WORLD TRADE
ORGANIZATIONG/SCM/N/25/CZE1
4 May 2000
(00-1823)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Updating Notification Pursuant to Article XVI:1 of
the GATT 1994 and Article 25 of the SCM Agreement
CZECH REPUBLIC
The following communication, dated 3 December 1999, has been received from the
Permanent Mission of the Czech Republic.
_______________
The Czech Republic hereby submits the following communication in regard to the Updating
Notification Pursuant to Article XVI:1 of th e GATT 1994 and Article 25 of the Agreement on
Subsidies and Countervailing Measures.
The notification of any of the programmes or measures does not prejudice whether or not
such programme or measure is specific, whether or not it has any trade effect and even whether or not
it falls under the Agreement on Subsidies and Countervailing Measures.
TABLE OF CONTENTS
Page
I. ENVIRO NMENT.................................................................................................................. ....2
II. RESEARCH AND DE VELOPMENT ....................................................................................3
III. STATE GUARANTEES........................................................................................................... 4
IV. SMALL AND MEDIUM-SIZ ED ENTERPR ISES ................................................................5
V. MINING INDUSTR Y.............................................................................................................. .6
VI. EXPORT PROMOTION .........................................................................................................7
VII. TRANS PORT.................................................................................................................. ..........8
VIII. AGRICULTURE............................................................................................................... ......10
                                                     
1 Previously incorrectly di stributed as G/SCM/N/48/CZE.G/SCM/N/25/CZE
Page 2
I. ENVIRONMENT
1. Title of the subsidy
Environmental aid.
2. Period covered by the notification
1996
3. Policy objective and/or purpose of the subsidy
Support for environmental protection and improvement.
4. Background and authority for the subsidy
1996 - Ministry of Environment
5. Legislation under which it is granted
Act No. 388/1991 Coll. on State Environmental Fund
6. Form of the subsidy (i.e. grant, loan, tax concessions, etc.)
Grant
Loan (it means the uncollected interest amounting to 10 per cent of granted loans).
7. To whom and how the subsidy is provided
Available to all companies involved in the State Environmental Fund schemes on air
protection, air improvement, protection of waters, disposal of waste etc.  The decision by the Fund to
provide the subsidy is based on established criteria and assessment of applications with regard to the
environmental and economic benefits and public interests.
8. Subsidy per unit, or in cases where it is not possible, the total amount or   the annual budgeted
for that subsidy
The total amount of the subsidy was K č 255 million, of which K č 228 million in the form of
grants, and K č 27 million in the form of low interest  loans (it means the uncollected interest
amounting to 10 per cent of granted loans.
9. Duration of a subsidy and/or any other time limits attached to it
Maximum 7 years (loans).
10. Statistical data permitting an assessment of the trade effects of a subsidy
Information on the trade effect of the subsidy is not available.G/SCM/N/25/CZE
Page 3
II. RESEARCH AND DEVELOPMENT
1. Title of the subsidy
Support for research and development.
2. Period covered by the notification
1996
3. Policy objective and/or purpose of the subsidy
Promote research and development, in particular in areas of  technology and engineering
projects.
4. Background and authority for the subsidy
Grant Agency which is a government agency  administering support to R&D and acting upon
supervision of the Government Council for Research and Development.  Support is also granted by
respective ministries within their competencies.
5. Legislation under which it is granted
Act No. 300/1992 Coll. on State Support for Research and Development, as amended, and
Act No. 576/1990 Coll. on Budgetary Regulations.
6. Form of the subsidy (i.e. grant, loan, tax concessions, etc.)
Grant, loan (it means the uncollected intere st amounting to 10 per cent of granted loans in
1996).
7. To whom and how the subsidy is provided
Most of financial funds for research and development were granted to the subjects dealing
with technology a engineering projects.  Conditions  of application are decided by the Government,
one of the conditions being delivery of data to the central registration of projects.  There is no legal
title to these financial funds.  The subsidies are awarded through tender procedures.
8. Subsidy per unit, or in cases where it is not possible, the total amount or   the annual budgeted
for that subsidy
The total amount of subsidy was K č 650 million, of which K č 631 million in the form of
grants, and K č 19 million in the form of low interest  loans (it means the uncollected interest
amounting to 10 per cent of granted loans).
9. Duration of a subsidy and/or any other time limits attached to it
Generally not limited, specified in each contract.
10. Statistical data permitting an assessment of the trade effects of a subsidy
Information on the trade effect of the subsidy is not available.G/SCM/N/25/CZE
Page 4
III. STATE GUARANTEES
1. Title of the subsidy
 State guarantees - state aid arising from the executed guarantees
2. Period covered by the notification
1996
3. Policy objective and/or purpose of the subsidy
Support to development programmes approved by the Government directed to the
infrastructure and restructuring of some areas of industrial production.  Performance of terms of
contract against creditors in the cases when enterprises are not able to pay their commercial loans to
realising of development programmes directed  to some areas of industrial production.
4. Background and authority for the subsidy
Ministry of Finance.
5. Legislation under which it is granted
Act No.  576 /1990 Coll. on Budgetary Regulations.
