RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q3/BLZ/6
28 May  2002
(02-2929)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement
on Subsidies and Countervailing Measures
Replies to Questions Posed by AUSTRALIA1, CANADA2, the EUROPEAN COMMUNITIES3,
JAPAN4, and the UNITED STATES5 Regarding the Notification of BELIZE6
The following communication, dated 24 April 2002, has been received from the Permanent
Mission of Belize.
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Introduction
In accordance with Article 27.4 of the Agreement on Subsidies and Countervailing Measures
(SCM) as per the procedure set forth in document G/SCM/39, and in accordance with paragraph 10.6
of the Ministerial Declaration on Implementation-Related Issues and Concerns (WT/MIN/(01)/17) the
Government of Belize requests the Committee on Subsidies and Countervailing Measures to extend
the transition period for the continued application of its export subsidy programmes listed below, andto grant similar treatment as it relates to eligib le programmes and the duration of extensions as that
granted to other developing countries that have requested such extensions pursuant to the procedure
set forth in document G/SCM/39.
Belize has submitted its new and full notification on export subsidies currently being
maintained, specifically, full or partial exemptions from import duties and internal taxes, in
conformity with the procedures set forth in document G/SCM/39.  Belize has since received written
questions from, Canada, Japan, the United States and the European Communities in respect of its
request subsidies granted under the following programmes:
Fiscal Incentives Act
Export Processing Zones Act
Commercial Free Zones Act
Conditional Duty Exemption Facility
                                                     
1 G/SCM/Q3/BLZ/1
2 G/SCM/Q3/BLZ/4
3 G/SCM/Q3/BLZ/2
4 G/SCM/Q3/BLZ/3
5 G/SCM/Q3/BLZ/5
6 G/SCM/N/74/BLZ + Suppl.1 and G/SCM/N/71/BLZ + Suppl.1G/SCM/Q3/BLZ/6
Page 2
The following are responses to the questions posed by the Members indicated.
QUESTIONS FROM AUSTRALIA
Q1. Under the Fiscal Incentives Programme, could Belize confirm that the benefit, while
provided to both domestic and export production, provides a longer tax holiday if the
production is solely for export?
Reply
The Act does not specifically require a longer tax holiday if production is solely for export.
However, Section 6(1)(b) states that for a compan y “…  whose production is strictly for export, the
tax holiday may be for a maximum of twenty-five years.”
Belize’s rather limited export basket is evidence that not many export-oriented companies
benefit under this programme.  In fact most of the beneficiaries are in the services sectors, mainly intourism and tourism-related services.
Q2. Australia notes that the Programme ha s been expanded to capture companies with
investments of less than BZ$250,000. Could Belize advise when and how it will phase out this
programme in relation to export projects?
Reply
Belize intends to make full and sincere efforts to  comply with the deadline agreed upon in the
WTO for phasing out full and partial exemptions of import duties and internal taxes in relation toexport projects.  However, this programme will not be easy to phase out given that it is one of the
main investment promotion incentives of the government, and its main elements may need to be
retained in relation to projects not directly tied to exports.
Belize anticipates that the Doha Round of trade negotiations will continue to address the need
for small developing countries to retain the use of  investment promotion instruments in light of the
stiff competition for investment that these countries face.  Furthermore, Belize would like to drawrecognition to the high levels of subsidization and domestic support being maintained by the major
developed economies, on which minimal reductions are anticipated in the near future.
With regard to phasing out of the programme, the Government of Belize foresees the need for
future in-dept analysis in order to assess the poten tial impact of the removal of such Programmes for
investments in the export sectors, and on the competitiveness of national export industries in the
absence of these subsidies.  Technical assistance will be required for such an analysis.
It is felt that the programme will need to be phased out through a gradual process of reduction
over a reasonable period of time.  This is necessary to maintain investor confidence and facilitate thetransition to a new investment regime.  There is no doubt that the removal of these incentives will
require substantial compensatory improvements in the domestic investment climate.  Any
improvements will require a multi-dimensional approa ch involving all sectors, including social sector
issues (education, health, transport, etc.) in addition to purely trade and investment issues.
