WORLD TRADE
ORGANIZATIONG/SCM/Q2/EEC/35
23 May 2002
(02-2843)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English/
French/
Spanish
SUBSIDIES
Replies to Questions from the UNITED STATES1 Regarding the Updating
Notification of the EUROPEAN COMMUNITIES
(Austria2, France3, Greece4, Spain5)
The following communication, dated 30 April 2002, has been received from the Permanent
Delegation of the European Commission.
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QUESTIONS TO AUSTRIA
Assistance Measures by the Lower Austri an Regional Border Promotion Company Ltd.
ERP Regional ProgrammeERP-SME Technology Programme
ERP Technology Programme
Question 1
For each of the above programmes, please in dicate whether there is a specified rate at
which the loans are provided under the programme?  If  so, what is that rate?  If not, how is the
interest rate determined?
Reply
Assistance Measures by the Lower Austri an Regional Border Promotion Company Ltd.
In the programme of the Lower Austrian Re gional Border Promotion Company Ltd. the
rate/interest is specified as follows:
Duration of loans: 8–10 years
                                                     
1 G/SCM/Q2/EEC/28
2 G/SCM/N/60/EEC/Add.1
3 G/SCM/60/EEC/Add.5
4 G/SCM/N/48/EEC/Add.7;  G/SCM/N/60/EEC/Add.7
5 G/SCM/N/60/EEC/Add.13G/SCM/Q2/EEC/35
Page 2
In the first 5 years: 2.5 per cent p.a. (fixed interest rate)
Remaining 3–5 years: 5.0 per cent p.a. (fixed interest rate)
The supervisory board, which decides on subsidies, always watches the EC–authorized
maximum subsidy measure and the reference interest and then decides on the quantity and theduration of the loans.
ERP Regional Programme
Detailed information on the conditions of the aid (= soft loans):
terms of soft loan:
utilization period:  in general, six months at a fixed interest rate of 1.5 per cent per year
period of loan:  eight years
  - grace period: in general, from two to three years at a fixed interest rate of 1.5 per cent
per  year
  - repayment period: from five to six years at a fixed interest rate of 2.95 per cent per
year (of 1.95 per cent per year in the “Assisted Area according to “Objective 1“)
A further reduction of the interest rate of 1 per cent per year is granted over a maximum
period of three years if the company increases the number of employees by more than 10 per cent
while carrying out the investment project subsidized under this aid scheme.
Utilization period: the soft loan provided by the ERP-Fund should be utilized by the recipient
within this period (it can be used later on, but in that case the grace period will be reducedcorrespondingly).
Maximum amount of the soft loans: an enterprise may receive soft loans up to an overall
amount of ATS 200 million for one or more investment projects during a single financial year; with
regard to companies located in the “Assisted Area“ according to “Objective 1“, amounts are not
limited.
ERP SME Technology Programme
Detailed information on the conditions of the aid (= soft loan):
terms of soft loan:
utilization period: six months at a fixed interest rate of 1.5 per cent per year
period of loan: eight years
- grace period: two years at a fixed interest rate of 1.5 per cent per year
- repayment period: six years at a fixed interest rate of 2.95 per cent per year
A further reduction of the interest rate of 1 per cent per year is granted over a maximum
period of three years if the company increases the number of employees by more than 10 per cent
while carrying out the investment project subsidized under this aid scheme.
Utilization period: the soft loan provided by the ERP-Fund should be utilized by the recipient
within this period (it can be used later on, but in that case the grace period will be reduced
correspondingly).G/SCM/Q2/EEC/35
Page 3
Maximum amount of the soft loans: an enterprise may receive a soft loan up to an amount of
ATS 100 million for a single project and up to an amount of ATS 200 million for several projects
during one “financial year“.
ERP Technology Programme
Detailed information on the conditions of the aid (= soft loan):
terms of soft loan:
utilization period: in general, six months at a fixed interest rate of 1.5 per cent per year
period of loan: eight years
- grace period: in general, three years at a fixed interest rate of 1.5 per cent per year- repayment period: five years at a fixed interest rate of 2.95 per cent per year (of
1.95 per cent per year in the "Assiste d Area" according to "Objective 1")
A further reduction of the interest rate of 1 per cent per year is granted over a maximum
period of three years, if the company increases the number of employees by more than 10 per cent
while carrying out the investment project subsidized by a soft loan.
Utilization period: the soft loan provided by the ERP-Fund should be utilized by the recipient
within this period (it can be used later on, but in that case the grace period will be reduced
correspondingly).
