RESTRICTED
WORLD TRADE G/SCM/N/3/AUS
L/7611/Add.16
ORGANIZATION 26September 1995
(95-2825)
Original: English Committee onSubsidies andCountervailing Measures
SUBSIDIES
Notifications Pursuant toArticle XVI:1 oftheGATT 1994
andArticle 25oftheAgreement onSubsidies and
Countervailing Measures
AUSTRALIA
Thefollowing communication, dated 7August 1995, hasbeenreceived from thePermanent
Mission ofAustralia.
Inview ofthedecision taken bytheCONTRACTING PARTIES oftheGATT 1947 on
AvoidanceofProceduralandInstitutionalDuplication(L/7582,dated13December1994)thisnotification
isdeemed tobealsoanotification under Article XVI:1 oftheGATT 1947.
_______________
Products subject tosubsidy measures asat30June1995.
Page
I. BED SHEETING 2
II. BOOKS 3
III. CITRIC ACID 4
IV. COMPUTERS 5
V. DAIRY PRODUCTS 6
VI. MACHINE TOOLS AND ROBOTS 9
VII. PRINTED FABRICS 10
VIII. SHIPBUILDING 11
IX. TEXTILE YARNS 12G/SCM/N/3/AUS
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Page2
I. BED-SHEETING
1. Nature andExtent ofBounty
(a) Background andAuthority
TheBounty (Bed-Sheeting) Act1977 provided forthepayment ofabounty oncertain bed
sheeting. Itcommenced operation on1January 1977, butwasextended retrospectively tobountiable
products produced after1September 1976.
Thebounty terminates on30June1995.
(b) Incidence
TheBounty waspayable oncertain polyester cotton bedsheeting woven, printed andmade
upintobedlinen bythemanufacturer. Themaximum payment inanytwelve-month period (defined
as1Novemberto31October)was$A600,000until28February1989.Theannuallimitincashoutlays
tomanufacturers wasincreased to$A3.2million witheffect from 1March 1989. Thebounty was
notpayable onexported bedsheeting.
(c) Amount ofBounty Paid
Year1$A'000
1991/92 2,568.0
1992/93 2,352.7
1993/94 1,765.8
(d) Rateofbounty
Thebounty waspayable tothemanufacturer attherateof8cents persquare metre ofprinted
sheeting usedinthemanufacture ofbedlinen.
2. Effect ofBounty
(a) Trade Effects
Thisbounty improved thecompetitive position ofthelocalmanufacturer.
(b) Statistics
Trade statistics relating tobedsheeting arenotseparately recorded.
1Unless otherwise indicated financial years throughout thisnotification begin on1Julyandfinish
on30June.G/SCM/N/3/AUS
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II. BOOKS
1. Nature andExtent ofBounty
(a) Background andAuthority
TheBounty (Books) Act1986, which commenced on1January 1987 andhasbeenextended
toexpire on31December 1997, provides forareducing rateofbounty.
(b) Incidence
Bounty ispayable onapproved books manufactured inAustralia. Tobeeligible forbounty,
books must ingeneral beatleast49pages andbeproduced inaminimum runof1,000 copies.
(c) Amount ofBounty Paid
Year $A'000
1991/92 21,536
1992/93 21,395
1993/94 22,274
(d) RateofBounty
Thebounty ispayable tomanufacturers asapercentage ofthetotalcostofproducing thebook.
Theratehasbeenreduced overthelifeoftheActasfollows:
1January 1987 -31December 1988: 20%
1January 1989 -31December 1989: 18%
1January 1990 -31December 1990: 16%
1January 1991 -31December 1991: 14%
1January 1992 -31December 1993: 13.5%
1January 1994 -31December 1994: 10.8%
1January 1995 -31December 1995: 9.0%
1January 1996 -31December 1996: 7.2%
1January 1997 -31December 1997: 4.5%
2. Effect ofBounty
(a) Trade Effects
Thebounty hasimproved thecompetitive position ofAustralian book manufacturers against
duty-free imports.G/SCM/N/3/AUS
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(b) Statistics
Year Imports
($A'000)Exports2
($A'000)
1991/92 509,859 91,777
1992/93 501,318 100,878
1993/94 508,540 86,158
III. CITRIC ACID
1. Nature andExtent ofBounty
(a) Background andAuthority
TheBounty (Citric Acid) Act1991came intoeffect on12March 1991andisduetoterminate
on1January 1996.
