   
  
G/SCM/Q2/EU/88  
 
20 October  2022 
(22-7891) Page: 1/4 
Committee on Subsidies and Countervailing Measures  Original: English  
 
 
SUBSIDIES  
REPLIES TO ADDITIONAL QUESTIONS1 POSED BY THE UNITED STATES REGARDING  
THE NEW AND FULL NOTIFICATION OF THE EUROPEAN UNION2 
The following communication, dated and received on 20 October  2022, is being circulated at the 
request of the delegation of the European Union . 
 
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Question 1  
European Regional Development Fund  
When describing the forms of assistance provided, the notification states that grants 
provided are used for the development of endogenous potential by measures which 
support regional and local development. Please describe what is meant by "endogenous 
potential"? How, and using what specific measures, does this program achieve the goal 
of developing endogenous po tential at the regional and local levels?  
Reply : 
Concerning ERDF, 'endogenous potential ' merely refers to the potential of the areas/territories that 
we support. It refers to measures supporting fixed investments in equipment and infrastructure, 
including cultural and sustainable tourism infrastructure, services to enterprises, in particular SMEs, 
support to research and innovation bodies and investment in technology and applied research in 
enterprises, as specified in Article 3(1)(e) of Regulation 1301/201 3, which cover the period 
2014-2020.  
Question 2  
Connecting Europe Facility (in the field of energy) (2014 -2020)  
Connecting Europe Facility EU Financing Programme (in the field of transport) (Regulation 
EU 1316/2013)  
For the two programs above, in response to whom and how the subsidy is provided, it is 
simply stated that "Others" are the recipients of these subsidies. Please clarify and 
provide greater details on which entities and/or sectors are eligible for this subsidy. In 
addition, please provid e information on how this subsidy is provided to its recipients.  
Reply : 
"CEF-Transport Financing Programme  supports key transport infrastructure for all transport modes. 
Projects must be located on the TEN -T. 
 
1 G/SCM/Q2/EU/77.  
2 G/SCM/N/372/EU . G/SCM/Q2/EU/88  
 
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  The following entities are eligible:  
(a) legal entities established in: (i) a Member State, including joint ventures; (ii) a third country 
associated to the CEF; or (iii) an overseas country or territory;  
(b) legal entities created under Union law and, if provided for in the work programmes, 
international organisations.  
Two types of applicants can submit their proposal under the CEF -Transport Financing Programme:  
- One or more Member States  
- With the agreement of the Member State(s) concerned, international organisations or 
public or private bodies established in an EU Member State.  
Following every call for proposals based on the work programmes, the Commission adopts  an 
implementing act setting the amount of financial support to be granted to the projects selected and 
specifying the conditions and methods for their implementation.  
Facilities and infrastructure supported under CEF must be accessible for use by all oper ators on a 
non-discriminatory basis ." 
In order to be eligible for CEF -Energy grants for studies or works, a project must be on the most 
recent list of Projects of Common Interest (PCI). Such PCIs concern cross -border energy 
infrastructure projects linking EU Member States ' energy systems, or connecting the EU to 
neighbouring third countries. The CEF grant would go to the (public or private) entity promoting, 
implementing and operating such an infrastructure project. Recipients include operators of electrici ty 
or natural gas transmission systems as well as LNG terminals. CEF grants are the exception, as the 
bulk of PCIs are delivered by the market and their costs recovered through user tariffs. With the 
revised TEN -E Regulation in force since this year, suppo rt for oil and gas infrastructure is excluded 
in future PCI lists.  
 
Grants are direct financial contributions from the European Union budget awarded by way of a 
donation to third -party beneficiaries engaged in activities that serve EU policies. Grants are based 
on the costs actually incurred by the beneficiaries for carrying out the activities in question, and the 
results of the action remain the property of the beneficiaries.  
Question 3  
Research on Coal and Steel (Research Fund for Coal and Steel (RFCS)  
The notification claims that demonstration projects "aim at constructing and/or operating 
an industrial -scale installation or a significant part of an industrial -scale installation." 
Given global overcapacity in the steel industry, how does the EU ensure that these 
projects do not lead to an overall capacity increase in the steel sector?  
Reply : 
COUNCIL DECISION (EU) 2021/1094 of 28 June 2021 revised the programme 's research objectives, 
in line with the  European Green Deal  and the  Just Transition Mechanism . The Research Progra mme 
provides support for collaborative research in the coal and steel sectors. As regards steel, the 
program provides support for clean steel breakthrough leading to near -zero-carbon steel making 
projects. This fits with the EU 's objectives to achieve clim ate neutrality by 2050  and is consistent 
with the political, scientific, and technological objectives of the Union, and shall complement the 
activities carried out in the Member States and within the existing Union Framework Programme for 
research, technol ogical development and demonstration activities.  
Question 4  
Additional Programs Not Notified: Publicly available information indicates that the 
European Union (EU) maintains other subsidy programs, such as those described below, 
that may meet the criteria for notification under Article 25 of the Subsidies Agreement .  
Please explain why the following programs have not been notified. Will the EU notify these 
subsidies in sufficient detail that satisfies the informational requirements of Article 25.3 
of the SCM  Agreement?  G/SCM/Q2/EU/88  
 
