WORLD TRADE  
ORGANIZATION   
G/SCM/Q2/CAN/49 
25 January 2012 
 (12-0495) 
Committee on Subsidies and  
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Questions Posed by the UNITED STATES Regarding the 
New and Full Notification of CANADA1 
  
 The following communication, dated 23 January 2 012, is being circulated at the request of the 
Delegation of the United States. 
 
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Question 1 
 
A. INDUSTRIAL PROGRAMS 
21. Enterprise Cape Breton Corporation Assistance 
  Canada's response in G/SCM/Q2/CAN/38 to US questions on this program satisfied most all 
of Article 25 notification requirements.  We th ank Canada for providing those details and for 
notifying this program in the current notification.  However, neither Canada's previous response nor 
the current notification addresses the core concern of  the United States' previous question.  That 
concern is, whether the program is consistent w ith Canada's commitments under Article 3 of the 
Subsidies Agreement, in light of the indication in  the Secretariat's TPR report that a condition of 
receiving assistance is that "the market for the output of this project must be import substitution or 
export orientated".  Could Canada please address this issue?  
 Question 2  
28. PRECARN  
According to the description, one of the program 's objectives is to "boost the productivity, 
agility and global competitiveness of Canadian firm s through the development and application of 
robotics and intelligent systems-enabled solutions th at have market demand".  Please clarify whether 
access to funding under this program is limited to  entities involved in the development and production 
of "robotics and intelligent systems-enabled solutions". 
 
Question 3 
 30. Strategic Aerospace and Defence Initiative 
 
In December 2010, the Government of Canada  announced that it had made a "repayable 
investment" of $300 million under this program to Pratt & Whitney.  See "Harper Government 
                                                      
1 G/SCM/N/220/CAN.   G/SCM/Q2/CAN/49 
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  Announces Major Aerospace Investment to Creat e Jobs and Keep Ca nada Cutting-Edge", 
http://www.ic.gc.ca/eic/site/ic1.nsf/eng/06147.html .  Canada's notification states that it covers fiscal 
year 2009/2010, but does not indicate the time period for that fiscal year.  Can Canada confirm 
whether or not this investment was made during the notified period?   
 
Question 4 
 
The description of the program indicates that assistance is made through contributions of up 
to 40 per cent of the eligible costs of the research .  Can Canada explain how a "repayable investment" 
into research (rather than into a company) operates under this program? 
 
Question 5 
 
C. FISHERIES 2. Atlantic Integrated Commercial Fisheries Initiative 
 
According to the program description, this program provides training to support capacity 
building in Mi'kmaq and Maliseet First Nations co mmercial fishing enterprises.  Please describe the 
entities that receive assistance under this program, an d the specific types of activities that are funded. 
 
Question 6 
 
3. Pacific Integrated Commercial Fisheries Initiative 
 
According to the program description, this program streamlines the transfer of retired 
licenses, quota, vessels and gear to facilitate the en try of First Nation commercial fishing enterprises 
into the fishing industry.  Please provide inform ation on the number and types of such transactions 
during the notification period.    Question 7  5. Short Term Transitional Measures 
 
According to the program description, this pr ogram provided assistance to lobster fishers who 
experienced financial hardship during the global do wnturn of 2007-2009.  Criteria are described as 
including "reliance on income from lobster fishing,  a maximum value of lobster landings in the 
previous year, and a decrease in income from lobs ter, inflicted by the economic downturn".  Please 
discuss whether these are the only criteria for participa tion, and please elaborate on the details of these 
criteria.   
 
Question 8 
 Government of Qu ébec Refundable Tax Credit for Vessels 
 
 The United States understands that two progr ams contained in the current notification 
correspond to the program discussed in Canada's repli es to US questions on this topic in the previous 
notification in G/SCM/Q2/CAN/38.  Those are "Cré dit d'impôt remboursable pour les constructeurs 
de navires" and "Réduction de la taxe sur le capital pour l'acqui sition de navires".  However, Canada's 
response in G/SCM/Q2/CAN/38 to US questions on this program does not address whether the "a 
reduction of tax on capital on the acquisition of vessels  made entirely in Québec" for firms acquiring 
such vessels is consistent with Canada's commitmen ts under Article 3 of the Subsidies Agreement.  
Could Canada please address this issue?   
  G/SCM/Q2/CAN/49 
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  Question 9 
  Canada's response also indicates that "the ta x will be abolished on 31 December 2010".  Can 
Canada confirm that this has indeed happened?  
 