(b) Incidence
Thebounty ispayable oncitric acidproduced inAustralia through thefermentation of
carbohydrates inairliftfermenters.
(c) Amount ofBounty Paid
ByJune1994paymentsofaround$A1.5millionhadbeenmade.InMay1994thesolerecipient
ofthebounty ceased production anditisunlikely thatanewrecipient willemerge priortothetermination
oftheBounty on31December 1995.
(d) RateofBounty
Period Rate($Apertonne)
1July1993 -30June1994 350
1July1994 -30June1995 250
1July1995 -31December 1995 150
2. Effect ofBounty
(a) Trade Effects
Thebounty wasintroduced tosupport thecommercialization ofleading edge Australian
fermentationtechnology.Distortionsarisingfrominternationalagriculturalandindustrysupportmeasures
2Total Australian Produce -these figures include allbooks, notonlythose subject tobounty.G/SCM/N/3/AUS
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werepreventing thecommercialization ofthistechnology inAustralia. Onlyrelatively small quantities
ofcitric acidhavebeenproduced under thebounty andthishasbeenforthedomestic market only.
(b) Statistics
Statistical dataisnotavailable duetocommercial confidentiality.
IV. COMPUTERS
1. Nature andExtent ofBounty
(a) Background
TheBounty (Computers) Act1984 provides forthepayment ofbounty onthemanufacture
ofcertain computer hardware onwhich nodutyisapplied under theAustralian Customs Tariff. The
introduction ofthebounty coincided withtheremoval ofcustoms duties from thegoods covered.
Thebounty isphasing down tomaintain asimilar effective rateofassistance formanufacturers
ofbountiable goods asthatprovided tomanufacturers ofgeneral goods through reducing tariff levels.
TheActcommenced on6July1984 andisduetoterminate on31December 1995.
(b) Incidence
Thebounty ispayable oncomputer equipment andcomponents produced inAustralia which,
interalia,caninclude microprocessor based controllers andregulators, modems andmultiplexors,
integrated circuitry, hybrid circuits, printed circuit boards, keyboards andcomputer casings.
(c) Amount ofBounty Paid
Year $A'000
1991/92 74,489
1992/93 74,974
1993/94 77,999
(d) RateofBounty
Before 6July1990 thebounty waspayable tothemanufacturer attherateof20percentof
thein-house value added (rateprogressively reducing to8percentby1994) ofthemanufacturer andG/SCM/N/3/AUS
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oncertainsub-contractedactivitiessuchasresearchanddevelopmentandoperatingsoftwaredevelopment.
Thebounty rateisreducing asfollows:
17percentin1990/91
14percentin1991/92
12percentin1992/93
10percentin1993/94
8percentin1994/95 until31December 1995
2. Effect ofBounty
(a) Trade Effects
Thebounty enables local manufacturers andassemblers ofcomputers andspecific related
hardware tohaveaccess toAustralian produced equipment andcomponents atclose toworld prices
anditencourages continued investment inthese facilities inAustralia.
(b) Statistics
Statistics arenotseparately available.
V. DAIRY PRODUCTS
1. Nature andExtent ofAssistance
(a) Background andAuthority
UndertheDairyProduceAct1986,theDairyProduceLevy(No.1)Act1986andDairyProduce
Levy (No.2)Act1986, amarket support scheme wasintroduced in1986 andcontinued under the
1992 Dairy Plan. TheDairy Planwasterminated on30June1995.
Themarket support scheme wasdelivered through anexport support payment (ESP) to
manufacturers onexport andwasfunded byastatutory levyonallmilkproduced. TheESPforced
uptheprice ofdomestic product totheexport parity price plustheESPperkg.,thereby creating a
monetary transfer fromconsumers tomanufacturing milkproducers. TheESPwaseffectively recycled
tomanufacturing milkproducers along withtheconsumer transfer inthepricepaidbythemanufacturer
formilktotheproducer. Manufacturers therefore operated atexport parity pricing without subsidy.
Although effectively adomestic market support scheme delivered through arecycled ESP,
thescheme wasclassified asan"export subsidy" subject toreduction commitments under theWTO
Agriculture Agreement. Itwasterminated on30June1995 andhasbeen replaced byaclearly
identifiable domestic market support scheme.
