G/SCM/N/123/EEC/Add.9
Page 11

World Trade
Organization
G/SCM/N/123/EEC/Add.9
26 August 2005
(05-3594)
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

EUROPEAN COMMUNITIES

Addendum

The following addendum to the notification of the European Community relates to subsidy programmes of Germany.

______

GERMANY

TABLE OF CONTENTS

Page

I. GERMAN SHIPYARDS (WERFTHILFEN) 3

II. German Shipyards (Wettbewerbshilfe) 3

III. Reduction of rates on inheritable land-use rights (Berlin) 5

IV. Joint Scheme on "Improving the Regional Economic Structure" 6

V. Regional Economic Support Programme (LAND NORDRHEIN-WESTFALEN) 7

VI. Promotion of efficient use of energy; programme section "promotion of technological development (REN/TE)" (Land Nordrhein-Westfalen) 8

VII. Regional Aid Programme (Land Rheinland-Pfalz) 9

VIII. National Programme for Civil Aeronautical Research 9

IX. Pulp Mill Stendal (Sachsen-Anhalt) 10

X. Corrugated Base Paper Plant (Brandenburg) 11

XI. Fairchild Dornier (for information reasons only) 11

I.  GERMAN SHIPYARDS (WERFTHILFEN)

1. Name of the subsidy scheme or ad hoc subsidy

Interest-Rate Grants to Finance Orders to German Shipyards ("Werfthilfen")

2. Form of the subsidy

Grant

3. Subsidy per unit

Total amount of assistance provided in 2003/2004

Total amount of assistance provided in 2003: 35,1 Mio. Euro

Total amount of assistance provided in 2004: 25,8 Mio Euro

4. Objective and/or purpose of the subsidy

The eighth shipyard assistance programme (VIII. Werfthilfeprogramm) exists to provide non-repayable interest-rate grants under the relevant OECD Understanding On Export Credits For Ships (1981). In the frame of this Export Credit Agreement, which expired in April 2002, only legal obligations from previous years will be completed.

Legal basis: Commitment authorizations in the Federal budget from previous years

Guidelines from the Federal Ministry of Economics and Technology

Modes of payment:

Support is given to the construction and reconstruction of high-technology marine vessels (merchant vessels), respecting the OECD Understanding On Export Credits For Ships:

8.5 year term

20 per cent advance payment

Minimum interest rate of 8 per cent p.a..

5. Duration of subsidy and other time-limits attached to it

No new committments

6. Statistical data permitting an assessment of the trade effects of a subsidy

n.a.

II.  German Shipyards (Wettbewerbshilfe)

1. Name of the subsidy scheme or ad hoc subsidy

Competition Aid for German Shipyards (Wettbewerbshilfe)

2. Form of the subsidy

Grant

3. Subsidy per unit

Total amount of assistance provided in 2003: 122,7 Mio. Euro

Total amount of assistance provided in 2004: 96,3 Mio, Euro

4. Objective and/or purpose of the subsidy

Grant towards production costs are given, where they are permissible under the relevant EU directive on shipbuilding subsidies (COMReg. (EC) 1177/202) and COM Reg. (EC) No.502/2004

Legal basis: Commitment authorizations in the Federal and Länder budgets.

Guidelines from the Federal Ministry of Economics and Labour

Modes of payment: Those receiving the grants are shipbuilding companies in the Federal Republic of Germany.

Support is given namely to the construction of container ships, product and chemical tankers and LNG carriers (Liquified Natural Gas carriers)

Support of 6% of contract value before aid

5. Duration of subsidy and other time-limits attached to it

In the frame of Commission Regulation (EC) No 1177/2002 / COMReg. (EC) No. 502/2004

Limited to contracts signed before 31.3.2005

6. Statistical data permitting an assessment of the trade effects of a subsidy

n.a.

3. Bavarian Regional Programmes in Support of Commerce and Industry

Name of the subsidy scheme or ad hoc subsidy

Bavarian programmes in support of commerce and industry (as promulgated by the Bavarian Ministry of Economics, Transport and Technology on 22 February 2002, No.3540-III/2-3540

2. Form of the subsidy

Investment grant.

Interest rate subsidy (to subsidize loans).

3. Subsidy per unit

Total support 2003 2004 (Mio. Euro)

Investment grant 117,8 73,4

Interest rate subsidy 8,8 10,5

Assisted investment volume 1.016,0 706,9

Number of assisted companies 498 387

4. Objective and/or purpose of the subsidy

Aid to finance investments in trade, industry and tourism to create and secure jobs and training places in assisted areas.

Objective: Improving regional economic structures and tourism offers;

Increasing the economic strength of structurally weak areas.

