 
  WORLD TRADE  
ORGANIZATION  G/SCM/Q2/AUS/25 
16 March 2004 
 (04-1140) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
Replies to Questions Posed by the EUROPEAN COMMUNITIES1 and the  
UNITED STATES2 Regarding the New and Full Notification of AUSTRALIA3 
 
  The following communication, dated 15 January 2 004, is being circulated at the request of the 
Delegation of Australia.  
_______________ 
 
 
QUESTIONS FROM THE EUROPEAN COMMUNITIES 
  
FEDERAL PROGRAMMES: 
 IV. PASSENGER MOTOR VEHICLES: 
 
Q1. What are the eligible imports for use of the duty credits, and how is the list of these 
eligible imports determined?  
Reply
 
  Under the Automotive Competitiveness and Invest ment Scheme (ACIS), participants receive 
duty credits which can be used to offset customs duty payable on certain eligible automotive imports 
or alternatively, can be sold or otherwise transfe rred.  The items classified as eligible automotive 
imports under ACIS are described in column 2 of Item 41E of Schedule 4 to the Customs Tariff Act 
1995 . 
  The list of eligible automotive imports under Item 41E is drawn from goods classified under 
customs tariff classifications relating to motor ve hicles, automotive components and goods used to 
produce automotive components.  The list does not include:   (a) Amphibious vehicles; 
 (b) Goods classified under subheading 8703.10.00; 
 (c) Goods classified under subheading 8704.10.00; 
 (d) Goods having a gross vehicle weight exceeding 3.5 tonnes;  (e) Used vehicles;  (f) Raw materials; 
                                                     
 
1 G/SCM/Q2/AUS/23 
2 G/SCM/Q2/AUS/24 
3 G/SCM/N/95/AUS G/SCM/Q2/AUS/25 
Page 2  
 
  (g) Goods (for example, paint, steel, cable or carpet) in bulk; 
 (h) A component that must be cut to length or shape; and 
 (i) A component that is not purpose built fo r automotive use (for exam ple, a fastener or 
electrical device in general use). 
 
A full list of the tariff classifications of eligible  automotive imports under Item 41E can be found at 
www.ausindustry.gov.au/acis
. 
 
Q2. For MVPs, what production is eligible for the earning of duty credits? 
 Reply
 
  Motor Vehicle Producers (MVPs) are eligible to earn duty credits for the production of all 
motor vehicles.  
IX. TEXTILE CLOTHING AND FOOTWEAR (TCF) PROGRAMME: 
 
Q1. What is the limit, or the range of limits, on the percentage of eligible expenditure, which 
can be covered by the grants? 
 
Reply
 
 
 The percentages of eligible expenditure for different eligible TCF activities are as follows: 
  (a) Grants in respect of new TCF research and development expenditu re can be made up 
to 20 per cent of eligible expenditure; 
 
 (b) Grants in respect of new TCF plant/bu ilding expenditure can be made up to 45 per 
cent of eligible expenditure; 
  (c) Special grants in respect of second-ha nd TCF plant expenditure can be made up to 
20 per cent of eligible expenditure; and, 
 
 (d) Special miscellaneous grants in respect  of TCF-dependent communities can be made 
up to 20 per cent of eligible expenditure. 
 SUB – FEDERAL PROGRAMMES: 
 
Q1. Why are the budgets for the sub-federal pr ogrammes all aggregated rather than given 
separately for each state?   
 
