WORLD TRADE  
ORGANIZATION  RESTRICTED 
G/SCM/M/78 
2 February 2012 
 (12-0647) 
Committee on Subsidies 
and Countervailing Measures  
 
 
 
MINUTES OF THE SPECIAL MEETING 
HELD ON 26 OCTOBER 2011 
Chairman:  Mr. Andreas Krallmann (Germany) 
 
 
1. The Committee on Subsidies and Countervailing Measures ("the Committee") held a special 
meeting on 26 October 2011. 
2. The Chairman recalled that the proposed agenda for this special meeting had been circulated 
in WTO/AIR/3829, dated 14 October 2011.  As indicated in that proposed agenda, the purpose of this 
meeting was to continue to discuss new and full subsidy notifications of Members. The Committee 
adopted the agenda as proposed: 
A.  REVIEW OF 2011  NEW AND FULL SUBSIDY NOTIFICATIONS NOT YET REVIEWED  ........................ 2  
1.  Armenia ....................................................................................................................... .............. 2  
2.  Colombia ...................................................................................................................... .............. 2  
3.  Croatia ....................................................................................................................... ................ 2  
4.  Cuba .......................................................................................................................... ................. 2  
5.  Ecuador ....................................................................................................................... ............... 2  
6.  Hong Kong, China .............................................................................................................. ...... 3 
7.  Mexico ........................................................................................................................ ................ 3  
8.  Qatar ......................................................................................................................... ................. 6  
B.  CONTINUATION OF REVIEW OF 2009  NEW AND FULL SUBSIDY NOTIFICATIONS  .......................... 6  
1.  Albania ....................................................................................................................... ................ 6  
2.  Brazil ........................................................................................................................ .................. 6  
3.  European Union ................................................................................................................ ........ 8 
4.  Former Yugoslav Republic of Macedonia ............................................................................ 11  
5.  Gabon ......................................................................................................................... .............. 11  
6.  India ......................................................................................................................... ................ 11  
7.  Japan ......................................................................................................................... ............... 12  
8.  Korea ......................................................................................................................... ............... 12  
9.  Kyrgyz Republic ............................................................................................................... ...... 12 
10.  Namibia ....................................................................................................................... ............. 12  G/SCM/M/78 
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  11.  Turkey ........................................................................................................................ .............. 12  
12.  United States ................................................................................................................. ........... 13  
C. 
CONTINUATION OF REVIEW OF 2005  NEW AND FULL SUBSIDY NOTIFICATIONS  ........................ 13  
 
 A. 
REVIEW OF 2011  NEW AND FULL SUBSIDY NOTIFICATIONS NOT YET REVIEWED  
3. The Chairman stated that th e Committee's review of new and full subsidy notifications 
followed the procedures that had been adopted by the Committee in 2005 and were contained in 
document G/SCM/117.  In accordance with these pr ocedures, the Committee had before it at this 
special meeting the notifications that had been circulated to Members in all three WTO working 
languages not later than 27 June 2011. 
1. Armenia 
4. The notification of Armenia had been circulated in document G/SCM/N/220/ARM.  The 
Chairman noted that Armenia had submitted th e same text as its 2009 new and full subsidy 
notification, which had been circulated in document G/SCM/N/186/ARM, dated 20 May 2011. The 
United States had posed questions regarding this not ification, which had been circulated in document 
G/SCM/Q2/ARM/1, dated 25 August 2011. No delegati on took the floor to comment or ask questions 
on this notification.  
2. Colombia 
5. The Chairman recalled that the notification of Colombia had been circulated in document 
G/SCM/N/220/COL. He further noted that Colombia  had submitted the same text as its 2009 new and 
full subsidy notification, which had been circul ated in document G/SCM/N/186/COL, also dated 
30 May 2011. The United States had posed questions  regarding this notification, which had been 
circulated in document G/SCM/Q2/COL/11.  Co lombia's replies to these questions had been 
circulated in document G/SCM/Q2/COL/12. No delegation took the floor to comment or ask questions on this notification.  
3. Croatia 
6. The Chairman stated that the 2011 notification of Croatia had been circulated in document 
G/SCM/N/220/HRV. Questions posed by Australia rega rding this notification had been circulated in 
document G/SCM/Q2/HRV/5. Croatia's replies to th ese questions had been circulated in document 
G/SCM/Q2/HRV/6. No delegation took the floor to comment or ask questions on this notification. 
4. Cuba 
7. The Chairman recalled that the notification of Cuba had been circulated in document 
G/SCM/N/220/CUB.  No delegation took the floor to  comment or ask questions on this notification. 
5. Ecuador 
8. The Chairman noted that the notification of  Ecuador had been circulated in document 
G/SCM/N/220/ECU. The United States had posed ques tions regarding this notification, which had 
been circulated in document G/SCM/Q2/ECU/3. Ecuador's replies to these questions had been 
circulated in document G/SCM/Q2/ECU/4.  No delega tion took the floor to comment or ask questions 
on this notification.  G/SCM/M/78 
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  6. Hong Kong, China  
9. The Chairman recalled that the notification of Hong Kong, China had been circulated in 
document G/SCM/N/220/HKG.  Australia and the Unite d States had posed questions regarding this 
notification, which had been circulated in documents G/SCM/Q2/HKG/8 and Corr.1, and G/SCM/Q2/HKG/9 and Corr.1, respectively.  Repli es to these questions by Hong Kong, China had 
been circulated in documents G/SCM/Q2/HKG/ 10 and G/SCM/Q2/HKG/11, respectively.  No 
delegation took the floor to comment or ask questions on this notification. 
