WORLD TRADE  
ORGANIZATION   
G/SCM/Q2/USA/48 
26 July 2011 
 (11-3795) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
  
 
  
SUBSIDIES 
 
Questions Posed by BRAZIL Regarding the New and Full 
Notification of the UNITED STATES1 
  
 The following communication, dated 25 July 2011, is being circulated at the request of the 
Delegation of Brazil.   
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Federal Programmes 
 
Title of the programmes: "Energy Supply:  Renewable Energy Resources"; "Energy 
Conservation Programmes: Transportation S ector"; "Energy Conservation Programmes: 
Building Technologies"; and "Energy Conservation: Industry Sector"  – pages 12-16 
 (a) With regard to the form of the programmes,  the US notifies the cooperative research and 
development agreements (CRADAs) that are "nego tiated, contractual agre ement between a federal 
agency or agency laboratory and a private sector partner or partners (including universities and 
independent research institutions) in which the par ties agree on the designation of personnel, facilities, 
equipment and other resources to a collaborative R& D activity, as well as to the disposition of any 
intellectual property which the R&D yields." (Footnote 2)  
Question 1 
   Could the US provide more information on the terms of those contracts?  
 
Question 2 
 
  Could the private sector partner or partners  benefit from patents resulting from the activities 
developed under those programmes?  
 (b) Regarding "to whom and how assist ance is provided", the notification states that participation 
in the programmes "is determined through various  competitive procedures, which are open to all 
eligible private parties." 
Question 3 
 
 What are the criteria that determ ine an "eligible private party"?  
                                                      
1 G/SCM/N/186/USA. 
 G/SCM/Q2/USA/48 
Page 2  
 
  Question 4 
 
 What are the parameters of the "competitive procedures"?  
 
Question 5 
 
 Do foreign companies benefit from th ese programmes under similar conditions? 
 (c) In relation to the trade effects of the programme s, the US informs that "in light of the scope 
and nature of the R&D activities being assisted, it is  not possible to determine what, if any, trade 
effects may ever result from this programme." 
Question 6 
 
 Do the US export products that incorporat e technologies developed under those programmes?  
 
 
Title of the Programme: "Alternative Fuel Production Credits"  – page 22 
 (a) With regard to whom and how assistance is provided, the US informs that "[p]roducers and 
royalty owners of qualifying pr oduction are permitted credits agai nst federal income tax."   
Question 1 
 
 What are the criteria that determine a "qualifying production"?  
 
Question 2  
 Do foreign companies benefit from th ese programmes under similar conditions? 
 (b) Concerning the amount of the programme, the notification informs absolute amounts of the 
revenue loss per year ($2,920 million in 2007 and $590 million in 2008). 
Question 3 
  What percentage would that revenue loss repre sent in terms of the total tax revenue in the 
sector?   Title of the Programme: "Capital Gains Treatment of Royalties on Coal"  – page 23 
 
 Under "trade   effects", the US notifies that "It is not possible to estimate what, if any, trade effects may result from the use of this provision." 
 
Question 1 
  Are the products benefited by this programme used as inputs in the domestic steel industry? 
 
Question 2 
 
 In case of an affirmative answer to the prior question: what is the percentage of this input 
costs on the total costs of steel production?  
  G/SCM/Q2/USA/48 
 Page 3 
 
 
  Title of the Programme: "Fisheries Finance Programme (FFP)"  – page 32 
 (a) According to the notification, the pr ogramme also benefits aquaculture. 
Question 1 
  Could the US inform if the beneficiaries of the programme include shrimp 
producers/fishermen? If that is the case, what woul d be the amount of the programme destined to 
those producers/fishermen?  (b) With regard to the form of the programme, th e notification makes reference to the interest 
rates involved ("2 percentage points above comparable  maturity Treasury bond yields as of the date of 
the loan closing").  
Question 2 
 
 What would be the other terms of financing under the programme? 
 
(c) With regard to whom and how assistance is provi ded, the notification states that "loans are 
provided directly to individuals or business enterprises that have qualified projects". 
Question 3 
 
 What are the criteria that would qualify a project to benefit from the programme?  Question 4 
 
 Do foreign companies or persons in the US benefit from the programme under the same 
conditions of national companies or persons? 
 
 
Title of the programme: "Saltonstall-Kennedy  Grant Programme: Fisheries Research and 
Development"  – page 34 
 (a) With regard to the policy objective and/or purpose of the programme, the notification 
indicates that it uses funds derived from duties collected on fishery imports. 
Question 1 
 
 Is that duty also collected when the product is sold in the domestic market by a national producer? 
 
(b) With regard to the form of the programme, the notification states that donations are made on 
competitive basis. 
Question 2 
 
 What are the parameters that inform the selection of the beneficiaries? 
 G/SCM/Q2/USA/48 
Page 4  
 
  Title of the programme: "Sea Grant"  – page 35 
 (a) With regard to the policy objective and/or purpose of the programme, the notification 
indicates that the "programme provides grants to  selected universities to carry out research that 
addresses many aspects of the long-term economic development, environmental stewardship, and 
responsible use of marine and inland resources, in cluding fish and shellfish" but some "Sea Grant 
projects benefit industry". 
Question 1 
 
 How would the industry benefit from the programme? 
 