Reply
 
 
 This is due to the nature of competitiv e bidding between sub-federal governments for 
investment within Australia and the need for the protection of commercial-in-confidence data. 
   G/SCM/Q2/AUS/25 
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 QUESTIONS FROM THE UNITED STATES 
 
I. GENERAL  
Q1. We understand that the Government of Australia currently reimburses hospitals in 
Australia for the purchase of locally-produced bl ood plasma-derived products, as provided for 
in Australia’s Plasma Fractionation Agreement (PFA) with CSL, Limited (Australia’s sole 
producer, importer and exporter of blood pl asma-derived products).  Furthermore, we 
understand that under the PFA, the Government of Australia does not provide the same 
benefits for foreign-produced plasma produc ts.  This programme appears to meet the 
notification requirements as provided in Arti cle 25 of the WTO Agreement on Subsidies and 
Countervailing Duties (SCM Agreement).  Please  explain why this programme has not been 
notified.  If the programme is notifiable , please provide the information required under 
Article 25. 
 Reply
 
 
Australia considers the procurement of blood pl asma products to be government procurement 
and, therefore, does not believe that it would be appropriate for such arrangements to be notified 
under the SCM Agreement.    
 The National Blood Authority is the body r esponsible for managing the national blood supply 
and is authorised to enter into funding and suppl y contracts with bodies involved in the collection, 
production and distribution of products for the purposes of the national supply.  It is incorrect that 
CSL Limited is the sole producer, importer and expor ter of blood and plasma-derived products.  In 
Australia, the National Blood Authority maintains reliance on voluntary, non-remunerated donations 
of whole blood and plasma and provi des products to patients free of charge and based on clinical need 
and appropriate practice.  The National Blood Author ity does not reimburse hospitals in Australia for 
plasma derived products, whether locally manufactur ed or imported.  Where there is a need for 
additional plasma products, they are imported and supplied free of charge to patients.   
 II. DAIRY 
 
Dairy Industry Adjustment Package (DIAP)
 
 
Q1. Please provide further details as to ho w producers in the dairy industry qualify as 
"eligible dairy farmers" under this programme. 
 
Reply  
  Eligible dairy producers were those who had a market milk dependency of more than 25 per 
cent in 1998-99 and were actively involved in a dairy enterprise on 21 May 2001.  
III. PASSENGER MOTOR VEHICLES  
 
Automotive Competitiveness and Investment Scheme (ACIS)
 
 Q1. We understand that where motor vehicle producers (MVPs) produce components, tools 
or services for a third party, the MVP may claim ACIS credits equal to: 
  • 25 per cent of the investment in approved plant and equipment  • 45 per cent of the investment in approved research and development  G/SCM/Q2/AUS/25 
Page 4  
 
  Please explain what qualifies as "approved plant and equipment" and "approved 
research and development" under this programme. 
 
Reply
 
 
 The purpose of ACIS is to provide transitional assistance to encourage competitive 
investment and innovation in the Australian automotive industry in the context of trade liberalisation.  
Australian automotive tariffs are legislated to be reduced from 15 per cent to 10 per cent on 
1 January 2005, with a further reduc tion to 5 per cent on 1 January 2010. 
 
 Section 54 of the ACIS Administration Act 1999  provides the detail on limits applying in 
respect of a cap (5 per cent of sales of ACIS goods and services) on credits a registered participant can receive under the scheme.   There are two aspects to approved plant and equipment or approved research and 
development under ACIS: 
 
(a) firstly, the plant and equipment or resear ch and development must be allowable plant 
and equipment or allowable r esearch and development; and 
 
(b) secondly, the allowable plant and equipmen t or allowable research and development 
is only allowed to a given value - the maxi mum claimable value in respect of that 
plant and equipment or research and development. 
  The plant and equipment or research and de velopment considered as allowable plant and 
equipment or allowable research and developmen t under ACIS, along with the maximum claimable 
value in respect of that plant and equipment or  research and development, is set out in the ACIS 
Administration Regulations 2000 (as amended).  These Regulations can be found at 
www.ausindustry.gov.au/acis
. 
  Noting the regulations provides a list of prohibited plant and equipment; the following are examples of allowable plant and equipment under the Regulations: 
 
(a) plant and equipment for the manufactur e, assembly, design, development or 
engineering of motor vehicles, engines, engine components, automotive components, automotive machine tools or automotive tooling; 
 