7. Mexico 
10. Mexico's notification had been circulated in document G/SCM/N/220/MEX. Questions posed 
by Australia, the United States and the European Uni on regarding this notification had been circulated 
in documents G/SCM/Q2/MEX/18, 19 and 20, respectively.   
11. The delegate of Mexico noted that Mexico had committed itself, already at the Committee's 
meeting of October 2010, to updatin g its subsidy notification. Me xico was delayed in doing so. 
Mexico acknowledged the importance of notifications , and significant work was under way in Mexico 
to update the notifications in due course.  
12. The delegate noted that Mexico's most recent notification had been made in 2000, when a 
temporary imports programme for machinery and equipment used to manufacture exported goods (so-
called "PITEX" programme) had been introduced. He i ndicated that he wished to provide information 
on the outcome of this programme before answeri ng the questions posed by delegations.  The PITEX 
programme had been notified on 21 November  1996 through document G/SCM/N/3/MEX as a 
subsidy pursuant Article XVI:1 of the GATT 1994 and to  the SCM Agreement, given the fact that the 
measure contained a tariff exemption for machin ery and equipment used to manufacture exported 
goods. The subsidy was to be removed over a trans itional period of eight years, pursuant to the 
provisions concerning special and differentiated treat ment for developing countries, as provided for in 
Article 27.2(b) of the SCM Agreement. Later, on  15 November 2000, Mexico had submitted to the 
Committee a notification, circulated in document G/SCM/N/48/MEX, concerning the decree 
amending the PITEX programme, which had been  published in the Official Gazette on 
13 November 1998. The decree stated that, with a view to bringing the provisions of the programme 
into line with Mexico's international comm itments in the WTO and NAFTA, as from 2001 the 
provision concerning the tariff exemptions for m achinery and equipment used to manufacture 
exported goods would be eliminated from th e programme. The reform had taken place on 
20 November 2000. Over time, the PITEX programme  had been merged with another programme, 
with the final merger taking place in November 2006, leading to the so-called IMMEX programme - 
programme for the Promotion of the Manufactur ing Industry, Maquiladora and Export Services 
(IMMEX).  
13. The delegate of Mexico recalled, with respect to Australia's questions related to programmes 
in the fisheries and aquaculture sector, that pursu ant to Article 25.7 of the SCM Agreement, the 
notification of a measure did not prejudge eith er its legal status under the GATT 1994 and SCM 
Agreement, the effects under the SCM Agreement or  the nature of the measure. Therefore, the 
considerations contained in Australia's questions  were outside the scope of the SCM Agreement. 
Nevertheless, these issues could be discussed in th e most appropriate forum which, with respect to 
negotiations on fisheries subsidies, would be the Negotiating Group on Rules. By proceeding in this 
manner, Members would be able to further improve  transparency and foster a comprehensive supply 
of information on subsidy program mes. The delegate indicated that information for each of the 
notified programmes had already been provided in th e notifications, including cross-references to the 
implementing legal instruments and the date of pub lication in the Official Gazette, which could be 
consulted at www.dof.gob.mx.  G/SCM/M/78 
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  14. With regard to the Forestry Sector Oriented programme (ProÁrbol), the delegate of Mexico 
stated that this programme did not contain expor t or sales performance requirements. He emphasized 
that the support granted under th is programme was intended to provi de technical assistance as well as 
to develop skills for forestry development, conser vation and restoration of forestry resources and to 
promote competitiveness. The details of this programme  could be consulted in the Official Gazette of 
31 December 2008. 
15. With respect to the questions submitted by Au stralia and the European Union concerning the 
programme for the Development of High Technology Industries (PRODIAT), the delegate of Mexico 
indicated that this programme did not contain pr ovisions setting forth any performance requirement 
with respect to export or sales performance or the use of domestic over imported inputs, and that the 
support granted was intended primarily for techni cal assistance projects and capacity building. The 
conditions and requirements for a beneficiary to be  eligible for support under the programme were 
those listed in section 6 "Eligibility Requirement s" and section 8 "Selection Criteria" of the 
programme, published on 29 December 2010 in the Official Gazette, which was available for consultations either on the Official Gazette we bsite (www.dof.gob.mx) or on the website of the 
Ministry of Economy (www.economia.gob.mx).  With  regard to the question concerning strategic 
projects, the delegate indicated that the criteria fo r a project to qualify as "strategic" were: response to 
market failures, its impact on the value chain as a whole, and competition in relevant markets.  
16. With respect to the question by the United States regarding Mexico 's steps to ensure that its 
future subsidy notifications were submitted on a more  timely basis, the delegate of Mexico recalled 
that as part of WTO technical assistance progra mmes, on 10-12 October 2011, a seminar on subsidies 
and countervailing measures had taken place in Mexico City.  The issue of notifications was part of 
the agenda of the meeting. He mentioned that this, together with further consultations and 
coordination with the relevant governmental agen cies, would contribute significantly to Mexico 
making full and timely notifications.  
