WORLD TRADE  
ORGANIZATION  G/SCM/Q2/CAN/31 
11 March 2008 
 (08-1050) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Replies to Questions Posed by the EUROPEAN COMMUNITIES1 Regarding  
the New and Full Notification of CANADA2 
 
  The following communication, dated 7 March 2008, is being circulated at the request of the 
Delegation of Canada.    
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1 G/SCM/Q2/CAN/26.   
2 G/SCM/N/155/CAN.   G/SCM/Q2/CAN/31 
Page 2  
 
  Ethanol Expansion Programme
 
 
Question 1 
 
 Could Canada indicate how many ethanol producers benefited from this programme 
since it entered into force?    
Reply
 
 
The Ethanol Expansion Program (EEP) was launc hed in August 2003.  The program funding 
ended on March 31, 2007.  Financ ial contributions were allocate d to seven Companies for nine 
ethanol plant projects.    
Question 2 
 
 The description of the programme states that  "Contributions are repayable according to 
the project profitability".  Could Canada explain this requirement in further detail?  Have there been any repayments so far?   
 
Reply
 
 
The financial contributions provided to Co mpanies under the EEP are repayable to the 
Government of Canada.  The repayment formula w as contained in the two calls for proposals that 
proceeded under the program (in October 2003 and December 2004).   
  Repayment reports (which include the calcu lation of the repayment amount) have to be 
submitted by Companies over a seven-year period or  until the full EEP contribution has been repaid to 
the Government of Canada.  The first year of calcu lation is typically the third calendar year after the 
signing of the contribution agreement.  The amount of repayment calculated as of December 31 of each year is as follows:     (Average Gross Income per litre - $ Can. 0.20 per litre) x (total Fuel Ethanol produced during 
the previous twelve months) x 20 per cent.   
 
"Average Gross Income per litre" means (Sales  – Costs of Goods sold over the previous 
36 months) divided by (amount of Fuel Ethanol production over the previous 36 months).   
 
 Repayment Reports for year 2007 for the first four ethanol plant projects under the EEP are 
being reviewed by Natural Resources Canada.    
Question 3 
 
 What was the amount provided to each beneficiary and what is the ratio of contribution 
per litre ethanol production?    
Reply
 
  The following provides the contribution amounts (in $ Can.) allocated to each project under 
the EEP and their annual fuel ethanol pro duction capacity (denatured ethanol).   
  1-  $ 7.8 million (130 million litres per year -mmlpy)  2- $ 3.5 million (25 mmlpy)  3- $ 22.0 million (200 mmlpy)  G/SCM/Q2/CAN/31 
 Page 3 
 
 
   4- $ 18.0 million (126 mmlpy) 
 5- $ 10.4 million (133 mmlpy)  6- $ 1.135 million (12 mmlpy)  7- $ 7.26 million (54 mmlpy)  8- $ 11.9 million (150 mmlpy) 
9- $ 15 million (208 mmlpy) 
 
Question 4 
 
 From the description of the programme we  understand that the programme consisted 
solely of a one-off contribution to benefi ciaries.  Could Canada confirm this?   
 
Reply
 
  There is one contribution amount allocated to each selected project (listed above).  
Contributions to Companies that meet all requireme nts are provided by the Government of Canada in 
two payments (initially 90 per cent once a set of criteria are met, with 10 per cent provided upon 
satisfactory completion of the project).    
Question 5 
 
 The programme gives a clear cost advantage to domestically produced ethanol 
compared to imported ethanol.  Are th ere any plans to renew the programme?   
 
Reply
 
 
 The contributions provided under the EEP are repayable  contributions (as per the above 
repayment formula) so there is no cost advantage.     Funding for the program ended on March 31,  2007.  The program was not renewed.   
  
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