WORLD TRADE  
ORGANIZATION  G/SCM/Q2/TPKM/11 
2 April 2008 
 (08-1452) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
Replies to Questions Posed by the EUROPEAN COMMUNITIES1 Regarding the  
New and Full Notification of the SEPARATE CUSTOMS TERRITORY  
OF TAIWAN, PENGHU, KINMEN AND MATSU2 
  
 The following communication, dated 31 March 2008, is being circulated at the request of the Delegation of the Separate Customs Territory  of Taiwan, Penghu, Kinmen And Matsu.   
 
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1 G/SCM/Q2/TPKM/9.   
2 G/SCM/N/155/TPKM.   G/SCM/Q2/TPKM/11 
Page 2  
 
  General
 
 
 According to the questionnaire format for subsidy notifications under Article 25 of the 
Agreement on Subsidies and Countervailing Measures and under Article XVI of GATT 1994 
G/SCM/6/Rev.1 the period covered by the notifi cation should be the most recently completed 
calendar or fiscal year.  According to our understa nding the current new and full subsidy notification 
should therefore cover the years 2005 and 2006 as it was due to be submitted by end of June 2007 
(G/SCM/N/155).  A reading of the subsidy notifica tion reveals that many programmes only cover the 
period 2003-2005 even though the programmes have not been abolished so far.   
 Question 1 
 
 Could the Separate Customs Territory of Ta iwan, Penghu, Kinmen and Matsu indicate 
the reason for this?   
 
Question 2 
 
 Could the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu please 
complete its subsidy notification as soon as possible?   
 
Industry
 
 
Five-year tax exemption for the emergi ng, important and strategic industries  
 
Question 3 
 
 Could the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu explain 
in more detail which important and strategic indus tries benefit from this exemption and which 
industries are considered to be impo rtant and strategic industries?   
 
Replies  
 
 We appreciate the EC's reminder about the lack of data in the relevant subsidies programmes 
such as Support for rice (page 4 of the original document, G/SCM/N/155/TPKM), Support for 
sorghum and feed corn (page 5), Measures for sweet potatoes, adzu ki beans, mug be ans and other 
miscellaneous corps (page 6), Support for tobacco leaves (page 7), Support for vegetables (page 9), 
Support for sugar (page 10), the Policy-oriented special agricultural loan (page 11), Five-year tax 
exemption for the emerging, important and strategic industries (page 21), Tax credit for investment in 
a disadvantaged region (page 23), Loans for small and medium-sized enterprises and private 
enterprises (page 27), and Grants for development of products  of the new leading industries 
(page 33).  Other than the agricultural subsidies pr ogrammes, such incompleteness is due to the late 
publication of annual statistics for previous years, wh ich is issued by the Ministry of Finance every 
August.  Therefore, when we submitted the notificati on by the end of June 2007, we were not able to 
offer the data for fiscal year 2006.   
  Except for the agricultural subsidies progr ammes, which are still under collection and 
compilation, most programmes have already been update d.  We would like to take this opportunity to 
provide them as below:    G/SCM/Q2/TPKM/11 
 Page 3 
 
 
  • Five-year tax exemption for the emergi ng, important and strategic industries 
 
7. Amount:    Unit:  thousand NT$ 
Fiscal Year 2006 
6,305,539 
 
• Tax credit for investment in a disadvantaged region 
 
7. Amount: 
 Unit:  thousand NT$ 
Fiscal Year 2006 
19,699,144 
 
• Loans for small and medium-sized enterprises and private enterprises 
 9. Trade effects or related statistical data 
(b) Related statistical data  
Total amount of loans granted in 2005
 
 
Name of Project Number of granted 
cases Total amount of 
granted loans 
(hundred million NT$)
Loans to assist in the upgrading of small and medium-sized enterprises 963 80.81 
 
• Grants for development of products of the new leading industries 
 
7. Amount (b) For the fiscal year 2005:  the amount of grant was NT$. NT$ 529,269,000 A breakdown of 
the products involved is shown below:   
 
  Unit:  thousand NT$ 
Name of Project (or Sector) Grant 
Precision machinery and automation 142,624 
Communication 55,523 
Information 149,242 
Consumer electronics 99,800 
Medical and health care 8,280 
Advanced materials 45,100 
Specialty chemicals and pharmaceuticals 16,700 
Pollution Prevention 12,000 
Total 529,269 
 
 As to the programme of Five-year tax exemption for the emerging, important and strategic 
industries , the phrase "emerging, important and strategi c industries" refers to industries that can 
generate substantial benefits for economic development, but are of high risk and in great need of 
support.   
 G/SCM/Q2/TPKM/11 
Page 4  
 
   The selection criteria in this programme are:   (1) Emerging industries (products):  there 
should be no domestic production or domestic production should s till be in the new technology 
product stage.  (2) High externalities (spillover):  th e industry must engage in a high level of research, 
development, and technological innovation due to th e short product life cycles, various risks, and the 
difficulty of commanding key technology;  and the spillover from its products or services must benefit 
other economic agents.  (3) International competiti ve effect:  the industry should be one in which 
international competitor countries provide general tax incentives, thus requiring Chinese Taipei to 
offer comparable incentives to upgrade competitiv eness.  (4) No incentives provided under current 
laws:  duplicate incentives should be avoided in i ndustries that already receive tax incentives under 
current laws.   
 
 The scope of "emerging, important, and strate gic industries" includes industries of the "3Cs" 
(computer, communication and consumer electronics), precision electronic devices, precision machinery equipment, aerospace, biotechnology and sp ecialty chemicals, green technology, advanced 
materials, nanotechnology, and technical service industr ies.  Furthermore, the tax benefits provided by 
the Statute for Upgrading Industries will expire on December 31, 2009.   
   
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