RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/M/38
9 October 2002
(02-5435)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
MINUTES OF THE SPECIAL MEETING
HELD ON 30 APRIL AND 1 MAY 2002
Chairman:  Mr. Remo Moretta (Australia)
1. The Committee on Subsidies and Countervailing Measures (the "Committee") held a special
meeting on 30 April and 1 May 2002.
2. The purpose of the special meeting, as set forth in WTO/AIR/1779 was to consider requests
for extension of the transition period for export subsidies under Article 27.4 and reservations of rightsof certain Members listed in Annex VII(b).  The Committee adopted the agenda as set forth in the
airgram convening the meeting, and the Chairman indicated that the Committee would start in theorder that the requests were listed in the airgram, but that certain requests might need to be brought
forward to accommodate the travel itineraries of certain non-resident delegations.
3. The Chairman stated that, as the Committee was aware, a total of twenty-two Members were
seeking extensions pursuant to Article 27.4.  Most had made requests based on the special procedures
contained in G/SCM/39, while several had made requests for certain programmes on the basis of
Article 27.4 alone, and one had made a request based on the language in paragraph 10.6 of the
Ministerial Decision on Implementation-Related Issues.  In addition, four Members had reserved
rights pursuant to the special procedures as Members listed in Annex VII(b).  All Members seeking
extensions had submitted notifications in respect of the programmes for which they were seeking
extensions and, for convenience, all of these notifications had been circulated in G/SCM/N/71 series.Item 3(a) of the airgram listed the requests and reservations of rights that the Committee was
considering for the first time at this meeting.  Item 3(b) listed the requests and reservations of rights
for which the Committee had a first round of consideration at its 13 March 2002 meeting.  Thus, these
latter requests and reservations of rights were on the agenda of this meeting for follow-up discussion.
4. As indicated in the airgram, a number of written questions had been received concerning each
of the requests and reservations of rights to be considered for the first time at this meeting, although
some questions had been submitted and/or received after the deadline that had been established.  The
Chairman wished to remind all Members of the importance of submitting their questions by the
deadlines that the Committee had set, as well as in  accordance with established procedures, so that
discussions at Committee meetings could be as productive as possible.  In spite of the lateness ofsome questions, most Members receiving questions had nevertheless submitted their written answers,
although some of these had been received only in the last couple of days and thus were available only
in the room.  Unfortunately, not all of the answers received were available yet in all three languages.
He hoped that this had not overly inconvenienced delegations.
5. As for the procedure at the meeting, on a purely organizational note, the Chairman indicated
that the discussion of each of the requests before the Committee would follow the usual practice of an
introduction and then presentation of answers to written questions by the requester, followed by an
opportunity for follow-up questions by other Members.  Members presenting their answers wereG/SCM/M/38
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invited to summarize them, or group them by topic where similar questions had been posed by more
than one Member.  As for the broader question of overall procedures and timing in resolving the
requests that had been received, the Chair stated that the Committee had had a good initial round of
discussion of some requests at the 13 March meeting, and that the discussions had generated some
useful written follow-up questions, which would be taken up at this meeting.  He stated that theCommittee was only now having an initial discussion on the rest of the requests, and Members would
certainly want to reflect on the issues raised in the various questions and the answers that would be
presented, to determine if they needed any additional information or clarification.
6. On the more precise question of whether the Committee would be in a position today to take
action in respect of some or all of the requests on the agenda, he was in the Committee's hands, of
course, and would be guided by the discussion.  As a general matter, he viewed this process as a
dialogue between the Committee and Members that had made requests, and it was clear that thisdialogue would need to continue in respect of each request until all questions and concerns that might
be raised had been addressed to the satisfaction of all Members.  The Committee as a whole thus
would need to be guided by the developments in th is dialogue in determining when it would be ready
to take action in respect of each request.
7. Given that the Committee was still at a rather preliminary stage in the process as a whole, and
given that a number of follow-up questions had been posed since the last meeting, the Chairman's
sense was that the Committee might not have reached a decision point for any of the requests as of
today.  In this considerable amount of factual information which might take some time for Members
to digest fully.  That said, it needed to be emphasized that Members who might still have questions or
concerns should raise those issues as soon as possible.  Even if a Member had not yet posed writtenquestions, it was strongly encouraged to raise any issues today, orally, in the first instance.  This was,
indeed, the very purpose of meetings of this kind:  to allow the Committee to have live exchanges
with the relevant experts and officials of the requesting Members.  These experts could, in many
cases, answer any questions on-the-spot, or at least could note them for detailed consideration in
capitals.  Thus, the responsibility in this process went two ways:  on the Committee to raise allquestions and issues in respect of each request as early as possible in the process;  and on the
requesting Members to provide answers as completely and as promptly as possible.