(b) Incidence
Asnoted above, theESPwasfunded byalevypaidbyproducers onallmilkproduced and
paidtomanufacturers onproduction ofevidence ofexport atratesdetermined annually bytheAustralian
Dairy Corporation forthevarious dairy products, having regard toestimated milkproduction, world
prices, export andlegislated limits. TheESPwaseffectively pre-paid tomanufacturing milkproducers
intheprice paidformilkdelivered tothemanufacturers.G/SCM/N/3/AUS
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(c) Amount ofSubsidy
Theallmilklevyraised $A154million in1993-94 andthefinalamount for1994-95 isexpected
tobeabout $A155million, being lower thanwould beexpected duetolower milkfatcontent under
drought conditions.
(d) Estimated amount perunit
TheESPratesfor1994-95 were:
Item $A/tonne
Cheddar 355
Butter 296
SMP 285
WMP 301
2. Effects ofSubsidy
(a) Trade Effects
Themeasures havebenefitted domestic production ofdairy products, butthetrade effects are
unquantifiable given thenature ofthemeasures.(b) StatisticsG/SCM/N/3/AUS
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PRODUCTION 1991-92 TO1993-94
(Thousand Tonnes)
Year Butter Cheese Cream Condensed
milkCasein Skim milk
powder (a)Whole milk
powderButter milk
powderMilk food
based
preparations
1991/92 108 198 206 89 4 147 69 11 30
1992/93 127 211 225 104 5 166 80 13 n.a.*
1993/94 143 234 212 107 3 207 93 15 n.a.*
Source: Australian Dairy Corporation (ADC)
(a) Includes skim andbuttermilk powder mixes
* Thisseries, which included Infant Powder/Invalid Products, wascollected bytheAustralian Bureau ofStatistics (ABS). TheABSceased collection
ofthese statistics in1992.G/SCM/N/3/AUS
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VI. MACHINE TOOLS AND ROBOTS
1. Nature andExtent ofBounty
(a) Background andAuthority
TheBounty (Metal Working Machines andRobots) Actreplaced theBounty (Metal-Working
Machine Tools) Act1978. TheActwasamended in1991tobecome theBounty (Machine Tools and
Robots) Act1985, andisduetoterminate on30June1997.
(b) Incidence
TheActprovidesforpaymentofbountiesonlocallymanufactureditemsincludingmetal-working
machines, robots, certain other advanced metal-working machinery, partsandaccessories. Machine
modification activities mayalsoqualify forbounty assistance.
Thebounty ispaidattworates; ahigher rateforadvanced machinery andalower onefor
standard machinery.
Under theexisting arrangements, higher bounties arepayable onadvanced technology items.
(c) Amount ofBounty Paid
Year $A'000
1991/92 15,961
1992/93 8,557
1993/94 8,421
(d) RateofBounty
Bounty ispaidasapercentage ofthevalue-added component undertaken byacompany. The
twoseparate ratesforadvanced andstandard machines arebeing phased down toasingle rateof5per
centforallmachines. Theratesofbounty payments areasfollows:
1July1991 to30June1992 24.0% 20.0% ofvalue added
1July1992 to30June1993 20.0% 17.0%
1July1993 to30June1994 16.0% 14.0%
1July1994 to30June1995 12.0% 11.0%
1July1995 to30June1996 8.0% 8.0%
1July1996 to30June1997 5.0% 5.0%
2. Effect ofBounty
(a) Trade Effects
Thebounty isdesigned toencourage local production ofmetal-working machine tools by
improving competitiveness against imports, without increasing thecoststructure ofuserindustries.G/SCM/N/3/AUS
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(b) Statistics
Fewrelevant statistics areseparately recorded butinfrequent surveys indicate thatAustralian
manufacturers have20percentofthedomestic market formachine tools (which intotalisaround
$A800million annually although withsharp fluctuations).
VII. PRINTED FABRICS
1. Nature andExtent ofBounty
(a) Background andAuthority
TheBounty (Printed Fabrics) Act1981cameintoeffect on1January 1982. TheActterminated
on30June1995.
