(b) costs of instruments, equipment, land and buildings used exclusively and permanently (except when disposed of on a commercial basis) for the research activity;

? Costs of consultancy and equivalent services used exclusively for the research activity, including bought-in research, technical knowledge, patents, etc.;

(d) additional overhead costs incurred directly as a result of the research activity;

(e) other running costs (such as those of materials, supplies and the like), incurred directly as a result of the research activity.

The first subparagraph shall not apply to civil aircraft (as defined in the 1979 Agreement on Trade in Civil Aircraft, as amended, or in any later Agreement amending or replacing such Agreement).

For the purpose of the first subparagraph:

(a) the allowable levels of non-countervailable subsidy shall be established by reference to the total eligible costs incurred over the duration of an individual project.

In the case of programmes which span both 'industrial research' and 'pre-competitive development activity', the allowable level of non-countervailable subsidy shall not exceed the simple average of the allowable levels of non-countervailable subsidy applicable to the above two categories, calculated on the basis of all eligible costs as set forth in points (a) to (e) of the first subparagraph;

(b) the term 'industrial research' means planned search or critical investigation aimed at discovery of new knowledge, with the objective that such knowledge may be useful in developing new products, processor services, or in bringing about a significant improvement to existing products, processes or services;

? The term 'pre-competitive development activity' means the translation of industrial research findings into a plan, blueprint or design for new, modified or improved products, processes or services, whether intended for sale or for use, including the creation of a first prototype which would not be capable of commercial use. It may further include the conceptual formulation and design of products, processes or services alternatives and initial demonstration or pilot projects, provided that these same projects cannot be converted or used for industrial application or commercial exploitation. It does not include routine or periodic alterations to existing products, production lines, manufacturing process, services, and other ongoing operations even though those alterations may represent improvements.

3. Subsidies to disadvantaged regions within the territory of the country of origin and/or export, given pursuant to a general framework of regional development, which would be non-specific if the criteria laid down in Article 3 (2) and (3) were applied to each eligible region concerned, shall not be subject to countervailing measures, provided that:

(a) each disadvantaged region is a clearly designated contiguous geographical area with a definable economic and administrative identity;