8. Considering the next steps, he suggested that the Committee should fix a deadline, in
principle, for any additional follow-up questions concerning any of the requests on the agenda.  He
proposed 23 May 2002, a deadline that the Committee had already identified for a number of other
sort of documents to be discussed a the 17 June meeting.  Written answers would thus be due on
6 June, also a pre-existing deadline for a number of other documents.  These written follow-upquestions and answers would then be up for discussion at the 17 June meeting, at which point the
Committee might have a clearer sense of the issues that remained open in respect of the various
requests.
A. I
NITIAL CONSIDERATION OF ARTICLE 27.4 REQUESTS AND DOCUMENTATION , INCLUDING
WRITTEN QUESTIONS AND ANSWERS AND RESERVATIONS OF RIGHTS AS MEMBERS LISTED IN
ANNEX VII ( B)
1. Article 27.4 requests
9. The first Article 27.4 request for discussion was that of Antigua and Barbuda.  The requests
and related documentation could be found in G/SCM/N/74/ATG and G/SCM/N/71/ATG.  This
request had been made on the basis of the special procedures agreed by Ministers at Doha indocument G/SCM/39.  Australia, the European Communities, Japan, and the United States had
submitted written questions on Antigua and Barbuda's request, contained in documents
G/SCM/Q3/ATG/1-4.  The written answers were contained in document G/SCM/Q3/ATG/5.  TheG/SCM/M/38
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European Communities posed a follow-up question, to be found  in G/SCM/Q3/ATG/6, and Antigua
and Barbuda's response can be found in G/SCM/Q3/ATG/8.
10. Concerning the request of Barbados, the Chairman recalled that this request had been made on
the basis of the special procedures in document G/SCM/39, and that the request and related
documentation could be found in documents G/SCM/74/BRB and G/SCM/N/71/BRB andCorrigendum 1.  Australia, the European Communities, Japan, Switzerland and the United States had
submitted written questions on the request, contained in documents G/SCM/Q3/BRB/1-5.  Written
responses to certain written questions of Switzerland and the United States were contained in
document G/SCM/Q3/BRB/6.  Written responses to certain questions of Australia, Japan, the
European Communities, Switzerland and the United States could be found in document
G/SCM/Q3/BRB/8.  The European Communities asked, as  an oral follow-up question to the reply to
question 5 posed by the United States, whether Barbados could indicate the currency in which the
figures were given.  The delegate of Barbados stated that she would seek clarification on this point.
11. On the request of Belize, the Chairman noted that the request had been made pursuant to the
special procedures in document G/SCM/39.  The request and related documentation could be found in
G/SCM/N/74/BLZ and Suppl .1 and G/SCM/N/71/BLZ and Suppl.1 plus Corrigendum 1.  Australia,
Canada, the European Communities, Japan and the United States had submitted written questions onBelize's request, in document G/SCM/Q3/BLZ/1-5.  The written responses to these questions were
contained in G/SCM/Q3/BLZ/6.
12. The delegate of Belize stated that a developing country Member whose share of world trade
was reflected in WTO statistics as 0.0 per cent, and with a GNI of less than US$2 billion, Belize
believed that it had met the eligibility requirements for the extension of export subsidy programmes.Of course, that was within the hand of this Committee to decide.  Belize's programmes were
essentially in the form of full or partial exemptions from import duties and other internal taxes.  In
addition, the manner in which these programmes were implemented, i.e. as revenue foregone, were
neither trade-restrictive nor trade-distortive.  This was readily evident when understood within the
context of Belize's share of world trade, coupled with its limited financial and export capacities.Instead, Belize's fiscal incentive and other programmes were designed to encourage economic
development, to attract investment in respect of the goods and services sectors.
13. In fact, the main objective of Belize's development incentive policy was to attract foreign
direct investment into the country for the purpose of creating new industries, or for enhancing existing
ones.  Belize, in the global society of states competing for investment dollars, or pounds, or yen or
Euros, would be practically unattractive as an investment destination without the programmes it
currently had in place.  In fact, even with the programmes it had in place, it ranked in the bottompercentile range as an investment destination.  Beliz e was, after all, a country with a labour force of
only 80,000, which was much smaller than many multinational corporations, and with limited export
capacity and products, and - even where these existed - with limited market opportunities.  Belize was
dependent on a few primary agricultural products which included citrus, sugar and bananas, and was
suffering from the recent decision with regard to the Banana  dispute, with the same fate possibly
befalling all its commodities.
14. Belize's ability to maintain its export subsidy programmes therefore was seen as essential in
maintaining at least its current level of development and would have a fundamental and significant
impact  on the decisions of domestic, and of potential domestic, and foreign investors in deciding
whether or not to invest in Belize.  Despite such as dismal-looking situation, Belize had taken thenecessary steps to ensure that its programmes en sured transparency and integrity in implementation
and Belize was making every effort to ensure that its programmes were in line with WTO rules on
subsidies and countervailing measures.G/SCM/M/38
Page 4
15. No questions nor comments were raised orally in respect to Belize's request.
16. Turning to the request of Costa Rica, the Chairman indicated that this request had also been
made on the basis of the special procedures in document G/SCM/39.  The request and related
documentation could be found in G/SCM/N/74/CRI and G/SCM/N/71/CRI.  Au stralia and the United
States had submitted written questions on Costa Rica's request in documents G/SCM/Q3/CRI/1-2.
