WORLD TRADE
ORGANIZATIONG/SCM/Q3/COL/13
12 June 2002
(02-3251)
Committee on Subsidies and
Countervailing MeasuresOriginal:  Spanish
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement on
Subsidies and Countervailing Measures
Replies to the Comments and Questions from ECUADOR1
Regarding COLOMBIA2
The following communication dated 7 June 2002, has been received from the Permanent
Mission of Colombia.
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Given the nature of the questions asked by Ecuador, it is important to point out that the
Decision on Implementation-Related Issues and Concerns (WT/MIN(01)/17) approved by the
Ministers at the Doha Ministerial Conference was the outcome of a process initiated in the framework
of the discussions on implementation, in which Colombia took a very active part.
Within that framework, Colombia initially put forward its views on the eligibility criteria for
countries wishing to be granted a preferential extension.  Subsequently, during the second half of
2001, and more particularly in the days leading up to the Ministerial Conference, Colombia reiterated
its argument concerning its relative competitiveness in relation to other countries receiving the
preferential extension.  That argument was endorsed by the Doha Ministerial Conference.
It should be noted that, in the Decision on Implementation approved in Doha, the Ministers
agreed to extend the transition period for a group of countries that complied with the requirements
laid down in document G/SCM/W/471/Rev.1, as well as  for countries complying with the requirement
of relative competitiveness with the above-mentioned WTO Members.
Taking into account these clarifications and in connection with the document submitted by
Ecuador, replies to each of the specific questions asked by the latter are set out below with a view to
contributing to the transparency of this process.
                                                     
1 G/SCM/Q3/COL/12.
2 G/SCM/N/74/COL and G/SCM/N/48/COL-G/SCM/N/60/COL-G/SCM/N/71/COL.G/SCM/Q3/COL/13
Page 2
1. As regards the Special Import-Export System for Capital Goods and Spare Parts
(SIEX) and the Free Zone Regime, Colombia may not be fulfilling at least two of the criteria in
paragraph 2 of document G/SCM/39. … Colombia provides no information on its total GNI,
which would be much appreciated in light  of the requirements in paragraph 2 of
document G/SCM/39.
First of all, it should be noted that, with a view  to avoiding differential treatment, the Decision
on Implementation adopted at ministerial level in Doha last year provided for flexible conditions of
compliance with the requirements of the second paragraph of document G/SCM/39, by establishing
the criteria of "similar stages of development" and "a similar order of magnitude" for countries
requesting extensions.  This provision is applicable to Colombia's circumstances.
For the above reasons, it is particularly important to read the Ministerial Decision in
conjunction with Article 27.4 of the Agreement on Subsidies, for the purpose of analysing Colombia's
request regarding the SIEX and the Free Zones.
Furthermore, although the above-mentioned criteria are not applicable to Colombia for the
reasons given, it should be noted that the second paragraph of document G/SCM/39 does not require
countries to submit any type of information on thei r GNI as long as the indi cator used is objective,
and therefore, in order to determine whether a country's gross national income is below
US$20 billion, it would be necessary to consult the publications of the World Bank.  Nor are countries
required to provide specific information on their share of world trade, as long as that share iscalculated on the basis of an appendix to document G/SCM/38.
2. We would welcome a detailed and duly substantiated analysis by Colombia of the
competitiveness of exports of all products covered by the Special Import-Export System for
Capital Goods and Spare Parts (SIEX) and the Free Zone Regime in relation to those of otherdeveloping country Members having requested an extension of the transition period, following
the procedures set forth in document G/SCM/39.
First of all, it is important to mention that the po int of departure in relation to this topic is the
change in the rules of the game that would be produced by the appearance of any lack of symmetry
between developing countries which maintain export supports under the multilateral rules.  Indeed, as
can be seen from document G/SCM/W/471/Rev.1, a number of conditions were laid down for the
granting of the extension of export subsidies to a group of developing countries.  The second part of
paragraph 10.6 of the Doha Ministerial Declaration on Implementation remedies this imbalance.
