G/SCM/N/95/USA
Page 47
Organization
G/SCM/N/95/USA
31 October 2003
(03-5811)
Committee on Subsidies
and Countervailing Measures / Original: English
SUBSIDIES
New and Full Notification Pursuant to Article XVI:1
of the GATT 1994 and Article 25 of the Agreement
on Subsidies and Countervailing Measures
UNITED STATES
The following communication, dated 29 October 2003, has been received from the Delegation of the United States.
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Enclosed please find the new and full notification from the United States, pursuant to ArticleXVI:1 of the GATT 1994 and Article 25 of the Agreement on Subsidies and Countervailing Measures, for the 2002 fiscal year (1 October 2001 through 30 September 2002). Information on programmes granted or maintained at subfederal levels in the United States is included in AttachmentI. This notification also includes information regarding federal domestic agricultural support programmes for 1999. Information with respect to federal domestic agricultural support programmes for 2000 through 2002 is not yet available.
The following notification constitutes the United States’ new and full notification. In general, the period to which the following information applies is the 2002 fiscal year (1 October 2001 through 30September 2002). Information on programmes granted or maintained at subfederal levels in the United States is included in Attachment I. This notification also includes information regarding federal domestic agricultural support programs for 1999. Information with respect to federal domestic agricultural support programmes for 2000 through 2002 is not yet available.
As noted in previous US notifications, insofar as the notification obligation is a transparency- orientated provision that, pursuant to Article 25.7 of the Agreement, carries no legal weight as to the actual identification or measurement of a subsidy, its action ability status, or its trade effects, the United States has included certain activities in this notification which arguably are not (or are not always) “specific subsidies” within the meaning of the Agreement.
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AEROSPACE & AERONAUTICS[1]
Title: The Spacecraft Technology Development Programme
Period covered by the notification
The period covered is fiscal year 2002 (September 2001–October 2002).
Policy objective and/or purpose
The Spacecraft Technology Development Programme is aimed at developing longterm advanced spacecraft technology that benefits both NASA programmes and the satellite communications industry. Key technology areas include phased array antennas, batteries, solar cells, travelling wave tubes, solid state power amplifiers, satellite propulsion and satellite network technology.
Background and authority
The Spacecraft Technology Development Programme is administered by NASA’s Office of Aerospace Technology. Legislative authority for the programme derives from the National Aeronautics and Space Act of 1958, as amended, and the US Government’s annual budget and appropriations legislation.
Form
The technology is developed at NASA laboratories, participating universities and participating industrial facilities.
To whom and how assistance is provided
Assistance to industry is provided through costshare contracts and technology knowhow transfer from NASA laboratories. Assistance to universities is provided through grants.
Amount
The amount budgeted for fiscal year 2002 was $19.4 million.
Duration
Although this activity was notified as the Spacecraft Technology Development Programme for ease of identification, the subject research and technology activities are actually sponsored under the Enabling Concepts and Technology and the Computing, Information, and Communications Technology Programmes. The duration of the programme is contingent upon annual appropriations of Congress. This programme has been reauthorized and funded for fiscal year 2003.
Trade effects
In light of the scope and nature of the R&T activity being assisted, it is not possible to determine what, if any, trade effects may ever result from this programme.
AGRICULTURE
Domestic Assistance Measures (covering fiscal year 1999)
Title: Agriculture Income Support, Marketing Assistance for Wheat, Feed Grains (Corn, Grain Sorghum, Barley, Oats, and Rye), Upland and Extra Long Staple (ELS) Cotton, Rice, Oilseeds (Soybeans, Sunflower Seed, Flaxseed, Canola, Rapeseed, Safflower, Crambe, and Mustard Seed), and Price Support for Peanuts, Milk, Sugar, and Tobacco Programmes
Period covered by notification
The period covered is fiscal year 1999.
Policy objectives
· Stabilize, support, and protect farm income and prices.
· Help ensure adequate supplies of quality food, feed and fibre.
· Assist in the orderly marketing of farm commodities.
Background and authority
These programmes were authorized by the Commodity Credit Corporation (CCC) Charter Act, the Agriculture Adjustment Act of 1938, as amended, the Agricultural Act of 1949, as amended, and the Federal Agriculture Improvement and Reform Act of 1996 ("The 1996 Act"). The programmes were financed by the CCC and administered by the Farm Service Agency (FSA).
The agricultural appropriations bill for fiscal year 1999, (other legislation where noted) contained special emergency provisions for crop and economic losses in 1998 and 1999, which are set out separately below.
