RESTRICTED
WORLD TRADE G/SCM/Q2/NOR/6
31January 1997
ORGANIZATION(97-0367)
Original: English Committee onSubsidies andCountervailing Measures
SUBSIDIES
Replies toQuestions posed byJAPAN1,KOREA2,ARGENTINA3,POLAND4
andtheUNITED STATES5Regarding theNew
andFullNotification ofNORWAY6
Thefollowing communication, dated 20January 1997, hasbeenreceived fromthePermanent
Mission ofNorway.
_______________
Replies toquestions from Japan
1. TheExport Campaign, theStrategy Programme andtheProgramme forExport Development
inSME
Does Norway consider thatthesubsidies fortrade fairs, market research/surveys, seminars,
training andconsultancy fees,etc.arenotexport subsidies?
Reply
Thesupport fortradefairs, increase incompetence etc.isgranted inaccordance withtheState
aidrulesofsoftaidaslaiddown bothintheTreaty oftheEuropean Union andtheEuropean Economic
AreaAgreement. Softaidincludes thecostofparticipating intradefairsandofstudies orconsultancy
needed forthelaunch ofaneworexisting product onanewmarket, orhelpandadvice fromoutside
consultants forone-off increases incompetence indifferent areas. Support directly linked tothegoods
exported, totheestablishment andoperation ofadistribution network ortocurrent expenditure linked
totheexport activity, isprohibited andnotincluded.
Thus, thesupport under thisscheme isnotcontingent uponexport performance. Thesupport
isnotinanywayrelated toexport volume. Thisscheme istherefore notanexport subsidy aslaid
down intheSCM Agreement.
2. Export Credit Financing Scheme
Does Norway consider that"aninternational undertaking inAnnex I(k)means "theOECD
Arrangement onGuidelines forofficially Supported Export Credits"?
1G/SCM/Q2/NOR/2+Rev.1,2G/SCM/Q2/NOR/1,3G/SCM/Q2/NOR/4,4G/SCM/Q2/NOR/3,5G/SCM/Q2/NOR/5.
6G/SCM/N/3/NOR+Corr.1.G/SCM/Q2/NOR/6
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Reply
Norway 'sanswer tothisquestion isaffirmative. Norway considers that"aninternational
undertaking" inAnnex I(k)means, interalia,the"OECD Arrangement onGuidelines forOfficially
Supported Export Credits". Norway hasbeenpartoftheArrangement since itbegan inApril 1978.
TheOECD Arrangement meets allthecriteria listed inAnnex I(k)oftheSCM Agreement.
3. Support forenergy saving devices onboard fishing vessels
Paragraph 8.9.5 ofthenotification states thatalimited range ofenergy saving devices qualifies
forthesupport. Inthisconnection, could Norway answer thefollowing questions?
- What arethecriteria forselecting theequipment covered bythisprogramme?
- Isonlydomestically produced equipment covered bythisprogramme?
Reply
Inorder togetthebesteffect ofthesupport scheme, justacertain typeofequipment qualify
forthesupport. Thismeans thatonlydevices which areconsidered tobemostimportant intheeffort
toreducetheenergysavings,areincluded.Accordingtotherestriction,theseareinstrumentstomeasure
theuseofandexpenditure onfuel.
Thecovered equipment isnotrestricted todomestic products.
Thesupport scheme wasremoved in1996.
4. Could Norway explain theoutlines ofthefollowing programmes andthereason whytheyhave
notbeennotified?
(1) Reduced Mineral OilTaxforthePaper andPulpIndustry andtheFishflour Industry
(2) Customs DutyExemption forShipbuilders
Reply
Reduced Mineral OilTaxforthePaper andPulpIndustry andtheFishflour Industry arenotified
inParagraph 7.3ofoursubsidies notification, under thetitle: "Reduced CO2TaxonMineral Oil/Coal
andCoke".
Asregards thesystem ofcustoms dutyexemptions forshipbuilders, thissystem wasreduced
overaperiod ofseveral years inthe1980's.Thesystem wasterminated on6October 1987. No
exemptions were allowed from thatdate.
