WORLD TRADE  
ORGANIZATION  G/SCM/Q2/EEC/50 
3 May 2006 
 (06-2119) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
Questions from the UNITED STATES Regarding the New and Full  
Notification of the EUROPEAN COMMUNITIES1 
 
  The following communication, dated 27 April 2006,  is being circulated at the request of the 
Delegation of the United States.  
_______________ 
  
G/SCM/N/123/EEC
 
 
Community Framework Programmes in the Field of Research  
 
 The United States would like to note that several  questions were asked with regard to the 
European Communities’ 2003 New and Full Notifi cation on the issue the Community Framework 
Programmes in the Field of Research, which have not yet been answered.  We look forward to 
receiving replies to these questions.  
 FIFG  
 
 Please explain what happens to fishing vessels after they are decommissioned under this 
programme.  Are the vessels scrapped, sold to other countries for the purpose of fishing, sold for other purposes, etc.?  
* * * * * 
 
G/SCM/N/123/EEC/Add.7 (Finland
) 
 
AID FOR PROMOTING 
RESEARCH AND DEVELOPMENT 
 ENTREPRENEUR LOAN
 
 1. What are the principal industries that  benefit from the above listed programmes? 
 
* * * * * 
 
                                                     
 
1 G/SCM/N/123/EEC + Adds.7, 8, 9, 10, 13, 16, 20, 22, 23,  and 25 G/SCM/Q2/EEC/50 
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  G/SCM/N/123/EEC/Add.6 (France
) 
 
3.1 Tax Credit to Promote Research  
 
 Please provide information regarding the in dustries that received incentives under this 
programme during the reporting period.  
 
General Questions  Aid to Alstom  
  Based on information from public sources, it appears that in July 2004 the European 
Commission approved a rescue scheme for the Fr ench company Alstom, in which the French 
Government financed a debt-for-equity swap provi ding Alstom €2.2 billion in aid.  Please explain 
how this programme does not qualify as notifiable un der Article 25 of the Subsidies Agreement.  If it 
is notifiable, please provide information regarding the aid package provided to Alstom, as required 
under Article 25.  Please describe France’s policy with  regard to support for “national champions”?  
 
Aid to Snecma  
 
 Information from public sources indicates that European Commission has approved research and development support in the amount of €140 million fo r Snecma in order to develop an engine for 
the Russian Regional Jet (RRJ).  Please explain how this programme does not qualify as notifiable under Article 25 of the Agreement on Subsidies a nd Countervailing Measures (Subsidies Agreement).  
If it is notifiable, please provide the in formation as required under Article 25. 
 Regional Aid - Business Tax Exemptions  
 
 Based on publicly available information, France’ s Finance Ministry plans to provide business 
tax exemptions up to €100,000 over three years to co mpanies in certain depressed regions in France.  
Please provide the information regarding the status of this programme.  If this programme is already 
in place, please provide information regarding this  programme as required under Article 25 of the 
Subsidies Agreement. 
 
Royalty Based Financing 
 
 The United States would also like to note that sev eral questions were asked with regard to the 
France’s 2003 New and Full Notification on the issue of  royalty based financing, and in particular 
assistance to the aircraft industry, which have not yet been answered.  We look forward to receiving 
replies to these questions.  
 
* * * * * 
 G/SCM/N/123/EEC/Add.9 (Germany
) 
 
Reduction of Rates on Inheritable Land-use Rights (Berlin)  
 
 Please provide information regarding the i ndustries that received incentives under this 
programme during the reporting period.  
  G/SCM/Q2/EEC/50 
 Page 3 
 
 
  Consolidation programme of th e Land Mecklenburg-Vorpommern  
 
 Germany’s notification states that aid under this programme is provided for “enterprises that are important for a region in Mecklenburg-Vor pommern in terms of labour-market policy and 
structural policy”.  Please explain the criteria fo r determining whether an enterprise/industry is 
important.  Please also provide examples of industries that have received incentives under the this 
programme during the reporting period.  
 
