RESTRICTED  WORLD TRADE  
ORGANIZATION  G/SCM/M/64 
1 August 2008 
 (08-3675) 
Committee on Subsidies  
and Countervailing Measures  
 
 
MINUTES OF THE SPECIAL MEETING  
HELD ON 29 APRIL 2008 
 
Chairman:  Mr. Pablo Klein (Mexico )  
 
 
1. The Committee on Subsidies and Countervailing Measures ("the Committee") held a special 
meeting on 29 April 2008.  As set forth in WTO/ AIR/3180, dated 18 April 2008, the purpose of this 
special meeting was:  (1) to continue the review 2007 new and full subsidy notifications; (2) to revert 
to the 2005 new and full subsidy notification of China;  and (3) to start the review of the 2005 new and 
full subsidy notification of the United States. 
A. CONTINUATION OF REVIEW OF 2007  NEW AND FULL SUBSIDY NOTIFICATIONS  
2. The Chairman  noted that the Committee's review of 2007 new and full subsidy notifications 
took place pursuant to procedures that had been ad opted by the Committee in 2005 and that could be 
found in document G/SCM/117.  In accordance with  these procedures, the agenda of this meeting 
provided for the review of 2007 new and full notificati ons that had been circulated to Members in all 
three WTO working languages not later than 31 December 2007.  These notifications had been 
submitted by Australia; Brazil; Canada; Switzerland; C uba; New Zealand; Qatar; Thailand; Separate 
Customs territory of Taiwan, Pengh u, Kinmen and Matsu; Turkey.  
1. Australia  
3. The 2007 new and full subsidy notification of Au stralia had been circulated in documents 
G/SCM/N/155/AUS and Add.1.  Turkey, the European Communities, the United States and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Mats u had posed questions on this 
notification.
1  Australia's replies to these questions ha d been circulated in G/SCM/Q2/AUS/34-37. 
4. There were no statements made on this notification.   
2. Brazil  
5. The 2007 new and full subsidy notification of Brazil had been circulated in document 
G/SCM/N/155/BRA.  The European Communities, the United States and the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Mats u had submitted questions  on this notification.2  Brazil 
had submitted replies to these ques tions in G/SCM/Q2/BRA/20-22. 
6. There were no statements made on this notification.  
                                                      
1 G/SCM/Q2/AUS/30-33.   
2 G/SCM/Q2/BRA/17-19.   G/SCM/M/64 
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  3. Canada  
7. The Chairman
 drew the Committee's attention to the 2007 new and full subsidy notification of 
Canada in document G/SCM/N/155/CAN.  China, Turkey, the European Communities, the United States and the Separate Customs Territory  of Taiwan, Penghu, Kinmen and Matsu had posed 
questions on this notification.
3  Canada had replied to  the questions posed by China, the United States, 
the European Communities, and Turkey in G/SCM/Q2/CAN/29-32.   
8. The delegate of the United States  observed that in its reply to the question posed by the 
United States on the Investissment Québec Programme, Canada indicated that it did not consider the 
assistance provided under this programme to constitu te a subsidy.  Since the programme involved 
some sort of financial contribution, this reply im plied that Canada was making the argument that the 
programme conferred no benefit.  He asked Canada to explain the basis for that argument.   
9. The delegate of Canada  stated that the Investissment Québec Programme was a provincial 
programme, and that Canada agreed that all sub-fe deral subsidy programmes th at were determined to 
meet Canada's obligations under Ar ticle 25 of the SCM Agreement s hould be notified.  The federal 
government had been engaged in on-going consulta tions with the provincial governments regarding 
their subsidy notification requirements.  Du ring these consultations, Canadian provinces and 
territories had not advised the federal government  of any programmes that would meet these 
requirements.  The programme in question fell with in the category that, acco rding to the provincial 
government, did not meet the notification criteria of Article 25. 
10. The Committee took note  of the statements.  
4. Switzerland  
11. The 2007 new and full subsidy notification of Sw itzerland had been circulated in document 
G/SCM/N/155/CHE.  Questions on this notificati on had been submitted by the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Matsu.4  Switzerland had replied to these questions in 
G/SCM/Q2/CHE/17.  
12. There were no statements made on this notification.   
5. Cuba  
13. The 2007 new and full subsidy notification of Cuba had been circulated in document 
G/SCM/N/155/CUB.  The Committee had not received a ny written questions on this notification.   
14. There were no statements made on this notification.  
6. New Zealand  
15. The 2007 new and full subsidy notification of  New Zealand had been circulated in 
G/SCM/N/155/NZL.  Questions had been subm itted on this notification by the European 
Communities and the United States.5  Replies of New Zealand had been circulated in 
G/SCM/Q2/NZL/20 and Corr.1 and 21 and Corr.1.   
16. There were no statements made on this notification.  
                                                      