Due account must be taken of the fact that the bulk of such subsidization by the Government
of Belize are related to FDI.  As such, these subsidies in fact accrue in large measure to the nationals
of developed countries, which in turn freely re-route the financial benefits back to their home
countries.  Belize consequently gains only from limited employment and domestic expendituresG/SCM/Q3/BLZ/6
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(utilities, local purchases, etc.) but has no [alternative] options given the realities of low domestic
savings and the consequent, paucity of domestic resources for investment.  The phenomenon of net
outflow of resources from developing to developed economies is an undesirable reality that must be
addressed.  Assistance by UNCTAD might prove helpful in assessing the full range of issues relating
to the adverse situation being faced by small developing countries, particularly as they relate to therelevance, appropriateness and application of exis ting multilateral trade rules to the actual needs of
these countries.
Q3. Have any project ever been rejected under this programme?
Reply
Yes.  Projects are assessed for economic and social feasibility and approved or rejected on the
basis of clear criteria laid out in Sections 3(1) and 4(1) of the Act.  The Belize Trade and Investment
Development Service (BELTRAIDE) is responsible for evaluating project proposals and applications
for Fiscal Incentives and only recommends viable projects for approval.
Q4. Could Belize indicate the budgetary outlays for the Fiscal Incentives Programme over
the last three years? [i.e. 1999, 2000, 2001]
Reply
There are no up-front budgetary outlays except for the administration of the various
programmes.  Such administrative costs amount to approximately BZ$150,000 per annum for all four
programmes notified.  However data on revenue foregone are not readily available due to human
resources and other capacity constraints and must be compiled from the original customs documents.
Therefore additional time will be required in order to provide detailed specific responses.
QUESTIONS FROM CANADA
Q1. Please identify total exports that benefit from these programmes and the percentage of
national exports under each programme.
Reply
As indicated in the response to Question 4 posed by Australia above, data revenue foregone is
not readily available and additional time will be required to provide detailed specific responses.
Q2. Please identify estimates of government revenue foregone under the programmes.
Reply
As indicated in the response to Question 4 posed by Australia above, data revenue foregone is
not readily available and additional time will be required to provide detailed specific responses.
QUESTIONS FROM THE EUROPEAN COMMUNITIES
Q1. Please indicate whether the programmes provide for other forms of subsidies than
exemption of import duties and internal taxes (e.g. grants, provision of goods or services).G/SCM/Q3/BLZ/6
Page 4
Reply
The only forms of subsidy provided for under the programmes are partial and full exemption
from import duties and internal taxes for a specified period.
Q2. Do the programmes provide for a condition to use domestic goods? If yes, please
describe  the relevant provision.
Reply
The Fiscal Incentives Act does contain a provision linking access to exemption from import
duty to the use of domestic goods.  Section 7(3) of the Act provides as follows:
“… except in the case of an export enterprise exporting to non-CARICOM countries,
no duty exemption shall be granted for any raw materials or articles which are
available in Belize or in any Member State provided that they are of comparable
quality and price.”
It will be noted that this condition applies only to import duty, as internal taxes are not
mentioned.  Further, the term “domestic” is used in the context of the Caribbean Common Market
(CARICOM) and takes into account Belize’s obligation to implement the community policy of
promoting the use of regional raw materials, and to operate the Common External Tariff (CET) and
related Community Rules of Origin consistently with that policy.
For purposes of clarification, the same conditions apply to any enterprise exporting to
CARICOM States, since the final goods produced fro m such materials for export to CARICOM must
meet the Rules of Origin (see Section 3.1(c)) and Belize has historically not resorted to the Safeguard
Mechanism under the Rules of Origin, under which area treatment is conferred on the final goodsmade using third country materials.
It must be further noted that the domestic content requirement is qualified by a requirement of
“comparable quality and price” (Sec. 7(3)).  Where price and quality of a particular raw material or
good are not comparable, the benefits are not denied, thereby leaving open the option to source from
outside CARICOM.