The written responses were contai ned in documents G/SCM/Q3/CRI/3.
17. The delegate of Costa Rica drew attention to the responses in G/SCM/Q3/CRI/3.  The basic
purpose of both relevant programmes (Free Zone Regime and the Inward Processing Regime) was the
social and economic development of the country through the attraction of foreign investment, national
investment and export promotion.  This type of syst em established certain conditions that favoured the
establishment of firms engaged in a wide range of activities, generating wealth and technical
knowledge and also increasing the international competitiveness of the country.  The Free Zoneregime was set up by a package of incentives and benefits which the Costa Rican State gave to firms
that made new investments in the country, provided that they complied with the other requirements
and obligations established under existing legislation and regulations.  Within this programme of
incentives and benefits were export subsidies in the form of total and partial exemptions of income
taxes and internal charges and taxes.  Similarly, the Inward Processing Regime made possible theimport of certain capital goods and imports which were used in the production of export goods and
also involved the exemption from certain charges and indirect taxes on imports.  In recent years,
Costa Rica had seen a deterioration in the prices of most export products and significant increases in
the international price of oil.  This, together with the persistence of other imbalances, had made more
difficult the smooth running of economic activities and favourable results in terms of the balance-of-payments.  The most important consequence of this was limited access to short-term foreign
assistance.  The occurrence of other things – the year 2000 recession in the United States, the crisis in
the high technology products market (a main Cost Rican export), and the fall in the prices of coffee
and bananas – had affected the country's exports, which fell by approximately 7.2 per cent by the end
of 2001.  In this way, this year, the real increase in production would be 0.37 per cent.  Now, in theface of this situation, the growth prospects for the Costa Rican economy were not particularly
favourable in 2002.  External costs and the accumulation of certain financial problems made more
difficult the early recovery of the country.  In this context, the preservation of some export subsidies
contained in the Free Zone and the Inward Processing Regimes was necessary for Costa Rica because
of the economic, financial and development needs of the country.
18. No oral questions nor comments were raised in respect to Costa Rica's request.
19. With respect to the request of Dominica, the Chairman recalled that the request and related
documentation could be found in document G/SCM/N/74/DMA and G/SCM/N/71/DMA and
Corrigendum 1.  The request had been made on the basis of the special procedures in document
G/SCM/39.  Australia, the European Communities, Japan and the United States had submitted written
questions on Dominica's request, in documents G/SCM/Q3/DMA/1-4.  The written responses to these
written questions were contained in document G/SCM/Q3/DMA/5.  The delegate of St. Lucia
introduced these responses on Dominica's behalf.
20. No oral questions or comments were raised in respect of Dominica's request.
21. The next request was that of the Dominican Republic.  This request had been made on the
basis of the special procedures in document G/SCM/39.  This request and related documentation
could be found in documents G/ SCM/N/74/DOM and G/SCM/N/71/DOM.  Australia, the European
Communities, Japan, and the United States had submitted written questions on the Dominican
Republic's request, in documents G/SCM/Q3/DOM/1-4.  The written responses to these written
questions were contained in document G/SCM/ Q3/DOM/5.  The United States posed a follow-upG/SCM/M/38
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question, to be found in document G/SCM/Q3 /DOM/6, and the response is contained in
G/SCM/Q3/DOM/7.
22. Turning to the request of El Salvador, the Chairman noted that this request and related
documentation could be found in documents G/ SCM/74/SLV/1 and 2 and G/SCM/N/71/SLV &
Suppl.1.  He noted that El Salvador had submitted two requests, one on the basis of the specialprocedures in G/SCM/39 and one pursuant in Ar ticle 27.4 on its own.  Australia, Canada, the
European Communities and the United States had submitted written questions on El Salvador's
request, in documents G/SCM/Q3/SLV1-4.  The wri tten responses to these written questions were
contained in document G/SCM/Q3/SLV/5.
23. No oral questions or comments were raised in respect of El Salvador's request.
24. Turning to the Article 27.4 request of Grenada, made on the basis of the special procedures in
document G/SCM/39, the Chairman noted that this request and related documentation could be found
in documents G/SCM/74/GRD & Suppl.1 and G/SC M/N/71/GRD & Suppl.1.  Canada, the European
Communities, Japan and the United States had submitted written questions on Grenada's request, in
documents G/SCM/Q3/GRD/1-4.  The written responses to these written questions were contained in
document G/SCM/Q3/GRD/5.
