Reply
 
  Funds provided under this programme were not  used to assist in the development of the 
Mitsubishi Regional Jet.   
 
Subsidy for Wind Power Generation and Its Grid Connection 
 Question 5 
 
 Japan states that this subsid y is provided to "wind power generation companies who are 
the applicant against the offer from electric utilities".  Explain whether there any limits on which wind power generation companies are elig ible for this programme and explain whether 
foreign companies are eligible fo r assistance under this programme.  
 
Reply
 
 
 Eligible applicants for this subsidy are co mpanies that are going to build new wind power 
facilities in Japan that require batte ries to connect to the grid with in the jurisdiction of each electric 
company because of a limited grid capacity.   
  Foreign companies are also eligible for this subsidy if their business meets such requirements 
and the operational data are provided by them.  The subsidy will be terminated at the end of 
fiscal 2009.  Fisheries Modernization Fund Interest Subsidy 
 
Question 6 
 
 Please provide greater detail on the structural adjustment operations of the subsidized 
fishery cooperatives.  Please include details on  the criteria for determining which small- or 
medium-size fisheries are eligible under the programme.    G/SCM/Q2/JPN/48 
 Page 5 
 
 
  Reply  
  While this structural adjustment programme covers not only capture fisheries by fishing 
vessels but also aquaculture and fish processing, fishing vessels smaller than 130 gross ton is its 
scope.   
 
Fund for the Measure to Supply Fishery Products Stably  
 
Question 7 
 
 Japan states that "subsidies for promotion of distribution, processing and consumption 
of fishery products are implemented for safe and efficient supply of food".  Please provide 
details on the operation of these subsidies, including eligibility criteria.   
 
Reply
 
 
 As was already explained in Japan's notifi cation in 2009 (No.64, page 69 of the document 
G/SCM/N/186/JPN), under this programme, several sub-programmes with different purposes are 
planned and implemented in every year.  Specific co ntents and target of sub-programmes are varied 
depending on the needs and situation of each year.  In 2007, for example, non-governmental 
organizations including fishermen's cooperatives ar e supported for them to implement such activities 
as follows.    
(i) prevention and mitigation of oil pollution of coastal area 
(ii) research and information sharing on the migration of big jellyfish to Japanese waters 
(iii) promotion of quality improvement and mana gement of fish and fish products 
 
Fisheries Programmes Not Notified
 
 
Question 8 
 
 In G/SCM/Q2/JPN/38, Japan stated that "Japan has fishing vessel insurance and 
reinsurance scheme, which compensates for part  of losses incurred by the natural disaster and 
other happenings.  The scheme reinsures the fi shing vessel insurance run by insurance 
associations.  Any type of fishing is eligible."  If this scheme was in effect during the period 
covered by Japan's most recent subsidy notificati on, please explain why it was not notified.   
 
Question 9 
 
 In G/SCM/Q2/JPN/38, Japan stated that "Japan has a programme, as a safety net in 
term of stable fish supply, to support fisheries organizations in stocking their members' catches, 
which are subject to great deal of fluctuation in  production and price".  If this programme was 
in effect during the period covered by Japan's  most recent subsidy notification, please explain 
why it was not notified.   
 
Reply 8 & 9  
 
 Japan notifies its programmes in accordance with  the SCM Agreement.  With regard to the 
Questions 8 and 9, as explained in previous doc uments (G/SCM/Q2/JPN/38, G/SCM/Q2/JPN/40 and 
G/SCM/Q2/JPN/42) in response to the US questions which are of similar nature, information on those 
programmes was provided in response to the questions by the United States, without prejudice to the 
Japan's position on whether this is required notification to the WTO.   G/SCM/Q2/JPN/48 
Page 6  
 
  Question 10 
 
 In G/SCM/Q2/JPN/38, Japan stated that "Jap an has an interest subsidy programme to 
assist fishermen, for those who borrow funds fo r obtaining their fishing vessels under specific 
requirements".  If this programme was in effect during the period covered by Japan's most 
recent subsidy notification, please expl ain why it was not notified.   
 
Reply
 
  The sort of support described in this ques tion is accommodated in a part of programme 
"Fisheries Modernization Fund Interest Subsidy", which was already notified (No. 63, page 68 of 
G/SCM/N/186/JPN).  As noted in Japan's previous  response to the US inquiry (Question 6, see 
above), the scope of the programme is not limit ed to the obtainment of fishing vessels.   
 
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