Export Processing Zone (EPZ) Act  and Commercial Free Zone (CFZ) Act
Neither the EPZ Act nor the CFZ Act requires use of domestic raw materials or goods.
The issue does not arise under the Conditional Duty Exemption facility.
Q3. Please indicate the rate of import duty or internal tax exemption as of
1 September 2001.
Reply
Import Duty
The exemptions under the Fiscal Incentives Act and the Export Processing Zone Act normally
apply to imports of construction materials, equipment, machinery and fixtures.
The former programme rarely covers any form of manufacturing, as most of the beneficiaries
are involved in services, mainly tourism and to urism-related activities.  The few manufacturingG/SCM/Q3/BLZ/6
Page 5
enterprises that benefit are mainly agricultural operations that rely on their own raw materials, which
are invariably “wholly produced” in Belize, and th ese companies produce almost exclusively for the
domestic (Belize) market at this time.  The latter programme has so far evolved into a “Special EPZ”
programme concentrated in shrimp farming and with  a few similar operations (e.g. fish farming and
bamboo farming).  The only operational EPZ is dedicated to data processing activities and involves nomanufacturing whatsoever.
The rates of import duty on the types of imports indicated above vary by item.  At this time
the rates reflect Phase IV of the CARICOM Programme for the Phased Reduction of the Common
External Tariff as approved by the Conference of Heads of Government.  The agreed rate structure is
as follows:
Phased-Reduction of the Common External Tariff
Period of Application Implementation Period Rate Structure (%)
1.1.93 – 31.12.94 1.1.93 – 1.7.93 (0-5) to 30/35
1.1.95 – 31.12.96 1.1.95 – 1.7.95 (0-5) to 25/30
1.1.97 – 31.12.97 1.1.97 – 1.7.97 (0-5) to 20/25
1.1.98  onwards 1.1.98 – 30.6.98 (0-5) to 20
The following is an indicative list of the rates of import duty that normally would apply to
imports of raw materials, construction materials, fixtures, etc..
Tariff Heading (HS 96) Description Rate of Duty
2523.2100 Portland cement, white 5%
2523.291 Building cement, grey 15%
Chapter 72 Construction and other steel 5%
Chapter 87 Motor Vehicles 5% – 45%
2710.13 Diesel $0.32/Imp.Gal.
2710.31 Gasoline $0.54/Imp.Gal.
Q4. Please describe changes to the programmes since 1 September 2001, if any.  In
particular, indicate any changes to the rate of exemption or the coverage of the programmes e.g.
in terms of products, location etc.
Reply
There have been no changes to the programmes since 1 September 2001.
Q5. Please elaborate on when and how Belize intends to phase out these programmes.
Reply
With respect to the Fiscal Incentives, please refer to the response provided to Question 2
posed by Australia above.
With respect to the Export Processing Zone and Commercial Free Zone programmes, Belize
will also need to conduct an evaluation of the economic and trade effects of termination .  An
alternative may be to alter the programme to remove any relevant trade distorting effect .  It is evident
also that the whole free zone concept will need to be re-examined in light of the impending FTAA,G/SCM/Q3/BLZ/6
Page 6
which can be reasonably expected to significantly alter the economic and trade significance and
importance of EPZs and CFZs as an export product generation mechanism the entire western
hemisphere.
QUESTIONS FROM JAPAN
Q1. What amount of per cent of import duty per company according to the amount of
payment is exempted under the Fiscal Incentives Programme?
Reply
Some companies are granted partial exemptions while others are granted full exemptions,
based on the projected economic benefits of the projects.  The partial exemptions may be in the form
of a reduction in the percentage rate of duty other wise applicable.  It may also be in the form of
exemptions on some items only (e.g. construction materials) while the duty remains applicable to
other items (e.g. fuels)
Q2. With respect to the CFZ Programme could Belize please indicate whether certain
corporations can receive benefits from CFZ and EPZ at the same time if a zone is designated as
these two zones types?
