WORLD TRADE  
ORGANIZATION   
G/SCM/Q2/CAN/52 
30 March 2012 
 (12-1686) 
Committee on Subsidies and  
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Replies to Questions Posed by the UNITED STATES1 Regarding the 
New and Full Notification of CANADA2 
  
 The following communication, dated 23 March 2012, is being circulated at the request of the Delegation of Canada. 
 
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Question 1 
 
A. INDUSTRIAL PROGRAMS 
21. Enterprise Cape Breton Corporation Assistance 
 
 Canada's response in G/SCM/Q2/CAN/38 to US questions on this program satisfied 
most all of Article 25 notification requirements.  We thank Canada for providing those details 
and for notifying this program in the current noti fication.  However, neither Canada's previous 
response nor the current notification addresses the core concern of the United States' previous 
question.  That concern is, whether the program  is consistent with Canada's commitments 
under Article 3 of the Subsidies Agreement, in light of the indication in the Secretariat's TPR 
report that a condition of receiving assistance is that "the market for the output of this project 
must be import substitution or export orient ated".  Could Canada please address this issue?  
 
Reply 
 
 Enterprise Cape Breton Corporation (ECBC) is  a federal Crown corporation created to 
promote and assist the financing a nd development of Cape Breton Is land.  ECBC is responsible for 
the delivery of Atlantic Canada Opportunities Agen cy's (ACOA) programs on Cape Breton Island.  
The ECBC Program is designed to provide support  to business, by facilitating private sector 
investment in projects that enhance the comp etitiveness of commercial enterprises and increase 
opportunities to produce long-term, sustainable jobs.  The program offers access to capital, support for 
human resource capacity building, entrepreneursh ip skills development, and assistance for e-
commerce.  Funding is also available to provide support to communities to help plan and implement 
non-profit community development projects.  This includes assistance for infrastructure, strategic 
planning and festivals and events. 
 
 It should be clarified that the question re fers to an ECBC policy applied to the food 
processing sector, and not to ECBC programs as a whol e.  In the context of this policy, import 
                                                      
1 G/SCM/Q2/CAN/49.   
2 G/SCM/N/220/CAN.   G/SCM/Q2/CAN/52 
Page 2 
 
 
  substitution or export oriented refers to shipments co ming in or out of the Cape Breton region (i.e. the 
Island), not Canada.  During fiscal years 2008-20 09 and 2009-2010, assistance provided to the food 
processing sector totalled $300,000.  The polic y referenced is no longer in place.   
 Question 2  
28. PRECARN  
According to the description, one of the program's objectives is to "boost the 
productivity, agility and global competitiveness of  Canadian firms through the development and 
application of robotics and intelligent systems-en abled solutions that have market demand".  
Please clarify whether access to funding under this program is limited to entities involved in the 
development and production of "robotics and intelligent systems-enabled solutions". 
 
Reply 
  The program was available to funding research  and development projects in the areas of 
robotics and intelligence systems.  The program ended in fiscal year 2010-2011.  
 Question 3  
30. Strategic Aerospace and Defence Initiative 
 
In December 2010, the Government of Canada announced that it had made a 
"repayable investment" of $300 million under this program to Pratt & Whitney.  See "Harper 
Government Announces Major A erospace Investment to Crea te Jobs and Keep Canada 
Cutting-Edge", http://www.ic.gc.ca/eic/site/ic1.nsf/eng/06147.html .  Canada's notification states 
that it covers fiscal year 2009/2010, but does not i ndicate the time period for that fiscal year.  
Can Canada confirm whether or not this invest ment was made during the notified period?   
 
Reply 
 
 The $300 million repayable contribution is to be  applied to eligible costs spent on the project 
described in the contribution agreement, from 2 July 2009 to 31 March 2015.  Fiscal year 2009/2010 starts on 1 April 2009 and ends on 31 March 2010. 
 
Question 4 
 
The description of the program indicates that  assistance is made through contributions 
of up to 40 per cent of the eligible costs of th e research.  Can Canada explain how a "repayable 
investment" into research (rather than into  a company) operates under this program? 
 
Reply 
  Under the Strategic Aerospace and Defence Initiative (SADI) program, the Government of 
Canada does not "invest" in a company;  rather , the Government of Canada provides repayable 
contributions to Canadian companies for the pur pose of undertaking research and development into 
aerospace, defence, space and security projects.   Under the SADI program, the Government of 
Canada can reimburse a recipient for up to 40 per cent of  its eligible costs with respect to the project.  
A recipient's eligible costs include its non-recurring costs and may include labour, material, overhead, 
specialized equipment and other costs, which are attr ibutable to the eligible  activities associated with 
the R&D project.  A recipient submits claims for reimbursement of its eligible costs for its project, 
and these claims are reviewed by the Government of Canada which determines whether the claims are  G/SCM/Q2/CAN/52 
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  eligible for reimbursement.  Once a recipient ha s completed the R&D phase of its project, it is 
required to begin repayment of the contribution.   
 