Joint Scheme on "Improving the Regional Economic Structure"  
  According to Germany’s notification, invest ments are eligible for promotion under this 
programme if the company applying aid “sells th e better part of its products or services on a 
supraregional basis”.  Please explain whether in centives under this programme are contingent upon 
export.   Corrugated Base Paper Plant (Brandenburg)  
 
 In G/SCM/Q2/EEC/40, Germany indicated that aid from the regional government of 
Brandenburg to Hamburger AG was provided unde r the Joint Scheme on Improving the Regional 
Economic Structure.  However, the information pr ovided by Germany in this notification indicates 
that the aid to Hamburger AG is being provided und er a different programme.  Could Germany please 
clarify and provide more information as to the Hamburger AG aid programme?  In addition, based on 
information provided in G/SCM/N/95/EEC/Add.6, it appears that the aid to Hamburger AG was granted in 2002.  Could Germany clarify whethe r aid was provided under the same programme to 
Hamburger AG in 2001 and 2003?  If so, could Ge rmany provide details regarding this aid 
programme as well? 
 
General Questions 
 
 The United States would also like to note that sev eral questions were asked with regard to the 
Germany’s 2003 New and Full Notification on the issue of royalty-based financing, and in particular 
assistance to the aircraft industry, which have not yet been answered.  We look forward to receiving 
replies to these questions.  
 
* * * * * 
 
G/SCM/N/123/EEC/Add.10 (Greece
) 
 
EFFECTIVE CO-OPERATION IN R&D ACTI VITIES (STATE AID N 547/2001) 
 
1. Could you please explain what is meant by “imp lementation of a series of interventions”?   
 2. How is it determined which sectors are of “speci fic interest”?  For this reporting period, what 
sectors qualify as “sectors of specific interest”? 
 
FISHERIES 
 
3. The United States appreciates the additiona l information provided by Greece in document 
G/SCM/Q2/EEC/46 regarding subsidies to the fisheries sector under the six Priority Pivots 
programmes.  Could you please confirm whether Greece currently maintains the six Priority Pivots programmes?  If so, have any modifications b een made to these programmes or have other 
programmes taken their place?  G/SCM/Q2/EEC/50 
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  AUTOMOTIVE 
 
4. It is our understanding that previously Greece has provided support to its automotive industry.  
Could you please confirm whether Greece still provides support to this industry and if so, please provide the required information set forth in Article 25 of the SCM Agreement.   
 
* * * * * 
 
G/SCM/N/123/EEC/Add.12 (Ireland)  
 
AUGHINISH ALUMINA RELIEF 
 
1. Do any other companies in Ireland receive relief from payment of excise duty on Heavy Fuel Oil?  If so, please provide further details regarding which other types of companies receive relief from payment of excise duty. 
 
SEA FISHING-REPAYMENT OF HYDROCARBON OIL LPG 
EXCISE DUTY IN THE CASE OF SEA FISHING  
3. Do operators of commercial fishi ng vessels benefit from this programme?  
 
4. What criteria must be met in order to receive the excise duty relief?  
 
SCHEME FOR THE DEVELOPMENT OF TH E COMMERCIAL HORTICULTURE SECTOR 
 
5. Could you please explain what qualifies as “specialized plant or equipment”?  
* * * * * 
 
G/SCM/N/123/EEC/Add.13 (Italy
) 
 
MEASURES FOR INVESTMENT IN THE NAVAL SECTOR  
 
1. Italy’s reply in G/SCM/Q2/EEC/46 appears to indicate that subsidies under this programme were available for new shipbuilding contracts only until 31 December 2000.  Could Italy clarify whether this means that subsidi es for new shipbuilding under this programme were terminated as of 
1 January 2001 and that no residual benefits  to recipients remain after that time? 
 
SPECIAL FUND FOR APPLIED RESEARCH (FRA) 
 
2. Please describe the repayment terms for the soft loans?   3.  How is it determined that the aid will be  in the form of a grant or a soft loan? 
 
INCENTIVES TO MANUFACTURING AND EXTRACTIVE ENTERPRISES IN DISADVANTAGE 
AREAS  FISCAL MEASURES IN FAVOUR OF INNOVATION OF INDUSTRIAL ENTERPRISES (MAP 4) 
 4. For the above programmes, please further expl ain exactly what types of tax concessions are 
being provided to companies.  5. What are the principal industries th at benefit from each of these programmes?  G/SCM/Q2/EEC/50 
 Page 5 
 
 
  6. Please explain what is a “fiscal bonus in tax payment”? 
 
URGENT MEASURES FOR THE ECONOMY – AUTOMATIC INCENTIVES 
 
7. In G/SCM/Q2/EEC/46, Italy states that “the  granting of concessions is not automatic” and 
that “eligible projects are record ed in a list according to which, within the funds available, 
contributions are subsequently granted”.  Given this  information, could Italy clarify why it refers to 
these subsidies as “ automatic  incentives”?  Moreover, could Italy further explain how projects from 
the list are selected for funding?  
* * * * * 
 