Question 10 
 
Crédits d'impôt pour la Gaspésie et certaines régions maritimes du Québec 
  Public information indicates that entities in the maritime industries receive higher levels of 
tax benefits under this pr ogram than entities in other covered industries.  Could Canada please explain 
how these differential benefits are provided under this  tax program as well as the policy objective and 
purpose of such different treatment? 
 
Question 11 
 
PROVINCIAL PROGRAMS NOT NOTIFIED 
 
Public sources indicate that Canada's provi ncial governments administer several programs 
that were not included in this notification.  For certain of these programs, the United States has 
previously asked Canada in prior submissions to explain why the program was not notified pursuant 
to Article 25 of the Subsidies Agreement.  For example, the Secretariat's Report in Canada's 2011 
Trade Policy Review states that "Federal and prov incial incentives are availa ble in areas such as film 
and TV production;  investment;  research and de velopment;  mineral exploration;  and renewable 
energy".  See W/TPR/S/246 at pg. xi, para. 13.  The United States expresses its concern that Canada's 
current notification still does not notify such program s.  Could Canada address why it has not notified 
programs that the Secretariat was able to identify? 
 
Question 12 
 Investissement Qu ébec;  Government of Qu ébec Aeronautical Development Strategy 
 
Canada's most recent response on Investi ssement Québec (see G/SCM/Q2/CAN/38, 
9 April 2010) acknowledges that this program prov ides "tax assistance" to a limited set of raw 
materials processing industries.  Can Canada pleas e explain why it did not notify this program 
pursuant to Article 25?   
 
Question 13 
 
Further, please confirm that this program conf orms to Canada's commitments under Article 3 
of the Subsidies Agreement. 
 
Question 14 
 
Regarding Government of Quebec support for the aerospace industry, Canada's previous 
response has been to state that the Québec Aeronautical Development Strategy "is not a programme 
and therefore has no budget".  See G/SCM/Q2/CAN/ 38.  However, there have been numerous reports 
over the years that the Quebec provincial government  has provided loans and loan guarantees through 
Investissement Quebec to support the aerospace i ndustry.  For example, in December 2004, it was 
reported that Investissement Québec provided $750 million in loan guarantees to Bombardier in order 
to back sales of about 100 regional jets.  In a ddition, in May 2005 Investissement Québec provided 
$75 million in royalty-based financing to Pratt & Whitn ey for research and development.  This was to 
be distributed over 3 years and repayment was repor tedly not scheduled to begin until 2030.  It has G/SCM/Q2/CAN/49 
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  also been reported that Investissement Québec has provided $118 million in financing for a plant near 
Montreal that will be used to assemble Bombardi er's new C-Series aircraft.  According to Quebec 
public documents, the first disbursement was made in July 2009 (FY 2009-2010), i.e., in the period 
covered by current notification.  Can Canada explain why its current and previous notifications make 
no reference to these activities of the Quebec government?   
 
Question 15 
 Government of Quebec Program for Lab Research Inc   
 
Canada's response in G/SCM/Q2/CAN/38 to US questions on this program acknowledges that 
the Government of Quebec has provided funding to a company that engages in commercial research 
and development on a contract basis.  Canada's pr evious response, however, does not explain why the 
program need not be notified.  Can Canada please explain why it did not notify this program pursuant 
to Article 25?   
 
Question 16 
 
Further, please confirm that this program conf orms to Canada's commitments under Article 3 
of the Subsidies Agreement.  Question 17 
 
Further, please discuss whether any funding was provided to Lab Research Inc during the 
period covered by this notification. 
 
 
 
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