WORLD TRADE  
ORGANIZATION  G/SCM/Q2/JPN/44 
8 July 2009 
 (09-3347) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
Replies to Follow-Up Questions from the UNITED STATES1 
Regarding the New and Full Notification of JAPAN2 
 
  The following communication, dated 3 July 2009,  is being circulated at the request of the 
Delegation of Japan.    
_______________ 
 
  As explained in G/SCM/Q2/JPN/40 and G/SCM/ Q2/JPN/42, we understand that the Programs 
and Acts, which have been raised by the US, are no t "limited to certain enterprises located within a 
designated geographical region within the jurisdiction of the granting authority".  Therefore, they are 
not specific, within the terms of Article 2 of the SCM Agreement, and accordingly Japan is not 
obliged to notify the SCM Committee of them, in acco rdance with Article 25 of the same agreement.   
  We think it's obvious that "specificity" is not au tomatically determined only from the fact that 
relevant subsidies are granted to a region, because elements to determine "specificity" is not only 
"located within a designated geographical region"  but also "limited to certain enterprises" in 
accordance with Article 2.2 of the SCM Agreement.   
 
 The followings are the criteria to determine the eligibility of measures which are taken under 
each Program and Act.  The applications of those measures are not limited to certain enterprises but 
open to all enterprises located within a designated geographical region within the jurisdiction of the 
granting authority.    
 Therefore, we regard the following criteria as "objective criteria or conditions" within the 
meanings of Article 2.1 (b) of the SCM Agreement and, accordingly, they are not determined as 
"specific" in accordance with Article  2 of the same agreement.   
 
Question 
 Aichi Prefecture's Industrial Fa cilities Tax Abatement Programme
 
 
 Japan's response to the United States' questions states that this programme is not "limited to certain enterprises located within  a designated geographical region within the 
jurisdiction of the granting authority" and is, therefore, not specific as provided under Article 2 of the Subsidies Agreement.  However, public information indicates that the tax abatement under this programme applies only to specific regions within this prefecture and that these 
                                                     
 
1 G/SCM/Q2/JPN/43.   
2 G/SCM/N/155/JPN.   G/SCM/Q2/JPN/44 
Page 2  
 
  regions are designated based on areas wher e the governor considers industrial promotion 
necessary.  Thus, it appears that benefits unde r this programme are limited to designated 
geographical regions within the prefecture.     Please describe the specific criteria gov erning eligibility under this programme and 
explain further why this programme does not qualify as a specific subsidy pursuant to 
Article 2.2 of the SCM Agreement.  If the programme does contain criteria that limit eligibility to certain enterprises located within a design ated geographical region, could Japan please 
further explain how it interprets Article 2.2 of the SCM Agreement?   
 Reply
 
  Aichi Prefecture's "Industrial Facilities Tax Abatement Program":    
Provided that a company which runs predeter mined businesses acquires a building or land and 
that certain conditions, such as a lower limit of its total price, are satisfied, in an area which is 
designated by the governor with a view to promoti ng industrial facilities, such a company is eligible 
for tax relief under this Program.   
 
Question 
 
Aichi Prefecture's Tax Incentive in Depopulated Areas Programme
 
  Japan's response to the United States' questions states that this programme is not "limited to certain enterprises located within  a designated geographical region within the 
jurisdiction of the granting authority" and is, therefore, not specific as provided under Article 2 
of the Subsidies Agreement.  However, public in formation regarding this programme indicates 
that only firms located in designated depopulated areas of the prefecture are eligible for the tax 
exemptions under this programme.  Thus, it a ppears that benefits unde r this programme are 
limited to designated geographical regions within the prefecture.     Please describe the specific criteria gov erning eligibility under this programme and 
explain further why this programme does not qualify as a specific subsidy pursuant to Article 
2.2 of the SCM Agreement. 
 
Reply
 
 
 Aichi Prefecture's "Tax Incentive in Depopulated Areas Program":   
  The Program, under predetermined conditions, provides tax relief for a company which 
establishes or extends its equipment used in a manufacturing, software, or hotel business, or for a 
person who runs a livestock or marine  products company, in depopulated areas which are stipulated in 
the relevant law.   
 
Question 
 
Akita Prefecture's Assistan ce for Site Acquisition in Industrial Parks Programme
 
 
 Japan's response to the United States' questions states that this programme is not 
"limited to certain enterprises located within  a designated geographical region within the 
jurisdiction of the granting authority" and is, therefore, not specific as provided under Article 2 of the Subsidies Agreement.  However, public in formation regarding this programme indicates 
that benefits under this programme are only prov ided to companies purchasing sites in one of  G/SCM/Q2/JPN/44 
 Page 3 
 
 
  the prefecture's industrial parks.   Thus, it appears that benefits under this programme are 
limited to designated geographical regions within the prefecture.     Please describe the specific criteria gov erning eligibility under this programme and 
explain further why this programme does not qualify as a specific subsidy pursuant to 
Article 2.2 of the SCM Agreement.  
Reply
 
  Akita Prefecture's "Assistan ce for Site Acquisition in Industrial Parks Program":   
 
 Although a price deduction system, which takes into account market prices, sales results, and so on, is established for lending or sale of industria l parks, the eligibility for this Program is not 
limited to a specific business or a specific company.   
 
Question 
 
Akita Prefecture's Tax Exemption Programme
 
  Japan's response to the United States' questions states that this programme is not "limited to certain enterprises located within  a designated geographical region within the 
jurisdiction of the granting authority" and is, therefore, not specific as provided under Article 2 
of the Subsidies Agreement.  However, public in formation regarding this programme indicates 
that only companies that establish factories in  certain areas or certain industrial parks are 
eligible for tax exemptions under this programme.  Thus, it appears that benefits under this 
programme are limited to designated geogra phical regions within the prefecture.   
 