G/SCM/N/123/EEC/Add.16 (Luxembourg
) 
 
SYSTEM OF AID TO SMALL AND MEDIUM ENTERPRISES AND INDUSTRIES 
 
SYSTEM OF REGIONAL AID IN FORCE UNTIL 31.12.1999  SYSTEM OF REGIONAL AID IN FORCE SINCE 28.12.2000  SYSTEM OF AID FOR R&D  
 
1. What are the principal industries that be nefit from each of the above listed programmes? 
 
* * * * * 
 G/SCM/N/123/EEC/Add.20 (Portugal
) 
 
PRIME- INCENTIVES PROGRAMME FOR THE M ODERNISATION OF ECONOMIC ACTIVITIES 
 
1. Under the PRIME programme, do the incentiv es vary between exporting and non-exporting 
companies?  If so please provide further details. 
 
2. What are the principal industries that benefit from this programme?  3. Please explain what type of aid qualify as a  “reimbursable subsidy?”  
4. Portugal states in document G/SCM/Q2/EEC/46 that refundable incentives may be converted 
into bonuses or non-refundable incentives.  Coul d you please explain under what circumstances this 
might occur?   5. Please describe the repayment terms for the loans.  
6 Portugal states in document G/SCM/Q2/EEC/46 that the PROPESCA scheme will be notified 
in the next notification under Article 25.  Howeve r, we note that the PROPESCA scheme has not been 
notified in G/SCM/123/EEC/Add.20.  Could Portugal  please explain why this scheme has not been 
notified for this reporting period?  
* * * * * 
 G/SCM/Q2/EEC/50 
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  G/SCM/N/123/EEC/Add.22 (Slovenia
) 
 
PROGRAMME OF ADJUSTMENT OF LEATHER AND FOOTWEAR INDUSTRY TO THE EU 
INTERNAL MARKET CONDITIONS  
PROGRAMME OF ADJUSTMENT OF TEXTILE INDUSTRY TO THE EU INTERNAL MARKET 
CONDITIONS 
 
1. For each of the programmes listed a bove, please answer the following questions: 
 
• Please provide further explanation of the purposes of the programmes.  In particular, 
please explain how the aid granted under the programmes will achieve the policy 
objectives described in your notification. 
 
• Please provide additional information concer ning the eligibility criteria for the 
programmes.  Please also indicate how many companies benefit from the programmes. 
 
• Please explain how the aid intensity is dete rmined for individual recipients under the 
programmes.  
 DEVELOPMENT OF ENTERPRISES  
2. Please provide further explanation regarding th e purposes of the programmes.  In particular, 
explain how the aid granted under the prog rammes will achieve “productivity growth, 
competitiveness and internationalism” as men tioned in the description of the programme. 
 3. What are the eligibility criteria to receive benefits under this programme?  Are any of the 
incentives contingent upon exportation or the us e of domestic over imported goods?  If so, please 
provide details. 
 4. How is it determined what type of aid (grant s, favourable loans or loan guarantees) will be 
provided to the recipient?  
5. Please describe the repayment terms for the loans.  
 
PROGRAMME ON FINANCING AND CO-FINANCING THE DEVELOPMENT OF FRESHWATER 
AND MARINE FISHERIES FOR 2003 AND 2004 
 
6. What are the eligibility criteria to receive the benefits under this programme?  Please explain 
exactly who receives the benefits under this progr amme?  Are the grants provided directly to 
fishermen, fishing ports, operators or manufactures of fishing vessels?  
* * * * *  
 G/SCM/N/123/EEC/Add.23 (Spain
) 
 
 We note that the United States posed questions to Spain in the context of their 2003 new and 
full subsidies notification regarding assistance to the ai rcraft industry.  Several of these questions have 
not yet been answered and we look forward to receiving Spain’s responses.    G/SCM/Q2/EEC/50 
 Page 7 
 
 
  RENOVATION AND REORGANIZATION OF FISHING VESSELS 
 
1. Please clarify whether this programme is inte nded to renovate and modernize existing fishing 
vessels or to build new ones?  2. Do the subsidy payments under this programme di rectly or indirectly promote the instructions 
of new vessels?   
 
DEFINITIVE STOPPAGE OF FISHING 
 
3. Please indicate what happens to the decommissi oned fishing vessels.  Are they sold, scrapped 
or bought back by the Spanish government for other purposes?  
 