Maximum amount of the soft loans: an enterprise may receive soft loans up to an amount of
ATS 100 million for a single project and up to an amount of ATS 200 million for several projects
during one financial year; with regard to compan ies located in the "Assisted Area" according to
"Objective 1" amounts are not limited.
Question 2
With respect to the ERP Technology Progra mme, are all enterprises in all industries
eligible for funds under this programme?
Reply
Recipients of subsidies granted under this aid scheme may be both producers and industrial
companies as well as enterprises in the production-related service industries. The subsidy amount of
each soft loan provided depends on the realised R & D expenditure, there is no restriction to special
enterprises in special industries.
Special Programme for the National Park Region “Hohe Tauern” in Tyrol
Question 1
Can funds provided under this programme be used to develop commercial opportunities
for recipients?G/SCM/Q2/EEC/35
Page 4
Reply
This programme has the following main points:
• enterprise analysis, industrial-commercial studies and counselling;
• enterprise settlement, expansion, relocation, development and commercial
environmental measures (including opening  of industrial and commercial areas);
• education and advanced training (including pilot projects);
• creation of information- and communicat ion facilities (including commercial
measures in the field of tourism);
• improvement of commercial tourism services through quality improvement measures
in existing accommodations as well as through new creation of enterprises;
• creation of local and regional tourism infrastructure;
• local and regional special-projects, which are in the public interest;
• agricultural marketing, especially in cooperation with tourism and business;
• activities of regional coordination.
Question 2
Are funds provided under this programme available to exporters?
Reply
Subsidies are only given for investments within the area of the National Park communities in
Tyrol.
Guarantees by the Tyrolean Credit Guaranteeing Company
Question 1
Are exporting companies eligible for aid under this programme?
Reply
Subsidies are only given for investments within the area of Tyrol.
Question 2
Are any of these companies ones which wo uld not receive loans (or credits) without
credit guarantees by the Tyrolean Government?
Reply
Loans (or credits) are only given in connection with a guarantee.G/SCM/Q2/EEC/35
Page 5
Question 3
According to the notification, aid under this programme is provided exclusively to
companies that are being ‘defing’.  Can you please clarify this statement?
Reply
Aid under this programme is provided exclusively to companies that are defined in chapter 35
to 40 in the document of the Chamber of Commerce.
Special Programme for the Strengthening of the Tyrolean Economy (Impact Package Tyrol)
1996-2000
Question 1
It is noted in the notification that in some  instances, there are specific sectoral focal
points.  What are those specific sectoral focal points?
Reply
Subsidies are available for all branches; there is no restriction to certain segments.  The legal
aspects concerning the sensitive sectors are taken into consideration.
Question 2
Is aid under this programme available to exporters?
Reply
Subsidies are only given for investments within the area of Tyrol.
Regional Planning Assistance Focal Point Programme (Rpafpp) 1996-2000 - Focal Point:
"Development of Industrial Sites", Part "Construction and Enlargement Of Private RailHaulages"
Question 1
Even though the period for submitting ap plications ends on 31 December 2000, how
long will aid be available after this date?
Regional Planning Assistance Focal Point Programme (Rpafpp) 1996-2000 - Focal Point:
"Assistance to Initiatives  in the Field of Agricultural Marketing"
Question 1
What types of marketing activities are eligible for aid under this programme?
Question 2
Does aid under this programme include such things as participation in international
expositions and promotion activities?G/SCM/Q2/EEC/35
Page 6
Question 3
Is aid under this programme available for exporters?
Question 4
Even though the period for submitting ap plications ends on 31 December 2000, how
long will aid be available after this date?
Reply
The Regional Planning Assistance Focal Point Programme (1996-2000), Focal Points
"Development of Industrial Sites, Part ‘Construction and Enlargement of Private Rail Haulages" and
"Assistance to Initiatives in the Field of Agricultural Marketing" ended in December 2000. One case,
which is still from the year 2000, shall be finished soon. Otherwise there is no aid available after
December 2000.
Assistance to the Industrial Waste Water Management by Means of the Region of Styria
Question 1
Even though the last date applications were accepted under this programme was
31 December 1999, how long will aid under this programme continue to be disbursed?
Reply
Aid under this programme will be disbursed until 31 December 2001.
Question 2
Are all manufacturing industries eligible for aid under this programme?
Reply
Manufacturing industries producing goods for private traffic are not eligible for aid under this
programme.  Moreover, all manufacturing industries which do not surpass the level of environmental
protection in the field of waste water management of  the European Union and the Republic of Austria
are not eligible for aid under this programme either.