Reply
Neither of the two legislations contains any explicit prohibition on access to benefits under
the other.  However, in the administration of the programme, the scenario is not allowed to occur.
There is only one CFZ in Belize, and no manufacturing activities have taken place therein to date.Benefits are only available to those companies that are physically located in that CFZ.
The EPZ is premised on production of goods and services for export.  There is one EPZ
involved in offshore data processing, but no operation EPZ dedicated to manufacture of goods
although there are two such designated zones that have ceased operations.  The operational EPZ are
under the category of “ Special EPZs”, which are individual companies that have their premises so
designated in conformity with the EPZ Act.  As elsewhere indicated, the majority of these stand-aloneenterprises are involved in aqua- culture projects such  as shrimp farming.  It is not possible for such
an enterprise to access benefits under the CFZ programme or vice versa.
QUESTIONS FROM THE UNITED STATES
Q1. Could Belize please explain whether these programmes provide any other incentives
apart from the full or partial exemption from import duties and internal taxes?
Reply
The only forms of subsidy involved are partial and full exemption from import duties and
internal taxes.
Q2. Please provide the normal customs dut y, consumption tax and income tax rates a
company would normally pay absent these programmes.G/SCM/Q3/BLZ/6
Page 7
Reply
In respect of customs duties please see response provided to the Question 3 posed by the
European Communities above.
With respect to consumption tax, the normal rate is eight (8) per cent.
With respect to income tax, the normal rate is twenty five (25) per cent.
Q3. Please explain whether subsidies under an y of these programmes are contingent upon
the use of domestic goods.
Reply
Please see response to Question 2 posed by the European Communities.
Fiscal Incentives Act
Q4. How many companies benefit from these programmes?
Reply
There are presently 112 companies with Approved Enterprise Orders under the Fiscal
Incentives Act.
Export Processing Zone Act
Q5. Tax and customs duty relief under this programme are provided for a minimum of
20 years, while dividends paid by an EPZ busine ss are exempted in perpetuity.  Please explain
how Belize would modify this programme so that subsidies do not extend beyond any extension
period provided.
Reply
Please see response to Question 2 posed by Australia.  The same circumstances apply to the
EPZ and CFZ Acts.
Q6. Please explain how the policy objective of boosting upstream value added for
agricultural commodities is carried out in practice.
Reply
The main strategy is to encourage agro- processing such that agriculture produce are
transformed into marketable finished goods such as pepper sauces, jams, jellies, hams, bacon, meatpatties, citrus juices etc.  This brings greater re turns to the economy than the sale of raw materials on
the international market where prices are normally depressed due to numerous low cost subsidized
producers.  Belize is now tackling the issue of ma rket access abroad from the standpoint of meeting
product standards and SPS requirements in major export markets.G/SCM/Q3/BLZ/6
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Commercial Free Zone Act
Q7. Tax and customs duty relief under this programme are extended for as long as the
beneficiaries continue operating in the CFZ.  Please explain how Belize would modify this
programme so that subsidies do not extend beyond any extension period provided.
Reply
Please see response to Question 2 posed by Australia.  The same circumstances apply to the
EPZ and CFZ Acts.
Conditional Duty Exemption Facility
Q8. Could Belize please provide the List of Items Eligible for Conditional Duty Exemptions?
Reply
The list is presented as an Attachment to this document and forms an integral part of Belize’s
response.G/SCM/Q3/BLZ/6
Page 9
ATTACHMENT
List of Items Eligible for Conditional Duty Exemption
The List is being forwarded as an attachment referred in Question 8 posed by the
United States.
1. Articles of a non marketable description accepted by the Comptroller of Customs as
advertising matter but excluding playing cards, pen knives or any other articles replacing
ordinary articles of commerce.
2. Arms, ammunition, uniforms, accoutrements a nd equipment, including musical instruments
imported by or for any Voluntary Force, Cadet Force or Rifle Association certified by the
Ministry of Defense and approved by the Ministry of Finance.
