RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q2/JPN/26
9 April 1999
(99-1425)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Replies to Questions from the EUROPEAN COMMUNITY1, MEXICO2, and
the UNITED STATES3 Regarding the New and Full Notification of JAPAN4
The following communication, dated 22 March 1999, has been received from the Permanent
Mission of Japan.
_______________
With reference to the new and full notification of Japan, please find attached Japan's answers to
the questions posed by the European Community, Mexico and the United States respectively.
These responses include notifications responding to questions using the standard format.  In
these notifications, Japan has included certain measures which may not constitute "subsidies" under
Article 1 of the Agreement and certain subsidies wh ich may not be "specific" under Article 2 of the
Agreement in order to achieve the maximum transpar ency with regard to the relevant programmes and
measures effective within its territory.
Japan recognizes that in accordance with Articl e 25.7 of the Agreement, the notification of such
programmes and measures does not prejudge its lega l status, effects or nature under GATT 1994 and the
Agreement.
Furthermore, the notification does not prej udge the non-actionable nature of certain
programmes or measures under footnote 35 to Article 10 of the Agreement, or the non-actionable status
that a programme or a measure would have under Ar ticle 8 of the Agreement, had it been notified
according to the provisions of Article 8.3.
For your information, we are still working on so me remaining questions, the answers to which
will be provided shortly.
TABLE OF CONTENTS
Page
QUESTIONS FROM THE EU ROPEAN CO MMUNITY ........................................................................2
QUESTIONS FR OM MEXICO.......................................................................................................... ......26
QUESTIONS FROM THE UNITED ST ATES .......................................................................................27
                                                     
1 G/SCM/Q2/JPN/21
2 G/SCM/Q2/JPN/24
3 G/SCM/Q2/JPN/22
4 G/SCM/N/38/JPN & Suppl.1G/SCM/Q2/JPN/26
Page 2
QUESTIONS FROM THE EUROPEAN COMMUNITY
I. NOTIFIED SUBSIDY PROGRAMMES
QI – 1 Subsidy to Promote and Foster New Enterprises of the Research and Development
Type or Knowledge-Intensive Type
Could Japan provide a description of a "knowledge-intensive type enterprise"?
Reply
"Knowledge-intensive companies" refer to co mpanies who have plans to conduct tentative
provision, or commercializ ation of new services.
QI – 11 Subsidy for the Technical Assistance to Small Sized Enterprises
In the FY 1998 budget, is this programme under the ¥357 million budget for "Subsidy for
measures to promote the textile industry (senis angyo–shinkotaisaku-hi-hojokin)" in the General
Account?
Reply
Yes it is.  This programme is a sub-programme of "Subsidy for measures to promote the textile
industry (senisangyo-sinkotaisaku-hi-hojokin).  It  will be notified under the name of "Subsidy for
measures to promote the textile industry" in the 1999 notification.
QI – 12 Subsidy for the Projects to Develop New Silk Products
In the FY 1998 budget, is this under the ¥94 million budget for "Subsidy for promotion of
textile industry production region (s enisagyo-sanchi-shinkoujigyou-hi-hojokin)"?
Reply
Yes it is.  The programme is a sub-programme of "Subsidy for promotion of the textile industry
production region (seni-sangyo-sanchi-sinkoujigyou-hi-hojokin), and it is included in "Subsidy for
measures to promote the textile industry (senisangyo -sinko-taisakuhi-hojokin).  It will be notified under
the name of "Subsidy for measures to promote the textile industry (senisangyo-sinko-taisakuhi-
ghojokin)" in the 1999 notification because this prog ramme is also under the programme of "Subsidy for
measures to promote the textile industry".
QI  – 13 Equity Capital Scheme for the Advanced Promotion Facility of the Textile
Industry
The subsidy for 1992-1997 was zero.  What is the budget for FY 1998?  Has this been
reclassified to another budget line?
Reply
The budget for this programme for FY 1998 is zero.  There has been no change in the
classification.G/SCM/Q2/JPN/26
Page 3
QI - 14. Subsidy for Promotion of the Textile and Apparel Industry
QI - 15. Loan Guarantee for Promotion of the Textile and Apparel Industry
Is this also under the ¥357 million budget line mentioned in No. 11 above?
Reply
"Subsidy for Promotion of the Textile and Apparel Industry" is a sub-programme of "Subsidy
for mesures to promote the textile industry (senisan gyo-sinko-taisaku-hi-hojokin).  It will be notified
under the name of "Subsidy for measures to promot e the textile industry" in the 1999 notification.  On
the other hand, "Loan guarantee for promotion of textile and apparel industry" is not included in
"Subsidy for measures to promote the textile industry".
QI – 16 Subsidy for the Leather and Leather Goods Industries
Is this the subsidy of ¥267 million from the Ge neral Account, to which ¥85 million is added
from other financial sources to make it ¥352 mi llion in total for FY 1998?  The budget is under
"Subsidy for measures to promote leather industry (hikakusangyo-shinkotaisakujigyo-hi-
hojokin)".  Since this was a new budget line since FY 1998, the notified budget of ¥322 million
came from another/old budget line.  What was the old budget line?
Reply
1. Japan has submitted notification of its subsidy programme "Subsidy for the leather and leather
goods industries" in compliance with its obligati ons under the GATT and the SCM Agreement.  The FY
1997 national budget amount of the subsidy programm e was ¥322 million as indicated by the EC.  This
¥322 million was the amount earmarked to both non-profit associations and local governments.
2. Since FY 1998, the notified subsidy programme above has been divided into two parts, a
subsidy programme to the non-profit associations (Hikaku Sangyou Sinkou Taisaku Jigyo-hi Hojyo-kin)
and one to local governments (Chiho Hikaku Sangyo  Taisaku Jigyo-hi Hojyo-kin).  The contents have
not changed.  In other words, the notified subsid y programme is continuing under the new names of
"Hikaku Sangyo Shinko Taisaku Jigyo-hi Hojyo-kin"  and "Chiho Hikaku Sangyo Shinko Taisaku Jigyo-
hi Hojyo-kin".
The previously notified subsidy programme (Subsidy for the leather and leather goods
industries) was formally abolished in FY 1998 and the above two new programmes were introduced.
3. The FY 1998 national budget amount of the subsidy is ¥267 million.  The ¥85 million pointed
out by the EC is not a subsidy originating in  Government budget, but funding from non-profit
associations.
QI – 17 Subsidy for the Bekko and Ivory Industries
The budget for FY 1998 under "Subsidy for bekko industry etc. relief measures (bekko-
sangyo-toh-kyusaitaisaku-jigyo-hi)" is ¥317 millio n including ¥5 million from other financial
sources.  Was FY 1998 budget reduced from the notified budget of ¥340 million for FY 1997?
Reply
1. Japan has submitted notification of its subsidy programme "Subsidy for the  bekko and ivory
industries" in compliance with its obligation unde r the GATT and the SCM Agreement.  The FY 1997G/SCM/Q2/JPN/26
Page 4
national budget amount of the subsidy programme was ¥340 million as indicated by the EC.  This
¥340 million was the amount earmarked to both non-profit associations and local governments.
2. The notified subsidy programme above was divided into two parts, a subsidy programme to the
non-profit associations (Bekko Sangyo-tou Kyusai Taisaku Jigyo-hi Hojyo-kin) and one to localgovernments (Bekko Sangyo Shido Jigyo-hi Hojyo-kin) in FY 1998, but the subsidy programme for
local government was abolished.  The content of the subsidy programme for non-profit associations has
not changed.