Assistance by Non-Repayable Cash Grants
Question 1
What type of investments are eligible for aid?
Reply
Eligible for aid are mainly:
• technical investments (machines, hardware, software) and buildings in the fields of
small-scale investments, innovation and technology, environment and ecology;G/SCM/Q2/EEC/35
Page 7
• improvements of the business structures of small and medium-sized tourist
enterprises, education and training, accommodation, gastronomy, private room rental,facilities for sports and recreation, development of tourism zones, IT investments in
hotels and pensions;
• infrastructural measures for the creation of industrial and trade or tourism zones or
the provision of technical and scientific infrastructures;
• research and development (e.g. wages, material, technical equipment);
• education and training.
Question 2
What stipulations are there for ente rprises to receive investment aid?
Reply
Stipulations to receive aid:
• the business site must be located in Burgenland;
• only new investments can be subsidized;
• a special purpose has to be fulfilled such as: innovation and technology, environment
and ecology, research and development, accommodation, gastronomy, etc;
• in case of financing the investment with a loan: interest rates have to be below a
certain rate;
• good economic ratios;
• the enterprises have to give any kind of information if necessary, show their books,
bills, etc., and give a notice if any changes occur;
• any other stipulations concerning the project can be fixed, too, such as: a certain
employment rate for a certain period of time (2-3 years).
Assistance to the Structural Renewal of the Styrian Basic and Finished Products Industries
Question 1
According to then notification, the deadline  for applications under this programme was
31 December 1999 and that commitments made prior to the deadline would be honoured after
1999.  However, it is also stated that since the deadline for applications was 31 December 1999,
that no budget forecast was made for the year 2000 or subsequent years.  If funding is still being
honoured for commitments made prior to the end of 1999, it seems that there would be an
estimated budget for the year 2000.  Please provide further details on the expected or
anticipated amounts that will be provided after the deadline date?G/SCM/Q2/EEC/35
Page 8
Reply
The budgets of all programmes of the Steirische Wirtschaftsförderung GmbH are intended for
commitments planned for a certain period of time (normally one year).  Payment of the grants is based
on the realisation of the projects and the eligible investments is are usually scheduled over the twoyears following the commitment.
For the programme "Assistance to the Structural Renewal of the Styrian Basic and Finished
Products Industries", commitments totalled ATS 84,126,927 by 31.12.1999, of which
ATS 19,323,005 were disbursed by that date. The rest has been disbursed to date or will be disbursed
by 31.12.2001.  Currently (30.6.2000), remaining commitments total ATS 11,896,347.
Assistance to Industrial Research and Development Projects
Question 1
Is assistance under this programme available to all industrial enterprises?
Reply
The Styrian notified regime or programme as laid down in the Directive on the promotion of
R&D-projects provides for subsidies to all industrial enterprises for the period 2000 until 2006 toimprove the innovation and R&D capabilities of these enterprises.  Preferential treatment is given to
projects aiming at an effective cooperation between firms and public research bodies, research
associations or universities.
QUESTIONS TO FRANCE
Regional Advisory Assistance Fund (FRAC)
Question 1
According to the notification, the subsidy take s the form of “direct subsidization” of a
number of items including recourse to outside consultancy.  Are the items that are directly
subsidized items for which the compan y must not pay any cost themselves?
Reply
Public intervention covers part of the costs of the advisory services or recruitment of
professional staff, but a large portion of these costs must still be paid by the company.
Question 2
Are these companies able to receive such bene fits indefinitely or are there time limits to
the assistance that is provided to them?
Reply
Support is limited to the first year for the recruitment of professional staff.  Advisory
assistance is valid only once.G/SCM/Q2/EEC/35
Page 9
Enterprise Zones
Question 1
The notification provides that the benefits under this programme are available to
corporations in the specific zones for 10 years and that the zones closed in 1992.  For
clarification purposes, does this mean the last benefits to accrue under this programme will
accrue in 2002?
Reply
Indeed, the tax exemption applicable in the enterprise zones ceases to apply in 2002.
Land-use Management Premium (PAT)
Question 1
Can the EC please identify the form of subsidy granted under this programme?
Reply
The land-use management premium is a subsidy paid to companies that create jobs in certain
disadvantaged zones in the national territory.  It is subject to a certain number of conditions (number
of jobs created, amount of investment) which, if not respected, can result in the revision of the
decision to grant the subsidy, or even the cancellation and reimbursement of the premium.