Question 5 
 
C. FISHERIES 
2. Atlantic Integrated Commercial Fisheries Initiative  
According to the program description, th is program provides training to support 
capacity building in Mi'kmaq and Maliseet First Nations commercial fishing enterprises.  Please 
describe the entities that receive assistance under this program, and the specific types of activities that are funded. 
 
Reply 
 
 Eligible entities are limited to any of th e 34 Mi'kmaq and Maliseet First Nations (MMFN) 
affected by the Supreme Court of Canada's Ma rshall Decision and certain Aboriginal aggregate 
organizations whose membership is comprised of these impacted First Nations.   Specific types of activities funded: 
 
 MMFN Governance Structure Enhancement – Activities that support the development and 
enhancement of the governance structures of MMFN commercial fishing enterprises (CFE) to 
ensure accountability, transparency, and well managed and operated commercial enterprises; 
 
 MMFN Management Practice Enhancement – Ac tivities that promote the enhancement of 
administrative, management and operational processes and systems that are critical to the 
successful operation of CFEs, including prepar ation or upgrading of Business Development 
Plans, implementation of Business Development Plans, implementation of the Fisheries 
Management System, and training and at-sea mentoring; 
 
 MMFN Collaborative Management - Activities that build the capacity of MMFNs to 
successfully participate in the collaborative manage ment of the integrated commercial fishery.  
The focus of AICFI support is for existi ng MMFN watershed-based Aggregate Bodies to 
become more involved in integrated commercia l fisheries collaborative management activities 
and; 
 
 MMFN Business Development- Activities that  further enhance MMFN CFE operational 
capacity, including acquisition of new vessels and gear, vessel modifications, overhauls of 
vessel engines, improvements to on-shore fish handling facilities, and small adjustments in 
fishing access through the addition of partial/seas onal or temporary allocations.  Only those 
MMFNs that demonstrate that they have im plemented adequate governance structures and 
Business Development Plans, and that contri bute at least 10% to the total funding of 
initiatives under this component, will be cons idered for support under this component. 
 
Question 6 
 
3. Pacific Integrated Commercial Fisheries Initiative 
 
According to the program description, this program streamlines the transfer of retired 
licenses, quota, vessels and gear to facilitate the entry of First Nation commercial fishing G/SCM/Q2/CAN/52 
Page 4 
 
 
  enterprises into the fishing industry.  Please provide information on the number and types of 
such transactions during the notification period.    
Reply 
  The Pacific Integrated Commercial Fisheries Initiative (PICFI) is a multi-faceted initiative for 
fisheries management renewal for Pacific commercial fi sheries.  In order to successfully achieve those 
renewal objectives, it is necessary to create an envir onment conducive to renewal.  In particular, this 
involves bringing some stability to the access held by the various harvesting sectors.  To achieve this 
end, PICFI provides commercial fishing access in a diversified array of species, for use by First 
Nations and aggregates of First Nations in setting up  and operating commercial fishing enterprises.  
The access is coupled with resourcing for First Nations  to build their capacity to operate sustainable 
commercial fishing enterprises (including training and mentoring and vessels and gear), and their 
ability to meaningfully and actively participate with  other harvesting sectors in fisheries management 
and planning.   
 
 Existing harvesters are invited to relinquish  license eligibilities and quota and receive a 
payment, through a process that ascertains value-for- money.  No new fishing effort is created.  The 
accesses acquired during the notification period of fiscal years 2008/09 and 2009/10 are listed in the 
Table below.  
Licence Type Retired  Licence 
Area2008/09  2009/10  Total  
Salmon Seine A 
B  9 
8 9 
8 
Salmon Gillnet C 
D 
E 5 
5 
8 8 
9 
18 13 
14 
26 
Salmon Troll F 
G 
H 9 
0 
7 4 
1 
3 13 
1 
10 
Schedule II  2 1 3 
Herring Gillnet  14 24 38 
Herring Seine  0 1 1 
Sablefish  1 1 2 
Halibut  24 10 34 
Crab  0 4 4 
Shrimp Trawl  1 0 1 
Groundfish trawl  2 0 2 
Prawn Trap  10 10 20 
Red Sea Urchin North 
South 7 
2 3 
1 10 
3 
Rockfish Hock and Line Inside 
Outside 0 
3 1 
1 1 
4 
Total  100 117 217 
 