17. As to the question concerning tax incentives fo r the cinematographic industry posed by the 
United States, the delegate of Mexico indicated that  such measures should be examined in the most 
appropriate group, which in this case would be th e Working Party on GATS Rules, more specifically, 
in the subsidy negotiations.  He noted that Me xico had already submitted information on this 
programme as part of the Working Pa rty's information exchange process.  
18. As regards the reduction of import duties unde r the PROSEC programme, the delegate of 
Mexico indicated that this mechanism, implemen ted through the decree establishing various sectorial 
programmes, published in the Official Gazette  on 2 August 2002 and am ended through various 
publications issued in the same Gazette, did not cons titute a subsidy within the meaning of  the SCM 
Agreement. The delegate stated that the mechanism entailed reductions in the tariff levels applied on 
the basis of the MFN principle, regardless of wh ether imported products were incorporated as inputs 
into manufactured products destined to the domestic market or for exports and without any 
performance requirement. 
19. The delegate of Mexico indicated that the ECEX and ALTEX programmes, with respect to 
which the United States had also asked questions, had been revoked through an amendment to the 
Decree for the Promotion of the Manufacturing I ndustry, Maquiladora and Export Services (IMMEX 
Decree), published in the Official Gazette on 24 Dece mber 2010.  He further noted that some of the 
benefits granted under these programmes were incl uded in the new IMMEX programme. This was an 
attempt to generate savings by the Federal Government by having one single, merged, programme as 
well as to provide legal stability, transparency and continuity to enterprises. He stated that such 
programmes, as well as the IMMEX decree, did not constitute a subsidy un der the SCM Agreement 
given that there was neither a financial contributio n being made by the government nor any form of 
income or price support mechanism. The IMMEX pr ogramme was an instrument that enabled the  G/SCM/M/78 
 Page 5 
 
 
  Federal Government to provide ad ministrative facilities to enterpri ses, allowing them to adopt new 
ways of operating and doing business, to reduce admi nistrative logistics costs and to modernize and 
streamline work. It also enabled the Federal Govern ment to enhance the efficiency of its control 
mechanisms. 
20. As regards the funding programmes implemen ted by the Mexican Development Banking 
Institutions (Nacional Financiera and Banco Nacional de Comercio Exte rior), the delegate of Mexico 
emphasized that such programmes did not constitute s ubsidies within the meaning of Article 1 of the 
SCM Agreement, as no benefit was granted. In that regard, the delegate stressed that the financing 
granted by this institution was given at market in terest rates and thus th e conditions were no more 
favourable than those applied in the market itself. 
21. The delegate of the United States expressed appr eciation for Mexico's thorough replies to its 
questions and asked Mexico to please provide these answers in writing.  His delegation had three 
follow-up comments with respect to Mexico's notifi cation. First, he asked whether, going forward, 
Mexico intended to be on a regular schedule in  making its notification and whether future 
notifications would include programmes provided by th e Mexican States.  He noted that, according to 
the Secretariat Report, there were approximately 531 programmes in 31 states that were listed by the 
inter-ministerial industrial policy programmes which n eeded to be looked at for possible notifications. 
Further, with respect to the IMMEX programme, he noted an excerpt from the 2008 Trade Policy 
Review of Mexico which had indicated the existenc e of deferment and reducti ons of tariffs and VAT 
payments, which he considered to constitute a fina ncial contribution within the meaning of the SCM 
Agreement. He asked whether Mexico could provide  further information on the topic. Finally, the 
delegate noted that Mexico had not replied to one  question concerning the national finance company. 
22.  The delegate of Australia first noted, in res ponse to Mexico's comments on the issue, that the 
purpose of asking questions on a notification was to analyse and review those notifications and to 
have an assessment of their trade effects. She stressed  that her delegation's qu estions were on point in 
terms of being able to assess the subsidy progra mme considered. In addition, she asked further 
information concerning the publication of the programme in the Official Gazette. 
23. The delegate of Japan stated that it was im perative for a well-functioning multilateral trading 
system that each Member meet its obligations under Article 25 of the SCM Agreement. Japan urged 
those Members which had not yet submitted notificati ons to do so in due course. In relation to 
Mexico's subsidy notification specifically, the delega te of Japan noted that this notification bore 
document number G/SCM/N/220, the documen t number for the 2011 new and full subsidy 
notifications. She asked whether it would be correct to understand that the period encompassed by this 
notification was the years 2009-2010. She added th at it was not clear whether this notification 
included several programmes that comprised years 2008-2010 or a programme that covered only the year 2011. She highlighted the importance of clar ifying whether separate notifications were to be 
expected for different reporting periods. Since so me of Mexico's notifications covered several 
reporting periods, and in such cases one notifica tion had several document numbers, it would be 
useful to clarify this issue before making specifi c comments. She added that her delegation would be 
preparing written questions with respect to speci fic programmes of Mexico and would submit them 
shortly after the meeting. 
