RESTRICTED
WORLD TRADE G/SCM/Q2/ISL/2
21March 1997
ORGANIZATION(97-1160)
Original: English Committee onSubsidies andCountervailing Measures
SUBSIDIES
Questions from theEUROPEAN COMMUNITY Regarding theNew
andFullNotification ofICELAND1
Thefollowing communication, dated 12March 1997, hasbeenreceived fromthePermanent
Delegation oftheEuropean Community.
_______________
Iceland submitted on22October 1996 itsnotification ofsubsidy programmes totheWTO
pursuant toArticle XVI:1 GATT 1994 andArticle 25oftheWTO Subsidies Agreement.
Inthisrespect, theCommunity would liketoobtain clarification onanumber ofissues onthe
notified schemes asdescribed below.
Moreover, theCommunity hasobtained information ondifferent subsidy schemes which were
notnotified totheWTO although theirnotification seems necessary pursuant toArticle 25.2ofthe
Subsidies Agreement.
I. NOTIFIED SUBSIDY PROGRAMMES
Thepresent analysis constitutes theremarks oftheCommunity andarequest forclarification.
(a) Support forR&D
- Could Iceland explain howprojects areselected andwhat thecriteria foreligibility
are?
(b) Industrial research
- Could Iceland provide adefinition of"manufacturing industries"?
- Arethecriteria foreligibility different fromthecriteria tobenefit fromthe"Industry
Development andMarketing" programme?
1G/SCM/N/3/ISL-G/SCM/N/16/ISL.
./.G/SCM/Q2/ISL/2
Page2
II. ADDITIONAL PROGRAMMES NOT NOTIFIED TOTHE WTO
Iceland hasnotnotified anumber ofprogrammes which appear tobenotifiable under Article 25.
TheCommunity findsthattheschemes described below provide afinancial contribution which confer
benefits tothelocalindustry. Inaddition, theschemes areclearly specific (aspertaining toaspecific
sector orcontingent uponexports). Inaddition tothespecific questions asked, theCommunity would
likeclarification whytheseprogrammes werenotnotified totheWTO andrequests that,ifappropriate,
Iceland supplies anotification under Article 25,using thestandard format.
1. Exemption from Income Tax
Foreign companies using anIcelandic agent ordistributor (which isrecognized bythe
government) benefit from anexemption from income taxonincome earned through Icelandic sales.
2. FreeTrade Zones
Since 1992, Iceland established anumber offreetradezones. Companies located inthesezones
areeligible fortaxincentives.
3. TheIcelandic Investment Corporation
TheIcelandic Investment Corporation isajointprivate andgovernment sponsored programme
tofinancially assist businesses andoffer financial aidforinnovative firms.