3. The FY 1998 national budget amount of the subsidy is ¥312 million.  The ¥5 million pointed
out by the EC is not a subsidy originating in  Government budget, but funding from non-profit
associations.
4. The FY 1998 national budget amount of the subs idy was less than that of FY 1997 because of
the reduction of subsidy to the non-profit associations and the abolition of subsidy to local governments.
QI – 18 Equity Capital Scheme for the Promotion of Traditional Craft Products
Is the budget for FY 1998 also zero as was the case during FY 1995-1997?
Answer
Yes, the budget for FY 1998 was zero.
QI – 21 Industrial Science and Technology Frontier Programme (ISTF)
The total budget for these projects under NEDO is ¥28.6 billion for FY 1998.  Why is the
notified subsidy ¥31.6 billion?
Reply
ISTF budget (¥31.629 billion) for FY 1998 is provided to NEDO (¥28.266 billion) and to
national laboratories and institutes (¥3.363 billion).  Th e 1999 notification shall be modified to represent
that financial contribution is made both to  NEDO and national laboratories and institutes.
QI – 22 The New Sunshine Programme
Under which budget lines does this fall?
Reply
If this question asks the relationship between each budget item in "Hojokin Soran" (1988) and
the notification (G/S CM/N/38/JPN, No. 22), the New Sunshine Programme basically corresponds to the
following 4 items in "Hojokin Soran".  (Not all the amount of budget for the listed four programmes
belong to the New Sunshine Programme.)
• Chinetsu Gijutsu Kaihatsu hi to Hojokin (page 504 ~);
• Taiyo Energy to Gijutsu Kaihatsu hi Hojokin (page 504 ~)
in Dengen Kaihatsu Sokushin Taisaku Tokubetsu Kaikei;
• Sekiyu Daitai Energy Gijutsu Kaihatsu hi Hojokin (page 518 ~);  andG/SCM/Q2/JPN/26
Page 5
• Energy Shiyo Gorika Gijutsu Kaihatsu hi Hojokin (page 522 ~)
  in Sekitan narabini Sekiyu Oyobi Energy Jukyu Kozo Kodoka taisaku
Tokubetsu Kaikei
QI – 23 Capital Investment and Loan for R&D Projects concerning Key Technology
What sectors are include d in "key technology"?
Reply
Key technologies are technology utilized in  the sector of mining, manufacturing,
telecommunication and broadcasting and are expected to  be conducive to strengthening the basis of the
national economy and peoples' lives.  The eligibility to carry out R&D projects concerning key
technology is not confined to certain sectors.
QI – 24 Subsidy for Research on Technologies for Exploring Deep Seafloor Mineral
Resources
Is this subsidy (notified as ¥31 million for FY 1997) under the ¥796 million budget for
"Commission to exploration of deep seafloor mining resources (shikaitei kobutsushigen-tansatou
itakuhi)" for FY 1998?
Reply
Yes it is.  This programme is a sub-programme.  The FY 1998 budget of "Commission to
exploration of deep seafloor mining resources" which the EC points out, and the programme is
¥24 million (¥31 million for FY 1997 budget).
The other programme of "Commission to explorati on of deep seafloor mining resources" is not
notified because it is a contract research of MITI and therefore provides no financial contribution to the
industry.
QI – 25 Subsidy for Basic Research on Technologies for Offshore Oilfield Development
This subsidy is provided to the Japan Oc ean Industries Association (¥639 million for
FY 1997).  It is different from the budget for "Subsidy for research and development for offshore
oil production support system (kaitei sekiyu-seisanshien-system-kenkyukaihatsuhi-hojokin)",
which is provided to NEDO (¥1,983 million for FY 1998 budget)?
Reply
Yes, this programme and "Subsidy for research and development for offshore oil production
support system" which the EC pointed out are different.  Both aim at stable supply of oil.  The former is
an investigation research of the offshore oilfield de velopment technologies.  The latter is a fundamental
and creative research and development of offshore oil system which has been notified the name of
"Industrial Science and Technology Frontier Programme (ISTF)".
QI – 30 Radioactive waste disposal
The special account budget for "Contracts for experimental and research expenses of
survey on criteria of radioactive waste disposal  etc. (Hoshasei-haikibutsi-shrikijun-chosatoh-G/SCM/Q2/JPN/26
Page 6
itakuhi)" was ¥2,651 million for FY 1997 and ¥2,936 million for FY 1998.  The notified settlement
of accounts was ¥1,924 million for 1997.  Does the budget include some other expenses?
Reply
See below:
A breakdown for FY 1997
(Unit:  million yen)
Budget Settlement of accounts
ANRE  2,073 1,924 (notified)STA    577   690
TOTAL  2,651 2,614
QI – 37 Subsidy for Overseas Coal Development Feasibility Survey
The special account budget for "Subsidies for overseas coal development feasibility survey
was ¥103 million annually for FY 1997 and 1998 (for FY 1998, ¥165 million in total which includes
¥61 million from other financial sources).  The notified settlement of accounts was ¥22.0 million
for FY 1997.  Does the budget include some other expenses?
Reply
No, the budget does  not include any other expe nses.  The budget of this programme for FY
1997 and 1998 (¥103 million) the EC point ed out is account by budget, while the amount of notification
is the settlement accounts.
The settlement of accounts (FY 1997) was ¥22 million because only one project was actually
carried out in FY 1997.
The amounts of ¥165 million is the total budget account FY 1998 and ¥61 million is from
private companies themselves.
QI – 41, 44 Subsidy for the Drilling Cost of Ex ploratory Well for a Geothermal Power Plant
Notified subsidy budget under No. 41 for 1996-1998 was zero and the duration of the
subsidy is FY 1992-1997.  Was this item reclassified to No. 44(ii) from FY 1998?
Reply
No.  This programme (No. 41 programme) a nd "Geothermal Energy Programmes" (No. 44
programme) the EC pointed out ar e different, so No. 41 Programme is not reclassified to No. 44
Programme.
QI – 43 Committee Verification Tests for the Coal Fired Power Generation
The total notified budget for FY 1998 is ¥2.6 billion, whereas the budget under "Contract
for verification tests for the coal fired power generation (sekitan-karyokuhatsuden-jisshoshikento-
itakuhi) is ¥3.1 billion.  What does ¥3.1 billion incl ude other than the notified subsidy amount?
Also, the notification No. 11 of the List B (of 23 Sept ember) is exactly the same as this notification.
Are they not duplicated?G/SCM/Q2/JPN/26
Page 7
Reply
"Committee Verification Tests for the Coal Fire d Power Generation" which the EC pointed out
consists of five sub-programmes.  The total budget for FY 1998 is ¥3.1 billion.
Three sub-programmes (total of the three s ub-programmes is ¥2.6 billion) have been notified
under the name of "Committee Verification Tests for the Coal Fired Power Generation".  The other two
sub-programmes are not notified because they are cont ract research of MITI, and provide no financial
contribution to the industry.
Also, No. 11 of the List B is  duplication of this programme as the EC pointed out.
QI – 47, 48 Subsidy for Development of Fuel Cells Power Generation – Verification tests for
establishment of the next generation dispersed power supply system.  Subsidy for
Development of Fuel Cells Power Generation – Development of Fuel Cell Power
Generation Technol ogy Urban Energy Centre)
The budget for FY 1998 is notified to be zero  but there exists a NE DO appropriate project
budget of ¥350 million.  Should this amount not be notified?
Reply
The proper title of a NEDO appropriate project as the EC pointed out is "Subsidy for high
priority field testing of high-efficiency ener gy system" which is different from "Subsidy for
development of fuel cells power generation".