(b) Incidence
Thebounty ispayable upon mechanical printing ofcertain lightweight textile fabrics thatare
suitable formaking upintogarments inAustralia andarewoven fromwool, cotton, silkorsynthetic
fibreyarns.
(c) Amount ofBounty Paid
Year $A'000
1991/92 2,803
1992/93 1,490
1993/94 670
(d) RateofBounty
From 1January 1982to19August 1986payment totheprinter wasmade attherateof70per
centofthevalue added tothefabric bytheprinter. From 20August 1986 to28February 1989 the
rateofbounty was56percent. From 1March 1989therateofbounty was53percentandistophase
down to15percenton1July1994. Thebounty wasterminated on30June1995.
2. Effect ofBounty
(a) Trade Effects
Thebounty isintended toaccord reasonable protection tolocalfabric printers without increasing
costs togarment manufacturers.
(b) Statistics
Therelevant statistics arenotseparately recorded.G/SCM/N/3/AUS
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VIII. SHIPBUILDING
1. Nature andExtent ofBounty
(a) Background andAuthority
TheBounty (Ships) Act1989 came intoeffect on1July1989 providing foraphase
down ofbounties toshipbuilders. Itreplaced theBounty (Ships) Act1980 following areview ofthe
shipbuilding bounty scheme bytheIndustries Assistance Commission in1988. Amendments tothe
Actin1993 varied thebounty phasedown schedule andextended theperiod ofoperation oftheAct
bytwoyears to30June1997.
(b) Incidence
Bountiesarepayabletoregisteredshipbuildersfortheconstructionandmodificationofbountiable
vessels. Bountiable vessels, asdefined inthelegislation, arevessels ofasizebetween 150and20,000
gross construction tonswhich arenavigable andhaveameans ofpropulsion. Modifications arerequired
toexceed $A1million inconstruction costs tobeeligible forthebounty. Shiprepair activities are
notbountiable.
(c) Amount ofBounty Paid
Year Bounty PaidUnder Bounty (Ships) Act
$Amillion
1991/92 24.36
1992/93 24.24
1993/94 25.93
(d) RateofBounty
Theamendment tothelegislation in1993 aligned therateofshipbuilding bounty tothe
phasedown ofgeneral manufacturing industry tariffs. Theratescorrespond withthetariff reductions
setdown intheGovernment 'sStatement 'Building aCompetitive Australia 'of12March 1992. The
bounty ratesare8percentfor1994/95, 7percentfor1995/96 and5percentfor1996/97.
2. Effect ofBounty
(a) Trade Effects
Thebounty enables Australian shipbuilders tobemore competitive intheAustralian market
against import competition.
(b) Statistics
Relevant statistics arenotseparately recorded.G/SCM/N/3/AUS
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IX. TEXTILE YARNS
1. Nature andExtent ofBounty
(a) Background andAuthority
TheBounty andCapitalization Grants (Textile Yarns) Act1981 which came intoeffect on
1January 1982 superseded theBounty (Polyester-Cotton Yarn) Act1978 which wasterminated on
31December 1981. TheActwasamended inJune1990tointroduce aCapitalization Grants Scheme.
ThisActterminated on30June1995.
(b) Incidence
Thebounty waspayable upon production ofcertain yarns, spunfrom certain textile fibres,
andusedtoproduce, inAustralia, yarns, othertextiles, orproducts made wholly orpartially therefrom.
Alternatively, eligible yarnbounty recipients were abletocapitalize projected bounty receipts to
June1995 provided thatsavings toAustralian Government outlays were achieved. Theacceptance
ofsuchgrants automatically disentitled applicants from textile yarnbounty payments. Applications
foraCapitalization Grant closed on31December 1991.
(c) Amount ofBounty Paid
Year $A'000
1991/92 90,182
1992/93 46,537
1993/94 20,980
(d) RateofBounty
Theratesofbounty applying from1982werecomplex, andphasing down. Since 1July1992
theratesforallyarns were made thesame:
1July1992 -30June1993 30%
1July1993 -30June1994 22%
1July1994 -30June1995 15%
2. Effect ofBounty
(a) Trade Effects
Thebounty wasintended toaccord reasonable protection toyarnspinners without increasing
costs toweavers andknitters.G/SCM/N/3/AUS
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(b) Statistics
Thedefinition ofbountiable items precluded collection ofcomparable statistics forproduction
andtrade.