(b) plant and equipment directly supporting the manufacture, assembly, design, 
development or engineering of motor ve hicles, engines, engine components, 
automotive components, automotive mach ine tools or automotive tooling;  
 
(c) plant and equipment required to comply with a law of the Commonwealth, a State or 
a Territory directly relating to the manufacture, assembly, design, development or engineering of motor vehicles, engines, engine components, automotive components, 
automotive machine tools or automotive tooling;  
 (d) plant and equipment for the activation of manufacturing processes for the production 
of motor vehicles, engines, engine components, automotive components, automotive 
machine tools or automotive tooling;  
 
(e) plant and equipment facilitating the provision of automotive services or approved 
research and development;   G/SCM/Q2/AUS/25 
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 (f) plant and equipment indirectly supporting f unctions that are integral to the production 
of motor vehicles, engines, engine components, automotive components, automotive machine tools or automotive tooling.  
 
 Eligible research and development activities under the Regulations include the following: 
 
(a) directly related to the design, develo pment, engineering or production of motor 
vehicles, engines, engine components, automotive components, automotive machine 
tools or automotive tooling; and 
 
(b) undertaken for the purpose of: 
 
(i) acquiring new knowledge; or 
 
(ii) creating new or improved materials,  products, devices, production processes 
or services.  
 Sub-para (a) and (b) includes the follo wing research and development activities: 
 
• basic and strategic research;  
• industrial and engineering design;  
• production engineering;  
• development activities relating to the building and testing of prototypes;  
• re-engineering and modification of  existing products and processes; 
• development and installation of purpose-designed systems for: 
 
(i) quality assurance and process control; or  
 
(ii) materials or movement control;   
• testing and modification of new production syst ems (either purpose-built or interchangeable) 
to achieve repeatability with in specified tolerances; 
 
• obtaining industrial property rights, including: 
 
(i) the preparation and lodging of applicati ons and other documents that are required to 
be lodged, in Australia or elsewhere, for th e initial grant or registration of the rights; 
and  
 (ii) the initial grant or registration of the rights, in Australia or elsewhere. 
 
IV. PIG MEAT  
Pigmeat Processing Grants Programme
 
 
Q1. Please provide more information as to the "the specified eligibility criteria" a 
processor’s application must meet to be eligib le for grants under this programme.  Is export 
performance a determinant of eligibility?  
 G/SCM/Q2/AUS/25 
Page 6  
 
 Reply
 
  The $8m programme which terminated on 30 June 2001 was open to Australian-based 
companies, partnerships and individuals, or consorti a of such bodies with the capacity or potential to 
process at least 250,000 pigs per year or to meet in ternational best practice parameters.  Applicants 
had to demonstrate a commitment to enhancing their competitiveness by embarking on significant 
capital investment in pigmeat processing.  Applicants  had to demonstrate they had financial resources 
to capitalise their plans.  Grants of up to 10 per cent of the cost (to a maximum of $500,000 per year 
for up to 3 years) of new project investment were available.  Applicants were assessed on their potential to succeed, the level of innov ation demonstrated and ability to lead the Australian industry.  
Export performance was not a determinant of eligibility. 
 V. SUB-FEDERAL PROGRAMMES - NORTHERN TERRITORY  
Industry and Business Assistance
 
 
Q1. In document G/SCM/Q2/AUS/20 (13 August 2001), Australia replied to the 
United State’s question regarding which indus tries have received assistance from this 
programme by providing a list of industry sectors.   Has this list of sectors substantially changed 
for the reporting period 2001-2003?  If so, please provide an updated list of sectors that have benefited from this programme. 
 
Reply
 
  The list of sectors receiving assistance is the same as listed in G/SCM/Q2/AUS/20, as follows: 
 
• Information Technology 
• Tourism and tourism services 
• Mining and mining services 
• Business services 
• Personal services 
• Forestry 
• Manufacturing and manufacturing services 
• Retail, wholesale and supply  
• Educational 
• Arts and culture 
• Regional development 
• A variety of industry associations. 
  
__________ 
 
 