. /.WORLD TRADE
ORGANIZATIONTN/RL/W/107
13 May 2003
(03-2519)
Negotiating Group on Rules Original:  Spanish
OBSERVATIONS AND COMMENTS BY VENEZUELA ON DOCUMENT TN/RL/W/78
SUBMITTED BY THE UNITED STATES CONCERNING PROHIBITED SUBSIDIES
AND OTHER SUBJECTS UNDER THE WTO AGREEMENT ON
SUBSIDIES AND COUNTERVAILING MEASURES
The following communication, dated 9 May 2003, has been received from the Permanent
Mission of Venezuela.
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The content of this paper does not prejudge Venezuela's final position on any aspect of the
subjects to which it refers, nor does it cover all the comments, observations and questions that could
be raised during this and future stages of the negotiations on this matter and other related topics.  A
more complete and detailed contribution could be submitted by Venezuela at a later stage.
First of all, the United States contribution in document TN/RL/W/78 is much appreciated.
The Venezuelan  delegation considers that the Agreement on Subsidies and Countervailing Measures
contains provisions that merit clarification and improvement.
Concerning natural resource and energy pricing, we take this opportunity to address some
questions, requests for clarification and a preliminary comment to the United States.  Some of the
questions, which will be circulated in writing, are the following:
1. A more detailed explanation of the terms "dual pricing" and "fair market value", as used in
the United States document, would be appreciated, particularly insofar as they relate to the provisions
of the relevant WTO Agreements, and the Agreement on Subsidies and Countervailing Measures in
particular.
2. It would be appreciated if the United States could elaborate on and clarify the analogy it
establishes between government provision of natu ral resources at lower than international market
prices and provision of a cash grant to purchase such resources at lower prices.
3. The United States proposal appears to be aimed at deepening and expanding the scope of the
SCM Agreement's rules, particularly in relation to  so-called prohibited subsidies.  The Venezuelan
delegation considers that this proposal could go beyond the mandate given by the Ministers inparagraph 28 of the Doha Declaration.
3.1 In this connection, how and to what extent does the United States consider that this proposal,
particularly as regards natural resource and energy pricing, clarifies and improves the existing
provisions of the SCM  Agreement?
3.2 Is the United States seeking to modify ASCM provisions?
3.3 If so, what specific provisions of the ASCM could be affected?TN/RL/W/107
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4. In its proposal, the United States affirms that " … it must … be accepted that preferential
natural resource pricing has been and, if not addressed, will continue to be a source of considerable
trade distortion and friction".  In this connection, we would appreciate learning from the United States
delegation whether it has any type of information, data or studies that demonstrate the distortingeffects on the international market of the practice of dual pricing to which it refers.
5. If a general subsidy is provided by a governme ntal authority within its jurisdiction, without
discrimination, and without any objective eligibility criteria being applied, i.e. without any
requirement relating to a specific branch of the domestic industry, so that all domestic and foreign
companies are eligible for the subsidy at national  level, regardless of whether their production is
directed to domestic consumption or export:
5.1 Would the United States consider this practice to constitute a prohibited subsidy?  Or an
actionable subsidy?  Why?
5.2 If so, would this not affect the structure and fundamental concepts of the ASMC, particularly
the concept of prohibited subsidy?
As regards compliance with the requirement of transparency, in the form of notifications of
various matters that may be agreed in the ASMC, such as the provision of equity capital, we would
comment that the preparation of notifications is already an arduous task requiring a trained and
dedicated staff and using up typically scarce human and economic resources and time in WTO
Members, as in the case of Venezuela.  Irrespective of the new substantive rules that might be agreedin the future, it would appear to be desirable to weigh up the benefits of these rules in relation to the
cost that new obligations might impose on some Members.  In that case, consideration should be
given to incorporating the development dimension and the principle of special and differential
treatment, including conditions of flexibility for the presentation of any new notification
requirements, including technical cooperation, extended time-limits and incentives for the submissionof full notifications by Members.
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