CONVERSION OF THE FISHING FLEET: JOINT VENTURE PROJECTS 
 
4. Do the subsidy payments under this progr amme directly or indirectly promote the 
constructions of new vessels?   
 
SUPPORT FOR THE CAPITALIZATION OF TECHNOLOGY-BASED ENTERPRISES  
5. Can you please explain what qualifies as “certain financial entities”? 
 
6. What are the eligibility criteria to receive  benefits under this programme?  Please explain 
exactly who receives the benefits under this programme?  
TECHNICAL RESEARCH DEVELOPMENT FOR TEXTILE/CLOTHING SECTOR 
 
7. It is stated that the policy objective of  this programme is to increase the sector’s 
competitiveness and promote integration into the worl d market.  Is this programme contingent upon 
exportation?  8. Please provide the exact types of subsid ies being provided under this programme. 
 
FINANCING OF RESEARCH, DEVELOPMENT AND INNOVATION PROJECTS CONDUCTED BY 
ENTERPRISES  
9. Spain notes that the beneficiaries of this programme, must be enterprises formed as “trading 
companies”.  Could you please explain what qualifies as a “trading company”? 
 
10. Please explain what targets must be met in orde r for the beneficiaries to receive the loans.  
Are the interest-free loans under this programme contingent upon exportation?    
* * * * * 
 
G/SCM/N/123/EEC/Add.25 (United Kingdom)
 
 
12. Competitiveness in the Oil and Gas Supplies Sector (COGSS) Aid Scheme  
 
 According to the United Kingdom’s notification, th e objective of this programme is to market 
goods and services to oil and gas companies, either  in the UK or for export.  Please explain whether 
this programme is contingent upon export or wh ether companies that export receive additional 
benefits under this programme. G/SCM/Q2/EEC/50 
Page 8  
 
  19. Excise Duty to Bio Ethanol Used as Road Fuel  
 
 Please provide additional information regardi ng the beneficiaries under this programme and 
the criteria for companies to receive those benefits.  32. LINK Collaborative Research Scheme 48. NI: Technology Fund (NITECH) 56. Reduced Rate of Excise Duty on Biodiesel (N804/01) 58. R&D Tax Credit 69.  The Britech Fund  
 
 Please provide information regarding the industries that received incentives under the 
above-listed programmes during the reporting period.   
 
38. Aggregates Levy - Extended Relief for Aggregate Commercially Exploited in NI  
 
 The United Kingdom’s notification states that one of the incentives under this programme is that “exports of virgin aggregate from the UK are eligible for 100% relief from the levy”.  Please 
explain how this programme is consistent w ith Article 3 of the Subsidies Agreement.  
 
41. NI: Complete Progra mme Round Three (2003-2008)  
 
 Please provide information regarding the i ndustries that received incentives under this 
programme during the reporting period.  In addition, the United Kingdom’s notification states that incentives are provided under this programme to “improve the national and international competitiveness of the business”.  It also states th at all awards are discretionary.  Please explain 
whether companies that export receive greater benefits under this programme? 
 42. NI: Restructuring Aid  
 
 This programme appears to provide equity/loan s to “manufacturing and internationally traded 
companies in Northern Ireland who are experiencing trading difficulties”.  Please explain whether this 
programme is contingent upon exports.  
 General Questions  
The Waste and Resources Action Programme (WRAP)  
 
 The Waste and Resources Action Programme (WRAP), is a UK Government body 
responsible for encouraging recycling activities.  It is our understanding, based on publicly 
available information, that this programme provides aid to paper mills in the form of grants in 
order to increase printing and writing (P&W) pa per production capacity and to stimulate the 
demand for collection of waste paper from offi ces.  Specifically, WRAP tenders grants among 
paper mills to co-finance capaci ty increases for the manufacturing of P&W paper using waste 
P&W paper.  The budget of the scheme is between £6 and £20 million ( _8.7 and _29.2 million).  
Please explain why this programme does not qualify as notifiable under Article 25 of the SCM Agreement.  If the programme does qualify as notifiable, please provide the information 
required under Article 25.   G/SCM/Q2/EEC/50 
 Page 9 
 
 
  Royalty-based financing  
 
 The United States would also like to note that sev eral questions were asked with regard to the 
United Kingdom’s 2003 New and Full Notification on th e issue of royalty based financing, and in 
particular assistance to the airline industry, which have not yet been answered.  We look forward to 
receiving replies to these questions.  
 
__________