25. The delegate of Grenada drew attention to Grenada's responses in document
G/SCM/Q3/GRD/5, and thanked the WTO for the assi stance provided to Grenada for the opportunity
to attend not only the Geneva Week but also this very important meeting, and thanked as well the
WTO for the excellent technical assistance provided in this regard.  This matter was of great
importance to Grenada's development as it sought to encourage investment and diversify its economy.
26. No oral questions or comments were raised in respect of Grenada's request.
27. The next request was that of Jamaica.  The Chairman recalled that this request and related
documentation could be found in documents G/SCM/ N/74/JAM and G/SCM/N/71/ JAM.  This request
had been made on the basis of the special procedures in document G/SCM/39.  Australia, Canada, the
European Communities, Switzerland and the United States had submitted written questions on
Jamaica's request, in documents G/SCM/Q3/JAM/1-5 and the written responses to the questions ofCanada, the European Communities and the United States were contained in document
G/SCM/Q3/JAM/6.  The delegate of Jamaica noted that, with regard to the questions posed by
Australia, questions 1 and 2 related to Jamaica's first notification which had been submitted in
December 2001 and she believed that those would have been addressed in Jamaica's February 2002
notification.  Australia's third question would have been addressed in the responses provided to a
similar question posed by the European Communities and the United States.
28. No oral questions nor comments were raised in respect of Jamaica's request.
29. Turning to the request of Jordan, the Chairman noted that this request had been made on the
basis on the special procedures in document G/SCM/39.  The request and related documentation could
be found in documents G/SCM/N/74/JOR and G/SC M/N/71/JOR.  Australia, Japan, Switzerland and
the United States had submitted written questions on Jordan's request, in documents
G/SCM/Q3/JOR/1-4, and Jordan's responses  were contained in G/SCM/Q3/JOR/5.
30. The delegate of Jordan drew attention to Jordan's responses contained in G/SCM/Q3/JOR/5,
and informed the Committee that a decision by the Cabinet had been taken to eliminate one of the two
subsidy programmes concerned - the discount facility programme - by 31 December 2002.
31. No oral questions nor comments were raised in respect of Jordan's request.G/SCM/M/38
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32. Turning to the Article 27.4 request of Mauritius, the Chairman noted that this request had
been made on the basis of the special procedures in G/SCM/39.  This request and related
documentation could be found in documents G/SC M/N/74/MUS and G/SCM/N/71/MUS.  Australia,
the European Communities, Japan and the United States had submitted written questions on the
request of Mauritius, in documents G/SCM/Q3/MUS/1-4.  Written responses to these questions werecontained in G/SCM/Q3/MUS/5.  The delegate of Mauritius wished to indicate that his delegation was
providing preliminary answers and that, if n eed be, Mauritius would provide supplementary
information.
33. Turning to the request of St. Kitts and Nevis, made on the basis of the special procedures in
document G/SCM/39, the Chairman noted that this request and related documentation could be found
in documents G/SCM/N/74/KNA and G/SCM/71/KNA.  Australia, Canada, the European
Communities, Japan and the United States had submitted written questions on this request, indocuments G/SCM/Q3/KNA/1-5.  The written responses to the questions of Australia, Canada, the
European Communities, Japan and the United States are contained in document G/SCM/Q3/KNA/6.
34. No oral questions nor comments were raised in the request of St Kitts and Nevis.
35. The next request for discussion was that of St. Lucia.  The Chairman recalled that this request
had been made on the basis of the special procedures in document G/SCM/39 and that the request and
related documentation could be found in do cuments G/SCM/N/74/LC A and G/SCM/N/71/LCA.
Australia, the European Communities, Japan and the United States had submitted written questions on
this request, in documents G/SCM/Q3/LCA/1-4.  St. Lucia's responses are contained in document
G/SCM/Q3/LCA/5.
36. The delegate of St. Lucia noted that the concise nature of her delegation's response to the
questions posed was facilitated by two factors, in particular:  the overlap between the written
questions that had been posed by Members and the similarity between, indeed the virtually
harmonized nature of, much of the legislation in OECS Member States.  The responses given by
Antigua and Barbuda, Dominica, Grenada, St. Kitt s and Nevis, and St. Vincent and the Grenadines
were largely coincident with the status quo  in St. Lucia.  There were some distinctions.  Most of the
relevant legislation referred to in St. Lucia's request pre-dated the WTO era.  The Fiscal Incentives
Act of 1975 reflected basic government policies that were instituted since independence.  The
Customs Free Zone Act of 1983 had been replaced by the Free Zone Act of 1999.  The Hotels Aids
Act of 1959 had bee replaced by the Tourism Incentives Act of 1996.