This programme (Subsidy for high priority fiel d testing of high-efficiency energy system) is
included in "Subsidy for promotion of facilities fo r the rationalization of the energy use", which will be
notified to WTO.
QI – B 2 Subsidy for Research and Development of House Technology Creating Life Values
The total general accounts budget and special account budget for "House Technology
Creating Life Value Project" for FY 1998 is ¥1,500 million.  Why was the settlement account for
FY 1997 ¥150 million?
Reply
"Subsidy for Research and Development of H ouse Technology Creating Life Values" which is
notified in G/SCM/N/38/JPN/Suppl .1 is a sub-programme of "House Technology Creating Life Value
Project" as the EC pointed out, so the former programme and the latter programme are different.
The FY 1998 budget of the "House Technology Cr eating Life Values Project" is ¥1,377 million.
The settlement account for the "Subsidy for Research and Development of House Technology
Creating Life Values" is ¥150 million, the same as its account budget.
Japan is preparing to notify the "House Technol ogy Creating Life Values Project" in its 1999
notification.G/SCM/Q2/JPN/26
Page 8
QI – B 16 Subsidy for Restructuring the Retailing Business of Petroleum Products
The special account budget for the "Subsidy for structural improvement of the petroleum
product sales industry (sekiyu-seihin-hanbaigyo-kozoukaizen-taisaku-jigyohi-hojokin) was
¥21,073 million for FY 1997 and ¥15,388 million for FY 1998 (¥25,095 million in total for FY 1998includes ¥9,706 million from other financial sources).  Does this budget line include expenses other
than the notified settlement account ¥1,709 million for FY 1996)?
Reply
No, it doesn't.  The budget of this programme for FY 1997 and 1998 which is pointed out by the
EC is account by budget, while the amount of notific ation is the settlement accounts.  The settlement of
accounts (FY 1997) was ¥11,517 million.
The ¥25,095 million is the total budget accounts for FY 1998 and ¥9,706 million is from private
companies themselves.
QI – B 17 Subsidy for Ensuring Petroleum Products Quality
The special account budget for the "Subsidy for ensuring petroleum products quality
(sekiyu-seihin-hin shitsukakuho-jigyohi-hojokin)" was ¥4,012 million for FY 1997 and
¥3,557 million for FY 1998 (¥3,583 million includes ¥26 million from other financial sources.  Doesthe budget include expenses other th an the notified ¥2,299 million for FY 1997?
Reply
No, it doesn't.  The budget of this programme for FY 1997 and 1998 which is pointed out by the
EC is account by budget, while the amount of notification is the settlement accounts.
The settlement of accounts (FY 1997) was ¥2,299 million.  The ¥3,583 million is the total
budget accounts for FY 1998 and ¥26 million is from private companies themselves.
II. PROGRAMMES NOT NOTIFIED TO THE WTO
QII – 11 Subsidy to the cost for establishi ng uranium enrichment technology (Uran
Noshyuku Gijyutsu Kakuritsu-hi Hojyo-kin)
Reply
1. Title of the subsidy programme
Subsidy for research and development of AV LIS technology (AVLIS:  Atomic Vapour Laser
Isotopic Separation).
2. Period covered by the notification
January 1995 – March 1999.
3. Policy objective and/or purpose of the subsidy
Research and developmen t of AVLIS technology.G/SCM/Q2/JPN/26
Page 9
4. Background and authority for the subsidy
Ministry of International Trade and Industry.
5. Legislation under which it is granted
Assistance by budget.
6. Form of the subsidy (i.e. grant, loan, tax concession, etc.)
Grant.
7. To whom and how the subsidy is provided
LASER-J:  Laser Atomic Separation Engineering Research Association of Japan.
8. Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount
budgeted for that subsidy
1995 FY ¥2,990 million (settlement of account)
1996 FY ¥2,856 million (settlement of account)
1997 FY ¥2,905 million (settlement of account)1998 FY ¥2,836 million (budget)
9. Duration of a subsidy and/or any other timelimits attached to it
FY 1987~FY 1998.
10. Statistical data permitting an assessment of the trade effects of a subsidy1
N.A.  The programme has no effects on trade because its purpose is R&D.
QII – 12 Subsidy to the special measures concerning credit insurance for machinery
(Kikairui Shinyo Tokurei Hoken Hokyu-kin)
Reply
The policy objective of this programme is to promote creative business (such as venture
enterprises) by subsidizing a portion of insu rance premium exceeding general insurance rate.
This programme is eligible to all the producers as defined in the law (Temporary Law
Concerning Measures for the Promotion of the Creative Business Activities of Small and Medium
Enterprises) and not limited to creation of industries or enterprises.  Therefore the programme is not
notified.
Standard to qualify for an enterprise of individual as a small and medium enterprise based
upon the law:
                                                     
1 Statistics of production, consumption, imports and exports:
(i)    for the three most recent years for which statistics are available;
(ii)  for a previous representative year, which, where possible and meaningful, should be the latest
period preceding the introduction of the subsidy or preceding the last major change in the subsidy.G/SCM/Q2/JPN/26
Page 10
Industrial sector of main business Size of capital (total
capital or total amount of
investment)Number of
employees (number
of regular
employees)
Manufacturing, transport sectors etc. (excluding the sectors
below)Less than  ¥100,000,000 Less than 300
Manufacturing of ceramic table ware, kitchenware
or tiles
Manufacturing of rubber products (tyres & tubes for
automobiles and airplanes, and belt for industrial use
excluded)Less than ¥100,000,000 Less than 900
Dyeing, processing of textiles Less than ¥100,000,000 Less than 600
Manufacturing of elongated copper products Less than ¥100,000,000 Less than 500
Mining Less than ¥100,000,000 Less than 1,000
Retailing Less than ¥10,000,000 Less than 50
Service industry (excluding the two industries below) Less than ¥10,000,000 Less than 50
Information processing services
SoftwareLess than ¥100,000,000 Less than 300
Wholesale Less than ¥30,000,000 Less than 100
Note: Owners, officers and temporary employ ees are not included in regular employees.
QII – 13 Subsidy to the cost of measures of stockpiling rare metals (Kisho Kinzoku Bichiku
Taisaku-hi Hojyokin
Reply
The policy objective of this programme is stockpiling rare metals implemented by the Metal
Mining Agency of Japan.
This programme is not notified because financial transfer remains within public sectors, from
MITI to a public body called Metal Mining Agency of Japan, not transferred to private sectors.
QII – 14 Subsidy to the cost for promoting improvement of R&D facility (Kenkyu
Kaihatsu Shisetsu Seibi Sokushin-hi Hojyo-kin)
Reply
This programme was provision of the infrastructure for R&D through Industry-Academia-
Government Collaborations by local governments etc. in FY 1997.  So this is not notified because
financial transfer remains within public sectors, from MITI to them, not transferred to private sectors.
QII – 15 Commission fees for R&D works – alcohol (Kenkyu Kaihatsu Chousa Itaku-hi –
alcohol)
Reply
The proper title of this programme is "Commission for research and development of ethyl
alcohol".G/SCM/Q2/JPN/26
Page 11
The policy objective of this programme is research and development for ethyl alcohol and
other related fields.  This programme is not notified because it is a commission research of MITI and
therefore provides no financial contribution to the industry.
QII – 16 Subsidy to the cost of projects for improving/strengthening underground
structure (Konai Kokkaku Kozo Setsubi Kakujyu Jigyo-hi Hojyo-kin)
Reply
The policy objective of this programme is to assist to make tunnels for a coal mine.  This
programme has already been notified under the name  of "Support to Structural Adjustment of the
Coal Mining Industry" (see  G/SCM/N/38/JPN (17.08.98)).