Replies toquestions from Korea
1. Regional investment grants
Yournotificationstatesthattheregionalinvestmentgrantsareprovidedtotheenterpriseslocated
inassisted areas which aredivided intothree zones, i.e.,zoneA,BandC.Onwhatbasis werethe
assisted areas divided intotheafore-mentioned zones? What industrial sectors arethegreatest
beneficiaries?G/SCM/Q2/NOR/6
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Reply
Theaidschemes areavailable toallnewandexisting undertakings located intheregions eligible
forregional State aid.
Theareas eligible forregional State aidcovers approximately 25%ofthetotalNorwegian
population.
TheEuropean Economic Area consists oftwopillars, theEFTA andtheECpillar.
TheEFTA Surveillance Authority hasthesamefunction inStateaidmatters intheEFTA pillar
astheEuropean Commission hasintheECpillar. Theareas eligible forregional State aidandthe
maximum ceilings forinvestment aidintheselected areas areapproved bytheEFTA Surveillance
Authority (ESA).
TheEFTA Surveillance Authority applies thesamemethod indetermining theregions eligible
forregional StateaidastheEuropean Commission. Themethod isinlinewiththecriteria laiddown
inArticle 8.2oftheSCM Agreement.
Themethod isbased onthree main criteria:
- GDP percapita;
- unemployment rates; and
- lowpopulation density.
Themaximum aidceilings allowed aredifferentiated according tothelevel ofdevelopment
oftheassisted region. Thelessdeveloped, thehigher theceiling foraidintensity. InNorway the
assisted areaisdivided intothree zones (A,BandC)withmaximum aidceilings inaccordance with
theaidintensity approved bytheEFTA Surveillance Authority.
TheRegional Investment Grant Scheme isneutral withregard tosector. Thusthescheme does
notfavour certain sectors. Thesectors receiving mostregional investment grants varyfrom yearto
yearanddepend onfrom which sectors theapplications arereceived.
2. Scheme forrestructuring inregions dependent onasingle industry
Thisisascheme under which grants areprovided toenterprises inmunicipalities dependent
onasingle industry orasingle enterprise. What industrial sectors arethegreatest beneficiaries?
Thisscheme doesnotfavour certain specific sectors. Which sectors arethegreatest beneficiaries
oftherestructuring schemes, depends onwhich sectors theapplicants intheactual region represent.
3. Aidtostructural measures andrationalization inthefishprocessing industry
Yournotification states thattheaidisgiven inaccordance toannual agreement between the
Norwegian Fishermen 'sAssociation andtheMinistry ofGovernment Administration soastostrengthen
thecompetitiveness ofthefishprocessing industry andtopromote theexport anddomestic saleoffish
andfishproducts. Could youprovide amore detailed explanation ofthecriteria usedforselecting
thefirms ortheproducts tobegranted?G/SCM/Q2/NOR/6
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Yournotification alsostates thatfor1995 noaidwasgranted. Isitexpected tobegranted
again?
Reply
Thissubsidy scheme wasterminated in1995.
When thescheme wasinoperation firms eligible forsupport were firms which were going
toenterintobindingcooperationthroughownershipinordertoobtainimprovedusageoflocalresources.
Animportant requirement forgranting support wasthatthesupport wastobewithin the
long-term plans fordevelopment ofthestructure oftheindustry intheconcerned area. Priority was
given toprojects assumed tohavethebestpotential forrestructuring ofalltheindustry andfuture
profitable operation.
4. Marketing Funds
Yournotification states thattheaidisgiven inaccordance toannual agreement between the
Norwegian Fishermen 'sAssociation andtheMinistry ofGovernment Administration soastostrengthen
thecompetitiveness ofthefishprocessing industry andtopromote theexport anddomestic saleoffish
andfishproducts. Could youprovide amore detailed explanation ofthecriteria usedforselecting
thefirms ortheproducts tobegranted?
Yournotification alsostates thatfor1995 noaidwasgranted. Isitexpected tobegranted
again?
Reply
Thissubsidy measure wasterminated in1994. Consequently, noaidhasbeengranted in1995
and1996.