6. Form of the subsidy (i.e. grant, loan, tax concessions, etc.)
  Guarantee (height of state aid amounts to th e difference between the fees for providing
guarantees and executed guarantees)
7. To whom and how the subsidy is provided
 The guarantee is paid to the creditor (bank) under the conditions stated into a contract
between the guarantor (state) and the creditor.
Under the Act on Budgetary Regulations No. 576/1990 the debtor is obliged to recover
all financial means, which were paid instead of him by the state.
The fees for the guarantee provisions amount to 0.5 per cent of the guarantee as per the Act
No. 368/92, concerning the administrative fees.
8. Subsidy per unit, or in cases where it is not possible, the total amount or   the annual budgeted
for that subsidy
The total stock of guarantees was K č 66 million (the difference between the fees for providing
guarantees and provided guarantees)
Balance in K č million
fees                                          losses--------------------------------------------------
24            99G/SCM/N/25/CZE
Page 5
9. Duration of a subsidy and/or any other time limits attached to it
Specified in each case, according to the maturity of guaranteed credits.
10. Statistical data permitting an assessment of the trade effects of a subsidy
Information on the trade effect of the subsidy is not available.
IV. SMALL AND MEDIUM-SIZED ENTERPRISES
1. Title of the subsidy
Promotion of Small and Medium-Sized Enterprises.
2. Period covered by the notification
1996
3. Policy objective and/or purpose of the subsidy
Assistance to SME, promotion of private business, and to provide regional assistance to areas
with higher rates of unemployment.
4. Background and authority for the subsidy
Ministry of Industry and Trade.
5. Legislation under which it is granted
Act No. 299/1992 Coll. on the Promotion of Small and Medium-Sized Enterprises.
6. Form of the subsidy (i.e. grant, loan, tax concessions, etc.)
GrantGuarantee (soft price guarantee, which represents the difference between the entrepreneur's
fee for the guarantee granting and the usual commercial rate applied to bank guarantees).
7. To whom and how the subsidy is provided
SMEs (a maximum of 500) which have their seat and carry out the project concerned in the
Czech Republic.  The subsidy is provided by the Czechomoravian Guarantee and Development Bank
(Èeskomoravská záruèní a rozvojová banka, a.s.) set up by the Decision of the Government.
8. Subsidy per unit, or in cases where it is not possible, the total amount or   the annual budgeted
for that subsidy
The total amount of the subsidy was K č 1 294 million, of which K č 894 million in the form of
grants, and K č 400 million in the form of  soft price guarantees.G/SCM/N/25/CZE
Page 6
9. Duration of a subsidy and/or any other time limits attached to it
For settlement of interest maximum 4 years for individual projects, duration of the whole
scheme is not limited.
10. Statistical data permitting an assessment of the trade effects of a subsidy
Information on the trade effect of the subsidy is not available.
V. MINING INDUSTRY
1. Title of the subsidy
Support for mining industry.
2. Period covered by the notification
1996
3. Policy objective and/or purpose of the subsidy
This subsidy has been established to cover the costs stemming from structural adjustment in
coal, uranium and ore mining activities and progressive reduction of production.
4. Background and authority for the subsidy
Ministry of Industry and Trade.
5. Legislation under which it is granted
Act on 1996 Budget
6. Form of the subsidy (i.e. grant, loan, tax concessions, etc.)
Grant
7. To whom and how the subsidy is provided
Companies engaged in coal, uranium and ore mining activities and covered by the
government resolution and technical plan of liquidation of mining plants, compensation of dismissedemployees, compensation of ecological damage and recultivation of environment.
8. Subsidy per unit, or in cases where it is not possible, the total amount or   the annual budgeted
for that subsidy
The total payments were K č  5,803 million, of which coal K č 3,791 million:
- compensation of dismissed employees K č 1,803, of  which coal  K č 1,403 million,
- liquidation of mining plants K č 2,357 million, of which coal K č 1,287 million,
- recultivation of environment K č 1,413 million, of which coal K č 871 million,
-  compensation of ecological damage K č 230 million, of which coal K č 230 million.G/SCM/N/25/CZE
Page 7
9. Duration of a subsidy and/or any other time limits attached to it
Not limited, based on the government plan of reduction of mining  activities.
10. Statistical data permitting an assessment of the trade effects of a subsidy
Information on the trade effect of the subsidy is not available.
VI. EXPORT PROMOTION
1. Title of the subsidy
Export promotion.
2. Period covered by the notification
1996
3. Policy objective and/or purpose of the subsidy
To promote the Czech exports of goods and services primary by  covering the exporters
commercial and political risks and providing concessional financing.
4. Background and authority for the subsidy
Ministry of Industry and Trade
5. Legislation under which it is granted
Act No. 58/1995 Coll. on Insurance and Financing with State Support, Act No.  576 Coll. on
Budgetary Regulations.
6. Form of the subsidy (i.e. grant, loan, tax concessions, etc.)
Grant
7. To whom and how the subsidy is provided
The conditions are in accordance with the OECD "Arrangement on Guidelines for Officially
Supported Export Credits" and "Bern Union Understandings".