37. With respect to the scope and coverage of all the programmes mentioned in St. Lucia's request
for an extension, the delegate observed that not all programmes notified necessarily constituted export
subsidies.  For example, some of the 10 newer programmes with respect to the Micro- and Small-Scale Business Enterprise act of 1998 and the Special Development Areas Act of the same year were
not, in law, contingent on export performance but, given the extraordinarily small size of their market
– with a population of a mere 150,000 – they could perhaps be found, irrespective of footnote 4 to the
SCM Agreement, to be in fact dependent on export performance.  A similar approach had been
adopted with respect to programmes which would not be treated within the procedures agreed on inG/SCM/39, i.e. other than in the form of exemp tion of import duties and internal taxes, under the
general Article 27.4 provisions for the request for extensions.  She referred, in particular, to the export
credit guarantee facilities provided for by the Eastern Caribbean Central Bank and export promotion
support from the OECS export development unit.  Her delegation did not believe that these
constituted export subsidies, for a number of reasons.  However, they continued to probe the issue forfurther clarification to confirm this view and, in the interim, had followed a philosophy which
generally said:  'when in doubt, request and notify'.G/SCM/M/38
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38. The delegate of the United States posed a follow-up question, in document
G/SCM/Q3/LCA/6.  The reply to this questi on can be found in document G/SCM/Q3/LCA/7.
39. Turning next to the Article 27.4 request of St. Vincent and the Grenadines, the Chairman
noted that this request and related documentation could be found in documents G/SCM/N/74/VCT
and G/SCM/N/71/VCT.  This request had been made on the basis of the special procedures indocument G/SCM/39.  Australia, Canada, the European Communities, Japan and the United States
had submitted written questions on this request.  These questions were contained in documents
G/SCM/Q3/VCT/1-5.  Written responses to these questions were contained in G/SCM/Q3/VCT/6.
40. The delegate of St. Vincent and the Grenadines drew attention to the responses contained in
G/SCM/Q3/VCT/6, and stated that St. Vincent and the Grenadines belonged to the Organization of
Eastern Caribbean States (OECS).  As these states gravitated towards an economic and political
union, their laws were generally harmonized.  Therefore, most of these states' answers were similar.
41. No oral questions nor comments were raised in respect of St Vincent and the Grenadines'
request.
42. Turning to the request of Uruguay, the Chairman recalled that Uruguay's request and related
documentation could be found in documents G/SC M/N/74/URY and Corr.1 and G/SCM/N/71/URG.
Uruguay's request had been made pursuant to both Article 27.4 and the procedures in G/SCM/39.
Written questions received on Uruguay's request could be found in documents G/SCM/Q3/URY/1-4,
from Australia, Japan, Switzerland and the United States.  The written responses to these questions
were contained in document G/SCM/Q3/URY/5.
43. No oral questions nor comments were raised in respect of Uruguay's request.
44. With respect to the Article 27.4 requests of Fiji, Papua New Guinea  and Suriname , in view of
the fact these delegations were not represented at the meeting, and in view of the fact that the
Committee was still awaiting written responses to Members' questions to them, the Chairman
proposed to revert to these requests at a future meeting.
45. The Committee took note of the statements made and agreed to proceed accordingly.
2. Reservations of rights as Members listed in Annex VII(b)
46. Turning to the reservations of rights of Bolivia and Honduras as Members listed in
Annex VII(b), the Chairman recalled that pursuant to paragraph 6(b) of the special procedures in
document G/SCM/39, a Member listed in Annex VII(b) had the possibility not later than
31 December 2001 to reserve it rights to use the procedures at such time as it may leave Annex VII(b)
due to its GNI per capita.  To do so, it had to submit the initial documentation as referred to in
paragraph 1(a) of the procedures.  According to paragraph 6(c) of the procedures, if a Member left
Annex VII(b) during the extension period it could obtain extensions through the end of calendar year2007 by following the procedures otherwise set forth in G/SCM/39.  As provided in paragraph 6(d),
the year of the Member's exist from Annex VII(b) Members, and the initial documentation of two of
those, Bolivia and Honduras, were on the agenda for discussion under this item.  The discussion on
the documentation of the others, Kenya and Sri Lanka, was on the agenda for discussion later in the
special meeting.
47. Before commencing the discussion of these individual reservation of rights, the Chairman
observed, as he had at the 13 March 2002 meeting, that because these two Members had at this point
only reserved their rights to exercise the procedures  in G/SCM/39 at some future point, it seemed to
him that there was no need for the Committee to take formal action in respect of these reservations ofG/SCM/M/38
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rights.  Rather, Committee action would be needed as and when these Members graduated Annex
VII(b) and sought to exercise their rights under the procedures to seek an extension of their transition
periods.  Thus, while the discussion of Bolivia and Honduras' initial documentation and the question
and answer process of course would continue until Members had received all of the clarifications that
they sought, he thought that today, and at any future  meetings where these reservations of rights might
be discussed, the Committee would need simply to take note of the information and answers provided.
48. Turning to the reservation of rights of Bolivia, which could be found in document
G/SCM/N/74/BOL, the Chairman noted that Au stralia, the European Communities, Japan,
Switzerland, and the United States had submitted written questions on this reservation of rights.