Question 7 
 
5. Short Term Transitional Measures 
 
According to the program description, th is program provided assistance to lobster 
fishers who experienced financial hardship during the global downturn of 2007-2009.  Criteria 
are described as including "reliance on income fr om lobster fishing, a maximum value of lobster 
landings in the previous year, and a decrease in in come from lobster, inflicted by the economic  G/SCM/Q2/CAN/52 
 Page 5 
 
 
  downturn".  Please discuss wheth er these are the only criteria fo r participation, and please 
elaborate on the details of these criteria.    
Reply 
  Eligibility criteria were developed to target  funding to lobster dependent low-income 
harvesters.  To qualify under the STTM program, the recipient would have had to meet the following 
criteria:  
 Submit an application form before or on 31January 2010; 
 
 Held a valid lobster licence in both 2008 and 2009; 
 
 Earn income from lobster fishing in both 2008 and 2009; 
 
 Have a gross value of lobster landings l ess than or equal to $50,000 in 2009; 
 
 Have experienced at least a 25% decline in th eir lobster landed value between 2008 et 2009;  
and, 
 
 Be lobster-dependent (their lobs ter landed value must have repr esented at least 50% of their 
total value of landings in 2008;  and, they must have had a minimum landed value of $2,500 
from lobster fishing in 2009). 
 
 Eligible fishers could receive financial assist ance equivalent to the difference between the 
value of their 2009 landings and 75% of the value of  their 2008 landings, up to a maximum of $5,000. 
 
Question 8 
 
Government of Qu ébec Refundable Tax Credit for Vessels 
  The United States understands that two programs contained in the current notification 
correspond to the program discussed in Canada's replies to US questions on this topic in the 
previous notification in G/SCM/Q2/CAN/38.  Th ose are "Crédit d'impôt remboursable pour les 
constructeurs de navires" and "Réduction de la  taxe sur le capital pour l'acquisition de 
navires".  However, Canada's response in G/SCM/ Q2/CAN/38 to US questions on this program 
does not address whether the "a reduction of tax on capital on the acquisition of vessels made 
entirely in Québec" for firms acquiring such vess els is consistent with Canada's commitments 
under Article 3 of the Subsidies Agreement.  Could Canada please address this issue?   
 
Reply 
  The United-States has asked a question concerning two different programs.  Regarding the first one (Crédit d'impôt remboursable pour les cons tructeurs de navires), an analysis of criteria 
indicates that it is not contingent on export performance or on the use of domestic over imported 
goods.  The second program (Réduction de la taxe su r le capital pour l'acquisition de navires), was 
abolished on 31 December 2010, as expl ained in Question 9 below.    G/SCM/Q2/CAN/52 
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  Question 9 
 
 Canada's response also indicates that "the tax will be abolished on 31 December 2010".  
Can Canada confirm that this has indeed happened?  
 
Reply 
  The program "Réduction de la taxe sur le cap ital pour l'acquisition de navires" was abolished 
on 31 December 2010, except for insurance corporations and life insurers. 
 
Question 10 
 
Crédits d'impôt pour la Gaspésie et certaines régions maritimes du Québec 
 
 Public information indicates that entities in the maritime industries receive higher levels 
of tax benefits under this program than entiti es in other covered industries.  Could Canada 
please explain how these differential benefits are provided under this tax program as well as the 
policy objective and purpose of such different treatment? 
 
Reply 
 
 Entities in the maritime industries do not receive tax benefits under this program. 
 
Question 11 
 
PROVINCIAL PROGRAMS NOT NOTIFIED 
 
Public sources indicate that Canada's provincial governments administer several 
programs that were not included in this notifica tion.  For certain of these programs, the United 
States has previously asked Canada in prior s ubmissions to explain why the program was not 
notified pursuant to Article 25 of the Subsidi es Agreement.  For example, the Secretariat's 
Report in Canada's 2011 Trade Policy Review stat es that "Federal and provincial incentives are 
available in areas such as film and TV produc tion;  investment;  research and development;  
mineral exploration;  and renewable energy".  Se e W/TPR/S/246 at pg. xi, para. 13.  The United 
States expresses its concern that Canada's cur rent notification still does not notify such 
programs.  Could Canada address why it has no t notified programs that the Secretariat was 
able to identify? 
 Reply 
 
 As mentioned in the past, Canada supports  the subsidy notification process as being an 
important transparency exercise and agrees that sub- federal subsidy programs that are determined to 
meet Canada’s obligation under Article 25 of the ASCM should be notified.  
 
 As such, the federal government is engaged in  continuing consultations with the provincial 
and territorial governments regardi ng subsidy notification requirement s.  During the consultation for 
the 2011 notification, five provinces and one territo ry have informed the federal government of 
programs that meet the criteria for the purposes of notification.  This is a significant improvement compared to the 2009 notification where two provinces provided information.  
 