Against this background, and given the nature of the programme for which Colombia is
requesting an extension under the Decision on Implementation-Related Issues and Concerns(WT/MIN(01)/17), it should also be borne in mind that, in view of the more favourable import
conditions enjoyed by certain countries in the region compared with Colombia as a result of flexibility
in the commitments relating to the application of common external tariffs, Colombia hopes that those
countries in particular will understand the importance to Colombia of the extension of the transition
period for the maintenance of export support mechanisms, which result in the duty-free import ofmachinery and equipment.
In the light of these considerations, Colombia has carried out a thorough analysis of the
products for which an extension of the SIEX and Free Zone mechanisms is requested, leading it to
conclude that any change to the present conditions that reflects a lack of balance in the granting ofauthorizations to maintain export supports un der the current circumstances on the domestic market
could impair Colombia's competitiveness.G/SCM/Q3/COL/13
Page 3
The analysis was conducted from two different angles:  (i) Colombia's competitiveness and
(ii) the situation of Colombian goods in the international market and, more particularly, in the
United States.
The global competitiveness report (GCR), published and edited by the World Economic
Forum (WEF), analyses aspects relating to the competiveness of 75 countries;  since 1994, Colombia
has been one of the sample countries studied.
Since that same year, a marked deterioration has been observed in the relative position of
Colombia in the growth competitiveness index (GCI).3  Only in 2001 was Colombia's ranking
maintained in relation to the previous year.  In 2000, 86 per cent of the countries surveyed posted
better results;  and in 2001, 85 per cent of countries had a higher ranking than Colombia.
Colombia's Ranking in the Global Competiveness Report*
Year Final position
aNumber of countries studied
bRelative position
c = [(a - 1)/b]*100
1994 30 41 71
1995 36 48 73
1996 40 49 80
1997 41 53 75
1998 47 53 87
1999 54 59 90
2000 52 59 86
2001 65 75 85
*The results up to 1999 relate to the global competitiveness index.
The results for 2000 and 2001 relate to the growth competitiveness index.
Source:  World Economic Forum.
In relation to Latin America and the Caribbean, Colombia (overall position 65) lies in
fourteenth place among 20 countries;  those whose overall position is better than that of Colombia
include Chile (27), Costa Rica (35), Mexico (42), Brazil (44), Uruguay (46), Argentina (49),
Domincan Republic (50), Peru (55) and Venezuela (62).
                                                     
3 The GCI is composed of the following three indexes:  the economic creativity index, the finance
index and the internationalization index.  Each component is given a one-third weighting.  The economiccreativity index was newly introduced in the 2000 report and is based on the consideration of 15 variables,including the factors of science and technology, management (business operation and strategy), finance anddomestic competition.  The finance and internationalization indexes have undergone no major change in content
in relation to the previous methodology.G/SCM/Q3/COL/13
Page 4
Growth Competitiveness Index 2001
Country Position in Latin America Overall position
Chile 1 27
Costa Rica 2 35
Trinidad and Tobago 3 38
Mexico 4 42
Brazil 5 44
Uruguay 6 46
Argentina 7 49
Dominican Republic 8 50
Jamaica 9 52
Panama 10 53
Peru 11 55
El Salvador 12 58
Venezuela 13 62
Colombia 14 65
Guatemala 15 66
Bolivia 16 67
Ecuador 17 68
Honduras 18 70
Paraguay 19 72
Nicaragua 20 73
Source:  World Economic Forum.
As can be seen from the above table, the comp etitiveness indicators for most of the larger
Central American and Caribbean countries are better than those for Colombia.
The second point that needs to be emphasized with regard to Colombia's competitiveness as a
capital recipient is that it has been affected by the recent escalation of internal conflict.
In this connection, there is no doubt that the decline in export supports would weaken
Colombia's competitiveness as a country and give rise to the loss of both national and foreign
investment, which would probably be directed to countries in the region that are able to support theirexport sectors.
