WORLD TRADE  
ORGANIZATION   
G/SCM/Q2/EU/17 
10 April 2012 
 (12-1845) 
Committee on Subsidies and  
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Replies to Questions Posed by the UNITED STATES1 Regarding the 
New and Full Notification of the EUROPEAN UNION2 
  
 The following communication, dated 23 March 2012, is being circulated at the request of the Delegation of the European Union. 
 
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Germany 
 
Joint Task on "Improving the Regional Economic Structure  
 
Question 1 
 
Have investment grants under this programme been given to enterprises in the 
aeronautics industry, including those involved in the production of, or supply of goods to, the 
civil aviation sector?  If so, please provide th e total amount of funding provided to these 
enterprises during the reporting period. 
 
Reply 
 
 Investments grants under the Joint Task on "Improving the Regional Economic Structure" 
have been given to enterprises in the aeronauti cs industry (WZ 2008 code 30.30:  Manufacture of air 
and spacecraft and related machinery) as follows: 
 
 2009:  total amount 2,747,000 EUR 
 2010:  total amount 5,004,000 EUR 
 National Programme for Ci vil Aeronautical Research 
 
Question 2 
 
 How many enterprises received grants und er this programme during 2009 and 2010?   
                                                      
1 G/SCM/Q2/EU/9.   
2 G/SCM/N/220/EEC/Add.10.   G/SCM/Q2/EU/17 
Page 2 
 
 
  Reply 
 
 2009:  363 institutions received funding unde r the National Programme for Aeronautical 
Research.  
 2010:  467 institutions received funding unde r the National Programme for Aeronautical 
Research.  
 
Question 3 
 
 What is the duration of this programme?  
 
Reply 
  The duration is 4 years.    Question 4   Please explain whether this program is the same as the 
"Luftfahrsforschungsprogramme des Bundes" as found at http://www.foerderdatenbank.de .  If 
this is not the same programme, please explain wh y the EU has not notified the aforementioned 
programme. 
 
Reply 
 
 The mentioned programme "Luftfahrtforschungs programm des Bundes" is the same as the 
notified "National Programme for Civil Aeronautical Research".  
 
Programmes Not Notified  
 
General remarks about questions 5 and 6 The Federal Republic of Germany h as notified all subsidy programmes th at have been granted in the 
area of goods manufacture and that are "specific" as defined in Article 2 of the ASCM.  Question 5  
 The United States has previously request ed information regarding numerous federal 
and sub-federal subsidy programme s as reported in a publically available study that appear as 
if they should have been notified under Article 25 of the Subsidies Agreement.
3  In response, the 
EU stated that Germany was aware of the stud y, which it said followed an approach of "in 
dubio pro notification" and that such an approach has no legal basis in the ASCM or in Article 
XVI:1 GATT.4  Please confirm that all of the progra mmes listed in the annex to the study are 
exempt from the notification requirements of  Article 25 of the Subsidies Agreement.  Please 
specifically explain why the following pr ogrammes listed in the annex are exempt: 
 
 Exceptional Electricity Tax Reductions ("Spitzenausgleich"), which provides tax rebates 
to energy intensive users in the manufacturing industry. 
                                                      
3 G/SCM/Q2/EEC/59;  Thone, M. and Dobroschke, S. (2008).  WTO Subsidy Notifications:  Assessing 
German subsidies under the GSI notification template proposed for the WTO .  Geneva, Switzerland:  the Global 
Subsidies Initiative of the International Institute for Sustainable Development. 
4 G/SCM/N/Q2/EEC/64.    G/SCM/Q2/EU/17 
 Page 3 
 
 
  Reply 
 
 Germany's Federal Government confir ms that the forms of tax relief [provided under the 
energy and electricity tax acts]  which are listed in the annex to the study published in April 2008 by 
the Cologne-based FiFo Institute are not subject to the notification requirement under Article 25 of the 
ASCM, because they are not specific. 
 
The tax relief (known as the Spitzenausgleich ) provided for in section 10 of the Electricity 
Tax Act ( Stromsteuergesetz ) was included in that Act in the cont ext of the ecological reform of the tax 
system.  This reform followed a dual approach.  Firstly, it increased energy tax and brought in 
electricity tax, with the aim of making energy more expensive as a factor of production and thus 
creating incentives to save energy.  Secondly, it used  the extra tax revenue gained to cut the rate 
payable for pension contributions, in order to reduce the cost of labour.  
The tax relief provided in section 10 of the El ectricity Tax Act addresses an issue resulting 
from this reform, namely that some companies have  to bear a relatively heavy burden due to the tax 
increase, while their low staff numbers preclude them  from benefiting significantly from the cut in 
employer's pension contributions.  To avoid putting these companies at a disadvantage compared to 
other companies, section 10 of the Electricity Tax Act provides a mechanism by which they are granted tax relief.  
 The company data used for this purpose, su ch as electricity cons umption and number of 
employees (used to calculate the reduction in the empl oyer's share of pension contributions) constitute 
objective criteria within the meaning of Article 2(2. 1)(b) of the ASCM, as mentioned explicitly in the 
footnote to that part of the Article.  The stated cr iteria are established in law, are rigorously observed, 
and are applied to any company that fulfils them. Acco rdingly, the tax relief is not specific and is not 
subject to the notification requirement under Article 25 of the ASCM. 
 
