WORLD TRADE  
ORGANIZATION  G/SCM/Q2/EEC/62 
26 April 2010 
 (10-2184) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Replies to Questions Posed by CANADA1 regarding the New and  
Full Notification of the EUROPEAN UNION2 
 
  The following communication, dated 23 April 2010,  is being circulated at the request of the 
Delegation of the European Union.    
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Question 1 
 Section 1:  Export Refunds 
 
 The notification indicates continued use of export subsidies in a number of products, 
including sugar, fruits and vegetables, wine, beef and pork.  In particular, Canada takes note of 
the sharp increase in export refunds provided to Pigmeat from 2007 to 2008.  Does the EU anticipate that these high levels of export refunds will continue in the future?   
 
Reply
 
  The EU sets export refunds within the volumes and outlays agreed in the Uruguay Round and guarantees that it will not go beyond those limits.  With this notification the EU reflects recent implementation of agricultural policies;  the EU re frains from forecasting in the current exercise.   
 
Question 2 
 Section 2.1:  Cereals 
 
 The notification indicates a production ref und is available for certain starches used in 
the manufacture of certain products.  Could the EU elaborate on the intended purpose of this support and the types of producers who receive it?   
 
Reply
 
 
 The CMO for cereals contained provisions which allowed granting of a production refund if that proved necessary.  The refund was of such a na ture that the basic products used by the industry 
concerned could be made available to it at a lower price than that resulting from the application of the 
                                                     
 
1 G/SCM/Q2/EEC/57.   
2 G/SCM/N/186/EEC.   G/SCM/Q2/EEC/62 
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  common prices.  The production refund can be gr anted to starch users (for example the paper 
industry).     The refund for cereals starch has been fixed at zero since October 2006.  The relevant 
provisions of the CMO for cereals have been main tained in the Single CMO Regulation 1234/2007 of 
22 October 2007 (OJ L 299, 16.11.2007, p. 1).   
 
Question 3 
 Section 2.6:  Fruits and vegetables 
 
 Could the EU elaborate on Producer Organisations and in particular the crisis 
management operations of these organisations?   
 
Reply
 
 
 The crisis management by producer organisations uses the tools indicated in the notification.  Please refer to Title III, Chapter I of the C ouncil Regulation 1182/2007 of 26 September 2007 
(OJ L 273 of 17.10.2007, p.1) for further informa tion concerning Producers Organisations and their 
crisis management operations.    Question 4  Section 2.7:  Wine   There are a number of elements that support the wine sector, in particular 
"Restructuring and conversion of vineyards" and "Grubbing up" where support is provided to 
certain vineyards to change their grape varieties to those that are more commercial.  Could the EU elaborate on the potential trade effects of this support?  There is also a shift to use of national financial envelopes, which includes supp ort for promotion on third-country markets.  
Could the EU elaborate on how these en velopes will be used and monitored?  
 Reply
 
  The "Restructuring and conversion of vine yards" and "Grubbing up" measures enable 
producers' choices specifically on the basis of market signals and therefore the measures have no or at 
most minimal trade distorting effects.    
 The use of the national envelopes for "promotion on third markets" is in detail elaborated in 
the notification. The measures are monitored under the regular monitoring and control mechanisms 
applied to the Common Agricultural Policy, assuri ng their application in the required manner.  
Ultimately, the European Court of Auditors will see to the correct use of the available funding.   
 Question 5  Section 2.9:  Other plant products, Dried fodder (page 28)   Processors of dried fodder, who meet cert ain conditions, can receive a processing aid 
of €33/tonne.  Could the EU elaborate on  the intended purpose of this support?   G/SCM/Q2/EEC/62 
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  Reply  
  The CMO for dried fodder had in the past provided for a processing aid granted as a means to govern the internal market in the sector.  This has been maintained with the same intention in the 
Single CMO Regulation 1234/2007 of 22 October 2007. (OJ L 299, 16.11.2007, p. 1).   
 
Question 6 
 Section 3.12:  Payments to starch potato producers  
 Could the EU elaborate on the intended purpose of this support and the types of 
producers who receive it?   
 
