WORLD TRADE  
ORGANIZATION  G/SCM/Q2/JPN/40 
28 August 2006 
 (06-4015) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
JAPAN’s Replies to Questions  Posed by the UNITED STATES  
Regarding the New and Full Notification of JAPAN1 
 
 The following communication, received 23 August 2006, has been received from the 
delegation of Japan.  
_______________ 
 
I. INDUSTRY  
 
General
 
 
 For many programmes, the form of the subs idy is listed as “contract.”  Please explain 
how the subsidy is provided in the form of a co ntract for each of the relevant programmes.   
 
Reply  
 
 The form of “contract” is used when the govern ment entrusts its tasks or projects to other 
organizations by means of concluding c ontracts and paying the expenses to them. 
 Contract for Exchanging Electronic Data for Trade-related Procedures
 
 Reply to how the subsidy is provided
 
 
 This programme aims at the development of the software connecting EDI (Electronic Data 
Interchange) system in Japan and that in forei gn countries.  The government concluded a contract 
with some manufacturers involved in the developm ent of Japanese EDI system in order to conduct 
this project.  Q1. Please provide further details regarding th e policy objectives regarding this programme. 
 
Reply
 
 
The policy objective regarding this programme is to replace paper documents such as B/Ls 
and Invoices with electronic data on the Internet fo r international B to B trade related procedures. 
 
                                                      
1 G/SCM/N/123/JPN G/SCM/Q2/JPN/40 
Page 2  
 
  Q2. What types of companies are eligible for this assistance, e.g., trading companies, 
manufacturers and/or producers?  What are the specific eligibility requirements for the 
recipients? 
 
Reply
 
 
Trading companies and manufacturers are eligible  for this assistance.  The specific eligibility 
requirements for the recipients are detailed knowle dge on trading procedure and that on information 
technology system.  
 
Commission on the Research for the Manufacturing Industries Technology  
 Q1. Please provide further details regarding the policy objectives of this programme . 
 Reply
 
 
The purposes of this research are to obtain the technological information, mainly about 
advanced ceramics, and to draw up a tec hnological road map on advanced ceramics. 
 Contract for Development of Information Processing System and for Related Purposes
 
 
Reply to how the subsidy is provided  
 
 The government makes contracts with organizati ons such as research agencies.  They conduct 
necessary research and they submit reports as refe rence materials for decision-making regarding 
information processing policy. 
 
Q1. Please provide further details regarding th e policy objectives regarding this programme. 
 
Reply  
 
The purposes of this contract are as follows: 
 
• to establish clear and systematized IT  skill standards necessary for providing 
advanced IT services; 
• to clarify the market value of such skills a nd adjust them to international standards; 
• to investigate the actual conditions of information processing and e-commerce; and 
• to analyze the effect of investment in IT and to build investment models in order to 
facilitate information technology utilization by private companies. 
 
Q2. Please provide the specific eligibility requirements and describe the industries that 
benefit.  
 
Reply  
 
 The specific eligibility requirement is suffici ent knowledge in the field of IT.  Research 
agencies and consumer electric ma kers benefit from this programme. 
 Contract for the Equipment of Infrastructure Concerning Information and Economy
 
 Reply to how the subsidy is provided
 
  G/SCM/Q2/JPN/40 
 Page 3 
 
 
   The government makes contracts with organizati ons such as research agencies.  They conduct 
necessary research and they submit reports as refe rence materials for decision-making regarding 
information infrastructure maintenance policy.  
Q1. Please provide further details regarding th e policy objectives regarding this programme. 
 Reply
 
 
The purposes of this contract are as follows:   
• to develop information system in certain public fields such as medical care, welfare, 
environment, recycling, distribution, and public project by means to choose certain public fields in which the introduction and th e development of the information system 
contribute to the effective reform in system and structure, and develop the information system in such fields. 
 Q2. Please provide the specific eligibility requirements and describe the industries that 
benefit.  
 
Reply
 
 
 The specific eligibility requirement is sufficient knowledge in the field of IT. Research 
agencies and consumer electric ma kers benefit from this programme. 
 Subsidies for Interest on Loans to  Introduce Specific Facilities Suitable for Alternative Energies to Oil
 
 
Q1. What are the eligibility requirements for this programme?  Please further clarify who 
receives funding under this programme, e.g., which industries. 
 
Reply  
 
The eligibility requirements for this programme  are to introduce new facilities which supply 
and utilize alternative energy to oil. Fo r instance, gas companies which introduce  natural gas as 
material can receive subsidies for interest under this programme.  
 