Export credit insurance is provided by the Export Guarantee and Insurance Company
(EGAP) established as a state company.  All Czech-based enterprises are eligible.  Concessional
financing, the provision of which is conditioned on export credit risk insurance provided by EGAP, iscarried out by the Czech Export Bank (ÈEB) by providing credits on terms more favourable than
market conditions. Export credits meet co nditions set out in the OECD Arrangement.
More detailed description:
1. The subsidy is provided to EGAP, a. s. (Export Guarantee and Insurance Company), founded
as a state company under the Decision of the Government in 1992. This subsidy enables
EGAP, a. s. to insure the export credit risks.G/SCM/N/25/CZE
Page 8
2. The government pays from the state budget to the Czech Export Bank ( ČEB) the interest
difference arising from the interest rate, which ČEB pays when acquiring financial sources at
the world money markets and from the interest rate for which it grants a government-
subsidised credit to foreign customers under the conditions as per Convention (i.e. at the ratewhich equals at least CIRR).
8. Subsidy per unit, or in cases where it is not possible, the total amount or   the annual budgeted
for that subsidy
1996
Total amount:             K č 609 mil.
          thereof:                   800 mil. - grant to the insurance fund (EGAP)
                                         -279 mil. - the difference between the realised
                                                           insurance performance and the
                                                           collected insurance premiums
                                                          (EGAP) /g119
                                            88 mil. - interest rate compensation (ÈEB)
/g119Balance (in mil. K č) - EGAP
premium losses
296 17
9. Duration of a subsidy and/or any other time limits attached to it
The duration of the scheme has not been specified.
10. Statistical data permitting an assessment of the trade effects of a subsidy
Statistical data showing the trade effects of the subsidy are not available.
VII. TRANSPORT
1. Title of the subsidy
Support for Transport Organizations.
2. Period covered by the notification
1996
3. Policy objective and/or purpose of the subsidy
Support for the state railway to cover operating lo sses and for investment, subsidy for the air
and water transport for investment and subsidy for ai r transport to cover interest costs related to the
renovation of the air fleet.
4. Background and authority for the subsidyG/SCM/N/25/CZE
Page 9
Ministry of Transport.
5. Legislation under which it is granted
Act on 1996 State Budget
6. Form of the subsidy (i.e. grant, loan, tax concessions, etc.)
GrantLoan (it means the uncollected interest amounting to 10 percentage of granted loan).
7. To whom and how the subsidy is provided
The subsidy is provided to the state ra ilway, air and water transport companies.
8. Subsidy per unit, or in cases where it is not possible, the total amount or   the annual budgeted
for that subsidy
The total amount of the subsidy was K č 9,310 million, of which
grant: K č 9,284 million, of which:
Kč 8,733 million - state railways
Kč    546 million - air transport
Kč        5 million - water transport
loan: K č 26 million - air transport (Security and technology
                                       renovation of the Air Traffic Control System)
9. Duration of a subsidy and/or any other time limits attached to it
According to the duration of individual case.
10. Statistical data permitting an assessment of the trade effects of a subsidy
Information on the trade effect of the subsidy is not available.G/SCM/N/25/CZE
Page 10
VIII. AGRICULTURE
1. Title of the subsidy
Support for Agriculture.
2. Period covered by the notification
1996
3. Policy objective and/or purpose of the subsidy
Support for development of private farming, restructuring of production, preservation of non-
production agricultural activities (preservation of genetic potential), support for forest farming and
improvements in drinking-water supply.
4. Background and authority for the subsidy
Ministry of Agriculture.
5. Legislation under which it is granted
Act No. 576 /1990 Coll. on Budgetary Regulations, Decision by the Government
Establishing the Farming and Forestry Support a nd Guarantee Fund (PGRLF), Principles  of State
Support in the agriculture for the year 1996.
6. Form of the subsidy (i.e. grant, loan, tax concessions, etc.)
Grant
7. To whom and how the subsidy is provided
The support in the form of direct subsidies and indirect subsidies through PGRLF is available
to all agricultural enterprises that meet the condition of 50 percentage share of the revenues comingfrom agricultural or forestry production.
8. Subsidy per unit, or in cases where it is not possible, the total amount or   the annual budgeted
for that subsidy
The total amount of the subsidy was K č 7,878 million, of which
Kč          27 million - transformation of land to forest
Kč          92 million -reconstruction of vineyards and hop plantations
Kč     1,452 million -countryside preservation
Kč          64 million - bee-keeping
Kč        355 million - cattle
Kč        295 million - genetic potential (animals)
Kč        100 million - genetic potential (plants)
Kč        124 million - improvement of animals health
Kč          20 million - improvement of plants health
Kč         595 million - forestry
  K č           39 million - breeding of special kind of horsesG/SCM/N/25/CZE
Page 11
Kč 32 million - liquidation of flood damages
Kč    4,683 million - grants provided by PGRLF
9. Duration of a subsidy and/or any other time limits attached to it
Individually, according to the programme.
10. Statistical data permitting an assessment of the trade effects of a subsidy
Information on the trade effect of the subsidy is not available.
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