24. The delegate of Mexico stated, with regard  to the follow-up questions posed by the 
United States, that Mexico had notified those progr ammes identified as requiring notification pursuant 
to the SCM Agreement. As regards the fund ing programmes implemented by the Mexican 
Development Bank (Nacional Financ iera and Banco Nacional de Come rcio Exterior), the delegate 
noted that two of the United States' questions related to the same organization - the NAFIN or Nacional Financiera - and that the financing pr ogrammes provided by the Development Bank did not G/SCM/M/78 
Page 6  
 
  provide a benefit within the meaning of the SC M Agreement, given that financing funds were 
provided at market rates. He invited the United St ates to provide its follow-up questions in writing. 
25. The delegate of Mexico indicated with respect  to Australia's follow-up comments that detail 
on all the answers to Australia's questions could be found in the legal implementing instruments of the 
fishery programmes which had previously been referr ed to.  These could be consulted on the Internet.  
He noted that some of this information was provi ded in English, but that the full information was 
published in Spanish, an official language of the WTO.  
26. In conclusion, the delegate of Mexico stated , with respect to the comments formulated by 
Japan, that as he had explained earlier in his stat ement, the programme which had been notified and 
updated in 2000 had been terminat ed. He added that Mexico's notification covered programmes 
identified by the Mexican authorities for the whole period and that these programmes did not 
necessarily correspond to just one particular year but could correspond to different years during the relevant period. As to whether Mexico's notifica tions fully complied with the technical requirements 
under the Committee, the delegate indicated that his delegation would consult w ith the Secretariat to 
determine whether it was necessary to divide up the programmes by year in the notification and 
circulate them under different docum ent numbers or whether some other technical solution could be 
adopted to comply with the rules governing the submission of notifications to the Committee.  
27. The Committee took note of the statements made. 
8. Qatar 
28. The Chairman stated that the notification of Qatar had been circulated in document 
G/SCM/N/220/QAT.  No delegation took the floor to comment or ask questions on this notification. 
B. CONTINUATION OF REVIEW OF 2009  NEW AND FULL SUBSIDY NOTIFICATIONS  
1. Albania 
29. The Chairman recalled that Albania's 2009 ne w and full subsidy notification had been 
circulated in document G/SCM/N/186/ALB and had been reviewed during the Committee's special 
meeting held on 28 October 2010.  The United States has asked questions regarding Albania's 
notification which had been circulated in docum ent G/SCM/Q2/ALB/3 dated 10 February 2011.  
These questions remained unanswered at the last speci al meeting, but replies had been received and 
circulated in document G/SCM/Q2/ALB/4. No delega tion took the floor to comment or ask questions 
on this notification. 
2. Brazil  
30. The Chairman stated that Brazil's 2009 new and full subsidy notification had been circulated 
in document G/SCM/N/186/BRA and had been revi ewed at the Committee's special meeting of 
3 May 2011.  Brazil's answers to some of  Japan's questions, contained in document 
G/SCM/Q2/BRA/27, remained pending. The Committ ee had not yet received written replies to these 
questions.  
31. The delegate of Brazil indicated that he woul d provide answers to the remaining questions 
posed by Japan which Brazil had not answered yet,  and that his delegation would provide these same 
answers in writing.  He added that Brazil was in  the process of finalizing its next new and full 
notification and might be in a position to discuss it at the next session of th e Committee.  Concerning 
the first question posed by Japan, the delegate of  Brazil first noted that ACC (Adiantamento de 
Contrato de Câmbio) was an anticipation of resource s to the exporter in a view of exportation to occur  G/SCM/M/78 
 Page 7 
 
 
  in the future, contingent on the closure of a future  foreign currency exchange contracts. He added that 
ACE (Adiantamento de Cambiais Entregues) was an anticipation of resources to exporters after 
shipment abroad on the condition of transfer to the bank of the rights on the credit sale. He noted that 
these were not government programmes, but pr ivate operations between commercial banks and 
exporters on commercial bases. Thus the terms depe nded on the operation and market interest rates 
that applied to it. Eligibility was a private matte r between banks and exporte rs, but there were no 
restrictions regarding sectors or industries. With respect to the second part of question 1 from Japan, 
he noted that since this was not a government progr amme, there were no statis tics on sectors using the 
programmes. 
32. Regarding the second question posed by Japan, th e delegate of Brazil indicated that FINEP 
encouraged and supported science, technology and innovation activities to institutions (public or 
private), which might contribute to extend knowle dge and generate positive  impacts in Brazilian 
social and economic development.  Its focus was on the pre-competitive stage of the scientific and 
technological development cycle. FINEP provided gr ants and loans, whose eligibility, terms and 
conditions were set forth in the relevant calls for proposals. Financing was provided by FINEP by 
means of an agreement with the applying orga nization specifying objectives and deadline for 
submission of the technical report and financial summa ry. He added that loans to institutions required 
the demonstration of tangible guarantees and conditions to develop science, technology and 
innovation projects.  Financial conditions varied in accordance with the nature of the project and the 
borrowing institution. Eligibility was based on the merits  of a project to foster innovation. There were 
no policies, priorities or special procedures guided to any sector in FINEP.  