When themeasure wasinoperation, nomaximum aidlevelwassetforgrants toonesingle
recipient. Ingeneral, theapplicants would havetofinance aminimum of50%oftotalexpenditures
connected withtherelevant project.
Otherlimitationsorcriteriaforthesubsidy:Subsidieswerenotgrantedintheformofinvestment
orincome support.
Replies toquestions from Argentina
1. Withregard tothesubsidies programme forassistance todisadvantaged regions, could Norway
specify theregions benefiting under theprogramme andthecriteria usedtogrant thesubsidies, in
accordance withArticle 8.2(b) oftheSubsidies Agreement?
Reply
Ouranswer toquestion 1from Korea applies alsotothisquestion.G/SCM/Q2/NOR/6
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2. National programmes forregional development:
(a) What R&D costsarecovered bytheprogramme andthepercentage oftotalprogramme
costs thatarecovered bysuchsubsidies, inaccordance withArticle 8.2(a) ofthe
Subsidies Agreement.
Reply
Single enterprises donotreceive support fromthisscheme, unless theyparticipate in
pluriannual programmes.
About 30%oftotalprogramme costcovers subsidies toresearch anddevelopment
projects. Theresearch anddevelopment projects supported areprecompetitive development
activities. Thecostcategories eligible arepersonnel costsandadministrative instruments costs
andtoalesser degree equipment costs.
Thus, research anddevelopment support tosingle enterprises areinaccordance with
thecriteria ofArticle 8.2(a) oftheSCM Agreement.
(b) What regions areeligible under theprogramme andthecriteria usedtoselect them,
inaccordance withArticle 8.2(b) oftheSubsidies Agreement?
Reply
Zones A,B,andCreferred to,inourreply toKorea ’squestion No.1,constitute the
eligible regions. Information about thecriteria usedtoselect themisalsocovered byouranswer
toquestion No.1from Korea.
Replies toquestions from Poland
1. Public Research andDevelopment Contracts
Asweunderstand thissubsidy isgranted totheenterprise tocover partofitscostrelated with
accomplishment oftheprojects aiming atimplementing newtechnologies, andthebasis ofthissubsidy
isanagreement between anenterprise andapublic authority. Wewould liketofindouthowever if
theamount ofsubsidy isrepaid bytheenterprise incaseoffailure oftheproject?
Reply
Theanswer tothisquestion isno.Thefirms arenotasked torepay thefunds received incase
offailure oftheproject.
2. TheExport Campaign, theStrategy Programme forExport Development inSME
Arethere anyadditional criteria thatmustbefulfilled bySMEenterprises tobegranted this
subsidy? Ifyes,please specify.
Reply
Theanswer tothisquestion isno.There arenoadditional criteria tothose already notified.G/SCM/Q2/NOR/6
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3. Thenotification doesnotspecify clearly whatcriteria aretaken intoaccount while granting
subsidies tofirms andorganizations, whatdecides theamount ofaidgranted toacertain subject and
whatisthemaximum levelofsuchanaidadmissible forasingle subject. Could Norway please explain
these points?
Reply
Thisquestion hasalready beenanswered inconnection withquestion No.4from Korea.
4. Thisscheme provides aspecial subsidy given tothebuyer ortothebuilder offishing vessels
inFinnmark county limited to15%ofthebuilding priceofthenewvessel or15%ofthepurchase price
oftheoldvessel, simultaneously theshipowner canalsotakeadvantage ofSupport toFishing Vessels
forDomestic Delivery Scheme which provides asubsidy ofupto9%ofthecontract price oftheship,
thissecond scheme isapplied ontheterritory ofthewhole ofNorway. Does thismean thatinthecase
ofatransaction which takes place inFinnmark county, thelevelofasubsidy canamount upto24%
ofthecontract price orthesubject canuseonlyoneofthisschemes? Could Norway clarify onthis
point?
Reply
The15%subsidy granted tothebuyer offishing vessels inFinnmark isgiven onthecondition
thatthegeneral subsidy ofupto9%isalready granted.