QII – 17 Commission fees concerning research for development of mineral resources
searching technology (Kobutsu Shigen Tansa Gijyutsu Kaihatsu To Chosa
Itaku-hi)
Reply
The proper title of this programme is "Contract for technology development of mineral
resource exploration".
The policy objective of this programme is to develop more efficient technology for the
exploration of mineral resources.  The programme has already been notified under the name of
"Contract for technology development of mineral resource exploration" (see G/SCM/N/38/JPN
(17.08.98)).
QII – 18 Interest subsidy for local bonds for financing projects to promote development
of coal mining areas (Santan Chiiki Shinko Jigyosai Choseibun Rishi Hokyu-
kin)
Reply
The policy objective of this programme is to subsidize the interest rate of local bonds for
financing projects to promote deve lopment of coal mining areas.
This programme is not notified because financial transfer remains within public sectors, from
MITI to local government, not transferred to private sectors.
QII – 19 Subsidy to the cost of projects for improving refining technology of oil producing
countries and for related purposes (Sanyukoku Sekiyu Seisei Gijyutsu To
Taisaku-hi Hojyokin)
1. Title of the subsidy programme
Subsidy to the cost of projects for improving refining technology of oil producing countries
and for related purposes.
2. Period covered by the notification
January 1995 – March 1999.G/SCM/Q2/JPN/26
Page 12
3. Policy objective and/or purpose of the subsidy
Implementation of interchanging with experts and information and cooperative R&D for
technologies related to the oil industry between Japan and oil producing countries also study of
investment towards those countries from Japan.
4. Background and authority for the subsidy
The Ministry of International Trade and Industry.
5. Legislation under which it is granted
Assistance by budget.
6. Form of the subsidy (i.e. grant, loan, tax concession, etc.)
Grant.
7. To whom and how the subsidy is provided
- Japan Cooperation Centre Petroleum
- Petroleum Energy Centre- Japan Cooperation Centre for the Middle East
- Information Centre for Petroleum Exploration and Production
8. Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount
budgeted for that subsidy
1995 FY ¥2,706 million (settlement of account)
1996 FY ¥3,630 million (settlement of account)
1997 FY ¥2,602 million (settlement of account)
9. Duration of a subsidy and/or any other time limits attached to it
The programme started in April 1981, and no time-limit is attached to it.
10. Statistical data permitting an assessment of the trade effects of a subsidy1
1994 FY 1995 FY 1996 FY
Production 225,729 223,931 221,614
Import 32,935 37,811 39,523
Consumption 239,312 245,411 245,282
Export 17,201 17,589 13,743
                                                     
1 Statistics of production, consumption, imports and exports:
(i)    for the three most recent years for which statistics are available;
(ii)  for a previous representative year, which, where possible and meaningful, should be the latest
period preceding the introduction of the subsidy or preceding the last major change in the subsidy.G/SCM/Q2/JPN/26
Page 13
QII – 20 Commission fees concerning development of information processing technology
(Jyoho Shori System Kaihatsu To Itaku-hi)
Reply
The policy objective of this programme is to develop information processing technology.
This programme is not notified because it is a contract research of MITI and therefore provides no
financial contribution to the industry.
QII – 21 Subsidy to technological development cost for the creation of new industries
(Shinki Sangyo Sozo Gijyutsu Kaihatsu-hi Hojyo-Kin)
Reply
The policy objective is to support research which involves a large risk implemented by a private
enterprise.
The programme is available to all the sectors to meet the policy objective.  Therefore this
programme is not notified.
QII – 22 Commission fees concerning R&D for new fuel oil (Shin Nenryo-yu Kenkyu
Kaihatsu Chosa Itaku-hi)
Reply
The policy objective of this programme is study of feasibility to introduce and expand methanol
fuel as new vehicular fuel in Japan.
This programme is not notified because it is a contract research of MITI.  Therefore, it provides
no financial contribution to the industry.
QII – 23 Grant for the assistance to the stab ilization of the coal mining industry (Sekitan
Kogyo Antei Hokyu Kofu-kin)
Reply
The policy objective of this programme is to assist coal mining production while they are
downsizing production.
This programme has already been notified under the name of "Support to Structural Adjustment
of Coal Mining Industry"  (see G/SCM/N/38/JPN (17.08.98)).
QII – 24 Grant for National Oil Co rporation (Sekiyu Kodan Kofu-kin)
Reply
The policy objective of this programme is to ensure  a stable supply of oil, through securing oil
stockpiles and promoting exploration and developm ent of oil and natural gas resources by Japan
National Oil Corporation.
This programme is not notified because financia l transfer remains within public sectors, from
MITI to a public body called "Japan National Oil Corporation", not transferred to public sectors.G/SCM/Q2/JPN/26
Page 14
QII – 25 Subsidy to technological development cost for oil mining (Sekiyu shigen Saikutsu
To Gijutsu Kaihatsu-hi Hojyo-kin)
Reply
This programme is a sub-programme of Industrial Science and Technology Frontier Programme
(ISTF) (see G/SCM/N/38/JPN (17.08.98)).
QII – 26 Subsidy to the cost of projects for the rationalization of oil refining (Sekiyu Seisei
Gorika Taisaku Ji gyohi To Hojyo-kin)
Reply
"Subsidy for the Rationalization of Petroleum Re finery (Sekiyu Seisei Gorika Taisaku Jigyohi
To Hojyo-kin)" which the EC pointed out is consti tuted by five sub-programmes.  One of the sub-
programmes has already been notified under the name  of "Subsidy for the Rationalization of Petroleum
Refinery (Sekiyu Seisei Gorika Taisaku Ji gyohi Hojyo-kin)" (see G/SCM/N/38/JP N of 1998).
We will notify "Subsidy for the Rationalization of Petroleum Refinery (Sekiyu Seisei Gorika
Taisaku Jigyohi To Hojyo-kin)" which includes all five sub-programmes (see below).
1. Title of the subsidy programme
Subsidy for the Rationalization of Petroleum Refinery.
2. Period covered by the notification
March 1998 – March 1999.
3. Policy objective and/or purpose of the subsidy
To assist the expenditure of the enhancement and the diversification of technology related oil
industry (such as the rationalization of refineries).
4. Background and authority for the subsidy
Ministry of International Trade and Industry.
5. Legislation under which it is granted
Assistance by budget.
6. Form of the subsidy (i.e. grant, loan, tax concession, etc.)
Grant (including the interest rate subsidy).
7. To whom and how the subsidy is provided
The New Energy and Industrial Technology De velopment Organization (NEDO), other public
corporations and private companies which conduct the business.G/SCM/Q2/JPN/26
Page 15
8. Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount
budgeted for that subsidy
1996 FY (budget) ¥6,896 million
1997 FY (budget) ¥6,978 million1998 FY (budget) ¥6,665 million
9. Duration of a subsidy and/or any other time limits attached to it
The subsidy was started in April 1986, and there is no time-limit attached to it.
10. Statistical data permitting an assessment of the trade effects of a subsidy1
(1,000 kl)
1994 FY 1995 FY 1996 FY 1997 FY
Production 225,729 223,931 221,614 229,183
Import 32,935 37,811 39,523 33,157
Consumption 239,312 245,411 245,288 243,223
Export 17,201 17,589 13,743 19,167
QII – 27 Commission fees concerning research fo r the revitalization of the textile industry
(Senisangyo Kasseika Taisaku Chosa Itaku-hi)
Reply
The policy objective of this programme is to en courage a creation power in fashion industries
which make a proposal of lifestyle for the consumer and establish market-oriented designing,
manufacturing and distributi on systems in Japan, implemented by the private body.