33. Turning to the third question asked  by Japan, the delegate of Brazil stated that the PDTI and 
PDTA programme was intended for the developmen t of the skills and capacity of industrial, 
agricultural and cattle breeding enterprises in orde r to generate new products or processes or the 
improvement of their characteristics by carrying out research and development programmes. He indicated that the research and development activ ities of the programmes co mprised basic research, 
applied research, experiment development and the necessary technical support to meet the programme 
objectives.  He indicated that for eligibility purposes,  the authorities had access to basic data of the 
company, objectives, targets and deadlines of the programme, the activities to be implemented as well 
the necessary resources for such implementation. He also indicated that the programme consisted of a 
set of coordinated lines of research and technol ogical development and that the deadline for the 
implementation of the programme was not to ex ceed five years. Moreover, the tax clearance 
certificate issued by the Secretariat of the Federal Revenue of Brazil had to be submitted. He indicated 
that the beneficiaries of the programme were indus trial, agricultural and cattle breeding enterprises 
that ran research and development programmes. He fu rther noted that the PDTI and PDTA legislation 
had been revoked in January 2006, thus termin ating the programme. Enterprises with on-going 
projects continued benefiting from the tax rates le vied on imports and acqui sitions on the domestic 
markets of goods and equipment including parts and components used in construction, conservation, 
modernization, conversion or repair of vessels, registered in the Brazilian Special Register.  
34. As regards the fourth question from Japan, the dele gate of Brazil stated that, as indicated in 
Brazil's new and full notification of 2009, the PDP included the adoption of tax incentives measures 
mentioned in threads 5(a), 5(b) and 5(c) of ite m I, Industrial Incentives - D, Productive Development 
Policy. He stated that the tax incentives mentione d in 5(a) of the document G/SCM/N/186/BRA were 
granted to shipyards performing the activities of build ing, conservation, modernization, conversion or 
repair of vessels registered in the Brazilian Speci al Register (REB). The tax incentive mentioned in 
5(b) and 5(c) was granted to automotive parts indus tries, as well as to capital goods industries.  He 
added that the reduction of PIS and COFINS indir ect taxes occurred on tax rates levied on imports 
and acquisition on the domestic mark et of goods and equipment, includi ng parts and components used 
in the construction, conservation, modernization, conversion or repair of vessels registered in the 
Brazilian Special Register (REB). The rates of the mentioned taxes were reduced to zero. The income G/SCM/M/78 
Page 8  
 
  tax deferral provided under the Pro ductive Development Policy comp rised the automotive and capital 
goods industries, and applied to the acquisition of capital goods used in the productive process of 
vehicles and their parts, automotive sector or pr oductive process of other capital goods (capital goods 
sector). Finally, he noted that, as already indicated , the beneficiaries and the measures under the PDP 
did not include the aircraft manufacture sector.  
35. The Committee took note of the statements made. 
3. European Union 
36. The Chairman stated that the European Union's 2009 new and full subsidy notification had 
been circulated in document G/SCM/N/186/EEC a nd addenda 1-27. This notification had been 
reviewed at the Committee's special meeting held on  27 April 2010. Questions by India with respect 
to this notification had been circulated in document G/SCM/Q2/EEC/67, dated 6 May 2011.  
37. The delegate of the European Union noted that the questions provided by India related to two 
particular areas: the coal industry and the fisheries sector. With respect to the questions related to the 
coal industry, the delegate stated that the Counc il Regulation which covered this programme, Council 
Regulation 1407/2002, introduced three types of aid:  First, aid for the reduction of activity; second, 
aid for accessing coal reserves which could be divided further into two types, aid for initial investment 
and current product aid; and third, aid to cover exce ptional expenses. She added that the beneficiaries 
of this aid were coal mining companies that met the requirements of Regulation 1407/2002.  
38. As regards the aid for the reduction of activity, she indicated that a beneficiary could only 
satisfy the conditions for the granting of aid if: (1) the operation of its production unit was 
discontinued definitively by 31 December 2007; (2) th e aid notified per tonne of coal equivalent did 
not exceed the difference between the foreseeable production costs a nd the foreseeable revenue for a 
coal year; (3) the amount of aid per tonne of coal equivalent did not cause delivered prices for Community coal to be lower than those for coal of  similar quality from third countries; (4) the aid did 
not lead to any distortion of competition between co al buyers and users in the European Union; and 
(5) on the electricity market, the market of combin ed heat and the electricity production, the coke 
production market and the steel market.  
39. With respect to the aid for initial investment, th e delegate indicated that beneficiaries were 
required to comply with conditions as follows: (1) the aid notified and actually paid did not exceed 
30% of the total costs of the relevant investment  project, which enabled a production unit to become 
competitive in relation to the prices for coal of a similar quality from third countries; (2) the aid had to 
be earmarked for existing production units which ha d not received aid under Article 3 of Decision 
3632/93/ECSC or which had received aid authorized by the Commission under the said Article 3, 
having demonstrated that they were able to achieve a competitive position vis-à-vis  prices for coal of 
a similar quality from third countries; and (3) the ai d granted to the investment project in question 
ensured the economic viability of production units of the beneficiary which were subject to aid. This 
kind of aid could not be paid to the beneficiar y after 31 December 2010. Current production aid had 
been granted only under the following conditions: (1) the beneficiary discontinued the operation of its 
production units definitively by 31 December 2007; (2) the aid notified per tonne coal equivalent did 
not exceed the difference between the foreseeable production costs a nd the foreseeable revenue for a 
coal year; (3) operation of the production units con cerned or of the group of production units in the 
same undertaking formed part of a plan for accessing  coal reserves; and (4) aid could be granted to 
production units with particular reference to the le vel and pattern of production costs and within the 
limits of the quantity of indigenous coal to be produced.  
