WORLD TRADE  
ORGANIZATION  G/SCM/Q2/TPKM/6 
2 May 2006 
 (06-2084) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
Questions from the UNITED STATES  
Regarding the New and Full Notification of the SEPARATE  
CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU1 
 
  The following communication, dated 28 April 2006,  is being circulated at the request of the 
Delegation of the United States. 
 
_______________ 
 
  
General Fisheries Questions
 
  Certain publicly available information indi cates that Chinese Taipei may have subsidy 
programmes that benefit its fishing industry whic h have not been notified.  Please explain why the 
programmes listed below do not qualify as notifiable under Article 25 of the SCM Agreement.  If they 
do qualify as notifiable, and to the extent they  have not yet been notified, please provide the 
information required under Article  25 of the SCM Agreement. 
 Fish Product and Promotion 
 
1. Establishment of omnidirectiona l marketing channels and promotion 
 2. Management of fish markets and markets products  
3. Planning of fishery related information 
 4. Promotion of fisheries techniques  5. Planning and management of aquaculture   
6. Establishment of marine processing brand name 
 Refurbishment of public facilities  7. Fishing port establishment and management 
 
8. Aquaculture facilities loan  9. The marine insurance on fishing vessels and fishermen 
                                                     
 
1 G/SCM/N/123/TPKM G/SCM/Q2/TPKM/6 
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  10. Developing domestic markets for fisheries products 
-  Stock enhancement programmes 
 11. Enhance fisheries business by fishermen’s association  
12. Developing new fisheries technologies  
  Fisheries Development Fund
   
 
 Article 56 of the Fisheries Act states that a Fisheries Development Fund will be established to 
promote fisheries development.  Please answer the following questions.  1. What is the policy objective and purpo se of the Fisheries Development Fund? 
 
2. Which government authority administers this Fund? 
 3. What types of incentives are provided for under this Fund ( e.g., grants, low-interest rate loans, 
tax concessions)?  4. Please specify which fisheries developmen t activities are eligible for funding under the 
Fisheries Development Fund ( i.e. funding of vessels, training, marketing, purchase of equipment.) 
  Import Duty Exemptions and Reductions
 
 
Under Article 58 of the Fisheries Act, fishing vessels, fishing gear and capital goods imported 
for fisheries production purposes will be exempt from import duties or will receive import duty reductions if these goods are not manufactured domes tically.  Please answer the following questions. 
 1. What is the policy objective and purpose of the Import Duty Exemption and Reduction programme? 
 
2. Which government authority administers this programme?   3. What was the total amount of duties from which the fishing industry was exempt in the 
notification period?  
 
 Fuel Oil Programme
 
 
Article 59 of the Fisheries Act states that fuel for equipment used in fisheries will be exempt 
from the commodity tax.  In addition, Article 59 al so states that the Executive Yuan will decide the 
standard for the preferential fuel price provided to  the fisheries industry.  Please answer the following 
questions.  1. What is the policy objective and purpose of these programmes?   
 
2. Which government authority administers these programmes?   
 
3. What was the rate of the commodity  tax during the notification period?   
  G/SCM/Q2/TPKM/6 
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  4. What was the total amount of commodity tax exemptions provided to the fishing industry 
during the notification period?    5. What was the preferential fuel price provided to the fishing industry during the notification 
period and how was this preferential fuel price determined?   
 
6. What was the market rate for fu el during the notification period?  
 7. Was the total amount of the subsidy provided to the fishing industry during the notification period from the preferential fuel price programme? 
 
Reduction of Tuna Fleet
 
 1. Based on publicly available information,  the government will compensate the losses of 
operators of the tuna fishing vessels this year and next year after their longliners are dismantled, and 
that the total amount provided under this programme is significant.  Please provide details regarding 
who the recipients of these funds are ( e.g., do the compensation payments go directly to the fisherman 
or are there other recipients or actors involved?).   
 
2. Please provide the total amount of funds provided under this programme during the 
notification period.   
 
3. How is the payment amount decided for each recipient?  
 
4.   Are there any conditions g overning the use of the payments? 
 
5.  Is the vessel license revoked in some manner?   
  Reward for Reduction of Fishery Activities Programme 
 
 1. Please explain in greater detail how this progr amme works with regard to coverage of the 
fishing vessels.  For example: 
 
(a) How is the amount of the grant determined? (b) Is this a type of wage subsidy? (c) Is the grant provided directly to the fisherman? 
 (d) How are funds for this programme disbursed? 
 2. How does the administering agency ensure that  those individuals who received the grant meet 
the relevant criteria?    
Five-year tax exemption for the emerging, important and strategic industries 
 
 1. What are the principal industrial sectors that benefit from this programme?  2. Is this programme in any way contingent upon exporting?   
 
 Tax Credit For Investment in a Disadvantage Region 
 
 1. What are the principal industrial sectors that benefit from this programme? G/SCM/Q2/TPKM/6 
Page 4  
 
  Medium-and-Long Term Loans for Product Marke ting and Loans for Overseas Investment and 
Construction Projects  
 1. According to document G/SCM/Q2/TPKM/3, there is no difference between these loans and 
commercial loans.  If so, what is the benef it from acquiring a loan under this programme? 
 
2. Are benefits under this programme in any way contingent upon exporting or the use of 
domestic over imported goods? 
   
Duty and tax exemptions for high-technology industries
 
 1. Could you please explain what qualifies as a "v alue added" and "non- value added" good? 
  
Programmes for Orchid Production
 
  Information from publicly available sources i ndicate that Chinese Taipei provides assistance 
to its orchid industry through the two programmes described below.   
Assistance for Construction of an Industrial Park for Orchid Production  
 
   According to public sources, the government has allocated over NTD $2 billion (approximately US$65 million) to construct an industrial park for orchid production.  The 
government’s investments in the park are expected to exceed US$ 25 million by the end of 2004.  
This funding has been included in the government’s  "Challenge 2008" six-year  national development 
plan.  The industrial park will serve as a specifi cally designed complex for cultivation, production, 
marketing, research and overseas sales for orchids.
2  
 
 
Low Interest Loans from Government Funds for Orchid Growers   
  In addition, the government aims to attract orchid growers to use the park for their own 
production by offering low interest loans from government funds for orchid growers.  Each orchid 
growing company can apply for a maximum loan of NT$40 million to be repaid over ten years with 
an annual interest of 2.5 per cent.
3 
 1. Please explain why these programmes were not notified or provide th e information pursuant 
to Article 25 of the SCM Agreement.   
 
 
__________ 
 
 
                                                     
 
2 "Ground broken for special Orchid Park in Taiwan."  Taipei Times .  Feb. 21, 2004; Bradsher, Keith.  
"Orchids Flourish on Taiwanese Production Line."  New York Times ,24 August, 2004 
3 Lin, Lillian.  "Orchid Growers Enthusiastic About Orchid Project."  Central News Agency—Taiwan.    
16 April, 2003.