These questions were contained in documents G/SCM/Q3/BOL/1-5.  Written responses were
contained in G/SCM/Q3/BOL/7-9.
49. The second and final reservation of rights for initial discussion was that of Honduras, found in
document G/SCM/N/74/HND.  Aust ralia, the European Communities, Japan, Switzerland and the
United States had submitted written questions on this reservation of rights, contained in document
G/SCM/Q3/HND/1-5.  Honduras' written responses were contained in document G/SCM/Q3/HND/6.
50. The Chairman sought clarification from Honduras on its categorization of type of benefit and
rate of duty.  In respect of the category of semi-finished products, the delegate of Honduras had saidthat the rate of duty was 10 and 5 per cent respectively and he asked for clarification as to what this
meant.
51. The delegate of Honduras clarified that the reference was only to semi-finished products.  The
tariffs of 10 per cent and 5 per cent varied within this category, some semi-finished products attracting
a rate of 10 per cent and thus attracting a rate of 5 per cent.
52. The Chairman thanked the delegations of Bolivia and Honduras for their answers and further
information and clarification provided.  He thought as well that the exchanges to date had been very
fruitful and constructive.  He reminded Members that wished to receive written answers to any
follow-up questions to submit such questions in writ ing to the Member concerned with a copy to the
Secretariat by 23 May 2002.  Written answers were to be provided directly to the Member posing thequestion, with a copy to the Secretariat, by 6 June 2002.
53. The Committee took note of the statements made.
B. ADDITIONAL DOCUMENTATION , INCLUDING WRITTEN QUESTIONS AND ANSWERS , RECEIVED
SINCE THE COMMITTEE 'S CONSIDERATION AT THE 13 MARCH 2002 MEETING
1. Article 27.4 requests
54. The first Article 27.4 request for follow-up discussion was that of Colombia.  The Chairman
noted that the request and related documentati on could be found in docu ments G/SCM/N/74/COL and
G/SCM/N/71/COL.  He recalled that Colombia's request  consisted of two parts:  one pursuant to the
language of paragraph 10.6 of the Ministerial Decision on Implementation Related Issues
WT/MIN/01/17 and one pursuant to Article 27.4 on its own.  Since the Committee's 13 March 2002
meeting, Peru and the United States had submitted additional written questions on Colombia's request,
in documents G/SCM/Q3/COL/9 and 10.  The written responses to these written questions werecontained in document G/SCM/Q3/COL/11.
55. The delegate of Ecuador stated that his delegation would have preferred it if the countries
which had put questions to Colombia had asked for more clarifications, but his delegation had certain
comments.  The request by Colombia referred to three particular specific programmes.  The first onG/SCM/M/38
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imports and exports of capital, the second was SIEX, and the third related to mechanisms of transport.
The first two came under Article 27.4 and paragraph 10.6 of the Ministerial Declaration which did not
refer to SCM/39, particularly in regard to paragraph 2, i.e. programmes which could be prolonged.
This was the problem which his delegation had.  There had been a period for exchange of questions
and answers, the last posed by Peru and the United States.  This information allowed his delegation tomake certain clarifications and draw certain conclusions and to see where they were going, and what
was and was not possible.  Ecuador believed that it was better for everyone if they could reorient the
situation, if possible.  Ecuador wished in this sense to thank Colombia for the abundant participation
and for the information provided during this consultation process.  Ecuador understood and saw with
appreciation some of the fundamental reasons that underlay the Colombian request, but these also had
to be duly compared and evaluated in relation to the situation of other geographically nearby countries
as even Colombia called them, as was the case of his country.  The concession of this type of subsidywould certainly have an evident negative impact on the international competitiveness of similar
products which also were produced and exported by  his country, which was without any request for
extension of subsidies.  Evidently, this could have implications for loss of market positions, including
complete loss of certain external markets.
56. Ecuador believed that Colombia had not prov ided the necessary information to show that
Colombia complied with the conditions for an extension.  Ecuador thus wished to express its
opposition to the request put by Colombia.  The reasons for this were as indicated by Peru in
document G/SCM/Q3/COL/9, but Ecuador also wish ed to make its views clear.  These were
preliminary comments indicative of Ecuador's position.  First, Ecuador considered that Colombia did
not comply with at least two of the conditions under the "special mechanism" because, aftercalculations made by the Secretariat of the WTO which appeared in the Annex of document
G/SCM/38, Colombia's share was higher than 0.06 pe r cent of the world market. This was also clear
from paragraph 9 of G/SCM/N/74/COL.  Colombia's GNI for the year 2000 published by the World
Bank would also be higher than $20 million.  Therefore, according to the World Bank, Colombia
would be at a higher level and reference could be  made to the footnote 2 of document G/SCM/39.