40. Beneficiaries of the aid to cover exceptional expe nses needed to prove that they were carrying 
out or had carried out an activity in connection with  coal production to enable them to cover the costs  G/SCM/M/78 
 Page 9 
 
 
  arising from or that had arisen from the rationalization and restructuring of the coal industry that were 
not related to current production.  The aid could not exceed such costs. She noted that the Council 
Regulation under which these obliga tions were set out (Council Regul ation 1407/2002) only applied 
to hard coal. Other qualities of coal such as lignite  were governed by the general state aid rules. The 
delegate indicated that out of the ten hard coal  producing Member States, six were giving at least 
some form of state aid under Council Regulation 1 407/2002. She further noted that this Regulation 
had expired on 31 December 2010. The countries con cerned were mainly Germany and Spain and, to 
a lesser extent, Hungary, Poland, Romania and Sl ovakia. More detailed in formation regarding the 
state aid granted to EU mining companies could be found in the European Commission's state aid 
scoreboard. The relevant web refere nce would be provided in the European Union's written reply. 
41.  The delegate next turned to the second ques tion, which was how the European Union ensured 
that the aid did not cause lower prices than those fro m third countries, and what steps were taken to 
ensure that there was no distortion of competition.  In  that regard, the delegate stated that one of the 
conditions for the granting of aid for the reduc tion of activity had been introduced in Council 
Regulation 1407/2002, Article 4. This provision provided that the amount of aid per tonne coal 
equivalent must not have caused prices for EU coal at utilization point to be lower than those for coal 
of a similar quality from third countries. The number of  beneficiaries of aid for initial investment had 
been limited only to those undertakings which we re not subject to previously granted aid under 
Decision 3692/93/ECSC or in case they had received such an aid, these undertakings had to have 
achieved a competitive position vis-à-vis  prices for coal of a similar quality from third countries. This 
provision guaranteed that only undertakings whic h had been competitive enough to maintain on the 
global market or had proven sufficient progress in  terms of competitiveness and achieved competitive 
position on the global market were allowed to use stat e aid for initial investment. Furthermore, aid for 
initial investment could only be granted for such projects which enabled pr oduction units to reach 
competitiveness level in relation to the prices for co al of a similar quality from third countries. She 
stressed that this ensured that only investment s which had allowed a production unit to adjust to 
conditions of global comp etition were supported. 
42. The third question posed by India concer ned the aspects for which operating aid was 
provided, the items covered under the category "oth er" and the nature of activities sought to be 
reduced. The delegate stated that aid for the reducti on of activity could be granted to those production 
units which were subject to closure plans with  the deadline not extending beyond 31 December 2007. 
The closure plans had to lead to the definitive clos ure of coal production units at that time. Operating 
aid had been intended to cover current production losses, calculated in accordance with the relevant 
Regulation, meaning that aid per tonne of coal e quivalent did not exceed the difference between the 
foreseeable production costs and the foreseeable reve nue for a year. The aid actually paid was subject 
to annual correction based on the actual costs and revenue at the latest by the end of the coal 
production year following the year for which the aid had been granted. As regards what was covered 
by category "other", the delegate explained that th is had included aid for initial investment and aid to 
cover exceptional expenses. The former had been  intended to cover expenses of accessing coal 
reserves and expenses of restructuring and were not related to current production. This included, 
among others, the costs of payments for social welfare benefits resulting from the pensioning of 
workers before they reached the statutory retirement age, the costs for the re-adaptation of workers, 
the supply of free coal to workers who lost their jobs as a result of restructuring and rationalization 
and to workers entitled to such supply before the restructuring mining damage provided that it had 
been caused by production units subject to closure due to restructuring, or costs related to the 
rehabilitation of former coal mining sites.  
43. The delegate next turned to India's questions  in relation to the fisheries sector, which 
concerned three schemes. In relation to the first sch eme - financial instruments of fisheries guidance - 
the question was whether the European Union coul d provide the breakdown of  subsidies provided for 
various types of aid under item 5 of this programme. The delegate stated that detailed information on G/SCM/M/78 
Page 10  
 
  the breakdown of the type of aid was publicly ava ilable, in particular in the document "Ex post 
Evaluation of the Financial Instrument for Fish eries Guidance 2000-2006". The European Union's 
written answer would indicate where on th e web that document could be found.  
44. India had asked two questions in relation to the second scheme, which concerned the 
European fisheries fund.  The first question asked th e European Union to clarify the nature of local 
strategies in support of the sustainable development of fisheries areas that had occurred under 
European fisheries fund support (what kinds of lo cal strategies for sustainable development had 
benefitted from this support). The delegate indicated  that, as for the financial instruments fisheries 
guidance, detailed information on the implementati on of the European fisheries fund was publicly 
available. Concerning the nature of local strategi es in support of the sustainable development of 
fisheries areas and the kind of local strategies fo r sustainable development that had benefitted from 
this support, information could be found in the document "Interim Evaluation of the European 
Fisheries Fund 2007-2013 Final Report". A reference to  the web page where this document could be 
found would be provided in the written reply. India ha d also asked how beneficiaries were identified.  