This programme is not notified because it is a contract research of MITI, therefore it provides
no financial contribution to the industry.
QII – 28 Interest subsidy to loans related to oil storage facility (Sekiyu Chozo Sinsetsu
Yushi Rishi Hokyu-kin)
Reply
The proper title of this programme is "Subsidy for loans to construction of petroleum storage
facilities".
The policy objective of this programme is to ensure a stable supply of oil by taking measures to
secure oil stockpiles.  This subsidy is provided  to Japan Development Bank, Okinawa Development
Finance Corporation and Japan National Oil Corp oration, which loans funds for construction of
petroleum storage facilities in low in terest to oil companie s.  This programme has already been notified
under the name of "Subsidy for loans to construction of petroleum storage facilities" (see
G/SCM/N/38/JP N/Suppl.1).
                                                     
1 Statistics of production, consumption, imports and exports:
(i)    for the three most recent years for which statistics are available;
(ii)  for a previous representative year, which, where possible and meaningful, should be the latest
period preceding the introduction of the subsidy or preceding the last major change in the subsidy.G/SCM/Q2/JPN/26
Page 16
QII – 29 Subsidy to technological development cost for solar energy and other systems
(Taiyo Energy To Gijyutsu  Kaihatsu-hi Hojyo-kin)
1. Title of the subsidy programme
Subsidy for Technology Development of Solar Power Generation etc.
2. Period covered by the notification
January 1995 – March 1999.
3. Policy objective and/or purpose of the subsidy
To assist the promotion for technology development of the new energy which can efficiently
utilize the resource (such as solar power generation).
4. Background and authority for the subsidy
The Ministry of International Trade and Industry.
5. Legislation under which it is granted
Assistance by budget.
6. Form of the subsidy (i.e. grant, loan, tax concession, etc.)
Grant.
7. To whom and how the subsidy is provided
New Energy and Industrial Technolo gy Development Organization (NEDO)
8. Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount
budgeted for that subsidy
Fiscal Year 1996 ¥41,040 million
Fiscal Year 1997 ¥41,254 million
Fiscal Year 1998 ¥36,965 million
9. Duration of a subsidy and/or any other time limits attached to it
It depends on each sub-programme.  (The programme itself started in April 1981, and no
specific time-limit exists at the moment.)G/SCM/Q2/JPN/26
Page 17
10. Statistical data permitting an assessment of the trade effects of a subsidy1
N.A.  This programme is included in the "Subsidy for Technology Development of High
Efficiency Gas Turbine" and "Subsidy for Development of Load Levelling Technology" which were
notified in 1998.
QII – 30 Subsidy to the cost of projects for the activation of regional industrial capacity
(Chiiki Sangyo Shuseki Kasseika Taisaku Jigyo-hi Hojyo-kin)
Reply
The policy objective of this programme is to maintain and develop agglomeration of regional
industries, and this programme supports public sectors to equip machines and tools for study, for
information communication and processing, and so on.
This programme is not notified because financial transfer remains within public sectors, from
MITI to local government, non-profit organization established by local government, not transferred toprivate sectors.
QII – 31 Subsidy to the facility cost for the activation of regional industrial capacity
(Chiiki sangyo Shuseki Kasseka Taisaku Shisetsu-hi Hojyo-kin)
Reply
The policy objective of this programme is to maintain and develop agglomeration of regional
industries and this programme supports public sectors to build facilities for study, information
communication, and so on.
This programme is not notified because financial transfer remains within public sectors, from
MITI to local government, non-profit organization established by local government, not transferred to
private sectors.
QII – 32 Subsidy to the cost of projects for promoting the development of regional leather
industries (Chiho Hikaku Sangyo Shinko Taisaku Jigyo-hi Hojyo-kin)
Reply
Japan has submitted notification of this programme under the name of "Subsidy for the
Leather and Leather Goods Industries" (see G/SCM/N/38/JPN of 17 August 1998).
In other words, this programme indicated by the EC constituted one part of the notified
subsidy programme until FY 1997, while the notified subsidy programme has been divided into two
parts, a subsidy programme for local government (the said subsidy programme) and one for non-profit
associations.  See the answer to Question I – 16.
                                                     
1 Statistics of production, consumption, imports and exports:
(i)    for the three most recent years for which statistics are available;
(ii)  for a previous representative year, which, where possible and meaningful, should be the latest
period preceding the introduction of the subsidy or preceding the last major change in the subsidy.G/SCM/Q2/JPN/26
Page 18
QII – 33 Subsidy for facility modernization of SMEs (Chusho Kigyo Setsubi Kindaika
Hojyokin)
Reply
The proper title of this programme is "Subsidy of modernization of facilities for medium and
small sized businesses".  The object of this programme is to modernize equipment (such as
machinery) of small-scale enterprises.
This programme is available to all the small medium-scale enterprises as defined in the Law
on Financial and Other Assistance for Small Business Modernization.  Therefore, this programme is
not notified.
The definition of SMEs is as follows:
Industries Employees and capital size
Manufacturing and other industries 300 or less employees, or ¥100 million or less
Mining 1,000 or less employees, or ¥100 million or less
Wholesale 100 or less employees, or ¥30 million or less
Retail and service 50 or less employees, or ¥10 million or less
QII – 34 Commission fees concerning projects to improve intellectual infrastructure of
SMEs (Chusho Kigyo Chiteki Ki ban Seibi Jigyo To Itaku-hi)
Reply
The policy objective of this programme is provis ion of the technological infrastructure for the
comprehensive chemical safety management etc.  This programme is not notified because it is done as a
contract research of MITI and therefore prov ides no financial contribution to the industry.
QII – 35 Commissions fees concerning research  works for the promotion of the leather
industry (Hikaku Sangyo Shinko Taisaku Chosa To Itakuhi)
Reply
This programme is not notified because it is a MITI's task which includes research on the actual
condition of the leather and leather goods industrie s in order for the Government to obtain necessary
information to plan its policy on the related industries and thus does not confer the benefit to any
industries or products.  This research work is not conducted by MITI itself, while it is implementedthrough the private sector to which MITI entrusts.
QII – 36 Subsidy to the training cost for the tortoiseshell industry (Bekko Sangyo Shido
Jigyo-hi Hojyo-kin)
Reply
Japan has submitted notification of this subsidy programme under the name of "Subsidy for
Bekko and Ivory Industries" (see G/ SCM/N/38/JPN of  17 August 1998).
In other words, this subsidy programme indicated  by the EC constituted one part of the notified
subsidy programme until FY 1997, while the notified subsidy programme was divided into two parts, a
subsidy programme for local government (the said subsidy programme) and one for non-profitG/SCM/Q2/JPN/26
Page 19
associations.  See the answer to Question I – 17.  However, the said subsidy programme was
subsequently abolished in FY 1998.
QII – 37 Subsidy to R&D cost for rationalization of energy of use and for other purposes
(Energy Shiyo Gorika Gijyutu Kaihatsu Ho To Hojyo-kin)
Reply
1. Title of the subsidy programme
Subsidy for Technology Development of Rationalization of Energy Use.
2. Period covered by the notification
January 1995 – March 1999.
3. Policy objective and/or purpose of the subsidy
To assist the technology development for the rationalization of the energy use (such as
Synergy Ceramics).
4. Background and authority for the subsidy
The Ministry of International Trade and Industry.
5. Legislation under which it is granted
Assistance by budget.
6. Form of the subsidy (i.e. grant, loan, tax concession, etc.)
Grants.