 Please describe the specific criteria gov erning eligibility under this programme and 
explain further why this programme does not qualify as a specific subsidy pursuant to Article 2.2 of the SCM Agreement. 
 
Reply
 
 
 Akita Prefecture's "Tax Exemption Program":   
  The Program, under predetermined conditions, provides tax relief for a company which 
establishes or extends its equipment used in a manufacturing, software, or hotel business, or for a 
person who runs a livestock or marine  products company, in depopulated areas which are stipulated in 
the relevant law. 
 
Question 
 
Mie Prefecture's Subsidy System for New Businesses Development Programme
 
 
 Japan's response to the United States' questions states that this programme is not "limited to certain enterprises located within  a designated geographical region within the 
jurisdiction of the granting authority" and is, therefore, not specific as provided under Article 2 of the Subsidies Agreement.  However, public in formation regarding this programme indicates 
that benefits under this programme are limited  to companies in underpopulated and semi-
underpopulated areas or in the eastern Kishu Regi on of the prefecture.  Thus, it appears that 
benefits under this programme are limited to designated geographical regions within the prefecture.    G/SCM/Q2/JPN/44 
Page 4  
 
   Please describe the specific criteria gov erning eligibility under this programme and 
explain further why this programme does not qualify as a specific subsidy pursuant to Article 2.2 of the SCM Agreement. 
 
Reply
 
 
 Mie Prefecture's "Subsidy System for New Businesses Development Program":  
 A company which conducts research and devel opment on predetermined issues regarding fuel 
cell and hydrocarbon development is eligible  for the subsidy under this Program.   
 
Question 
 
Underdeveloped Area Industrialization Act
 
  Japan's response to the United States' questions states that this programme is not "limited to certain enterprises located within  a designated geographical region within the 
jurisdiction of the granting authority" and is, therefore, not specific as provided under Article 
2of the Subsidies Agreement.  However, the title of the programme is the Underdeveloped Area 
Industrialization Act; thus, it appears that bene fits under this programme are not provided to 
all regions in Japan and are limited to designated geographical regions.  
  Please describe the criteria used by the Government of Japan to designate a region as an 
"underdeveloped area" under this Act and fu rther explain why this programme does not 
qualify as a specific subsidy pursuant to Article 2.2 of the SCM Agreement. 
 
Reply
 
 
 "Underdeveloped Area Industrialization Act":   
  The purposes of this Act is to achieve a we ll-balanced development of the national economy 
through providing more employment opportunities and reducing the economi c gap between regions 
by promoting industrial development in underdeveloped  areas. Regarding a specific area, the Minister 
of Land, Infrastructure, Transport, and Tourism designates an "Underdeveloped Area Industrialization 
District" upon an application by a prefectual gover nor, following deliberation by the National Land 
Council.    
Question 
 
Peninsula Development Promotion Act
 
  Japan's response to the United States' questions indicates that this programme is not "limited to certain enterprises located within  a designated geographical region within the 
jurisdiction of the granting authority" and is, therefore, not specific as provided under Article 2 
of the Subsidies Agreement.  Howe ver, the title of the programme  is the Peninsula Development 
Promotion Act;  thus, it appears that benefits under this programme are limited to designated 
geographical regions within the country.   Please provide a description of the region in  Japan that is covered by the Peninsula 
Development Promotion Act, describe the sp ecific criteria governing eligibility under this 
programme and explain further why this progr amme does not qualify as a specific subsidy 
pursuant to Article 2.2 of the SCM Agreement.   G/SCM/Q2/JPN/44 
 Page 5 
 
 
  Reply  
  "Peninsula Development Promotion Act":    
 The purposes of this Act is to achieve development of peninsular areas which are in a 
relatively poor condition in terms of the living envi ronment and industrial infrastructure because of 
geographical constraints, compared with other areas.   
  The Minister of Land Infrastructure Transport a nd Tourism, the Minister of Internal Affairs 
and Communications, and the Minister of Agriculture , Forestry and Fisheries will designate an area, 
according to this Act, upon an application by a prefectual governor.    
Question 
 
Chubu Region Development Act
 
  Japan's response to the United States' questions indicates that this programme is not "limited to certain enterprises located within  a designated geographical region within the 
jurisdiction of the granting authority" and is, therefore, not specific as provided under Article 
2of the Subsidies Agreement.  However, the title of the programme is the Chubu Region Development Act;  thus, it appears that benefits  under this programme are limited to designated 
geographical regions within the country.     Please provide a description of the region in  Japan that is covered by the Peninsula 
Development Promotion Act, describe the sp ecific criteria governing eligibility under this 
programme and explain further why this progr amme does not qualify as a specific subsidy 
pursuant to Article 2.2 of the SCM Agreement. 
 
Reply
 
 
 "Chubu Region Development Act":     The purpose of this Act is to achieve and est ablish a well-balanced development of the Chubu 
region, which should occupy an important position in the Japanese industrial economy.  The applied 
area covers the Chubu region, as a whole, which cons ists of Toyama, Ishikawa, Fukui, Nagano, Gifu, 
Shizuoka, Aichi, Mie and Shiga prefectures.  The C hubu Region Development Plan is determined by 
the Minister of Land Infrastructure Transport and T ourism, after consultation with the National Land 
Council and deliberation by releva nt administrative organs.   
 
__________