The delegate stated that this information was also  publicly available and that the reference would be 
provided in the EU's written reply.  
45. With regard to the third scheme, "Comm on Organization of Markets in Fishery and 
Aquaculture Products", India had posed five que stions. The first question concerned the exact 
duration of the programme. In that regard, the dele gate of the European Union indicated that there 
was no specific duration for this programme.  
46. The second question asked who the producer orga nizations were and how are they were 
identified for receiving the subsidy.  The delegate  of the European Union indicated that producer 
organizations were designed to enable producers to cooperate to manage their resources in a way that 
made economic as well as ecological sense. They did this by drawing up an annual operational 
programme which was binding on all their members. The programme set out how catches and production would be spread over the fishing season and included a marketing strategy. Producer 
organizations were expected to anticipate difficulties,  not just to react to them and had the power to 
impose penalties on members who did not respect their production plan. Only producers who belonged to a producer organization had access to th e EU's price support scheme. She highlighted that 
recently some producer organizations had taken gr eater responsibility for fisheries management, for 
instance by managing the quota uptake of their members to ensure that it remained within the total 
quota available to them. The legal definition of "pro ducer organizations" was set out in Article 5 of 
Council Regulation 104/2000. Detailed rules for the application of this Regulation, as regards the 
granting of specific recognition to producer organizations in the fisheries sector in order to improve the quality of their products, were laid down in Commission Regulation 1924/2000. She also 
indicated that the list of producer organizations that could benefit from aid under the Common Organization Market was public and that the most rece nt list could be found in the Official Journal of 
the European Union C225 of 30 July 2011.  
47. The third question on this scheme concerned the st eps that had been taken to ensure that the 
subsidy promoted sustainable fish ing and optimal use of fish pr oducts as specified in the EU's 
notification.  The delegate indicated that the sustai nability of fisheries in the European Union was the 
subject of specific and separate legislation on the conservation and management of marine resources. 
This legislation could be found on a web page, details of which woul d be provided in the EU's written 
reply. In addition, the provisions and measures under the common organization of markets concerned, 
as one of the key objectives, the optimum use of fi sh products. Examples of such measures were the 
marketing standards, including the prohibition to  sell undersized fish, or the establishment of 
producers organizations, of catch plans, to ensure the sustainability of fish stocks or to avoid catches 
of fish for which demand was low or non-existent.   G/SCM/M/78 
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  48. The delegate next turned to the fourth questi on, which concerned the percentage of the overall 
cost of fishing for the beneficiaries of this pr ogramme which was subsidized. In that regard, she 
indicated that no figures were availa ble concerning the percentage of th e cost of fishing in comparison 
with the yearly budget, which was less than 14 m illion euros on a yearly basis, allocated to the 
common organization markets. Nevertheless, she emphasized that the aid provided in 2008 
(32.5 million euros) represented less than 0.002% of the total of EU catches in value terms (over 
6,000 million euros). 
49. In question five, India had asked the European  Union to provide a breakdown of subsidies 
granted for marine fisheries and aquaculture produc ts. The delegate of the European Union noted in 
that respect that such a breakdown was not available.  
50. The sixth and last question posed by India concerned the amount of the subsidies for 
programmes for guaranteeing reasonable consumer  prices and programmes for the support of 
fishermen's incomes.  The delegate  stated that in the budget alloca ted to the common organization of 
markets (less than 14 million euro s a year) no specific amount was allocated for the guarantee of 
reasonable consumer prices or for the support of fi shermen's incomes. There were, rather, objectives 
pursued by the common organization of market s which might be achieved by budgetary and non-
budgetary measures.   
51. The delegate concluded by highlighting that he r delegation would provide  a written version of 
its replies to India's questions. 
52. The Committee took note of the statements made. 
4. Former Yugoslav Republic of Macedonia  
53. The Chairman noted that the Former Yugosla v Republic of Macedonia's 2009 new and full 
subsidy notification, contained in document G/SCM/N/186/MKD, had been reviewed at the 
Committee's special meeting held on 3 May 2011.  Through document G/SCM/Q2/MKD/1, the United States had posed questions with respect to this  notification which had not been answered at the 
previous meeting. Replies to these questions by  the Former Yugoslav Republic of Macedonia had 
subsequently been received and circulated in documents G/SCM/Q2/MKD/2 & Corr.1. No delegation 
took the floor to comment or ask questions on this notification. 
5. Gabon 
54. The Chairman recalled that Gabon's 2009 new an d full subsidy notification, contained in 
document G/SCM/N/186/GAB, had been reviewed at the Committee's special meeting held on 
3 May 2011.  Questions from the United States and fr om Turkey with respect to this notification had 
been circulated in documents G/SCM/Q2/GAB /1 and G/SCM/Q2/GAB/2, respectively. These 
questions had remained unanswered at the last meeting. 
55. The delegate of Turkey took the floor to indi cate that his delegation was looking forward to 
receiving answers to its questions from Gabon. 