7. To whom and how the subsidy is provided
New Energy and Industrial Technology De velopment Organization (NEDO) etc.
8. Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount
budgeted for that subsidy
Fiscal Year 1996 ¥35,330 million
Fiscal Year 1997 ¥45,668 million
Fiscal Year 1998 ¥51,542 million
9. Duration of a subsidy and/or any other time limits attached to it
It depends on each sub-programme.  (The programme itself started in April 1986, and no
specific time-limit exists at the moment.)G/SCM/Q2/JPN/26
Page 20
10. Statistical data permitting an assessment of the trade effects of a subsidy1
N.A.
QII – 38 Commission fees for development/study etc. of energy use rationalization system
(Energy Shinyo Gorika System Kaihatsu Chos To Itakuhi)
1. Title of the subsidy programme
Contract for Technology and System Development for Rationalization of Energy Use.
2. Period covered by the notification
January 1995 – March 1999.
3. Policy objective and/or purpose of the subsidy
Pushing the technology and system development for the rationalization of the energy use.
4. Background and authority for the subsidy
The Ministry of International Trade and Industry.
5. Legislation under which it is granted
Assistance by budget.
6. Form of the subsidy (i.e. grant, loan, tax concession, etc.)
Contract.
7. To whom and how the subsidy is provided
Enterprises and/or non-profit organizations which have ability to carry out R&D projects.
8. Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount
budgeted for that subsidy
Fiscal Year 1996 ¥4,473 million
Fiscal Year 1997 ¥5,692 million
Fiscal Year 1998 ¥7,533 million
9. Duration of a subsidy and/or any other time limits attached to it
It depends on each sub-programme.  (The programme itself started in April 1989, and no
specific time-limit exists at the moment.)
                                                     
1 Statistics of production, consumption, imports and exports:
(i)    for the three most recent years for which statistics are available;
(ii)  for a previous representative year, which, where possible and meaningful, should be the latest
period preceding the introduction of the subsidy or preceding the last major change in the subsidy.G/SCM/Q2/JPN/26
Page 21
10. Statistical data permitting an assessment of the trade effects of a subsidy1
N.A.
QII – 39 Subsidy to the cost of measures for promoting introduction of energy use
rationalization facility etc. (Energy Shiyo Gorika Setsubi To Donyu Sokushin
Taisaku-hi Hojyo-kin)
1. Title of the subsidy programme
Subsidy for promotion of facilities for the rationalization of the energy use.
2. Period covered by the notification
January 1995 – March 1999.
3. Policy objective and/or purpose of the subsidy
To assist the expenditure of facilities, introduction for the rationalization of the energy use
(such as subsidy for the unused energy use district heating and cooling, etc.)
4. Background and authority for the subsidy
The Ministry of International Trade and Industry.
5. Legislation under which it is granted
Assistance by budget.
6. Form of the subsidy (i.e. grant, loan, tax concession, etc.)
Grants.
7. To whom and how the subsidy is provided
New Energy and Industrial Technology Devel opment Organization (NEDO) and private
company, etc.
8. Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount
budgeted for that subsidy
Fiscal Year 1996 ¥13,245 million
Fiscal Year 1997 ¥12,103 million
Fiscal Year 1998 ¥27,178 million
                                                     
1 Statistics of production, consumption, imports and exports:
(i)    for the three most recent years for which statistics are available;
(ii)  for a previous representative year, which, where possible and meaningful, should be the latest
period preceding the introduction of the subsidy or preceding the last major change in the subsidy.G/SCM/Q2/JPN/26
Page 22
9. Duration of a subsidy and/or any other time limits attached to it
It depends on each sub-programme.  (The programme itself started in April 1989, and no
specific time-limit exists at the moment.)
10. Statistical data permitting an assessment of the trade effects of a subsidy1
N.A.
QII – 40 Interest subsidy to the fund for spec ial facility for energy-use rationalization
(Energy Shiyo Gorika Tokutei Setsubi To Shikin Rishi Hokyukin)
Reply
This system is a supply of an interest from th e Government to the enterprises that introduce
energy equipment and so on, to give loan advantage for the investment.
This programme is not notified because it is available for all the industrial sectors  to introduce
certain equipment (such as advanced gas separator, co mbined cycle gas turbine, high efficiency olefine
plant).  In addition, there exists an objective criteria governing the eligibility for a subsidy.
QII – 41 Grant to NEDO for enhancing supply-demand structure (NEDO Kofukin-Jyukyu
Kozo Kodoka)
Reply
A grant to NEDO is allocated for NEDO's personnel and management expenses and expenses
for smoothly promoting the developm ent of oil-alternative energy.
The former expenses (NEDO's personnel and management expenses) are not notified because
financial transfer basically rema ins within public sectors, from MITI to a public body (NEDO), not
transferred to private sectors.
Concerning the latter expenses (expenses for th e development of oil-alternative energy), there
also exists financial transfer from NEDO to private s ectors.  However, it is a contract research of NEDO
and therefore provides no financ ial contribution to the industry.
QII – 42 Grant to NEDO for diversification of electric sources (NEDO Kofukin-Dengen
Tayoka)
Reply
A grant to NEDO is allocated for NEDO's personnel and management expenses and expenses
for smoothly promoting the developm ent of oil-alternative energy.
The former expenses (NEDO's personnel and management expenses) are not notified because
financial transfer basically rema ins within public sectors, from MITI to a public body (NEDO), not
transferred to private sectors.
                                                     
1 Statistics of production, consumption, imports and exports:
(i)    for the three most recent years for which statistics are available;
(ii)  for a previous representative year, which, where possible and meaningful, should be the latest
period preceding the introduction of the subsidy or preceding the last major change in the subsidy.G/SCM/Q2/JPN/26
Page 23
Concerning the latter expenses (expenses for th e development of oil-alternative energy), there
also exists financial transfer from NEDO to private s ectors.  However, it is a contract research of NEDO
and therefore provides no financ ial contribution to the industry.
QII – 43 Grant on administrative expenses  of NEDO (NEDO jimu-hi To Kofu-kin)
Reply
The policy objective of this programme is to recover coal mine damage implemented by NEDO.
This programme is not notified because financial tr ansfer remains within public sectors, from MITI to
NEDO.
QII – 44 Subsidy to NEDO (NEDO Hojyo-kin)
Reply
This programme is a subsidy for a public body, NEDO.  This subsidy provides for personnel
expenses, general expenses and expenses for collectin g information, publicizing etc. in order to promote
industrial technology research and development smoot hly.  So this programme is not notified because
financial transfer remains within  public sectors, from MITI to public body (NEDO), not transferred to
private sectors.
QII – 45 Interest subsidy to NEDO loans for financing supply-demand stabilization (NEDO
Jyukyu Anteika Yushi Rishi Hojyo-kin)
Reply
This programme was to subsidize the New Energy and Industrial Technology Development
Organization (NEDO) in order to carry out the smoot h promotion of Japan's future energy security in
coal supply, but this programme has already finished in FY 1997.
QII – 46 . Subsidy to technological improvement expenses related to alternative energy for
petroleum (Sekiyu Daitai Ener gy To Gijyutsu-hi Hojyo-kin)
1. Title of the subsidy programme
Subsidy for Technology Development of Oil-Alternative Energy.
2. Period covered by the notification
January 1995 – March 1999.
3. Policy objective and/or purpose of the subsidy
To promote the development and technology of oil-alternative energy.
4. Background and authority for the subsidy
The Ministry of International Trade and Industry.G/SCM/Q2/JPN/26
Page 24
5. Legislation under which it is granted
Assistance by budget.
