WORLD TRADE  
ORGANIZATION  G/SCM/Q2/JPN/42 
1 October 2008 
 (08-4601) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
Replies to Questions from the UNITED STATES1 Regarding the New  
and Full Notification of JAPAN2 
 
  The following communication, dated 25 September 2008, is being circulated at the request of the Delegation of Japan.    
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Contract for Development of Information Processing Systems and for Related Purposes 
 Question 1 
 
 Please elaborate on your response regarding the form of the subsidy under this 
programme, which is described as "contract".  Sp ecifically, what is the nature of the financial 
contribution provided under this programme?  What types of private sector companies are parties to these contracts?   
 
Reply
 
  The government commissions researches rega rding next generation information processing 
fundamental technology to private companies and organizations that won the price competitive-bid contract under this programme, and makes contracts to pay the costs necessary for conducting this 
research to them.  The benefit of the contract is not thereby conferred.   In addition, the government 
makes contracts with any types of private compani es and organizations that have sufficient knowledge 
in the field of IT.  (Japan Information Processing Development Corporation, New Media Development Association, etc.)  The New Energy and Industrial Technology Develo pment Organization (NEDO) Japan Oil, Gas 
and Metals National Corporation 
 
Question 2 
 
 For various notified programmes, Japan st ates that subsidies are provided "through 
Japan Oil, Gas and Metals National Corporation"  or "through NEDO".  Please describe the 
nature of these two organizations and their specific purpose and role in the implementation of various programmes (eg., why were these entities created?).   
 
                                                     
 
1 G/SCM/Q2/JPN/41. 
2 G/SCM/N/155/JPN.   G/SCM/Q2/JPN/42 
Page 2  
 
  Reply
 
  The New Energy and Industrial Technology Development Organization (NEDO) and the Japan Oil, Gas and Metals National Corporatio n (JOGMEC) are new-type legal entities founded in 
2003, and employ private management methods as incorporated admini strative agencies.  
Specifically, after they draw up plans to achieve the objectives set by the government, they 
commission researches, and provide grants, loans, lo an guarantees, and equity infusion in line with 
the plans, utilizing  assets capital and non- specific funds provided by the government.  
  NEDO plays a major role in managing and coordinating R&D under the industry-academia-
government collaboration, aiming at enhancing indu strial competitiveness and solving environmental 
problems.  JOGMEC seeks to secure a stable supply of natural resources and energy, and 
environmental protection, by providing the grants , loans, equity infusion and loan guarantees 
necessary for projects to explore, develop and st ock petroleum, natural gas, metal and mineral 
resources, and to prevent mine pollution. 
 
Subsidy for Strengthening and Production System for Rationalization of Oil Industry 
 
Question 3 
 
 Could you please explain how the Petroleum As sociation of Japan assists in the closure 
of refineries?  How is it decided which refineries a re to be shut down or continue production in 
order to streamline the industry?    
Reply
 
 
 The Petroleum Association of Japan assists in  the voluntary closure of excess refineries by 
providing the cost for scrapping the surplus capacity to  oil companies dealing with refineries.  Neither 
the government nor the Petroleum Association of Japan is taking part in the judgment of the closure of 
excess refineries, because such decisions depend on the management judgment of the oil companies. 
 
Contract for Investigation of Promoting De velopment and Introduction of Hydropower 
 
Question 4 
 
 Are the companies listed (i.e., New Energy Foundation, New Energy Foundation, Pacific 
Consultants Co., Ltd., Chugoku Electric Power Co., Inc.) all private sector companies?  Please 
describe the eligibility criteria that must be met in order to receive a contract under this 
programme.  Do the same entities participate every year?    
Reply
 
  The companies listed are all private sector entities.  Each year, the government commissions 
researches to private sector entities that won the pr ice competitive-bid contract under this programme, 
and makes contracts to pay the costs necessary for conducting these researches to them.  The benefit 
of the contract is not thereby conferred.   In addition, the government makes contracts with  any types of private sector entities that are 
eligible to complete the projects appropriately an d that have sufficient knowledge in the field of 
hydropower.  G/SCM/Q2/JPN/42 
Page 3 
 
 
  Reserve for Special Repairs 
 Question 5   Is this programme limited to the steel i ndustry?  If not, please describe the other 
industries that benefit.    
Reply
 
  This programme is not limited to the steel indus try and is not specific to "certain enterprises".  
Corporations which possess vessels or blast fu rnaces etc could benefit under this programme. 
  
FOLLOW-UP QUESTIONS FROM PREVIO US NOTIFICATION AND RESPONSE  
TO QUESTIONS (G/SCM/N/123/JPN;  G/SCM/Q2/JPN/40) 
 
Focus 21 Program 
 
 It is our understanding that "Focus 21" is centred on the provision of funds to support 
research and development in priority areas.  Coul d you please further explain what is meant by 
"priority areas"?  Why was this programme not notified?   
 