Question 2
Are there any limitations concerning how much aid a company can receive?
Reply
The mechanism is subject to a triple ceiling (which varies according the zone and/or the
nature of the activity concerned):
− Ceiling on the premium per job created;
− ceiling on the aid in the form of a fraction of the amount of eligible tax-free
investment (for industrial enterprises) or  of the labour cost of the job created
calculated on the basis of a 2-year period (for company services or research and
development activities);
− ceiling on the total amount of shareholders' equity and current accounts of partners
blocked for the duration of the programme.
Mining Reconversion Programme
Question 1
How is the repayment period determined?  What is the maximum amount of time over
which a company may repay its loan?G/SCM/Q2/EEC/35
Page 10
Reply
This programme performs a re-industrialization function in mining reconversion zones that
are generally not very attractive and are sometimes enclave zones.
In the case of loans, market rates are applied.  The repayment period is 7 to 8 years.  For
equity loans (minority participation), efforts to create a leverage effect have led, in some cases, to the
fixing of even shorter repayment periods, not exceeding 5 to 6 years.
Industrial Development Company (SODIE)
Question 1
What are the terms on the loan s offered under this programme?
Reply
SODIE loans are granted at a rate of 4 to 5 per cent, repayable over a period of 5 to 7 years.
French overseas departments
Long-term tax treatment
Question 1
For the five authorized mining companies,  can you please clarify whether the taxes
being exempted are French (natio nal) taxes owed on “industrial activities” conducted in the
departments of Guyana, Guadeloupe, Martinique and Reunion?
Reply
The taxes and fees being exempted are purely national.
Question 2
What types of activities are included in “industrial activities”?
Reply
Industrial activities are those that directly contribute to the transformation of raw materials for
semi-finished goods into manufactured goods in which the role of equipment and tools is
predominant.
VAT Deduction for certain exempted products
Question 1
Can you please clarify how this programme operates?  For example, from what is the
uncollected VAT deducted?G/SCM/Q2/EEC/35
Page 11
Reply
In the Departments of Guadeloupe, Martinique and Réunion, all imports from third countries,
from the Community and from metropolitan France of raw materials and certain other products are
exempted from value added tax (VAT).  When these goods are used to perform taxable operations,and in order to ensure that this VAT exemption on imports is carried over to the end customer,
operators established in the French Overseas Departments can deduct from the VAT collected from
their customer a sum representing the VAT that was not billed on the goods acquired.
Temporary Tax Exemption for Creation of Ac tivities in the Overseas Departments
Question 1
What types of activities are included in “authorized activities”?
Reply
The sectors concerned by the temporary tax exemption for the creation of activities in
overseas departments are industry, fisheries, hotels and restaurants, tourism, new energy, computer
services, agriculture, construction and public works, transport and crafts.
Reduced taxation of operating results
Question 1
What types of activities are eligible for a reduction of taxes on profits and losses?
Reply
Activities eligible for reduced taxation of operating results come under the following sectors:
agriculture, industry, hotels and restaurants, tourism, fisheries, new energy, construction and public
works, transport and crafts, as well as maintenance services provided for industrial activities, and
audiovisual and cinematographic production and broadcasting.
QUESTIONS TO SPAIN
Fisheries
Question 1
After money or funds are transferred to the Autonomous Communities, who has
oversight of the funds?  How is the money disbursed from the Autonomous Communities?
Reply
The Autonomous Communities, as State territorial administrations, have competent
administrative bodies (Regional Ministry of Agriculture and Fisheries, Directorate-General of
Fisheries) which establish, through specific regulations, the eligibility requirements for any kind ofaid, as well as a body of auditors who oversee the expenditures in accordance with the General
Budget Law.G/SCM/Q2/EEC/35
Page 12
The Autonomous Communities incorporate the funds in their budgets, and having examined
the documentation relating to the granting of assi stance for a specific investment together with the
accompanying expenditure file, duly audited, transfer the corresponding amount to a current bank
account specified beforehand by the beneficiary.
Question 2
Are there requirements for the ways in which aid under this programme must be used?
Reply
Yes, the requirements are set out and published in the notice of aid.  This notice, in addition to
being subject to prior legal opinion, is examined for consistency with the Treaty on European Union
and notified to the Commission, after which it is published in the official journal of the corresponding
Autonomous Community.
Special economic aid to shipowners af fected by the stoppage of fishing
Question 1
Since the duration of this programme is listed as 1 March to 30 April 1999, does this
mean that the programme has ceased?  Or is this a yearly renewable programme?