6. Form of the subsidy (i.e. grant, loan, tax concession, etc.)
Grant.
7. To whom and how the subsidy is provided
New Energy and Industrial Technology Devel opment Organization (NEDO) and Petroleum
Energy Centre (PEC) etc.
8. Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount
budgeted for that subsidy
Fiscal Year 1996 ¥29,320 million
Fiscal Year 1997 ¥27,288 million
Fiscal Year 1998 ¥25,620 million
9. Duration of a subsidy and/or any other time limits attached to it
It depends on each sub-programme.  (The programme itself started in April 1980, and no
specific time-limit exists at the moment.)
10. Statistical data permitting an assessment of the trade effects of a subsidy1
N.A.
QII – 47 Subsidy to technological improvement expenses related to alternative energy for
petroleum (Sekiyu Daitai Energy To Gijyutsu Kaizen-hi Hojyo-kin)
Reply
The policy objective of the programme is to  develop the technology of the petroleum
substantive energy and the energy use rationalization by a public body called Japan Small Business
Corporation.
This programme is not notified because financ ial transfer basically remains within public
sectors, from MITI to Japan Small Business Co rporation, and therefore provides no financial
contribution to the industry.
QII – 48 Interest subsidy on loans for financing special facility related to alternative energy
for petroleum (Sekiyu Daitai Energy Tokutei Setsubi To Shikin Rishi Hokyu-kin)
1. Title of the subsidy programme
Subsidy for facilities of oil-alternative energy.
                                                     
1 Statistics of production, consumption, imports and exports:
(i)    for the three most recent years for which statistics are available;
(ii)  for a previous representative year, which, where possible and meaningful, should be the latest
period preceding the introduction of the subsidy or preceding the last major change in the subsidy.G/SCM/Q2/JPN/26
Page 25
2. Period covered by the notification
January 1995 – March 1999.
3. Policy objective and/or purpose of the subsidy
To promote the introduction of the facilities for oil-alternative energy.
4. Background and authority for the subsidy
The Ministry of International Trade and Industry.
5. Legislation under which it is granted
Assistance by budget.
6. Form of the subsidy (i.e. grant, loan, tax concession, etc.)
Interest rate subsidy.
7. To whom and how the subsidy is provided
The subsidy is provided to owners who install the facilities by the Japan Development Bank
etc.
8. Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount
budgeted for that subsidy
Fiscal Year 1996 ¥875 million
Fiscal Year 1997 ¥808 million
Fiscal Year 1998 ¥682 million
9. Duration of a subsidy and/or any other time limits attached to it
It depends on each sub-programme.  (The programme itself started in April 1980, and no
specific time-limit exists at the moment.)
10. Statistical data permitting an assessment of the trade effects of a subsidy1
N.A.
                                                     
1 Statistics of production, consumption, imports and exports:
(i)    for the three most recent years for which statistics are available;
(ii)  for a previous representative year, which, where possible and meaningful, should be the latest
period preceding the introduction of the subsidy or preceding the last major change in the subsidy.G/SCM/Q2/JPN/26
Page 26
QII – 49 Subsidy to the cost of measures for promoting development/use of regional
energy (Chiiki Energy Kaihatsu Riyo To Sokushin Taisaku-hi Hojyo-kin)
Reply
The programme is not notified.  Because the policy objective of this programme is to promote
the use of regional new energy, it is available for all the industrial sectors as well as local
governments, etc.  In addition, there exists an obje ctive criteria governing the eligibility for a subsidy.
QII – 50 Subsidy to the cost of measures for promoting projects relating to development,
use and power generation of regional energy (Chiiki Energy Kaihatsu Riyo
Hatsuden Jigyo To Sokushin Taisaku-hi Hojyo-kin)
Reply
The programme is not notified.  Because the policy objective of this programme is to promote
exploration and development of the power generation of regional new energy, it is available for all theindustrial sectors as well as local governments, etc.  In addition, there exists an objective criteria
governing the eligibility for a subsidy.
QII – 51 Financial incentives for companies lo cated in foreign access zones under the Law
on Extraordinary Measures for the Promotion of Imports and the Facilitation of
Foreign Direct Investment
Reply
The Law on Extraordinary Measures for the Promotion of Imports and the Facilitation of
Foreign Direct Investment provides the private co mpanies located in the foreign access zones with two
kinds of tax incentives:  accelerated depreciation of their business assets and exemption from
landholding tax.  The law aims to promote Japa nese import of manufactured goods from foreign
countries through concentrating import-related busin ess within the foreign access zones.  In order to
achieve this goal, the tax incentive mentioned above is made available to all manufacturing, wholesale,
retailing and transportation sectors, as far as they satisfy certain requirements set out clearly by the law.
QUESTIONS FROM MEXICO
Q1. (a) With regard to Programme 2, Support for Business Innovation (page 5), what
are the criteria for selection of the sect ors designated eligible for the programme
and under what conditions are they granted loans?
Reply
The term "designated industry" shall refer to an industry in the mining or manufacturing
sector where production and/or employment levels have declined or are expected to decline as a result
of diverse and structural changes in the domestic and international economic environment or industry
in the retail or wholesale as such under the ministerial order.
And a designated enterprise1 that has received approval for business innovation plan from the
competent Minister.
                                                     
1 The term "designated enterprise" shall refer to an enterprise engaged in business activities in the
designated industries.G/SCM/Q2/JPN/26
Page 27
(b) What is this programme's effect on international trade?
Reply
This programme would not cause adverse effects to the interests of other Members.
Q2. What is the nature of the subsidy (contr act) under Programme 5 entitled Real World
Computing (RWC) (page 9)?
Reply
The budget for the RWC programme is not a grant.  The programme is a national undertaking
substituted by the Real World Computing Partnership (RWCP).
Q3. With regard to Programme 16, Subsidy for the Leather and Leather Goods Industries
(page 21), what is the nature of the grant to lo cal government bodies or non-profit associations?
- What are the effects of this programme on  firms in the leather and leather goods
industries?
- How does the programme contribute to improving the competitiveness of
exports?
Reply
1. The aim of the subsidy programme is for fostering sound development of the leather and
leather goods (bags, leather footwear, etc.) industries as a whole.
2. This subsidy programme is for non-profit associations related to leather and leather goods
industries and local governments, but not to any individual enterprise.
3. Eligible activities of this subsidy programme include the collection and distribution of
information related to leather and leather goods industries, the creation of demand for leather productsas a whole and the collection of data related to the chrome-free and chrome-reduced leather tanning
production technologies conducted by the above-mentioned organizations.  Thus the subsidy is used
for objectives that do not directly affect the competitiveness of domestic products or exports.
QUESTIONS FROM THE UNITED STATES
Q2. Under "Subsidy to Promote and Foster New Enterprises of the Research and
Development Type of Knowledge-Intensive Type":
(a) Under which legislation is the subsidy granted?
Reply
No specific legislation exists to provide for this subsidy.
(b) Are the results of the funded enterprises' research made available to all
industries?  Is this grant primarily for producers, exporters, or others?G/SCM/Q2/JPN/26
Page 28
Reply
The subsidy is provided, not to assist compan ies directly, but to form a fund by which the
Venture Enterprise Centre conducts debt guarantee services for companies with plans to develop new
products or services.  The subsidy is dire cted neither to producers nor to exporters.
Q3. Regarding "Support for Business Innovation":
(a) Under what terms is the loan granted?
Reply
A designated enterprise1 that has received approval for business innovation plan from the
competent Minister.
(b) How are the sectors chosen?