With respect to relative competitiveness with regard to neighbouring countries and the prolongation of
the period of subsidies, paragraphs 5 and 6 of Article 27 showed the conditions which needed to be
achieved.  Although Colombia stated that their competitiveness was similar to that of other central
American and Caribbean countries, Ecuador believed that this information needed to be compared to
other international information.  He therefore wished to request the Secretariat to make available the
information on export competitiveness under Article 27.6.
57. With respect to the payment of VAT referred to in document G/SCM/COL/10, there was no
moratorium.  Any deferral of the obligation to make the VAT payment could not extend beyond the
extended transition period. In the present circumstances, with the information provided by Colombia,
Ecuador could not support the petition presented by Colombia unless it was shown that this country
fulfilled the eligibility criteria.
58. The Chairman noted that although Ecuador might have wished the delegations of the United
States and Peru to have followed up with further clarification or further follow-up questions, it was of
those delegations to judge whether or not that was appropriate based on the information that Colombia
had so far provided.  That said, the delegate of Ecuador had stated Ecuador's position on, or
opposition to, this request, as was Ecuador's right.  However, the delegate had said that his views were
of a preliminary nature and were based largely on the extent to which insufficient information orjustification had been provided.  As their review process was of an iterative nature, it was therefore
important for Ecuador to give Colombia the opportunity either to cure the deficiencies that Ecuador
saw in the request or to respond to each of the issues that Ecuador had raised which had led Ecuador
to form its views.  The Chairman noted that Ecuador had asked for a computation to be conducted by
the Secretariat on export competitiveness.  He wish ed to point out to Members that this was the first
such request ever made, and Ecuador would need to submit a formal written request detailing exactlyG/SCM/M/38
Page 10
the computation it asked to be made.  He urged Ecuador to put forward in writing its comments and
questions, including the request for a computation, as soon as possible.
59. The delegate of Colombia thanked the delegate of Ecuador for his statement, especially for his
statement at the beginning that he understood why Colombia was making its request.  Secondly, she
noted that, from Colombia's point of view, this process was at a preliminary stage during which thereshould be an exchange of information among Members, and this was why she believed it was terribly
important for Ecuador to take into account Colombia's explanations and comments concerning what
Ecuador had said.  The delegate of Ecuador had asserted that Ecuador's concerns about Colombia's
request were linked to the fact that Colombia was not included in the list of countries in G/SCM/38.
That document had been replaced by document G/SCM/39.  Obviously, Colombia was not on the list
in document G/SCM/38, but there were other, subsequent, documents, such as G/SCM/39.  Above all,
at the Ministerial Conference in Doha, Ministers had adopted the Implementation Decision, which, inparagraph 10.6, established certain conditions which were distinct from, or additional to, those set
forth in the documents she had already referred to.  This meant that the process would continue in
Geneva at some point.  At the Ministerial Conference, consideration was given to the special
circumstances of certain Members.  That resulted in the adoption by all Ministers of the
Implementation Decision.  She wished to draw Ecuador's attention to these facts.  She underlined thatit was particularly important to read the Ministerial Decision in conjunction with Article 27.4, for the
purpose of analysing Colombia's request regarding the SIEX and the Free Zones.  With a view to
avoiding differential treatment, the Decision on Implementation provided for flexible conditions of
compliance with the requirements of the second paragraph of document G/SCM/39, which were
applicable to Colombia's circumstances.
60. With respect to the reference by the delegate of Ecuador to competitiveness among
Colombian exporters and countries requesting the extension and to paragraphs 27.5 and 27.6 of the
SCM Agreement, she wished to emphasize that these were two entirely different topics.  The
"competitiveness" to which Colombia referred in this request was the competitiveness mentioned in
paragraph 10.6 of the Implementation Decision, the relative competitiveness between Colombianexports and exports of those countries for which the special process was adopted.  At no point was
Colombia talking about "competitiveness" as defined in Articles 27.5 and 27.6.  She thought that once
Colombia had clarified these two points, perhaps Ecuador might have a slightly changed view of this
entire picture and the various documents in this procedure.  Ecuador had a clearer picture at least of
what the Colombian approach in making this proposal had been.  Colombia would welcome Ecuador's
statement of any further concerns that they might ha ve in the future and would try to provide as much
clarification as they could in connection with such concerns, and with the concerns of any otherMember of this Committee.
61. The delegate of Ecuador stated that obviously the right of "self-defence" existed and his
delegation did not wish to pre-empt this.  In the present circumstances, his delegation did not have
sufficient information to enable it to qualify and evaluate Colombia's request.  He thanked Colombia
for its oral responses, and stated that his delegation was aware of the points which Colombia raised,especially with regard to competitiveness under paragraph 10.6, but that his delegation had a different
reading of the situation.
62. Comments and questions of Ecuador with respect to Colombia's request were subsequently
circulated in document G/SCM/Q3 /COL/12.  Colombia's responses to these comments and questions
can be found in G/SCM/COL/13.