Q2. Do Japanese steel companies, including co mpanies affiliated with the steel industry, 
receive assistance under the programme? 
 Reply
 
 
While there is actual case in terms of companies affiliated with the steel industry, there is no 
case in steel companies.  Q3. What would constitute as a “specific facility” under the programme? 
 
Reply
 
 
"Specific facility" constitutes facilities utilizi ng alternative energies to oil, such as LNG 
satellite station, LNG tankers, and gas transportation pipes.  
 G/SCM/Q2/JPN/40 
Page 4  
 
  II. FINANCE  
 
Special Depreciation on Certain Machinery Used for Advanced Technology Industries in Certain 
Advanced Technology Industrial Group-site Areas  
 Q1. Please explain what types of machinery qualify for the special depreciation under this 
programme.  What are the principal industr ies or sectors which have benefited from 
this programme? 
 
Reply
 
 
 Article 44.2, paragraph 1 of the Special Ta xation Measures Law provides that this measure 
will apply when “machineries or equipments which have not yet provided for business use after their 
constructions or factory or laboratory buildings and their attached equipments are acquired by a 
corporation and provided for the use of advanced technology industries which that corporation carries 
on”. No statistical data is available on which indu stry have actually benefited from this programme. 
 
Q2. What criteria must be met in order to be  a  “qualified advanced technology industry?”  
Please explain what qualifies as an “industrial group site area.” 
 
Reply  
 
Main criteria for the qualified Advanced T echnology Industrial Group-site Areas are: 
 
• concentration of enterprises which carry out development of high technology that 
respond to the development of technical innovation or use such technology for the development, production or sales of products or services; 
• existence of universities or other research or ganizations inside or nearby that area, 
which carry out research on high technology; and 
• access to transportation facility such as hi ghway or airport and to information 
facilities which provide information require d for the development or use of high 
technology. 
 Additional Depreciation on Fishing Boat (owned by  persons or corporations which execute the 
management improvement plan of fishing industry)  
 
Q1. Please describe what the “management improvement plan” of the fishing industry 
includes and requires? 
 
Q2. What is total amount of depreciation perm itted over the useful life of the fishing vessel 
as compared to the purchase price of the vessel?  
 
Q3. Does this programme promote the construction or purchase of new vessels? 
 
Reply  
 
This programme was abolished in the fiscal year 2005. 
 Additional Depreciation on the Machinery of Corpora tion which is provided in the plans to strengthen 
the management base  
  G/SCM/Q2/JPN/40 
 Page 5 
 
 
  Q1. Please explain what types of “certain  buildings and machinery” qualify for the 
additional depreciation. 
 
Reply  
 
 Article 13.2, paragraph 1 of the Special Ta xation Measures Law defines that “machinery or 
equipments, factory buildings, and these attached equipments owned by small-and medium sized 
enterprises which are qualified as implementing plans to strengthen the management base and are operating certain specified businesses”.  Q2. What is total amount of depreciation permitted over the useful life of the relevant 
machinery as compared to the pu rchase price of the machinery?  
 
Reply
 
 
95% (total amount of depreciati on permitted over the useful life is not affected by whether or 
not the additional depreciation is applied.)           
Q3. Does this programme promote the construction or purchase of new fishing vessels?  
Does this programme promote new fi sh-processing capacity, or the 
maintenance/modernization of existing processing capacity? 
 
Reply
 
 
This programme is not for promoting the cons truction or purchase of new fishing vessels, new 
fish-processing capacity, or the maintenance/m odernization of existing processing capacity.  
 
Agriculture, Forestry and Fisheries Finance Corporation Subsidy  
 
Q1. What is the form of the subsidy pr ovided to fishermen under this programme? 
 
Reply  
 
The subsidy is provided in the form of grant to the Agriculture, Forestry and Fisheries 
Finance Corporation, not to fishermen. 
 
III. ADDITIONAL SUBSIDIES PROGRAMMES  
 
A. National Programmes  
 
Q1. Regional Programmes Tax Programmes 
 
 It is our understanding the following programmes provide special tax treatment to 
companies in  designated rural areas.  For ea ch of the below programmes, please provide the 
information required under Article 25 of the SCM Agreement or explain why these programmes are not subject to the notifica tion requirements under the SCM Agreement . 
 
• Rural Industrial Act 
 Reply
 
 
 There seems to be no law name d Rural Industrial Act in Japan. G/SCM/Q2/JPN/40 
Page 6  
 
   
• Underdeveloped Area Industrialization Act 
 Reply
 
 
Japan does not notify the Law pursuant to Article 25 of the SCM Agreement because 
financial measures under the Law do not limit access to a subsidy to an enterprise or industry or group 
of enterprises or industries therefore are not “sp ecific” under Article 2 of the SCM Agreement.  
 