3 G/SCM/Q2/CAN/24-28.   
4 G/SCM/Q2/CHE/16.   
5 G/SCM/Q2/NZL/18-19.    G/SCM/M/64 
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  7. Qatar  
17. The 2007 new and full subsidy notification of  Qatar had been circulated in document 
G/SCM/N/155/QAT.  No questions had been submitte d with regard to this notification.   
18. There were no statements made on this notification.  
8. Thailand  
19. The 2007 new and full subsidy notification of Thailand had been circulated in document 
G/SCM/N/155/THA.  Turkey had subm itted questions on this notification.6  Thailand had provided its 
responses to these questions in document G/SCM/Q2/ THA/21.  
20. There were no statements made on this notification.  
9. Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu  
21. The 2007 new and full subsidy notification of th e Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu had been circulat ed in document G/SCM/N/155/TPKM and Corr.1. 
Turkey and the European Communities had posed questions on this notification.7  T h e  S e p a r a t e  
Customs Territory of Taiwan, Penghu, Kinmen and Matsu had replied to these questions in 
G/SCM/Q2/TPKM/10 and 11.   
22. There were no statements made on this notification.  
10. Turkey  
23. The 2007 new and full subsidy notification of Turkey had been circulated in document 
G/SCM/N/155/TUR.  Questions had been posed on this notification by the United States and the 
Separate Customs Territory of Taiwan, Pengu, Kinmen and Matsu.8  Turkey had responded to these 
questions in G/SCM/Q2/TUR/21 and 22.   
24. The delegate of the United States  thanked Turkey for its replies and said that there was one 
question that had perhaps been overlooked by Turkey.  
25. The delegate of Turkey  stated that his delegation was willing to provide responses to any 
further questions.9  
26. The Committee took note  of the statements.  
27. The Chairman  stated that the Committee would conti nue its review of the 2007 new and full 
subsidy notifications at a special meeting that woul d be held in conjunction with the regular meeting 
in October 2008.  In accordance with the agreed procedures, the Committee would at that meeting 
review notifications that would have been circul ated in all three working languages not later than 
17 weeks before the date of the meeting.10   
                                                      
6 G/SCM/Q2/THA/20.   
7 G/SCM/Q2/TPKM/8 and 9.   
8 G/SCM/Q2/TUR/19 and 20.   
9 Turkey has provided a written reply to the question referred to by the United States in 
G/SCM/Q2/TUR/21/Add.1 of 1 July 2008.  
10 See WTO/AIR/3221 of 11 July 2008 for a list of the notifications that will be reviewed at the next 
special meeting of the Committee.  G/SCM/M/64 
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  B. 
REVIEW OF 2005  NEW AND FULL SUBSIDY NOTIFICATION OF CHINA  
28. The Chairman  recalled that at its special meeti ng held on 25 October 2007 the Committee had 
reverted to the 2005 new and full subsidy notifica tion of China (G/SCM/N/123/CHN).  Subsequent to 
that meeting, the Committee had received writte n questions from the European Communities and 
from the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.11  China had provided 
replies to the questions posed by the Separate Customs Territory of Taiwan, Penghu, Kinmen and 
Matsu in G/SCM/Q2/CHN/36.  
29. The delegate of China  thanked the European Communiti es and Chinese Taipei for their 
questions and their continued interest in China's 2005 subsidy notification.  China's responses to the 
questions of Chinese Taipei were contained in docu ment G/SCM/Q2/CHN/36.  However, regretfully,  
China had not been able to provide written respon ses to the questions of the European Communities 
prior to this meeting.  China would respond to these questions orally at the meeting and would 
provide a written version of its replies after this meeting. 
30. The first question of the European Communities in G/SCM/Q2/CHN/34/Rev.1 referred to 
China's replies in G/SCM/Q2/CHN/25 to questions  I.2(c) and I.3(b) posed by the European 
Communities in G/SCM/Q2/CHN/16.  In response to this  first question, the delegate of China stated 
that China's notification in G/SCM/N/123/CHN already contained information on special economic zones.  The purpose of the two policies referred to  in question I.3(b) of G/SCM/Q2/CHN/16 was to 
alleviate poverty.  The funds were mainly used  for infrastructure construction and labour-force 
training.  The recipients of such funds were mainly individuals and other organizations, not 
enterprises.  With regard to the total amount of su bsidies during the period 2001-2004, he referred to 
China's notification on subsidies in G/SCM/N/123/CHN.  With regard to the total amount of subsidies 
during the period 2005-2008, he stated that China was now preparing the data and would notify them 
in China's second notification on subsidies.   
31. The second question of the European Commun ities in G/SCM/Q2/CHN/34/Rev.1 concerned a 
number of replies in G/SCM/Q2/CHN/25 where, in  the view of the European Communities, China 
had not provided the inform ation requested  in accordance with the format set out in G/SCM/6/Rev.1.  
In response to this question, the delegate of Ch ina stated that China ha d already provided the 
requested information in G/SCM/Q2/CHN/25 and that if possible China would improve the format of 
the information in its next notification.   
32. With regard to the third question of the European Communities in 
G/SCM/Q2/CHN/34/Rev.1, which concerned the lack of statistical data in G/SCM/Q2/CHN/25, the 
delegate of China stated that China had made its best efforts in providing various statistical data 
requested by other WTO Members.  As to the statis tical data requested by the European Communities, 
China had not collected such data thus far.   
33. In response to the fourth question in G/SC M/Q2/CHN/34/Rev.1, in which the European 
Communities asked when China would submit a notifi cation that covered subsidies granted at all 
levels of government, the delegate of China stated that his delegation had addressed this matter at the 
special meeting of the Committee held in November  2006.  China was internally discussing how to 
gather information on subsidies applied at different levels of government in an efficient and effective 
way.  The submission of a notification of local s ubsidies also made it necessary for local government 
officials to acquire an in-depth, technical unde rstanding of the SCM Agreement.  China would 
continue its work in order to submit its notificati on on policies and measures of local governments.   
                                                     