Reply
 
  The Focus 21 programme encourages research  and development that contributes to the 
stimulation of the Japanese economy.  For that purpose, the government supports a wide variety of 
technological fields that will create large growth a nd have a wide range of economic effects.  This 
programme is not designed to promote R&D for certa in industries or sectors, but is conditioned on 
leading to the creation of new markets throug h R&D and the enhancement of competitiveness in 
industries.  Therefore, the Focus 21 programme do es not correspond to a "specific subsidy" as defined 
in Article 2 in the SCM Agreement.  The subs idies under the programme terminated in 2006. 
 General Specificity Question 
 
Q. With regard to the following programmes, please explain further the basis for Japan's 
position that benefits limited to enterpris es located in a certain geographical region are not 
specific, within the terms of Article 2 of the SCM Agreement.   
 
- Aichi Prefecture's Industrial Fa cilities Tax Abatement Program 
- Aichi Prefecture's Tax Incentive in Depopulated Areas Program 
 
Reply
 
 
 The above programmes of Aichi Prefecture ar e not "limited to certain enterprises located 
within a designated geographical region within the ju risdiction of the granting authority".  Therefore, 
these programmes are not specific, within the terms of Article 2 of the SCM Agreement. 
 
- Akita Prefecture's Assistan ce for Site Acquisition in Industrial Parks Program 
- Akita Prefecture's Tax Exemption Program 
 G/SCM/Q2/JPN/42 
Page 4  
 
  Reply
 
  The above programmes of Akita Prefecture ar e not "limited to certain enterprises located 
within a designated geographical region within the ju risdiction of the granting authority".  Therefore, 
these programmes are not specific, within the terms of Article 2 of the SCM Agreement. 
 
- Mie Prefecture's Subsidy System for New Businesses Development Program 
 
Reply
 
 
 The above programme of Mie Prefecture is not "limited to certain enterprises located within a 
designated geographical region within the jurisdicti on of the granting authority".  Therefore, this 
programme is not specific, within the te rms of Article 2 of the SCM Agreement. 
 
- Underdeveloped Area Industrialization Act   
 
Reply  
  The financial and tax related measures under this act are not  "limited to certain enterprises 
located within a designated geographical region within the jurisdiction of the granting authority".  Therefore, they are not specific, within th e terms of Article 2 of the SCM Agreement. 
 
- Peninsula Development Promotion Act 
 
Reply
 
 
 The financial and tax related measures under this act are not  "limited to certain enterprises 
located within a designated geographical region within the jurisdiction of the granting authority".  Therefore, they are not specific, within th e terms of Article 2 of the SCM Agreement. 
 
- Industrial Relocation Promotion Act 
 Reply
 
 
The Industrial Relocation Promotion Act was repealed in 2006. 
 
- Chubu Region Development Act 
 Reply
 
  The financial measures under this act are not " limited to certain enterp rises 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. 
 
Fisheries 
 
Q. In answering questions on its prior notifica tion (G/SCM/Q/JPN/39), Japan stated that it 
had programmes for:  promoting sustainable fi sheries development;  fishing vessel insurance 
and reinsurance;  price stabilization (i.e., suppor t to fisheries organizations in stocking their 
members' catches);  reducing or reimbursing fuel  taxes;  scrapping of fishing vessels;  and 
obtaining fishing vessels (i.e., an interest subsidy).  Were any of these programmes in effect during the period covered by Japan's most recen t subsidy notification?  If so, please explain G/SCM/Q2/JPN/42 
Page 5 
 
 
  why they were not notified.  If they should  be notified, please provide all the required 
information under Article 25 of the Subsidies Agreement.    
Reply
 
 
 Japan notifies its programmes in accordance w ith the SCM Agreement.  As explained in 
G/SCM/Q2/JPN/38 and G/SCM/Q2/JPN/40, info rmation on those programmes was provided in 
response to the questions by the United States, w ithout prejudice to the Japan's position on whether 
this is required notification to the WTO.  Wind Turbines 
 
Q. Publicly available information indicates that in 2006 Japan had a wind power subsidy 
programme in place.  It is our understanding th at the subsidy level varied depending on various 
conditions being met.  Please describe this progr amme and the eligibility criteria for each level 
of subsidy and explain why the programme was not notified.    
Reply
 
  This programme intends to reduce the effect of electric power systems associated with power variation in wind power generation and to collect da ta to contribute to R&D on storage systems.  For 
that purpose, this programme covers part of the costs incurred in installing a storage system when 
setting up a wind power generator, for a wide va riety of enterprises, and local governments. 
  Specifically, this programme covers one-third of the costs of system installation and construction for those who install storage system s in setting up wind power generators, on condition 
that they provide data on the power variation of the wind power generation for a period of two years 
after installation.  This programme, however, starte d in 2006, and so is outside the scope of this 
notification.   
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