56. The Committee took note of the statement made. 
6. India 
57. The Chairman noted that India's 2009 new and full subsidy notification had been circulated in 
document G/SCM/N/186/IND.  This notification had been reviewed at the Committee's special 
meeting of 3 May 2011.  At that meeting, the delegation of India had indicated that the Indian G/SCM/M/78 
Page 12  
 
  delegation would provide answers to questi ons posed by Japan contained in document 
G/SCM/Q2/IND/18.  India had provided replies to these questions at the end of the week preceding 
the meeting (G/SCM/Q2/IND/22). No delegation took the floor to comment or ask questions on this 
notification. 
7. Japan 
58. The Chairman stated that Japan's 2009 new and full subsidy notification had been circulated 
in document G/SCM/N/186/JPN and discussed at the Committee's special meeting of 27 April 2010. 
India had posed questions concerning this notifi cation, which had been circulated in document 
G/SCM/Q2/JPN/51 dated 20 June 2011.  Japan had provided replies to these questions (document 
G/SCM/Q2/JPN/52, dated 14 October 2011).  Supplem entary replies from Japan had been received 
the night prior to the meeting and woul d be circulated by the Secretariat as 
G/SCM/Q2/JPN/52/Suppl.1. No delegation took th e floor to comment or ask questions on this 
notification. 
8. Korea 
59. The Chairman stated that Korea's 2009 new and full subsidy notification had been circulated 
in documents G/SCM/N/186/KOR and Corr.1. This notification had been discussed at the 
Committee's special meeting of 28 October 2010.  India had posed questions with respect to this notification (document G/SCM/Q2/K OR/40 dated 28 April 2011). Korea had provided replies to these 
questions, circulated in document G/SCM/Q2/KOR/4 1 dated 15 June 2011. No delegation took the 
floor to comment or ask questions on this notification. 
9. Kyrgyz Republic 
60. The Chairman noted that Kyrgyz Republic's 2009 new and full subsidy notification had been 
circulated in document G/SCM/N/186/KGZ.  This no tification had already been reviewed at the 
special Committee meetings of 28 October 2010 and 3 May 2011.  Questions posed by the 
United States regarding this notification in doc ument G/SCM/Q2/KGZ/1 remained unanswered. No 
delegation took the floor to comment or ask questions on this notification. 
10. Namibia 
61. The Chairman recalled that Namibia's 2009 ne w and full subsidy notification had been 
circulated in document G/SCM/N/186/NAM, which ha d already been reviewed at the Committee's 
special meetings of 28 October 2010 and 3 May 20 11. Questions posed by Thailand with respect to 
this notification had been circulated in G/SC M/Q2/NAM/3 dated 5 November 2010 and remained 
unanswered. 
62. The delegate of Thailand indicated that he r delegation was looking forward to receiving a 
reply from Namibia. 
63. The Committee took note of the statement made. 
11. Turkey 
64. The Chairman stated that Turkey's 2009 new and full subsidy notification had been circulated 
in document G/SCM/N/186/TUR and had been revi ewed at the Committee's special meeting of 
28 October 2010. At that meeting, the delegate of  Turkey had indicated that his delegation would 
soon submit replies to a question posed by Australia in document G/SCM/Q2/TUR/23.  At the Committee meeting of 3 May 2011, the delegate of Tu rkey had stated that his authorities needed more  G/SCM/M/78 
 Page 13 
 
 
  time to respond to this question.  The Committee w as yet to receive Turkey's reply to Australia's 
question. 
65. The delegate of Turkey stated that his aut horities were still working on an answer to the 
question and needed further time to respond to it. 
66. The Committee took note of the statement made. 
12. United States 
67. The Chairman recalled that the 2009 new and full subsidy notification of the United States 
had been circulated in document G/SCM/N/186/US A and had been reviewed at the Committee's 
special meeting of 3 May 2011. At that meeting, th e delegation of the United States had indicated that 
it would provide replies to the questions posed by I ndia and by Japan in due course.  These questions 
were contained in documents G/SCM/Q2/USA/43 a nd G/SCM/Q2/USA/44, respectively.  No replies 
to these questions had been received by the Committ ee. In addition, Brazil had also posed questions 
on the same notification.  Brazil's questions were  contained in document G/SCM/Q2/USA/48, dated 
26 July 2011. The Committee had not receive d any replies to these questions either. 
68. The delegate of the United States stated that his delegation was still working on answers to 
these questions and that it would provide these answer s by the next Committee meeting at the latest.  
69. The Committee took note of the statement made. 
C. CONTINUATION OF REVIEW OF 2005  NEW AND FULL SUBSIDY NOTIFICATIONS  
70. The Chairman stated that on 1 February 2 011 India had submitted a supplement to its 2005 
new and full subsidy notification, which had been circulated as document 
G/SCM/N/123/IND/Suppl.1.  Questions posed by the European Union regarding this notification had 
been circulated in document G/SCM/Q2/IND/19 and replies by India to these questions, in document 
G/SCM/Q2/IND/21.  No delegation took the floor to  comment or ask questions on this notification. 
71. The Chairman informed Members that the next  special meeting of the Committee would take 
place during the week of 23 April 2012. 
72. The Chairman adjourned the meeting. 
 
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