Reply
 
 
 The CMO for cereals contained provisions which allowed granting of a production refund if 
that proved necessary.  The refund was of such a na ture that the basic products used by the industry 
concerned could be made available to it at a lower price than that resulting from the application of the 
common prices.  The relevant provisions of the CM O for cereals have been maintained in the Single 
CMO Regulation 1234/2007 of 22 October 2007 (OJ L 299, 16.11.2007, p. 1).  Growers of starch 
potatoes receive a payment of EUR 66.32 for the amo unt of potatoes needed to produce one tonne of 
starch.   
 
Question 7 
 Axis I:  Improving competitiveness for farm ing and forestry, Modernisation of agricultural 
holdings (page 51)  
 
 Could the EU elaborate on the types of "tan gible and/or intangible investments" that 
have received support?   
 
Reply
 
 
 In the case of investments, the elig ible expenditure is limited to:   
 (a) the construction, acquisition,  including leasing, or improveme nt of immovable property;   
(b) the purchase or lease-purchase of new machinery and equipment, including computer 
software up to the market value of the asset.  Other costs connected with the leasing contract, such as 
lessor's margin, interest refinancing costs, overhead s and insurance charges, shall not be eligible 
expenditure;   (c) general costs linked to expenditure referred to in points (a) and (b), such as fees of architects 
and engineers and consultation fees, feasibility studi es, the acquisition of patent rights and licences.   
 
 See Regulation (EC) No 1974/2006 of 15 Dece mber 2006 laying down detailed rules for the 
application of Council Regulation (EC) No 1698/2 005 on support for rural development by the 
European Agricultural Fund for Rural Development (EAFRD) OJ L 368, 23.12.2006, p. 15.    
Question 8 
 
European Fisheries Fund   The notification from the European Communi ties states that the European Fisheries 
Fund (EFF) is the successor to the Financial Inst rument of Fisheries Guidance (FIFG) and that G/SCM/Q2/EEC/62 
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  the EFF budget was €428 million in 2007 and €611 million in 2008.  Although some EC member 
states have notified programmes under the FIFG , no member states have notified programmes 
under the EFF.     Please explain why the following EC member states, which we understand have 
operational programmes funded through the EFF, have not notified any programmes related to 
this fund:  Austria, Bulgaria, Cyprus, Germany,  Denmark, Estonia, Spain, Finland, France, 
Greece, Italy, Lithuania, Latvia, Netherlands , Portugal, Romania, Sweden, and Slovakia.   
  If the programmes are notifiable, please provi de all relevant information as stipulated 
under Article 25.    
Reply
 
  On 1 January 2007 the European Fisheries Fund (EFF), which covers the period 2007-2013, 
replaced the Financial Instrument for Fisheries Guidance (FIFG).   
  On 26 March 2007 the European Commission adopted Regulation (EC) No 498/2007, laying down detailed rules for the implementation of  Council Regulation (EC) No 1198/2006 on the 
European Fisheries Fund.  The purpose of this Commission Regulation is to set out in detail how Member States should implement the EFF in line with the priorities laid down in the basic regulation.  
The implementing regulation lays down the detailed pr ocedures to be followed by the Member States 
in drawing up and implementing their Operational Programmes.     The Operational Programmes (OPs) are designed to implement the policies and priorities to 
be co-financed by the EFF and by national contributions , the latter being the aids paid to beneficiaries 
by the individual EU Member State.   
  Each EU Member State, except Luxembourg did set up an OP for the programming period 2007 - 2013, in which it describes and justifies its ch oice of priority axes and sets specific targets for 
each axis.  The programme also includes a financ ing plan with a breakdown of the budget each year 
and the amounts earmarked for the different axes during the whole programming period.  The OPs are 
approved by the European Commission which checks th at they are consistent with the objectives of 
the Common Fisheries Policy and other EU policies and priorities.     Following thorough negotiations with the Member States on the OPs, the European Commission adopted 19 out of 26 OPs in  the third trimester of 2007, the majority 
in December 2007.  The European Commission was unable to adopt the seven remaining OPs since 
they were either submitted too late or not submitted at all by the Member States in question.  By the end of 2007, only 19 (out of 26) (OPs) were a dopted.  The remaining 7 OPs were adopted in the 
second half of 2008, some of which in late 2008.     Information on all the aforementioned OPs was finally compiled in document "Report from 
the Commission - Second annual Report on implementa tion of the European Fisheries Fund (2008)" 
(doc. COM/2009/0696 final of 21 December 2009)  and the Annex "Commission Staff Working 
Document" (doc SEC(2009) 1714 final of 21 December 2009).     These documents can be found at the following website:   
 