63. Turning to the Article 27.4 request of Guatemala, the Chairman stated that the request and
related documentation could be found in docume nts G/SCM/N/74/GTM and 71/GTM.  Since the
13 March meeting, the United States had submitted additional written questions on this request,G/SCM/M/38
Page 11
contained in document G/SCM/Q3/GTM/7.  Guat emala's written responses were contained in
G/SCM/Q3/GTM/8.
64. No oral questions nor comments were raised in respect of Guatemala's request.
65. The next request for follow-up discussion was that of Panama.  The Chairman recalled that
the request and related documentation could be  found in documents G/ SCM/N/74/PAN/1, 74/PAN/2
and 71/PAN.  He recalled that the two requests documents from Panama reflected the fact that
Panama had requested extensions of various programmes, some under the special procedures under
document G/SCM/39, and some under Article 27.4 on its own.  Since the last meeting, Japan and the
United States had submitted additional written questions on Panama's requests, contained in
documents G/SCM/Q3/PAN/9 and 10.  Panama's written responses to these additional questions were
provided in document G/SCM/Q3/PAN/11.
66. No oral questions nor comments were raised in respect of Panama's request.
67. The last Article 27.4 request for follow-up discussion at the meeting was that of Thailand,
which had been made on the basis of Article 27.4 on its own.  The request and related documentation
could be found in documents G/SCM/N/74/THA and G/SCM/N/71/THA.  Since the 13 March
meeting, Peru and Switzerland had submitted additional questions, contained in documents
G/SCM/Q3/THA/8-9, and Thailand's written responses to these questions can be found inG/SCM/Q3/THA/11-12.  In addition, Thailand had submitted additional – and, in some cases, revised
– written responses to the written questions of Australia, the European Communities, Japan, Mexico,
Switzerland and the United States that had been posed in connection with the 13 March meeting.
These had been circulated as G/SCM/Q3/THA/10.
68. No oral questions nor comments were raised in respect of Thailand's request.
69. The Chairman thanked all delegations that had pa rticipated in this follow-up discussion of the
Article 27.4 requests of Colombia, Guatemala, Pa nama and Thailand including the requesters who
had provided additional responses.  The Committee had had a constructive exchange of additional
questions.  He urged Members to reflect carefully on the answers that had been presented and to
submit any further written follow-up questions for discussion at the 17 June meeting, by the 23 Maydeadline, to the Member concerned, with a copy to the Secretariat.  Written answers to all such
questions were to be sent to the Member that posed the question with a copy to the Secretariat for
circulation by 6 June 2002.
70. The Committee took note of the statements made in respect of these requests.
2. Reservations of rights as Members listed in Annex VII(b)
71. Turning to the follow-up discussion of Kenya's and Sri Lanka's reservations of rights as
Members, the Chairman recalled the general observations he had made earlier in the meeting with
respect to paragraph 6(b) of the procedures in document G/SCM/39.
72. The Chairman noted that there had been no additional questions or comments since the
13 March meeting with respect to the reservations of rights by Kenya, in document
G/SCM/N/74/KEN, or of Sri Lanka, in document G/SCM/N/74/LKA.
73. He thanked delegations for their questions and answers and further information and
clarifications provided.  This had been a very  useful discussion and the Committee had made much
progress, which he believed had helped the Committee to advance its work towards an eventual
decision on these requests.G/SCM/M/38
Page 12
74. The Committee took note of the statement made.
75. The Chairman took stock of where he thought th e Committee seemed to be in the process, and
how Members should prepare for the next meetings.  First, the Committee had completed a first
consideration of most of the requests and a second consideration of some of them.  All of these
requests would be reverted to at the upcoming meetings for discussion of any further follow-up issuesthat might be raised.  Concerning how the Committee would move to the next stage of this process, it
would seem logical that as and when no further questions were posed in respect of a given request, the
Committee could be asked whether it was in a position to take action on that request.  It was therefore
very important for Members who might still have concerns for which they required further
clarification to raise those issues as soon as possible.  There were a considerable number of requests
pending before the Committee.  The Committee had many other items of business on its work
programme and all Members were certainly very busy with other matters as well. Thus, it was veryimportant for Members that might still have concerns or questions about one or more requests to make
an effort to engage fully in the clarification process as promptly and as comprehensively as possible,
so that the Committee could move in an efficient and orderly manner to the next stage of this process
with respect to each request.
76. The Chairman recalled that the discussion at the 17 June meeting would be organized around
the written questions and answers exchanged before the meeting, to again remind Members that the
deadline for written questions was 23 May and the deadline for written answers was 6 June.  Before
this session came to an end, he also wished to recall that the Committee had set a schedule of
meetings for the rest of this year at which the Article 27.4 requests, amongst other things, would
figure on the agendas.  Thus, following the 17 June meeting, the Committee would meet on 25 Julyand, as necessary, on 19 September and 13 December in addition to the regular series of fall meetings
to be held at the end of October and beginning of November.
77. The Committee took note of the statements made.  The meeting was adjourned
.
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