RESTRICTED
WORLD TRADE G/SCM/Q2/VEN/8
12June1997
ORGANIZATION(97-2416)
Committee onSubsidies Original: Spanish
andCountervailing Measures
SUBSIDIES
Replies toQuestions posed bytheEUROPEAN COMMUNITIES1
Regarding theNewandFullNotification ofVENEZUELA2
Thefollowing communication, dated 20May1997, hasbeenreceived from thePermanent
Mission ofVenezuela.
_______________
Question
CanVenezuela explain whyitconsiders thattheexport scheme fortheautomotive industry
doesnotconstitute asubsidy?
Reply
TheprovisionsofArticle3.1,subparagraph(a)oftheAgreementonSubsidiesandCountervailing
Measures mustbeconsidered asestablishing theprohibition of"subsidies contingent, inlaworinfact,
whether solely orasoneofseveral otherconditions, uponexport performance, including thoseillustrated
inAnnex I".
Accordingly, itisimportant topoint out,firstofall,thatthepolicy fordevelopment ofthe
automotive industry inVenezuela doesnotconstitute anexport scheme initself. Similarly, itmust
beemphasized thattheabove-mentioned policy isgoverned bytheAndean Group 'sComplementarity
Agreement fortheautomotive sector, which wasdevised asameans ofincreasing thecompetitiveness
andefficiency oftheregional automotive industry.
Secondly, although Resolution No.001containing theregulations governing Venezuelan
automotive policy stipulates thattheadded value ofexports, measured asanf.o.b. value, ispartof
theformula formeasuring thepercentage ofsubregional purchases, wemustpointoutthatconsideration
ofthepercentage ofadded value inexports isoptional, thatistosaythatinnocaseisitbinding on
vehicle assembly plants, andforthatreason thisscheme cannot beconsidered toconstitute asubsidy
within themeaning oftheaforementioned subparagraph (a).
Inaddition, itisextremely important topoint outthatthisvariable hasaccounted fora
progressively smaller percentage share inthecalculation ofsubregional purchases, inthecaseofthose
enterprises which atagiven point intimemayhaveopted fortheuseofthismechanism.
1G/SCM/Q2/VEN/7.
2G/SCM/N/3/VEN +Suppl.1.