Reply
The aid is linked to the Fisheries Agreement between the European Union and the
Kingdom of Morocco: the cessation is specifically  reflected in the text of the Agreement, and
temporary aid is therefore provided to compensate  for the resulting unemployment.  In other words,
the programme of 1 March to 30 April 1999 ceased without any possibility of renewal.  Since the
Agreement that lapsed on 30 November 1999 was not renewed, there is no aid for that purpose.
Development of non-energy mining
Question 1
Are funds under this programme able to be used for exportation of mined material?
Reply
A total of Ptas 752 million was paid in aid for non-energy mining in 1999.  The production
value was Ptas 554,444 million.  Next to the figure of Ptas 570,000 million, the Ptas 752 million in aid
represents nothing.  The trade balance in traditionally negative, and was negative that year as well
with a deficit of Ptas15,882 million.
Shipbuilding subsidies
Question 1
Under what terms and conditions do recipients receive funds under this programme?
How is the level of funding for each individual participant decided?G/SCM/Q2/EEC/35
Page 13
Question 2
Is there a mandated purpose for which the recipients must use the funds they receive
under this programme?
Reply
There are two types of restructuring aid:  investment aid, linked to a restructuring plan
without an increase in capacity, and closure aid, for irreversible capacity reduction.  The volume of
such aid depends on the scope of the restructuring and on the region's structural problems.
Investment aid is linked to sectoral objectives relating to innovation, specialisation, and the
improvement of work safety and environmental conditions.
The purpose of closure aid is to compensate workers that have been laid off or given early
retirement and to retrain workers, as well as to ensure the re-use of existing infrastructure for purposes
other than shipbuilding.
Interest subsidy for shipbuilding loans
Question 1
It is stated that under certain conditions, shipbuilders domiciled outside the European
Economic Area are eligible for this subsidy.  Please indicate under what conditions this occurs.
Reply
They are eligible for interest subsidies if the credit conditions correspond to the
OECD Council Resolution of 3 August 1981.
R&D Plan for the aeronautical sector
Question 1
What are the terms for the repayable advances under this programme?
Reply
Enterprises having recourse to this programme, that conduct aeronautical R&D projects of a
general nature (indirect support for non-specific research projects), of sufficient technological interest,
may receive repayable advances for a maximum amount of 75 per cent of the eligible project costs,
provided as the work progresses.  These are repayable advances, with reimbursement always taking
place once the project has been completed.  According to the terminology of the 1992 EU-US
Agreement on Large Civil Aircraft, disbursements under this programme do not constitute directsupport.
SME industrial development initiative
Question 1
Since the duration of this programme is listed until 31 December 1999, does this mean
that the programme has been terminated?G/SCM/Q2/EEC/35
Page 14
Reply
The validity of the regulations contained in Royal Decree 937/1997 of 20 June establishing
the aid regime and the system by which SME Industrial Development Initiative is run spans the period
1997-1999.
ARTE/SME Programme
Question 1
Please indicate whether this programme was terminated in June 1999.  Also, please
explain what was meant by the phrase “subsidized projects may be terminated after this date.”Does this mean that after June 1999, grants will no longer be provided or that previously
subsidized projects must end?
Reply
The time-frame for the programme was 1995-1999, in the sense that the last projects were
accepted for subsidization in June 1999, after which the ARTE/SME Programme could be considered
terminated.  However, expenditures could continue to be made and aid received under these projects
until 31 December 2001.  Indeed, 2001 saw the publication of a new subsidy grant for advanced
telecommunication service projects of common interest to the SMEs (ARTE/SME II).
Regional economic incentives scheme
Question 1
Who is eligible to receive funding under this programme?  Are all enterprises in every
industry eligible for aid under this programme?
Reply
Eligible under the Regional Economic Incentives Scheme are investments by companies
located in regions authorized by the European Commission under the corresponding regional aid map
and subsequently determined by the government.  They may receive such aid provided they are
involved in one of the following activities:
• Mining and processing industries, especially those using advanced technologies;
• agri-food and agricultural industries,  subject to Community criteria and national
regulations governing the sector;
• industrial support services  and services which significantly improve trade
structures;
• certain tourist installations  having an impact on the development of the zone.
In the case of investments to be made in the so called "sensitive" sectors (steel, shipbuilding,
synthetic fibres and the automobile industry), prior authorisation must be obtained from the European
Commission before the aid can be granted.
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