WORLD TRADE
ORGANIZATIONG/SCM/Q2/CHL/16
14 May 2004
(04-2145)
Committee on Subsidies
and Countervailing MeasuresOriginal: Spanish
SUBSIDIES
Reply to the Question Posed by BOLIVIA1
Regarding the New and Full Notifications of CHILE2
The following communication, dated 12 May 2004, is being circulated at the request of the
delegation of Chile.
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I have pleasure in submitting herewith the reply to the question posed by Bolivia and
circulated to all Members in the framework of the Committee on Subsidies and Countervailing
Measures (G/SCM/Q2/CHL/15).
In spite of the fact that the notification by Chile is scheduled for review only in October 2004,
we have decided, in response to the interest expressed by Bolivia, to reply now, as follows:
Could the commercial transactions which are conducted by Chile in the Iquique Free-
Trade Zone and the Extended Free-Trade Zone in the First Region of the country and which
are exempt from payment of Customs duties and value-added tax be considered export subsidy
mechanisms?
Reply
Chile wishes to state that it notified two programmes in the free-trade zones in northern Chile.
The first is a tax credit for investment in the provinces of Arica and Parinacota (Region I); the second
is an exemption from income tax on the profits of management companies and users in the Iquique
Free-Trade Zone. Neither programme may be considered an export subsidy within the meaning of
Article 3 of the Agreement on Subsidies and Countervailing Measures.
Bolivia asks whether exemption from payment of Customs duties and value-added tax in
Chilean free-trade zones could be considered an export subsidy mechanism. First and foremost, Chile
does not consider these exemptions to be subsidies. The free-trade zones enjoy “extraterritoriality”,
that is to say, goods are assumed to be abroad and are therefore tax-exempt unless they enter the rest
of national territory.
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1G/SMC/Q2/CHL/15
2G/SCM/N/95/CHL