With regard to competitiveness between exports of specific products, the analysis was based
on imports to the United States from some of the countries that satisfy the eligibility criteria contained
in paragraph 2 of document G/SCN/39 and which are therefore granted an extension under the termslaid down in that document.  The price elasticity of demand for Colombian exports was also
considered for purposes of the analysis.
In accordance with the information submitted by the United States Department of Commerce,
using the four-digit Harmonized System (HS) nomenclature, consideration was given to imports(leaving aside agricultural imports), which amounted to US$1.125 million in 2001.G/SCM/Q3/COL/13
Page 5
The principal United States imports from Colombia were then identified4, and from this
selection – accounting for 94 per cent of United States imports from Colombia mining sector goods
were excluded, as their competitiveness is associated with the existence of mineral deposits rather
than with this type of support.
In order to assess the competitiveness of Colombian exports on the basis of the above-
mentioned criteria, a subgroup was identified which also met the requirement of competition with
goods imported into the United States from other countries requesting an extension under the
procedures set out in document G/SCM/39.  A sample of 17 products was obtained in this way and the
countries concerned were identified as Costa Rica, El Salvador, Guatemala, Jamaica and the
Dominican Republic.
Annex 1 to this document shows the relative le vel of competitiveness compared with certain
countries which would receive a preferential extension under the agreed terms set forth in document
G/SCM/39.
On this basis and taking into account the high price elasticity of demand for Colombian goods
both on the United States market (-2.1) and in the rest of the world (-1.5)5, it is clear that, if exports
from the Caribbean and Central American countries, are subsidized, they would displace Colombian
goods on the United States market.  In other words, a decrease in the relative price of goods exported
from the Central American or Caribbean countries, which – we repeat – would occur in the event of a
lack of even-handedness in granting approval for the possibility of maintaining export supports,would push up demand for those goods more than proportionally in terms of order of magnitude.
This situation could be made even worse by the fact that the recent escalation of internal
conflict has affected physical infrastructure, resulting in a substantial increase in the costs of
production and mobilization of inputs, raw materials and end products.
3. Transport Compensation Mechanism:  Colombia should … provide a detailed
description of all the products under the programme and then present a detailed and duly
substantiated analysis of the competitiveness of exports of all these products, pursuant to
Articles 27.5 and 27.6.
In reply to Ecuador's request for a detailed description of products, Annex 2 to this document
contains a list of industrial products to which the Transport Compensation Mechanism was applied in
2001.
Regarding the analysis of competitiveness pursuant to Articles 27.5 and 27.6, it is important
that, prior to any such analysis, the WTO Members consider the many discussions that took place lastyear on the meaning of the term "product" for the purposes of the above-mentioned paragraphs.
Those discussions brought to light two distinct schools of thought among Members, taking into
account the different language versions of the Subsidies Agreement.
Colombia understands that Ecuador has requested the Secretariat to assess whether the
products benefiting from the Transport Compensation Mechanism are in a situation of
                                                     
4 Not including agricultural imports.  The percentage of Colombian exports to United States markets
was used as the basis for the study.
5 Recent studies on the determinants of non-traditional exports estimated new income and relative price
elasticity.  Misas Martha, María Teresa Ramírez and Luisa Fernanda Silva (2001), Exportaciones no
tradicionales en Colombia y sus determinantes  (non-traditional exports in Colombia and their determinants),
Borradores de Economía No. 178, Banco de la República, Subdirectorate of Economic Studies.
www.banrep.gov.co.G/SCM/Q3/COL/13
Page 6
competitiveness.  Bearing in mind the implications of that exercise not only for Colombia but for
developing countries in general, and without prejudice to the position to be taken in the future, any
analysis by the Secretariat should be subject to the existence of a consensus on the definition of the
term "product".
Under those conditions, we are willing to provide any additional information that may be
required.