Replies toquestions from theUnited States
1. Thestated objective ofthe"Export Credit Guarantees" scheme istopromote Norwegian exports
ofgoods andservices, primarily bycovering theexporter 'scommercial andcredit political risk.Could
Norway provide information withregard totheagricultural products thatbenefit fromthisprogramme?
Also, whataretheeligibility criteria forprogramme participants?
Reply
TheNorwegian Guarantee Institute forExport Credits (theGIEK) hasnotissued guarantees
relating totheexport ofagricultural products under thescheme in1994. Thisapplies alsofor1995.
However, asregards theeligibility criteria forprogramme participants, credits related toexports
ofallcategories ofproducts maybecovered under thescheme. Anexporter isrequired tofurnish
sufficient credit information before anapplication forcover isprocessed. GIEK provides cover for
credits inaccordance withnormal terms forthetrade inquestion.
GIEK onlyunderwrites export credits ontheprovision thattheexporter paysapremium. The
premium ratesareadequate tocover thelong-term operating costsandlosses oftheprogrammes, (see
Annex I(j)oftheSCM Agreement).
2. Could Norway explain ingreater detail howthe"Export Credit Financing Scheme" operates?
Inaddition, information ontheeligibility criteria toparticipate intheprogramme would beappreciated.
Reply
TheExport Credit Financing Scheme isagovernmental interest ratesupport scheme made
available through anagreement between theNorwegian Government andASEksportfinans. Under
thisagreement, Eksportfinans administers thegranting ofexport credits, asoutlined intheOECD
Arrangement, onbehalf oftheNorwegian Government.G/SCM/Q2/NOR/6
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Thescheme operates inthefollowing manner: TheNorwegian Government allows for
Eksportfinans, which administers thescheme, tobeabletoextend credits attheminimum ratesallowed
bytheOECD Arrangement. TheGovernment doesthisbypaying theadministrative costsassociated
withthescheme. Inaddition, theGovernment reimburses Eksportfinans ifithastopayahigher rate
ofinterest onitsfunds thanitcanattract onitsinvestments. Withtheinvestment, wemean theexport
credits onOECD Arrangement terms. TheGovernment alsoreimburses Eksportfinans foranylosses
thatitmayendure duetoexchange ratefluctuations. Anyprofit made bythisscheme would betreated
asGovernment income.
Theeligibility criteria forparticipation intheprogramme arethat:
- thecredit isusedbyanimporter tobuyNorwegian capital goods fromaNorwegian
exporter;
- onlymedium- andlong-term credits aresupported bytheGovernment, andthesecredits
canbemade onOECD Arrangement terms; and
- thefinancing ofnon-Norwegian components islimited to30%ofacontract.
TheExport Credit Financing scheme follows strictly theOECD Understanding. Itistherefore
considered tobeinconformity withAnnex I(k)oftheSCM Agreement.
3. Could Norway provide thespecific amount ofsupport provided foroilseed production in1994
and1995?
Reply
TheNorwegian oilseedproduction israther limited, andnopolicy measure applies specifically
tothese products. However, oilseed production istreated aspartofthegrain sector, andaccordingly
iseligible forsupport provided under theGrain Price Support scheme aswellasunder theAcreage
andCultural Landscape Support scheme. Thesupport provided under these schemes was
NOK 36.4million in1994 andNOK 41.7million in1995.
Itisimportant tonotethattheNorwegian oilseed production isusedexclusively asaprotein
source inthedomestic feeding stuffproduction, andnotasarawmaterial intheproduction ofcooking
oilsforhuman consumption.
Oilseed Production
Grain Price Support
Year Volume Rate Total
1,000 tons NOK/kg MioNOK
1994 13.4 1.55 20.8
1995 14.6 1.55 22.6G/SCM/Q2/NOR/6
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Acreage andCultural Landscape Support
Year Area Rate Total
Hectares NOK/ha MioNOK
1994 9,880 1,580 15.6
1995 10,860 1,760 19.1
Total Figures
Measure Grain price Support Acreage andCultural
Landscape SupportTotal
MioNOK MioNOK MioNOK
1994 20.8 15.6 36.4
1995 22.6 19.1 41.7