Programme Descriptions and Actual Expenditures for Period of Notification
(a) Production Flexibility Contract (PFC) Payments.
No changes were made to this programme in the period under notification.
Total maximum annual PFC payments were established and fixed by law at the national level for each of the 7 years of the contract period (see table below).
Table 1
Production Flexibility Contract Payments by Fiscal Year, 19961999 (Billion US$)
Year / 1996 / 1997 / 1998 / 1999Amount / 5.141 / 6.320 / 5.672 / 5.476
(b) Nonrecourse Marketing Assistance Loans and Loan Deficiency Payments (LDPs) for Wheat, Feed Grains, Upland and ELS Cotton, Rice, and Oilseeds.
Nonrecourse commodity loan programmes and repayment provisions remained in effect for wheat, feed grains, upland and extra long staple (ELS) cotton, rice, oilseeds (soybeans, sunflower seed, flaxseed, canola, rapeseed, safflower, and mustard seed). Loan and LDP programs were added for crambe (1999). Except in the case of ELS cotton, producers of loan commodities could forgo obtaining a loan for the commodity in return for a loan deficiency payment (LDP). Alternative loan repayment provisions were also not available for ELS cotton.
Actual total expenditures (combined LDPs, marketing loan gains, and certificate exchange gains) for 1999 crops totaled $8.0 billion.
Marketing assistance loans for each commodity have a term of 9 months beginning on the first day of the first month after the month in which the loan is made. For ELS and upland cotton, the loans have a term of 10 months beginning on the first day of the month in which the loan is made.
Because the final loan availability date was as late as 31 May 2000 for some 1999crop commodities, loan repayments and debt writeoff may occur as late as February 2001. Thus, LDP and marketing loan program costs may span three fiscal years for a given year's crop.
(c) Peanuts.
No changes were made to the way in which this programme was administered in the period under notification.
For 1999, the national poundage quota was set at 1,180,000 short tons.
Loan rates for 1999crop quota and additional peanuts were $610 per short ton ($0.305 per pound) and $175 per short ton ($0.088 per pound), respectively.
(d) Dairy Products.
No changes were made to the programme in the period under notification.
The support price of milk was $9.90 per hundredweight (cwt) for calendar year (CY) 1999. Actual net expenditures were $182.8 million in FY 1999.
(e) Sugar.
During fiscal year 1999, sugar loans continued to be issued as nonrecourse commodity loans. Sugar loans were unchanged at 18 cents per pound for raw cane sugar, and 22.90 cents per pound for refined beet sugar. In the event of forfeiture, processors are assessed a penalty of 1 cent per pound in the case of raw cane sugar and 1.364 cents per pound for refined sugar, thus essentially reducing the effective level of price support by about 1 cent per pound.
First processors of sugar paid marketing assessments to CCC at rates of 0.2475 cents per pound of raw cane sugar and 0.3376 cents per pound of refined beet sugar for fiscal year 1999.
The sugar program operates under a “ nocost” provision. Actual net expenditures on this program were –$50.7 million in 1999.
(f) Tobacco.
National avg. loan level ($/lb) National marketing quota (mil.lb.)
1999crop 1999crop
Fluecured $1.63/lb 668
Burley $1.79/lb 453
The tobacco support programme is statutorily mandated to operate at "no net cost" to the government, and a nonetcost assessment is imposed on every pound of tobacco marketed.
Actual net expenditures on this program for the 1999crop were $113 million. The negative sign () indicates net revenues from the program.
(g) Special Emergency Provisions of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies, Appropriations Act, 2000 (Pub. L. 10678), enacted October 1999.
Crop Loss Assistance
Emergency financial assistance was provided to producers on farms that incurred losses in a 1999 crop due to a disaster in the same manner as assistance provided for losses under the agricultural appropriations bill for fiscal year 1999. The losses covered include quantity losses, quality losses, and severe economic losses due to damaging weather or related condition.
The agricultural appropriations bill for fiscal year 2000, $1.2 billion for this assistance and later increased by $186 million under the 2000 Omnibus Appropriation Act (Public Law 106113, enacted 29 November 1999). Outlays totaled $1.251 billion.
Mohair Recourse Loans
Recourse marketing assistance loans are continued for mohair produced before or during fiscal year 2000 in the same manner as under the agricultural appropriations bill for fiscal year 1999. All loans must be repaid, and mohair may not be delivered to CCC in satisfaction of the loan obligation.
