. /.RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/W/450
29 May 2001
(01-2666)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
FOLLOW-UP QUESTIONS AND COMMENTS CONCERNING
PROPOSALS ON IMPLEMENTATION-RELATED ISSUES
REFERRED TO THE COMMITTEE IN THE 15 DECEMBER 2000
DECISION OF THE GENERAL COUNCIL
Comments of Switzerland
The following communication, dated 28 May 2001, has been received from the Permanent
Mission of Switzerland.
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Proposal regarding Article 27.6 of the SCM Agreement and the possibility to establish export
competitiveness on the basis of a period  longer than two years (G/SCM/W/431/Rev.1)
Switzerland puts forward the following comments as a reaction to the replies given by
Honduras, on behalf of the co-sponsors of the proposal set forth in above mentioned document, during
the informal meetings of the Committee on Subsidies and Countervailing Measures on 1 and 3 May.
We thank Honduras for their encouraging statement regarding the Swiss initial reactions to
this proposal.  As already stated, Switzerland could support the main thrust of it acknowledging thatthe time period fixed in Art. 27.6 of the SCM Agreement may be too short for determining the export
competitiveness of a developing country taking into account e.g., potentially adverse effects due to
volatility on international markets.  Therefore, Swit zerland could envisage to agree to an extension of
the requested two consecutive calendar  years  as proposed by a number of Members in this
Committee.
Moreover, we reiterate that the re-inclusion of a developing country whose exports may have
fallen under the threshold of 3.25 per cent should - in our view - be accompanied by additional
conditions.  Switzerland had proposed two of them:  firstly, the share in the world market of the
concerned product should fall under 3 per cent and, secondly, the drop below this mark should cover aperiod of two consecutive calendar years before ex port subsidies could then again be introduced.
Some Members have already expressed some interest and support to this suggestion.
However and following closely the discussions in  the committee so far, it has appeared to us
that the different time periods stipulated in Art.  27 of the SCM Agreement may render difficult the
common understanding of the effects of the re-inclusion mentioned above.  Switzerland feels that
such a common understanding of Art. 27 should be sought and is a prerequisite in finding a suitable
response to the task given by the General Council to this Committee.
It is our appreciation that Art. 27.2 lit. (b) and 27.4 of the SCM Agreement formulate the
general rule that all developing country Members other than those referenced in Article VII were
provided eight years to phase out all their export subsidies.  Art. 27.5 of the SCM Agreement wouldG/SCM/W/450
Page 2
then be a specific rule for cases where a developing country has reached export competitiveness, this
latter term being defined in Art. 27.6.  Under this particular rule a developing country included in
Annex VII would have to phase out gradually its ex port subsidies of that specific product in eight
years when export competitiveness has been reached.
Developing country Members not listed under Annex VII are only concerned by this
paragraph until 1 January 2003 when the general prohibition of export subsidies for those countries
comes into effect.  Until then, the attainment of export competitiveness provides them only with a
timeframe of two years to phase out those specific export subsidies.  After this deadline, such a
developing country Member deeming it necessary to apply export subsidies beyond the eight year
period, must refer the matter to this committee under a consultation mechanism foreseen in Art. 27.4.
It is clear that the possibility of re-inclusion would therefore predominantly be of interest for thosecountries listed in Annex VII.
Hence, Switzerland understands that the requested re-inclusion in relationship to the general
discipline invoked under Art. 27.4 of the SCM would onl y be accessible to developing countries listed
in the Annex VII after the deadline of 1 January 2003.  Other developing country Members would bebound after that date to the general prohibition of export subsidies.  The time period applicable for
phasing out of those newly introduced export subsidies would remain unchanged, i.e. eight years for
those countries referred to in Annex VII while all other developing country Members would be
subject to a two year period for the re-introduced export subsidies until the beginning of 2003.
Switzerland is of the view that an understanding on common grounds clarifying the
relationship of the different time periods stipulated in Art. 27 of the SCM Agreement could pave the
way in finding a suitable solution under this item in the Committee.  We are looking forward in
receiving your comments hereto.
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