 
11 G/SCM/Q2/CHN/34/Rev.1 an d G/SCM/Q2/CHN/35.    G/SCM/M/64 
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  34. Regarding the fifth question posed by the European Communities in 
G/SCM/Q2/CHN/34/Rev.1, which concerned China's VAT  system, the delegate of China stated that 
at present no VAT was levied on agriculture produc ts sold by agricultural producers including food 
grains.  Like other WTO Members, China applied a VAT rebate system for exports of food grains.  
According to the provisional regulation of the Pe ople's Republic of China on value-added tax, the 
sellers and the traders of food grains, except primar y producers, shall pay a tax rate of 13 per cent for 
the selling or importing of food grains and the same  amount of tax shall be rebated upon exportation.  
China believed that these regulations were c onsistent with Article III of GATT 1994 and with 
Article 3 of the SCM Agreement.  
35. The delegate of the United States  said that the United States had not submitted any additional 
questions regarding China's 2005 new and full subsid y notification because so many of its previous 
questions, unfortunately, continued to remain unanswere d.  He then highlighted several concerns that 
his delegation had already expressed on prior occasions.   
36. First, the United States remained troubled by China's continued failure to notify any sub-
national subsidies, an issue in China's WTO accessi on that continued to this  day to be raised by 
Members in this Committee.  As a WTO Member with many levels of government, the United States 
appreciated the challenge in notifying subsidies ad ministered by sub-national authorities.  China, 
however, had been a WTO Member for almost seven y ears.  It had also been almost two years since 
China had submitted its first-ever subsidy notification.  China, therefore, had had ample time to educate local authorities about this obligation and to prepare a complete notification.  This current gap 
in China's WTO transparency obligations was par ticularly troubling given the important role of 
provincial and local governments in establishing an d implementing economic development policy in 
China.  Much more troubling was that several sub-national programmes appeared to be clearly 
prohibited under WTO rules.  However, the questio ns raised by the United States regarding these 
programmes remained unanswered and this had creat ed an untenable situation..  It was therefore 
imperative that China fully account for the subsidy pr ogrammes administered by local authorities.  At 
this time, the United States would appreciate an e xplanation of the steps taken by China to address 
this problem and an estimated time by which it c ould expect not only a full notification but full 
compliance with the provisions of the SCM Agreement.   
37. Second, another area of ongoing concern to th e United States was the lending by state-owned 
banks and the activities of China's state-owned asset management companies, both of which supported financially weak state-owned enterprises.  China's continued support for such state-owned 
enterprises, long after its commitment to end subsid ies to "loss-making" ente rprises, remained a very 
significant concern to the United States.  The United States was particularly troubled by the commercially questionable activities of the state-owned asset management companies that assumed bad loans originally provided by state-owned banks  to state-owned enterprises and then exchanged 
these loans for an ownership interest in the same companies that were unable to repay the loans from 
the start.  It was difficult to imagine that ther e was no subsidy element in these transactions.  Yet 
nothing had been notified, nor had China indicated  a practical difficulty in obtaining the necessary 
information.  It was time that these transactions saw  the light of day and that China notified its support 
for state-owned enterprises.   
38. The delegate of China
 thanked the United States for its co mments and its interest in China's 
subsidy notification.  China recognized that some  of these questions had been discussed on previous 
occasions and it remained ready to discuss them furthe r, either multilaterally or bilaterally to try and 
address the concerns of the United States and to explain China's situation.  With regard to the issue of 
China's notification of regional government subs idies, he stated that as China had explained 
previously, it had been trying its best to resolv e the difficulties encountered domestically regarding 
the training of local government officials and the collection of data.  During China's accession process 
other WTO Members had recognized the difficulties fa cing China in this regard.  Such difficulties G/SCM/M/64 
Page 6  
 