5. Duration of subsidy and other time-limits attached to it

Until 30 June 2007

6. Statistical data permitting an assessment of the trade effects of a subsidy

Not available. Outside the assisted areas pursuant to the Joint Federal Government/ Laender Scheme for the Improvement of Regional Economic Structures, support is restricted to small and medium-sized enterprises (SMEs) within the meaning of the Decree (EC) Nr.70/2001 of the European Commission on State Aid to SME's ( EC L 10/33 dated 12 January 2001)

III.  Reduction of rates on inheritable land-use rights (Berlin)

1. Name of the subsidy scheme or ad hoc subsidy

Reduction to between 3 and 5 per cent of the rates payable on inheritable land-use rights in the case of projects worthy of special promotion of manufacturing firms depending on the degree of use of the buildings

2. Form of the subsidy

Cutting land costs by granting a reduced rate on land-use rights.

3. Subsidy per unit

Payments: 31.069,67 € in 2003

Payments: 31.069,67 € in 2004

4. Objective and/or purpose of the subsidy

Reducing land acquisition costs for the manufacturing industry for regional promotion purposes.

5. Duration of subsidy and other time-limits attached to it

Until 31 December 2006

6. Statistical data permitting an assessment of the trade effects of a subsidy

The effects of the subsidy in accordance with WTO standards cannot be assessed due to the low financial resources.

5. Consolidation programme of the Land Mecklenburg-Vorpommern

1. Name of the subsidy scheme or ad hoc subsidy

Consolidation programme of the Land Mecklenburg-Vorpommern on the granting of public financial aid to small and medium-sized commercial and industrial enterprises – special fund to support companies

2. Form of the subsidy

Loans of up to 2,5 million Euro at market conditions. Usually restricted to SMEs within the meaning of the Community Framework.

3. Subsidy per unit

Approved loans in 2003: 1.680 Mio. Euro

Disbursed loans in 2003: 1.656 Mio. Euro

Approved loans in 2004: 2.280 Mio. Euro

Disbursed loans in 2004: 1.730 Mio. Euro

4. Objective and/or purpose of the subsidy

Liquidity aid for enterprises that are important for a region in Mecklenburg-Vorpommern in terms of labour-market policy and structural policy.

5. Duration of subsidy and other time-limits attached to it

The loans have a maximum duration of ten years.

6. Statistical data permitting an assessment of the trade effects of a subsidy

Statistics are not available to assess the trade effects of the subsidy. Most of the assisted enterprises operate on regional markets only.

IV.  Joint Scheme on "Improving the Regional Economic Structure"

1. Name of the subsidy scheme or ad hoc subsidy

Joint Scheme on "Improving the Regional Economic Structure".

2. Form of the subsidy

Regional assistance in the form of investment grants and, exceptionally, loan guarantees

3. Subsidy per unit

Generally speaking budget allocations for the Scheme have been decreased.

In 2003, a total amount of 1,100 Mio. Euro was disbursed by the „Länder“ under the Scheme in order to promote business (commercial and industrial) investments. 86.3 % of this amount (0,955 Mio. Euro) was paid out by the Eastern Länder and Berlin. The amounts indicated federal co-financial contributions.


In 2004, a total of 1,170 Mio.. Euro as disbursed by the Länder under the Joint Scheme in order to promote business (commercial and industrial) investments. 89.3 % of this amount (1,045 Mio. Euro) was paid out by the Eastern Länder and Berlin. The amounts indicated include federal co-financial contributions.

4. Objective and/or purpose of the subsidy

The primary regional policy objective is to enable structurally weak regions to keep pace with general economic development by offsetting locational disadvantages and reducing regional development differentials. Regional structural policy focuses on supporting regional development activity with a view to raising the levels of employment and income in problem areas in this way. Eligible for subsidies under this scheme are commercial and industrial firms.

Investments in commerce and industry are eligible for promotion if they generate additional income to the region so that the region's total level of income is raised to a not insignificant extent in the long run (primary effect). This is deemed to be the case if the company applying for subsidy payment sells the better part of its products or services on a supraregional basis. The investment projects concerned must create new jobs in the assisted areas or secure existing ones.

Assisted areas are redefined at multiannual intervals on the basis of regional indicators (level of income, unemployment, infrastructure). Assisted areas in the original Länder including Berlin (West) cover 17.7 per cent of the German population in the period from 2000 to 2006. The new Länder and Berlin (East) represent assisted areas in their entity till 2006. Moreover, these areas have been recognized as objective-1 areas within the framework of the EC Structural Funds until the end of 2006.

5. Duration of subsidy and other time-limits attached to it

Regional assistance consists of a non-recurring payment and is granted to investment projects in assisted areas. The programme is under no time-limit.