• Peninsula Development Promotion Act 
 
Reply  
 
Japan does not notify the Law (the Peninsulas Development Act) pursuant to Article 25 of the 
SCM Agreement because financial measures under the Law do not limit access to a subsidy to an 
enterprise or industry or group of enterprises or i ndustries therefore are not “specific” under Article 2 
of the SCM Agreement.  
• High-Tech Industrial Zone Promotion Act (Technopolis Act) 
 Reply
 
 
Since this Act was repealed, the Act is out of th e scope whether it is subject to the notification 
requirements.  
• New Industrial Cities Promotion Act 
 
Reply
 
 
Since this Act was repealed, the Act is out of th e scope whether it is subject to the notification 
requirements.  
• Knowledge-Intensive Industry Location Act 
 Reply
 
 
Since this Act was repealed, the Act is out of th e scope whether it is subject to the notification 
requirements. 
 
• Industrial Relocation Promotion act 
 Reply
 
 
 The Industrial Relocation Promotion Act, wh ich was repealed on April 2006, aimed at the 
balanced development of the country. For that pur pose, the Government of Japan supported a wide 
variety of industrial fields which would create a wide range of economic effects by means to 
encourage factories to relocate from the area wh ere industry accumulated excessively to the one 
where the degree of industrial accumulation was low.  However, this act was not designed to promote 
industrial relocation for certain industries or sectors.  
 
Therefore, the Industrial Relocation Promotion Act did not correspond to a “specific subsidy” 
as defined in Article 2 of the SCM Agreement.   G/SCM/Q2/JPN/40 
 Page 7 
 
 
  • Chubu Region Development Act 
  Reply
 
 
Japan does not notify the Law pursuant to Artic le 25 of the SCM Agreement because financial 
measures under the Law do not limit access to a subsid y to an enterprise or industry or group of 
enterprises or industries therefore are not “specific” under Article 2 of the SCM Agreement.  
• Law on Special Measures on Tax, Article 34.65-7  
 
Reply
 
 
 These programmes under the law are not subject to the notification requirements under 
Article 25 of the SCM Agreement because th e taxation measures under the law are provided 
according to objective criteria and do not limit ac cess to enterprises located within a designated 
geographical region therefore they are not specific in the sense of Article 2 of the SCM Agreement. 
 
Q2. National Research Development Programmes 
 
 For each of the below programmes, pl ease provide the information required under 
Article 25 of the SCM Agreement or explain why these programmes are not subject to the notification requirements under the SCM Agreement. 
 
"Focus 21" Programme 
 
 It is our understanding that "Focus 21" is  centered on the provision of funds to support 
research and development in priority areas.  This programme includes funds to develop key areas such 
as semiconductor mirco-processing, next-generati on robot technology, high-speed communication 
equipment, nano-technology, etc. 
 
Reply
 
 
Focus 21 programme encourages research a nd development which contributes to the 
stimulation of Japanese economy.  For that purpose, the Government of Japan supports wide variety 
of technological fields which will create large grow th and wide range of eco nomic effects.  This 
programme covers technologies in various industri es horizontally, and is not designed to promote 
R&D for certain industries or sectors.  
 Therefore, Focus 21 programme does not correspond to “specific subsidy” as defined in 
Article 2 in the SCM Agreement. 
 
Local Industrial Cluster Programme It is our understanding that this programme seeks to  create local industrial agglomerations (clusters) 
focused on new and high-technology industries.  
Reply
 
 
The purpose of the Industrial Cluster Projects is to activate Japan’s regional economies by 
forming industry-academic-government networks in each  region of the country.  In order to promote 
the Industrial Cluster Projects, the assistance is provided to the regional business organizations that 
form the industry-academic-government networks (e.g. Workshop on various industries, Exhibition G/SCM/Q2/JPN/40 
Page 8  
 
  for seeds transfer from local universities to SMEs),  but the project does not give economic incentives 
for the promotion of R&D only to certa in industries or certain enterprises. 
 Therefore, Industrial Cluster Projects do not co rrespond to "specific subsidy” as defined in 
Article 2 of the SCM Agreement.
 