Honey Recourse Loans
Recourse marketing assistance loans are continued for the1999crop of honey in the same manner as for the 1998 crop. Because the loan availability period ends at the end of March following the end of the crop year, program costs for a single crop year extend over 3 fiscal years. Net expenditures for the 1998 2000 honey loan programmes were $2.4 million in fiscal year 1999. Repayment of interest is due when the loan is repaid. All loans must be repaid, and honey may not be delivered to CCC in satisfaction of the loan obligation.
Emergency Supplemental Income Support for PFC Contract Holders
Market loss assistance (MLA) was provided to PFC contract holders (individuals or entities) for the 1999 crop year as a posthoc programme. Like with PFC payments, no production of any kind was required as a condition to receive the MLA payments.
Payments were issued in November 1999 to PFC contract holders who were eligible for fiscal year 1999 PFC payments. The payments were made proportional to the amount of PFC payments received by such PFC contract holders in fiscal year 1999. To receive market loss assistance, an individual or entity must have been enrolled in the 7-year PFC programme by 1 August 1996.
The 2000 Act appropriated $5.544 billion for these payments. Actual payments totalled $5.466 billion.
Oilseed Payments
Makes payments available to producers of oilseeds that are eligible to receive marketing assistance loans for the 1999 crop to assist oilseed producers suffering from reduced farm incomes as a result of large supplies and low prices. Payments were prorated on the basis of production volumes.
The agricultural appropriations bill for fiscal year 2000, $475 million for these payments, but this was reduced by $12.425 million to cover administrative costs, bringing the funding level to $462.57 million. Actual payments totaled $459.96 million in fiscal year 2000.
Livestock Assistance Programme
The agricultural appropriations bill for fiscal year 2000, $200 million (the 2001 fiscal year Act, subsequently added $10 million) in assistance to livestock producers for losses, due to drought or other natural disasters, incurred in 1999. The funds were used to implement a Livestock Indemnity Program (LIP) and a Livestock Assistance Program (LAP). The programme level for LAP was $190.2 million and outlays totaled $188.1 million. The programme level for LIP was $11 million and outlays totaled $1.9 million.
Dairy Market (Income) Loss Assistance Programme
Dairy indemnity payments were made available to provide assistance to dairy farmers for 1999 losses.
The agricultural appropriations bill for fiscal year 1999, $125 million for these payments with $2.3 million deducted for administrative expenses. Actual payments were $122.7 million.
Upland Cotton User Marketing (Step 2 and Step 3) Payments
Amended provisions allow Step 3 import quotas to trigger with greater responsiveness to the need of US textile manufacturers.
User marketing payments totaled $445 million in FY 2000.
Cottonseed Market Loss Assistance Payments
Made payments available to producers and firsthandlers of cottonseed for the 1999 crop. Funding of $79 million was provided from a portion of residual funds authorized for Public Law 10678 and Public Law 105277. These payments totaled $79 million in fiscal year 2000.
Amount
Actual expenditures for each program are presented at the end of each section.
Duration
The policies described were in effect for fiscal year 1999.
Trade effects
It is difficult to determine to what extent, if any, these programs have affected trade, given the existence of other policy instruments that affect agricultural trade. Moreover, nonetcost provisions and/or payment limitations are in effect for all programmes.
Export Assistance Measures
Title: The Export Enhancement Program (EEP)
Period covered by the notification
The period covered is fiscal year 2002.
Policy objective and/or purpose
In June 1991, the US Department of Agriculture (USDA) published programme criteria governing the selection of proposed sales initiatives under the EEP. All EEP initiatives are evaluated based on five criteria:
(1) Trade Policy Effect B the expected contributions of the initiative in furthering the US trade policy objectives.
(2) Export Effect B the potential to develop, expand, or maintain markets for US agricultural commodities;
(3) Effect on Non-subsidizers B possible effects, if any, on non-subsidizing exporters of agricultural products;
(4) Subsidy Requirements B the expected benefits compared with expected costs of the initiative; and
(5) Market Development B EEP can be used for market development purposes.
The overall programme level for EEP, as well as bonus awards under individual EEP initiatives, will be maintained at the minimum levels necessary to achieve the expected benefits of the programme's export expansion objectives, as well as the anticipated long-term benefits from multilateral agricultural trade reform. Together, these criteria are considered in the selection of initiatives targeting specific commodities and countries that will best meet the program's trade policy and export expansion objectives.