6. Statistical data permitting an assessment of the trade effects of a subsidy

Regional promotion is aimed at offsetting domestic investment disadvantages of certain regions and contributes to raising the levels of income and employment in structurally weak areas. Promotion under the Joint Scheme therefore is neutral in terms of competition and has no effect on competition in international trade.

V.  Regional Economic Support Programme (LAND NORDRHEIN-WESTFALEN)

1. Name of the subsidy scheme or ad hoc subsidy

Regional Economic Support Programme

2. Form of the subsidy

Grants towards investment projects of trade and industry and local infrastructure.

3. Subsidy per unit

The total amount budgeted for 2003: 88,1 Mio. Euro

Total number of recipients: 88

The total amount budgeted for 2004: 70,0 Mio. Euro

Total number of recipients: 18

4. Objective and/or purpose of the subsidy

Improving the regional economic structure and supporting small and medium-sized businesses.

5. Duration of subsidy and other time-limits attached to it

Not limited

6. Statistical data permitting an assessment of the trade effects of a subsidy

Given the objectives of the programme, trade effects cannot be assessed.

VI.  Promotion of efficient use of energy; programme section "promotion of technological development (REN/TE)" (Land Nordrhein-Westfalen)

1. Name of the subsidy scheme or ad hoc subsidy

Promotion of efficient use of energy; programme section "promotion of technological development (REN/TE)". State subsidy N 497/94.

2. Form of the subsidy

Grant

3. Subsidy per unit in 2003

Approx.: € 2.482.000

Total number of recipients: 5 (five)

The programme REN/TE was not continued in 2004.

4. Objective and/or purpose of the subsidy

The promotion section "technological development" supports companies in the fields of energy technology, the energy industry and commercial and industrial energy users in North-Rhine/Westphalia. The subsidy is granted for the development of new products and processes for the efficient use of energy and raw materials and for the use of renewable energies that have a pilot character beyond individual companies.

5. Duration of subsidy and other time-limits attached to it

The duration is two to three years for projects subsidised in 2003.

6. Statistical data permitting an assessment of the trade effects of a subsidy

The above-mentioned subsidy programme is based on the European Community’s Research and Development (R&D) framework. The assisted projects comprise only

development stages before competition.

VII.  Regional Aid Programme (Land Rheinland-Pfalz)

1. Name of the subsidy scheme or ad hoc subsidy

Regional aid programme of the Land Rheinland-Pfalz.

2. Form of the subsidy

Investment grant

3. Subsidy per unit

Up to 7.5 per cent for medium-sized industries, 15 per cent for small-sized industries.

Total budget: DM 17 million, disbursement in 2002: € 2,8 Mio. Euro.

disbursement in 2003: € 1,9 Mio. Euro.

disbursement in 2004: € 1,0 Mio. Euro

4. Objective and/or purpose of the subsidy

Promotion of investment in small- and medium-sized industries.

5. Duration of subsidy and other time-limits attached to it

Unlimited.

6. Statistical data permitting an assessment of the trade effects of a subsidy

In 2002: creation of 262 jobs by providing financial assistance to 53 individual promotional cases;

In 2003: creation of 39 jobs by providing financial assistance to 17 individual promotional cases;

In 2004: creation of 40 jobs by providing financial assistance to 19 individual promotional cases.

VIII.  National Programme for Civil Aeronautical Research

1. Name of the subsidy scheme or ad hoc subsidy

National programme for civil aeronautical research and technology for the period 2003 to 2007. Federal Government and aid for research and technology.

2. Form of subsidy

Non repayable grants (industry: 40 %; universities: 100% of the expenses) are awarded towards R&T expenditure

3. Amount of grant per unit

2003: 27.77 Mio. Euro

2004: 35.82 Mio:Euro

4. Purpose of aid

This programme intends to contribute to strengthening innovative medium and long term research and technology, one of the most important key technologies with spin-off effects to other sectors. The programme aim forms part of the Federal Governments' research and technology policy.

. The priorities of the programme are encouraging sustainable research in the fields:

Low pollutant and safe Aircraft of the next generation

Low noise all-weather helicopter

Efficient and ecologically friendly engine

6. Duration of aid

2003 - 2007

7. Statistical data permitting an assessment of the trade effects of the subsidy

n.a.

IX.  Pulp Mill Stendal (Sachsen-Anhalt)

1. Name of the subsidy scheme or ad hoc subsidy

Zellstoffwerk (Pulp Mill) Stendal based on following aid schemes:

A: Improvement of the regional economic structure (Gemeinschaftsaufgabe)

B: Investitionszulagengesetz 1999

C: Scheme for direct guarantees of the Fed.Rep.of Germany and the Federal Länder

2. Form of the subsidy

A: Grant

B: Grant

C: Guarantee