 B. Prefecture Administered Programmes
 
 
 It is our understanding that there are num erous programmes administered by Japan’s 
prefecture governments.  Information obtained fr om public sources indicates that many of these 
programmes benefit high-tech companies or indust ries.   Below are examples of some of the 
prefectural programmes for which information is available from public sources.  Please provide 
the information required under Article 25 for these and other prefecture administered programmes, or explain why these programmes are not subject to the notification requirements 
under the SCM Agreement. 
 
Aichi Prefecture Subsidies  
  
• Industrial Facilities Tax Abatement Programme 
• Subsidies for Actively Inviting Leading-Edge Industries 
• Fund Loan Programme for Actively Inviting Companies 
• Long-Term Installment Payment Plan for Land Purchase 
• Tax Incentives in Depopulated Areas 
 Reply
 
 
 These subsidies of Aichi Prefecture except for the Fund Loan Programme for Actively 
Inviting Companies and the Long-Term Installment Payment Plan for Land Purchase, do not explicitly limit access to an enterprise or industr y or group of enterprises or industries, and the 
objective criteria or conditions governing the eligibili ty for, and the amount of, each of these subsidies 
are established by Aichi Prefecture which spells out the criteria and conditions in its ordinances etc. 
The eligibility is automatic and the criteria and c onditions are strictly adhered to. Therefore, these 
subsidies are not “specific” under Article 2 and are not subject to the notification requirements under 
Article 25 of the SCM Agreement.  
 The Fund Loan Programme for Actively In viting Companies does not exist in Aichi 
Prefecture. 
 
 The Long-Term Installment Payment Plan for Land Purchase is not the Aichi Prefecture's practice that involves any direct transfer of funds. It is not the case that Aichi Prefecture's revenue that 
is otherwise due is forgone or not collected under the Plan. Aichi Prefecture neither provides any 
goods or services, nor purchases goods under the Plan. Aichi Prefecture does neither make any 
payments to a funding mechanism, entrust nor dir ect a private body under the Plan. Therefore, the 
Plan is not a “subsidy” under Article 1 of the SCM Agreement. 
 
Akita Prefecture Subsidies  
 
• Subsidies for Investments in Equipment and Facilities 
• Assistance for Site Acquisition in Industrial Parks 
• Low Interest Loans 
• Tax Exemptions 
  G/SCM/Q2/JPN/40 
 Page 9 
 
 
  Reply  
  These subsidies of Akita Prefecture do not exp licitly limit access to an enterprise or industry 
or group of enterprises or industries, and the objec tive criteria or conditions governing the eligibility 
for, and the amount of, each of these subsidies are est ablished by Akita Prefecture which spells out the 
criteria and conditions in its ordinances etc. The e ligibility is automatic and the criteria and conditions 
are strictly adhered to. Therefore, these subsidies are not “specific” under Article 2 and are not subject 
to the notification requirements unde r Article 25 of the SCM Agreement.
 
 
Mie Prefecture  
 
• Subsidies to Flat-Screen TV Producers 
• Subsidy System for New Business Development 
• Subsidies for the Establishment of Factories and Research Institutes 
 
Reply  
  These subsidies of Mie Prefecture do not explicitly limit access to an enterprise or industry or 
group of enterprises or industries, and the objective criteria or conditions governing the eligibility for, 
and the amount of, each of these subsidies are estab lished by Mie Prefecture which spells out the 
criteria and conditions in its ordinances etc. The e ligibility is automatic and the criteria and conditions 
are strictly adhered to. Therefore, these subsidies are not “specific” under Article 2 and are not subject 
to the notification requirements under Article 25 of the SCM Agreement. 
 C. Other Programmes
 
  Responding to questions from the Unit ed States, Japan described several fishery 
programmes in G/SCM/Q2/JPN/38, which had not been notified.  Please explain why the following programmes are not required to be noti fied or provide the necessary information in 
accordance with Article 25 of the SCM Agreement. 
  
• Programmes to support constructing/maintaining fishing ports or installing their 
related facilities, or conserving/re habilitating the marine environment 
• Fishing vessel insurance and reinsurance programmes 
• Programmes to “support fisheries organizations in stocking their members’ catches”  
• Programmes to reduce or reimburse fuel taxes for the fishing industry 
• Fishery research and development 
• Fishing vessel buyback programmes 
• Interest rate subsidies for fi shermen to purchase fishing vessels 
• Rural development programmes that provide assistance to fishing villages and 
communities 
 Reply
 
 
Japan notifies its programmes in accordance w ith the SCM Agreement.  As explained in 
G/SCM/Q2/JPN/38, information on those programme s was provided in response to the questions by 
the United States, without prejudice to the Japan’s po sition on whether this is  required notification to 
the WTO.  
 
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