3. (a) The accompanied baggage of a passenger passed as such by the proper officer,
including wearing apparel, jewelry, toilet requisite and any portable article in a
passenger’s baggage or on his person which he might reasonably be expected to carry
with him for his own regular and private use and in the case of accompanied baggage
of a person eighteen years old and over may be included:
(1) Wines and spirits not exceeding one litre in all and
(2) Tobacco not exceeding 250 grams or
(3) Cigars not exceeding 50 in number or
(4) Cigarettes not exceeding 200 in number
(5) Goods to the aggregate of BZ$200.00 through an International Airport
(BZ$50.00 at other entry points) belonging to a Belizean passenger
(including a passenger under eighteen years old) which accompany that
passenger and were acquired abroad by him for his personal use or household
use or as souvenirs or gifts and admitted as such by the Comptroller of
Customs;
provided that:-
(a) A passenger shall not be entitled to the exemption granted above in respect of
alcoholic beverages or tobacco products in excess of the quantities specified
in items (1) to (4) of this sub paragraph;
(b) A passenger returning from a visit to a neighbouring border town or city shall
not be entitled to the exemption granted above in respect of alcoholic
beverages and tobacco products.
A passenger can claim and allowance through an International Airport twice a year
and once a month through other points of entry.
3. (b) Household effects admitted as such by the Comptroller of Customs which accompany
a returning resident or any other person in possession of a Belizean residency permit,
which are for his personal use and are not intended for other persons or for sale andare declared to have been in use and possession of the passenger for at least one year;
(c) Personal and household effects admitted as such by the Comptroller of Customs, not
exceeding a c.i.f. value of BZ$20,000.00 which accompany a Belizean family or aG/SCM/Q3/BLZ/6
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Belizean citizen with out having a family returning to reside in Belize who have
resided abroad continuously for at least three years immediately prior to their return
and which are for their personal use and are not intended for any other person or for
sale;
(d) Baggage and household effects, imported within three months before or after the
arrival of a passenger, or with in such further period as the Comptroller of Customs
shall in the circumstances deem reasonable provided that the articles would have been
exempted from import duty had they been imported under subparagraphs (a) or (b)
hereof;
(e) Used implements, instruments and tools of profession, trade, occupation or
employment approved by the Ministry of Finance and admitted as such by the
Comptroller of Customs, of persons arriving in the country, which are declared to
have been in the possession and use of the passenger for a reasonable period;
(f) Used personal effects, not being merchandise of citizens of Belize of persons
ordinarily domiciled in Belize, who have died abroad as approved by the Comptroller
of Customs.
4. Beehive and beekeeping apparatus certified as such by the Ministry of Agriculture and
approved by the Comptroller of Customs.
5. Goods including motor vehicles for the use of any international organization or personnel of
that organization pursuant to the agreement in force between the organization and the
Government of Belize.
6. Package and containers including crates, barrels, boxes, bags (except paper bags) and sacks,
box lining, labels and materials for making such packages and containers, which are imported
for use exclusively as containers for the packing or packaging of any product or manufacture
of the country as approved by the Ministry of Finance.
7. All articles approved by the Ministry of Finance and admitted as such to the satisfaction of
the Comptroller of Customs, to have been imported by or on behalf of, or taken on as bondfor the use of Belize City Council, and District Town Boards or public institution, provided
that if such articles are sold or otherwise disposed of for consumption in Belize, the unpaid
duty in respect thereof shall be paid by such Council, Board, or Institution.