Reply
The term "designated industry" shall refer to an  industry in the mining  or manufacturing sector
where production and/or employment levels have declined or are expected to decline as a result of
diverse and structural changes in the domestic a nd international economic environment or industry in
the retail or wholesale as such under the ministerial order.
Q4. Under "The Real World Computing (RWC) Programme":
(a) How does the contract provide the subsid y?  What type of contract is written to
provide aid?  Does the Contract provide fo r tax concessions, grants, loans or other
forms of aid?
Reply
The budget for the RWC programme is not a grant.  The programme is a national undertaking
substituted by the Real World Computing Partnership (RWCP).
(b) Who is a member of the Real World Computing Partnership?  Is this membership
available to every business which wishes to join?
Reply
The Real World Computing partnership (RWCP) consists of private enterprises and non-profit
organizations (see below).  The RWCP is open to  every business, foundation, university, national
research institute, and any other kind of organizati on.  Anyone can join the RWCP through the decision
at the general meeting of the partnership.
Members of the RWCP:
Fujikura Ltd.
Fujitsu Ltd.
The Furukawa Electric Co. Ltd.GMD-German National Research Centre for Information Technology
                                                     
1 The term "designated enterprise" shall refer to an enterprise engaged in business activities in the
designated industries.G/SCM/Q2/JPN/26
Page 29
Hitachi Ltd.
Kent Ridge Digital Labs
Matsushita Research Institute Tokyo Inc.
Mitsubishi Electric Corporation
Mitsubishi Research Institute Inc.NEC Corporation
Nippon Sheet Glass Co. Ltd.
Nippon Telegraph and Telephone Corporation
Oki Electric Industry Co. Ltd.
SANYO Electric Co. Ltd.
Sharp Corporation
Stichting Neurale Netwerken (SNN)Sumitomo Electric Industries Ltd.
Sumitomo Metal Industries Ltd.
Swedish Institute of Computer Science (SICS)
Toshiba Corporation
Q5. In the section, "Subsidy for the Development of Support System for Nuclear Electric
Power Generation":
(a) Under which legislation is the subsidy provided?
Reply
No particular legislation exists to provide for this programme.
(b) Is the subsidy provided to manufactu rers only producing equipment for nuclear
power plants?  Do the manufactu rers also produce other machinery?
Reply
The manufacturers produce not only equipment fo r nuclear power plants but also other
electrical machinery such as generators and motors.
Q6. Under "The Commission about the Resea rch and Development of Next Generation
Aeroplanes", what is meant by "c ontract" as the form of the subsidy?  Please elaborate on how
such contracts are structured and implemented,  and how assistance is provided through them.
Reply
The programme is a contract research of MITI, and therefore provides no financial contribution
to a private company.
This contract research establishes a committee consisting of people of academic studying in the
Society of Japanese Aerospace Companies (SJAC).  furthermore, subcommittees constituted by
specialists under the committee are established, and special investigations such as project investigation,
airplane-body investigation and environment influence investigation are conducted.
Q7. Regarding "The Commission about the Rese arch and Development of Remote Sensing
Technology to be applied to Exploration for Oil Resources":
(a) Under which legislation is the subsidy provided?G/SCM/Q2/JPN/26
Page 30
Reply
No particular legislation exists to provide for this programme.
(b) What is meant by "contract" as the form of the subsidy?
Reply
It is commissioned from MITI to Japan Resour ces Observation System Organization (JAROS)
and Earth Remote Sensing Data  Analysis Centre (ERSDAC).
(c) Is the subsidy provided only to the public sector or the private as well?  If it is
provided to the private sector, how are those receiving funds chosen?
Reply
This subsidy is provided to JAROS and ER SDAC which are foundations approved by the
Minister of International Trade and Industry, and al so to the private sector through the contract with
JAROS and ERSDAC.  JAROS and ERSD AC choose enterprises which have the ability to carry out the
R&D projects of remote sensin g technology as recipients.
Q8. Regarding "The Industrial Science and Technology Frontier Programme", under what
legislation is the subsidy provided?
Reply
No particular legislation exists to provide for this programme.
Q9. Under "Capital Investment and Loan fo r R&D Projects Concerning Key Technology":
(a) Are the applicants required to make kno wn publicly the results of their research?
Reply
A patent is usually granted to the result of the project, therefore the result would be usually
made known publicly through the patent.
(b) Is the Japan Key Technology Centre a public institution?
Reply
Japan Key Technology Centre is an institution approved by the Minister of International Trade
and Industry and the Minister of Posts and Telecommunication based on the Law for the Facilitation of
Research in Key Technology.
(c) Under what terms is a loan made to an applicant?
Reply
The upper limit of the loan is 70 per cent of the total R&D expenditure.  The period for the
R&D is within five years.  The term of repaymen t is within ten years from the completion of the R&D.G/SCM/Q2/JPN/26
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Q10. Regarding "Subsidy for Ex ploration of Underground Non-Ferrous Metal Resources", do
the owners of the mining rights in the studied areas pay for the res ults for their areas?  Are they
able to use these results to profit in the market?
Reply
This subsidy is provided to the Metal Mining Agency of Japan (MMAJ).  MMAJ explores non-
ferrous metal resources, with local government (onl y in the domestic case), and owners of the mining
rights in Japan and owners of the exploration conc ession abroad in the studied areas, bearing a part of
the expenses of exploration.  Those owners are ab le to use these results to profit in the market.
Q11. Under "Subsidy for Exploration of Natural Gas", is the subsidy available to all owners of
natural gas mining rights?
Reply
This programme is eligible to all who own mining rights under the Mining Law and conducts
exploration of natural gas prospects.
Q18. Finally, please explain why the following subsidy programme was not included in your
subsidy notification:
Association of Super-Advanced El ectronics Technologies (ASET)
The Government of Japan has provided a total of ¥15 million by the end of fiscal year
1997 to the Association of Super-Advanced Electroni cs Technologies (ASET).  ASET is an R&D
organization that runs front-edge projects that a re directly financed and supervised by MITI.  It
was reported that a private group of semiconductor makers called Semiconductor Leading Edge
Technologies Inc. (SELETE) took  over a national semiconductor project spearheaded by ASET.
Reply
1. Title of the subsidy programme
Ultra Super-Advanced Electronics Technology Development Programme.
2. Period covered by the notification
April 1996 – March 1999
3. Policy objective and/or purpose of the subsidy
To conduct research and development on ultra-fine processing technology and technologies
for hyper-precision measurement, analysis, control, etc. as well as new functional electronic materials,thereby establishing super-advanced technology of the "next-after-the-next" generation level.
4. Background and authority for the subsidy
The Ministry of International Trade and Industry.
5. Legislation under which it is granted
Assistance by budget.G/SCM/Q2/JPN/26
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6. Form of the subsidy (i.e. grant, loan, tax concession, etc.)
Contract.
7. To whom and how the subsidy is provided
Association of Super-Advanced Electronic Technologies (ASET).
8. Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount
budgeted for that subsidy
Fiscal year 1996 (settlement of accounts) ¥1,000 million
Fiscal year 1997 (settlement of accounts) ¥1,700 million
Fiscal year 1998 (settlement of accounts) ¥7,279 million
9. Duration of a subsidy and/or any other time limits attached to it
Fiscal year 1996 – Fiscal year 2000.
10. Statistical data permitting an assessment of the trade effects of a subsidy1
N.A.
__________
                                                     
1 Statistics of production, consumption, imports and exports:
(i)    for the three most recent years for which statistics are available;
(ii)  for a previous representative year, which, where possible and meaningful, should be the latest
period preceding the introduction of the subsidy or preceding the last major change in the subsidy.