 Canada's 2011 subsidy notificati on represents our best efforts to notify all specific subsidy 
programs, at both the federal and sub-federal le vel, as required under Article 25 of the ASCM. 
  G/SCM/Q2/CAN/52 
 Page 7 
 
 
  Question 12 
 Investissement Qu ébec;  Government of Qu ébec Aeronautical Development Strategy 
 
Canada's most recent response on Invest issement Québec (see G/SCM/Q2/CAN/38, 
9 April 2010) acknowledges that this program provi des "tax assistance" to a limited set of raw 
materials processing industries.  Can Canada please explain why it did not notify this program 
pursuant to Article 25?   
 Reply 
 
 Investissement Québec  is a development agency, not a program.  The agency manages tax 
assistance measures for companies engaged in the manufacturing and processing of a wide range of 
products involving wood, energy, foodstuffs, metals , peat, slate, precious or semiprecious stones, 
recycling of waste and residue from development or processing of natural resources, printing or 
publishing, non-metallic minerals and so on.  Unde r Article 25 of the ASCM, Members are to notify 
specific subsidies.  Since the Investissement Québec  is not a specific subsidy, and does not provide 
specific subsidies, Canada did not provid e notification pursuant to Article 25.   
 
Question 13 
 
Further, please confirm that this program conforms to Canada's commitments under 
Article 3 of the Subsidies Agreement. 
 Reply 
  Assistance provided by Investissement Québec  is not contingent on export performance or on 
the use of domestic over imported goods.  It does not contravene any obligations pursuant to Article 3 
of the ASCM. 
 
Question 14 
 
Regarding Government of Quebec support  for the aerospace industry, Canada's 
previous response has been to state that the Qu ébec Aeronautical Development Strategy "is not 
a programme and therefore has no budget".  See G/SCM/Q2/CAN/38.  However, there have 
been numerous reports over the years that th e Quebec provincial government has provided 
loans and loan guarantees through Investissement  Quebec to support the aerospace industry.  
For example, in December 2004, it was reported that Investissement Québec provided $750 
million in loan guarantees to Bombardier in order to back sales of about 100 regional jets.  In 
addition, in May 2005 Investissement Québec prov ided $75 million in royalty-based financing to 
Pratt & Whitney for research and development.  This was to be distributed over 3 years and 
repayment was reportedly not scheduled to begin until 2030.  It has also been reported that 
Investissement Québec has provided $118 million in  financing for a plant near Montreal that 
will be used to assemble Bombardier's new C- Series aircraft.  According to Quebec public 
documents, the first disbursement was made in  July 2009 (FY 2009-2010), i.e., in the period 
covered by current notification.  Can Canada ex plain why its current and previous notifications 
make no reference to these activities of the Quebec government?   
 
Reply 
  The December 2004 loan guarantees were not  provided under a program which was 
maintained during the period covered by this or the previous notification.  Furthermore, the 
gouvernement du Québec did not provide $118 million in financing for a plant to be used to assemble G/SCM/Q2/CAN/52 
Page 8 
 
 
  Bombardier's new C-Series aircraft.  This is a f actual mistake.  Rather, this represents the maximum 
amount of a repayable contribution to Bombardier  for research and development in the CSeries 
program.  
 
Question 15 
 
Government of Quebec Program for Lab Research Inc   
 
Canada's response in G/SCM/Q2/CAN/38 to US questions on this program 
acknowledges that the Government of Quebec has provided funding to a company that engages 
in commercial research and development on a cont ract basis.  Canada's previous response, 
however, does not explain why the program need not be notified.  Can Canada please explain 
why it did not notify this program pursuant to Article 25?    
Reply 
  The Government of Québec's programs which pr ovided funding to Lab Research Inc. are not 
specific and do not have to be notified under Article 25 of the ASCM. 
 
Lab Research Inc. provides pre-clinical and n on-clinical contract research services in the 
pharmaceutical, biotechnology, agro-chemistry and industrial sectors.  The aid was granted in the 
context of a second extension of the company's fac ilities.  It is limited on the one hand to covering 
costs incurred in the expansion of premises used exclusively and permanently for research purposes in 
an amount of $2 million for an investment of at least $24 million, and, on the other, to covering 
expenditures relating to staff engaged solely in research activities for specialized training in an 
amount of the order of $529,000. 
 
Question 16 
 
Further, please confirm that this program conforms to Canada's commitments under 
Article 3 of the Subsidies Agreement. 
 Reply 
 
 This program is not contingent on export performance or on the use of domestic over 
imported goods.  It does not contravene any obl igations pursuant to Article 3 of the ASCM. 
 
Question 17 
 
Further, please discuss whether any funding was provided to Lab Research Inc during 
the period covered by this notification. 
 
Reply 
  Funding from programs which are not specific w ithin the meaning of Article 2 of the ASCM 
was provided to Lab Research Inc during th e period covered by this notification. 
 
 
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