 http://eur-lex.europa.eu/en/index.htm
  G/SCM/Q2/EEC/62 
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   Extensive information of the functioning of the EFF can be found at the website address:   
  http://ec.europa.eu/fisheries/cfp/stru ctural_measures/eff_introduction_en.htm
 
  Due to the late adoption of the OPs it was not possible to already include them in the 
submitted subsidy notification.  A detailed brea kdown of funds provided by Member States on a 
yearly basis beginning with the year 2007 will be in cluded in the next subsidy notification of the EU 
in the required format.     For transparency purposes the EU provid es hereunder an extract of the information 
included in the above mentione d documents, concerning Member States' OPs covering the full 
period 2007-2013.    
(Note:  the Member States' national contribution c an be found by subtracti ng the EFF allocation from 
the total public contribution).   
 
Austria 
 
 Total public contribution amounts to EUR 10 393 753. The EFF allocation amounts to EUR 5 260 000.   
 
Belgium  
 The total public contribution for the Belgian OP amounts to EUR 52 523 296, out of which the EFF allocation amounts to EUR 26 261 648.   
 
Bulgaria  
 The total public contribution for the Bulgarian OP amounts to EUR 106 679 611, with EU assistance through the EFF amounting to EUR 80 009 708.    
Cyprus 
 
 The total public contribution amounts to EUR 39 448 836, out of which EFF assistance is EUR 19 724 418. 
 
Czech Republic 
 
 Total public contribution amounts to EUR 36 142 234, with the EFF assistance of EUR 27 106 675. 
 
Germany 
  The total public contribution to the pr ogramme amounts to EUR 247 156 670 with EU 
assistance through the EFF amounting to EUR 155 865 417.   
 
Denmark  
  Total public contribution amounts to EUR 267 350 338 and the EFF assistance amounts to 
EUR 133 675 169.   
 G/SCM/Q2/EEC/62 
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  Estonia  
 
 Total public contribution of the OP amounts to EUR 112 757 386, out of which the EFF allocation amounts to EUR 84 568 039.  
 
Spain  
 
 The total public contribution to the programme  is 2 088 280 559.  The EFF allocation is 
EUR 1 131 890 912.   
 
Finland  
 The total public contribution to the programme amounts to EUR 91 848 827, with the EFF assistance amounting to EUR 39 448 827.   
 
France  
 The total public contribution of the programme amounts to EUR 390 605 482, with the EFF allocation of EUR 216 000 000.   
 
Greece 
 
 Total public contribution to Greek OP amounts to 274 105 143 out of which the EFF contribution amounts to EUR 207 832 237.   
 
Hungary  
 
 The total OP public contribution amounts to EU R 46 840 816, with EU assistance through the 
EFF of EUR 34 850 860.   
 
Ireland  
  Total public contribution amounts to EUR 65 555 603.  The total EFF contribution to Irish OP 
is EUR 42 266 603.   
 
Italy 
  Total public contribution amounts to EU R 848 685 708 EFF allocations amounts to 
EUR 424 342 854.    
Lithuania  
 
 The total public contribution amounts to  EUR 71 256 575, with EFF assistance of 
EUR 54 713 408. 
 
Latvia 
 
 Total eligible public contribution of the OP amounts to EUR 166 687,419, out of which EFF 
allocation amounts to EUR 125 015 563.    G/SCM/Q2/EEC/62 
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  Malta  
 
 Total public contribution amounts to EUR 11 163 105 out of which the EFF funding is 
EUR 8 372 329. 
 