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  European Fund for Strategic Investments (EFSI)  
The Secretariat Report on EU's latest Trade Policy Review (TPR) (WT/TPR/S/395/Rev.1)3 
states that the EFSI has up to EUR 315 billion in funds available and has "already 
supported more than 750,000  jobs, with the figure set to rise to 1.4 million jobs by 2 020."4 
The plan is aimed at boosting long -term economic growth and competitiveness in the EU 
in areas such as infrastructure, research and innovation, education, health, information 
and communications technology and others.5  
Reply : 
The European fund for  strategic investments (EFSI) is aimed at boosting long -term economic growth 
and competitiveness in the European Union. The fund covers projects in areas such as infrastructure, 
research and innovation, education, health, information and communications tec hnology and also 
supports small and medium sized enterprises. The fund is managed by the European Investment 
Bank (EIB) and the Commission. Without prejudice to the status of the fund, the Commission is 
analysing if the EFSI may be subject to the notificat ion requirements under Article 25 of the ASCM.  
InvestEU  
InvestEU aims to supports sustainable investment, innovation, and job creation in Europe. 
It aims to provide more than €372 billion in additional investment over the period 2021 -
27. The programme supports four main policy areas, including 1) Sustainable 
infrastructure 2) Research, innovation and digitalization, 3) SMEs, and 4) Social 
investment and skills.6 
Reply : 
In accordance with Article 37, InvestEU Regulation 2021/523 applies from 1  January 2021.  
The implementation of the InvestEU programme started in 2022 when the first guarantee agreement 
was signed in February 2022. Consequently, it is outside of the notification period covering the years 
2019-2020 and without prejudice to determi nation whether it would be subject to notification for 
subsequent periods.  
Innovation Fund  
The Innovation Fund is one of the world's largest programmes for the demonstration of 
innovative low -carbon technologies.7 Accounting firm Ernest Young describes th e 
programme as "being used to support floating wind farms, carbon capture mechanisms 
and energy storage, all of which could help make sectors such as cement and steelmaking 
more sustainable."8 The Fund will provide around EUR 10 billion of support over 20 20-
2030.9  
 
3 WT/TPR/S/395/Rev.1 ( 7 July 2020), Trade Policy Review Report by the Secretariat: European  Union  
("TPR/395 ") 
4 TPR/395, page 23, paragraph 1.28 and page 217, paragraph 4.202.  
5 "European fund for strategic investments (EFSI) ", European Council, 5 March 2020, 
https://www.consilium.europa.eu/en/policies/investment -plan/strategic -investments -fund/  (accessed on 
13 July 2022).  
6 "What is the InvestEU Programme? " European Union, https://investeu.europa.eu/what -investeu -
programme_en  (accessed on 13 July 2022).  
7 "Innovation Fund. " European Commission, https://ec.europa.eu/clima/eu -action/funding -climate -
action/innovation -fund_en  (accessed on 12 July 2022).    
8 Smith, Brian. "How Europe, India and Africa are incentivizing foreign investment. " Ernest Young, 
29 July 2021, https://www.ey.com/en_fi/tax/how -europe -india-and-africa -are-incentivizing -foreign -
investment (accessed on 12 July 2022).  
9 "Discover the Innovation F und, one of the world 's largest funding programmes, with EUR 10 billion 
funding. " Cl erens, https://www.euinnovationfund.eu/ (accessed 14 July 2022).  G/SCM/Q2/EU/88  
 
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  Reply : 
There was no funding granted under the EU Innovation fund in 2019 and 2020. Therefore , it is 
outside of the notification period and without prejudice to determination whether it would be subject 
to notification for subsequent periods.   
Just Transition Fund (JTF)  
The JTF is a "financial instrument within the Cohesion Policy which aims to provide 
support to territories facing serious socio -economic challenges arising from the transition 
towards climate neutrality." The fund provi des grants to Member States in territories 
expected to be the most negatively impacted by the green transition. For eligible 
territories, the JTF provides benefits such as investments in Small and Medium -sized 
Enterprises, creation of new firms, research a nd innovation incentives, environmental 
rehabilitation, clean energy, up - and reskilling of workers, job -search assistance, and the 
transformation of existing carbon -intensive installations. The JTF has an overall budget 
of EUR 17.5 billion for 2021 -2027.10  
Reply : 
This fund covers the programming period 2021 -2027. Therefore, it is outside of the notification 
period covering the years 2019 -2020 and without prejudice to whether it would be subject to 
notification for subsequent periods.  
 
 
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10 Kolodziejski, Marek. "Just Transition Fund. " European Pa rliament, March 2022, 
https://www.europarl.europa.eu/factsheets/en/sheet/214/just -transition -fund (accessed on 
12 July 2022).  