(b) With regard to trade effects, notification st ates that the results of the researches conducted 
under this programme in general belongs to public domain.   
Question 2 
  Is there the possibility that some researches result in intellectual property rights? If so, who 
would hold those IP rights?   On pages 37 and 38 and pages 42 to 44 of the notification, the US describes the programmes: 
"Capital Gains Treatment of Certain Timber Income"; "Expensing of Multi-period Timber 
Growing Costs"; "Excess of Percentage over Cost Depletion for Non-fuel Minerals"; 
"Expensing of Exploration and Development Co sts for Non-fuel Minerals"; "Capital Gains 
Treatment of Iron Ore"; and "Special Ru les for Mining Reclamation Reserves".   The amount of 
revenue loss for each programme is given per year (2007 and 2008) in absolute terms (US$).   
 
Question 3 
 
 What percentage would the revenue loss of those programmes represent in terms of the total tax revenue of the related industr ies: "Lumber and Timber" and "Metals, Minerals and Extraction 
(non-fuel)?    
Title of the Programme: "Emergency Steel Loan Guarantee Programme"  – page 45 
  With regard to the policy objective and/or purpose of the programme, the notification states that "the programme is to assist steel companies in jured since the beginning of the steel import crisis 
in 1998". Further the notification states that th e "programme guarantees loans provided to qualified 
steel companies". 
 
Question 1 
 
 What are the criteria that qualify a steel company to benefit from the programme? 
 
Question 2  
 Do those companies also bene fit from trade remedies measures? 
  G/SCM/Q2/USA/48 
 Page 5 
 
 
  Sub-federal Programmes 
 
Title of the Programme: "Enterprise Zone Tax Credit" (Alabama)  – page 56 
  According to the notification, the Enterpri se Zone Tax Credit "is a performance driven 
programme and provides credits for speci fic accomplishments of the company". 
 
Question 1 
 
 What are the specific accomplishments requi red by the companies to benefit from this 
programme? 
  
Title of the Programmes: "Ad hoc Incentive Packages" (Indiana) and "Ad hoc Incentive 
Package" (Iowa) – pages 97 to 99 
 
 According to the notification, all these programmes have the purpose to assist the 
construction of new facilities of particular companies of the steel industry. 
 
Question 1 
  What trade effects have resulted or are expected to result from these programmes? 
  
Title of the Programmes: "Aerospace Initiative" (Mississippi) and "Aircraft Manufacturing 
Tax Deduction" (New Mexico)  – pages 124 and 141 
 
 According to the notification, the policy obj ectives of these programmes are (i) to assist 
qualified companies, in the aerospace industry, th at promise significant development of the economy 
of the State of Mississippi through the creation of quality jobs; and (ii) "[r]eceipts of an aircraft 
manufacturer or affiliate from selling aircraft or ai rcraft parts, or from selling services performed on 
aircraft or aircraft components or from selling aircra ft flight support, pilot training or maintenance 
training services may be deducted from gross receipts." 
 
Question 1 
 
 What trade effects have resulted or are expected to result from these programmes? 
 
 Title of the Programme: "Ethanol Tax Credit" (Nebraska)  – page 131 
  According to the notification, the amount  of subsidy under this programme is 
"$0.18 per gallon".  Question 1 
 
 What is the volume of production that benefit from that subsidy?  
 
Question 2  
 Do the producers that benefit from this progra mme also benefit from the national programme 
"Alcohol Fuel Credits" (page 24 of the Notification)?  G/SCM/Q2/USA/48 
Page 6  
 
  Programmes not notified by the US 
 
Low cost credit provided by the "Export-Import Bank of the US" and other official sources.  
 
 According to the report by the Secretariat in the last TPR of the US (WT/TPR/S/235), "Ex-Im 
Bank accepts risks that the private sector is unwilling or unable to take". The report indicates that at 
least in some transactions the Ex-Im Bank prov ides financing under conditions that are more 
favorable than those available in the market place.  In addition, in different programmes administered 
by the Bank there would be some import substitution requirements.   
 According to the same report, below-market conditions export cr edits would also be available 
under some programmes administered by the "Small Business Administration", like the "Export Working Capital Programme".  
Question 1 
 
 Please also explain how these programmes are consistent with US's obligations under Article 3 of the SCM Agreement. 
 
Question 2  
 Could the US further describe the terms of financing provided under these programmes? Are 
the interest rates charged under these programmes above  the interest rates the loan recipients would 
have paid on a comparable commercial loan? 
 
Question 3 
 
 What are the specific requirements under th e Ex-Im Bank programmes to purchase domestic 
goods or services?  
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