 Support for the Chemical industry in Northrhein-Westphalia. 
 
Reply 
  This is an individual measure, namely the c onstruction of a propylene pipeline in the Ruhr 
District. 
 
 Propylene is a colourless, flammable gas that can be obtained during the oil refining process 
from the thermal treatment of benzenes.  It is both  used for flame cutting, as well as being a feedstock 
for numerous products in the chemical industry.  The flame-cutting process is also used in other 
industry branches, such as mechanical engineering.   The majority of propylene is used for the 
manufacture of polypropylene, a thermoplastic material .  Propylene gas is highly explosive; road or 
railway haulage is potentially hazardous (e.g. 19 78 tanker accident in Spain in which more than 
200 people at a nearby campsite perished).  The construction of the pipeline was therefore undertaken 
in order to protect lives. 
  Access to the pipeline remains open to all interested companies unde r the same conditions 
and without discrimination.  This is particularly true for companies with foreign participation or 
foreign direct investment (FDI). We have therefore arrived at the view that the "propylene pipeline" 
measure is not a "specific measure" as defined in Art. 1 and 2 of the ASCM. 
 
 Aid to Investment in East Germany ("Investitionszulagengesetz"), which provides 
grants to enterprises investing in the East German Lander and Berlin. G/SCM/Q2/EU/17 
Page 4 
 
 
  Reply 
 
 The Investment Allowance Act ("Investition szulagengesetz") provides grants for specific 
branches of companies in a specific area, however  it also establishes objec tive criteria in accordance 
with which these companies have a legal entitlement to the investment allowance.  The individual 
who processes an application for an investment allowa nce has no discretion in terms of whether or not 
the investment allowance is granted and in what amount.  
 
 List of programmes that provide aid to promote the commercial fishing industry in 
Germany. 
 
Reply 
 
 The main funding instrument for the fisheri es sector is the European Fisheries fund (EFF), 
Regulation (EC) 1198/2006, for the 2007-2013 period. Article 12 of the EEF provides for spending of 
a total of €3849 million on various funding programmes.  Of this sum, Germany will receive 
€155 million.  In addition to this, Germany also contributes approximately the same amount in state 
aid in the form of national co-financing. 
 
 In terms of individual measures, the EFF allocates around ten thousand funding packages 
across Europe. These cannot, of course, all be notifie d individually to the WTO.  The funds granted 
across Europe, the measures and the funding period in particular are clear from 
Regulation 1198/2006.  
 The funding packages listed for fisheries sector in the GSI st udy are evidently all individual 
measures within the framework of EEF funding.  
 Aid to support the Aviation Industry in Hamburg. 
 
Reply 
 
 The Aid to support the Aviation Industry in Hamburg is notified under the National 
Programme for Civil Aeronautical Research. 
 
Question 6 
 
 The Funding Database Föderdatenbank (www.Föderdatenbank.de) of the German Federal Ministry of Industry and Technology provides extensive information on aid provided 
by federal (Bund) and state (Länder) government s in Germany.  There is information on a 
wide-range of programmes in support of regiona l development, industry-specific research and 
development, small and medium sized enterpri ses, and renewable energy.  Most of these 
programs have not been notified by the EU.  Included in the database are the following 
examples:   
 
 Förderung der regionalen Entwicklung (pro viding aid to enterprises to assist 
disadvantaged regions in Land Hessen), 
 
Reply 
  Apart from the regional funding programmes that have been notified, there are no other programmes in Hesse that are subject to a notification requirement. 
  G/SCM/Q2/EU/17 
 Page 5 
 
 
   Regionales Landesförderprogram (providing ai d to enterprises to assist disadvantaged 
regions in Land Rheinlandpfalz), 
 
Reply 
  The mentioned program is the same as th e notified "Regional Aid Program (Rheinland-
Pfalz)".   
 
 Forschung und Entwicklung im Bereich erne uerbare Energien (providing aid to 
enterprises for research and development of energy efficient technologies), 
 
Reply 
 
 The "renewable energies" programme, which is  part of the German Government's energy 
research programme, does not fall subject to the notif ication requirements stipulated in Article 25 of 
the ASCM, as the subsidies are not limited to speci fic companies and there are objective criteria for 
access to the subsidies.  There is therefore no speci ficity in accordance with Article 2 of the ASCM. 
 
 Grundlagenforschung Energie 2020+ (supporting enterprises engaged in the 
development of next generation energy efficient technology), 
 
Reply 
  The programme does not fall subject to the notif ication requirements stipulated in Article 25 
of the ASCM, as the subsidies are not limited to spec ific companies and there are objective criteria for 
access to the subsidies.   There is therefore no speci ficity in accordance with Article 2 of the ASCM.   
 