  were quite common among WTO Members, as evidenced by the fact that a substantial number of 
Members had not made a subsidy notification for 2005.  China was ready to share with the United States and other Members information on the steps it had taken to resolve this problem, for 
example through the training of local officials and the establishment of a system for the collection of data.  He expressed his delegation's appreciation for a bilateral meeting that had recently taken place 
with the United States at which the United States ha d shared with China its experience with its system 
of gathering information on subsidies of regional governments.  It was interesting that when his 
delegation asked how long it had ta ken the United States to establish this system, it had not received 
an answer.  While for some Members seven years might seem a long time, as a developing country 
with an enormous population and 36 regional governments, China would probably need some more 
time to resolve this issue.  
39. In response to the comments of the United States on state-owned banks, the delegate of China 
stated that on past occasions China had fully r esponded to the questions of the United States.  
Although China understood the concerns expressed by the United States, similar measures had 
recently been applied by other Members, including the United States, trying to bale out banks that 
have been hit by the sub-prime crisis.  China remained ready to discuss this matter with the 
United States. 
40. The delegate of the European Communities
 thanked China for its preliminary replies to the 
questions posed by the European Communities in  G/SCM/Q2/CHN/34/Rev.1.  While these replies 
referred to a large extent to China's 2005 new and full notification in G/SCM/N/123/CHN, it was precisely the fact that this notification was not in full conformity with WTO requirements that had 
given rise to the questions posed by his delega tion.  The European Communities was disappointed 
that China had not provided written answers in  advance of the meeting, as required by the 
Committee's procedures and by Article 10 of China's Accession Protocol to the WTO.  This was likely to hinder further discussions of China's no tified programmes and undermined the purpose of 
Article 25 of the SCM Agreement to increase tran sparency in respect of government subsidy 
programmes.  However, his delegation was looking forward to receiving written responses.  He also 
asked China to provide details on the VAT system for the agricultural pro ducts that the Chinese 
delegate had referred to in his statement.  
41. In response to the comments of the delegate of China, the delegate of the United States
 stated 
that, with respect to lending from state-owned banks, it was not the assistance to the state-owned banks in China with which the United States was most  directly concerned.  Rather, it was concerned 
with the assistance provided to state-owned indus trial goods-producing companies in China, through 
the banking system, and through the asset management companies. 
42. The delegate of China
 stated that his delegation would provide written replies to the questions 
of the European Communities after the meeting.  He disagreed with the Eu ropean Communities that 
the lack of written replies would hinder any fu rther discussion on China's notification and would 
undermine the effectiveness of th e Committee.  China's notification had been under discussion for 
quite some time and Members were free to come ba ck to this notification at any time if they had 
further concerns or questions.  He understood clear ly that the concern of the United States pertained 
not to the state-owned banks, but to the state-owned enterprises.   
43. The Committee took note  of the statements.  
C. 2005  NEW AND FULL SUBSIDY NOTIFICATION OF THE UNITED STATES  
44. The Chairman  stated that the 2005 new and full subsidy notification of the United States, 
contained in document G/SCM/N/123/USA, had been circulated on 15 November 2007.  Questions on 
this notification had been received from Canada, Ch ina, the European Communities and the Separate  G/SCM/M/64 
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  Customs Territory of Taiwan, Penghu, Kinmen and Matsu (G/SCM/Q2/USA/31-34).  The 
United States had replied to these questi ons in document G/SCM/Q2/USA/36.  
45. The delegate of China  stated that since his delegation had just received the replies of the 
United States it wished to have the opportunity to study these replies and revert to the US notification 
at the next special meeting.   
46. The Committee took note  of the statements.  
47. The meeting was adjourned .  
__________