The Netherlands  
 
 The total eligible public contribution to the Dutch OP amounts to EUR 120 578 417 with the 
EFF allocation of EUR 48 578 417.   
 
Poland  
 
 The total eligible public expenditure am ounts to EUR 978 790 099, out of which the EFF 
allocation amounts to EUR 734 092 574.   
 
Portugal  
 
 Total public contribution amounts to EUR 325 013 154, out of which the EFF allocation is 
EUR 246 485 249.   
 
Romania  
 
 The total public contribution of the progra mme is EUR 307 618 942, with the EFF assistance 
amounting to EUR 230 714 207.    
Sweden  
 
 The total public contribution to the programme amounts to EUR 104 774 205 and the total EFF allocation amounts to EUR 54 664 803.   
 
Slovenia  
  The total public contribution to Slovenia n OP is EUR 28 853 712 out of which the EFF 
funding amounts to EUR 21 640 283.    
Slovakia  
  The total OP public contribution amounts to EUR 18 922 750, with the EFF assistance of 
EUR 13 688 528.    
United Kingdom  
 
 The total public contribution amounts to EUR 246 888 642.  The total EFF contribution to the 
UK OP is EUR 138 000 000.   
 
Question 9 
 Production subsidies to shipbuilding  
 
 The notification of Italy states that the EC council regulation EC No 1540/98 provided 
for interest subsidies under Italy's Measures for Investments in the Naval Sector (page 3 of Italy's notification) for a period of 12 years.  The notifications of Italy also states that EU Law 132/94 provides for grants to shipyards for the production of ships (page 3 of Italy's G/SCM/Q2/EEC/62 
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  notification).  However, the EU 's response to a question based on its 2005 notification, indicated 
that according to the EC Regulation No. 11 77/2002 of 27 Ju ne 2002, concerning a temporary 
defensive mechanism to shipbuilding, production aids granted to final contracts signed within 
31 March 2005 would not be renewed or replaced.  Given that production aids and support to 
the European shipbuilding sector appears to be continuing on without any identified 
termination date, could the EU provide an explanat ion as to why support for this sector is still 
in place and whether such aid, including in the case of Italy, will be terminated?   
 
Reply
 
 
 Council Regulation (EC) No 1177/2002 of 27 June 2002 authorised, exceptionally and 
temporarily (extended until 31.03.05), a provision al defensive mechanism for specific market 
segments and for a given short period of time in order to grant aid to Community naval shipyards in the sectors suffering negative effects in the form of serious tangible damages due to the Korean unfair 
competition.  Italy, in compliance with said Regul ation (EC), provided grants to shipyards up until 
31 March 2005.  Law No 244/08 (Government Bill 2008) authorised expenditure amounting to 
10 million Euros for the year 2008 to complete what laid down in the Article  4, subparagraph 153 of 
Law No 350/2003 that applies Council Regulation (E C) 1177/2002 as there were still some initiatives 
to be granted aid for which formal request ha d been submitted according to Regulation (EC) 
No 1177/2002 and relevant procedure for inquiring had already been started.  The European Commission with Decision C (2008) 6015 of 21 October 2008 stated that the aid scheme 
was not compatible with the common market and that  therefore it would not be possible to carry it 
out.  The funds allocated by the Government Bill 2008 were eliminated by the Legislative Decree 
No 93 of 27 May 2008 turned into La w No 126 of 24 July 2008.  As no new legislation had passed to 
date, this Administration considers it a ppropriate to cancel the programme.   
 
 With respect to national Laws No 132/1994 and No 88/2001, in compliance with Regulation 
(EC) 1540/98 concerning aids to shipbuilding expiring  on 31 December 2003, it is important to recall 
that aids to production in favour of shipbuild ing ended.  The amounts specified on page 3, 
paragraphs A.3 and B.3 regarding subsidy notifi cation for the years 2007 and 2008 only refer to 
payments related to previously signed contracts w ithin the date fixed by Community regulations.   
   
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