 KMU-innovativ:  Ressourcen- und Energieeffizienz (supporting high risk and pre-
competitive research and development by sma ll and medium sized enterprises with the 
aim or promoting energy efficient technology), 
 
Reply 
  KMU innovativ Ressourcen- und Energieeffizienz  (KMUi R+E)  is one element of the BMBF's 
KMU innovativ  funding initiative which pursues the aim of strengthening the innovation potential of 
small and medium-sized enterprises (SMEs) in the ar ea of leading-edge research.  Research funding 
under KMUi R+E  is provided under the BMBF funding programmes "Research for Sustainability 
(FONA)", "Research for Tomorrow's Production", and "Materials Innovations for Industry and 
Society (WING)".  
 These programmes are intended to contribute to overcoming current challenges, such as 
sustainability, resource conservation, energy savin g and societal needs (eg due to demographic 
developments).  The funding decision is based on the degree to which research projects contribute to 
solving these socially relevant issues. 
  Funding focuses therefore on projects that conduct research in the following fields, among 
others: 
 
‐ increasing resource efficiency, primarily in resource intensive production systems 
‐ innovative recycling and recovery procedures 
‐ emission-reducing technologies (for example for climate gases/CO
2) G/SCM/Q2/EU/17 
Page 6 
 
 
  ‐ system-related technologies, processes and services in the context of energy efficiency and 
alternative energy generation 
‐ improving the applicability of alternative fuels and materials characteristics (better materials 
efficiency, longer lifecycle of components and plants) 
‐ more energy-efficient production machines and plants and their components 
‐ innovative methods of drinking water production and conservation, irrigation technologies, 
etc. 
 Funding is provided in particular for colla borative projects in which enterprises cooperate 
with research institutions to solve the above-men tioned issues.  This is pre-competitive research 
which focuses on the use of resources and energy, materials, technologies and processes and how they 
can be improved in the interest of society.  This  type of research develops just the basis for later 
application;  the projects are conducted (sometim es a long time) prior to the actual production of 
goods. For this reason, no funding is ca rried out for the production of goods.  
 
 On this basis, no notification was made.  Even if GATT/ASCM were applicable, in our 
opinion it is doubtful that the funding provided should  be a subsidy due to notification.  In accordance 
with ASCM, Art. 25 para 2, subsidies as defined in Art. 1 para 1 have to be notified only if they are 
specific within the meaning of ASCM, Art. 2. Subsid ies are specific if access is explicitly limited to 
certain enterprises.  However, where objective crite ria or conditions governing the eligibility for a 
subsidy apply, specificity does not exist, provided that the eligibility is automatic and that such 
criteria and conditions are strictly adhered to. In  accordance with ASCM, FN 2 "objective criteria and 
conditions" are horizontal in application, economic  in nature, neutral and do not favour certain 
enterprises over others (such as the number of employees or size of enterprise). 
 
 In the case of the KMUi R+E  programme, funding is awarded on the basis of the funding 
regulations of 31 August 2007 (as am ended by announcement of 18 June 2009):  Project proposals 
may be submitted by SMEs in particular and, w ithin the framework of collaborative projects, by 
institutions of higher education, non-university research institutions  and other business enterprises.  
Funding is provided for projects characterized by  a high scientific and technological risk if the 
applicants can demonstrate their expertise in the area of resource/energy efficiency.  Funding is awarded in a two-step procedure. In the first st ep, project outlines are submitted and evaluated and 
selected on the basis of the following criteria, among others:  importance of the research aim, 
scientific and technological quality of the chosen a pproach, level of innovation of the scientific and 
technological concept, qualification of partners, quality  of the project management and, if applicable, 
the collaboration structure and assessment of th e social, economic and ecological opportunities and 
risks involved in the scientific and technological innovations.  In the second step, applicants whose 
outlines were evaluated positively are asked to submit a formal funding ap plication.  In our view, this 
procedure fulfils the requirement of "objective criteria", since the evaluation criteria are both neutral 
(quality, qualification, etc.), economic in nature and horizontal in application.  Even if a legal claim to 
a subsidy exists only once the two-step funding pro cedure has been concluded and a final notification 
of award has been issued, according to the underlying idea of ASCM, Art. 2 para 1 sub-para c), 
consideration has in particular to be given to th e "manner in which discretion has been exercised by 
the granting authority in the decision to grant a subs idy".  In doing so, the reasons for such decisions 
must be considered, as provided in FN 3.  In the case of KMUi R+E , these reasons are determined by 
the above-mentioned evaluation criteria which are set up and adhered to, taking into consideration the 
interest of the general public and th e stakeholders (enterprises, institu tions, competitors).  In view of 
these considerations, we believe that the criterion of specificity does not apply and, all in all, a 
notification is not required. 
 
 Rationellere Energiegewinnung und -verw endung (BayREV) (providing aid to 
enterprises in support of the development a nd application of new entergy technologies in 
Land Bayern).   G/SCM/Q2/EU/17 
 Page 7 
 
 
   The programme is neither aimed at "specific companies" as defined in 2.1 a) nor are the 
requirements of 2.1. b) or even c) of the AS CM fulfilled.  In the above programme, objective 
conditions and criteria are set out and fulfilled.  
 
 
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