8. (i) Equipment and ambulances, drugs, medical, surgical and laboratory supplies for
hospitals and veterinary institutions including institutions providing out patients
health care as approved by Cabinet and admitted as such by the Comptroller of
Customs;
(ii) Materials for construction, furnishing and replacement or extension of hospitals and
veterinary institutions including offering outpatients healthcare and furnishing for
such health care facilities as approved by Cabinet and admitted as such by the
Comptroller of Customs;
(iii) Other goods catering to the needs of the mentally or physically handicapped and
admitted as such by the Ministry of Finance on the recommendation of the Ministry
of Health;
(iv) Tools of trade for the disabled, as certified by the Comptroller of Customs.G/SCM/Q3/BLZ/6
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9. Articles proved to the satisfaction of the Comptroller of Customs to have been imported by or
on behalf of or taken out of bond for the use of educational bodies under the following
conditions:
(a) In the construction, extension or repair of any building used or intended to be used
exclusively as a school including electronics and lamps for lighting of any
denominational school as certified by the head of the schools;
(b) As equipment, furniture, prizes or medals specially for a school;(c) Academic robes admitted as such by the Comptroller of Customs.
10. Films, filmstrips, microfilms, and sound recordings of an educational character as approved
by the Comptroller of Customs.
11. Goods imported by or on behalf of, or taken out of bond for the use of the Government of
Belize as certified by the Head of the relevant Department/Ministry and the Ministry of
Finance.
12. Medicines, drugs and appliances as approved by the Ministry and imported by or on behalf of
an established Organization recognized by the Minister for free distribution to indigentpersons.
13. Goods imported by or on behalf of any office or Bureau for meteorological observation or any
institution engaged in scientific, medical or technical research, including instruments,
apparatus and equipment for geological or topographical purposes as approved by theMinistry of Finance and admitted as such by the Comptroller of Customs.
14. Articles imported by or on behalf of the Red Cross Society, which are imported solely for the
use of the Red Cross Society of Belize, and certified as such by the Director and admitted as
such by the Comptroller of Customs.
15. Articles proved to the satisfaction of the Comptroller of Customs:
(a) to have been re-imported within one year of the date of exportation;(b) to be the produce of Belize re-imported within one year of the date of exportation;
(c) to have been re-imported after repair or improvement provided that duty shall be
charged on the value of the repair, renovation or improvement at the rate of duty
chargeable on such articles.
16. Goods of a non- consumable nature which the Comptroller of Customs is satisfied:
(a) are imported solely for the use, furnishing, decoration, building or repairs of places of
worship, or as vestments for use during public worship on the signed declaration of
the head of the denomination that the goods and vestments will be used only for such
purposes for which they are intended;
(b) altar bread and wine for the purpose of administering the sacrament, on the signed
declaration of the head of the denomination for which they are intended;G/SCM/Q3/BLZ/6
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(c) candies and frankincense which the Comptroller of Customs is satisfied are imported
by or on behalf of any religious denomination solely for the purpose of distribution in
order that subscriptions or offering should be enclosed therein;
(d) Offertory envelopes which the Comptroller of Customs is satisfied are imported by or
on behalf of any religious denomination solely for the purpose of distribution in order
that subscriptions or offering should be enclosed therein;
(e) Other goods of a consumable nature, imported by or for the use of religious bodies in
their places of worship as approved by the Ministry of Finance on the signed
declaration of the head of the denomination.
17. Patterns and samples, cut, mutilated or otherwise spoiled to the satisfaction of the Comptroller
of Customs so as to render them unmarketable.
18. Cups, medals, shields, and similar trophies, not being articles of general utility proved to the
satisfaction of the Comptroller of Customs to be specially imported for bestowal as honorarydistinctions or prizes in the spheres of art, literature, sciences, or sports and awards for acts of
gallantry for public service or for other similar outstanding actions or conduct, or when won
abroad or sent by donors resident abroad; provided that the articles do not bear any
advertisements and that this exemption shall not apply or extend to the importation or
stocking of the articles for the purpose of trade.
19. Uniforms and equipment imported and for the use of Boy Scouts and Girl Guides
Associations and such other youth associati ons as may be approved by the Ministry of
Finance.
20. All articles, accoutrements, equipment, uniforms and prizes proved to the satisfaction of the
Comptroller of Customs to have been imported by or on behalf of or taken out of bond for the
use of Her Majesty’s Naval, Military or Air Forces.
21. Sports and Culture materials and equipment approved by the Ministry of Finance on the
recommendation of the Ministry responsible for Culture and Sports.
__________