4. Ecuador would be grateful if Colombia could specify whether it considers that measures
under the Transport Compensation Mechanism, which refunds 26 per cent of the total cost of
freight to the country of destination over the fi rst three years and 13 per cent over the last two
years of the programme, would come under Article 3.1(a) and Annex I(c) of the SCMAgreement.
Regarding the relationship of the Transport Compensation Mechanism to certain provisions of
the SCM Agreement, it should be made clear firs t of all that the starting point for requesting an
extension under Article 27.4 is that the requesting country considers that the programme in questioncan somehow be classified as an export subsidy prohibited by the SCM Agreement.
The Transport Compensation Mechanism has been notified by Colombia in accordance with
its commitments under Article 25.1 of the SCM Agreement.G/SCM/Q3/COL/13
Page 7ANNEX 1
GROUP OF PRODUCTS PROVIDING EVIDENCE OF SIMILARITIES IN THE COMPETITIVENESS OF COLOMBIAN  PRODUCTS
AND THOSE OF OTHER COUNTRIES WHICH HAVE REQUESTED AN EXTENSION IN ACCORDANCE WITH THE
SPECIAL PROCEDURE SET FORTH IN DOCUMENT G/SCM/39
HS Description United
StatesColombia Costa Rica El Salvador Guatemala Jamaica Dominican
Republic
6203 Men's suits, ensembles, jackets, blazers, trousers, bib and brace overalls,
breeches and shorts7,497,486 130,468 167,191 54,280 200,871 7,339 819,426
6204 Women's suits, ensembles, jackets, blazers, trousers, bib and brace
overalls, breeches and shorts10,610,615 79,336 51,812 179,110 359,796 259 299,228
7103 Precious and semi-precious stones 575,670 59,278 356 7 0 0 0
4202 Tr unks, suitcases, vanity-cases, executive cases, briefcases and school
satchels4,595,263 24,964 2,958 4,772 869 162 22,343
7306 Other tubes, pipes and hollow profiles, of iron or steel 1,290,210 23,358 0 0 4,535 0 0
9403 Other furniture and parts thereof 10,986,027 20,528 4,061 616 6,519 33 3,554
6302 Bed linen, table linen, toilet linen and kitchen linen 1,970,101 16,436 0 21,835 2,953 7 242
6112 Tracksuits, ski-suits and swimwear, knitted or crocheted 455,263 14,559 81 408 5,955 0 49,758
6108 Slips, petticoats, briefs, panties, nightdresses, pyjamas, negligés, dressing
gowns2,045,367 14,158 148,373 142,342 30,188 37,577 102,544
6109 Singlets and other vests, knitted or crocheted 3,453,602 12,423 5,738 344,335 91,329 57,783 158,337
6212 Brassières, girdles, corsets, braces, suspenders, garters and similar articles
and parts thereof, whether or not knitted or crocheted1,474,163 11,422 81,255 30,562 605 29 160,081
7202 Ferro-alloys 703,805 11,384 0 0 0 0 29,255
6209 Babies' garments and clothing accessori es 573,462 10,671 1,346 10,407 10,199 62 3,720
6110 Garments made up of products of headings 56.02, 56.03, 59.03, 59.06,
59.0711,841,126 10,568 18,607 277,241 415,921 12,209 126,566
6115 Pantyhose, tights, stockings and other hosiery 962,946 10,519 91,757 89,672 339 45,888 33,773
8504 Electrical transformers, static converters and inductors 7,122,147 9,203 8,985 1,638 424 0 46,712
7615 Table, kitchen or other household articles and parts thereof 487,547 9,002 744 3,751 35 0 78
Source:  United States Department of Commerce.G/SCM/Q3/COL/13
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ANNEX 2
PRODUCTS COVERED BY THE TRANSPORT COMPENSATION MECHANISM,
BY TARIFF HEADING – YEAR 2001
Heading Description
1108 Starches, inulin
1704 Sugar confectionery (including white chocolate)
1905 Bread, pastry, cakes, biscuits and other bakers' wares, whether or not containing cocoa
2001 Vegetables, fruit, nuts and other edible parts of plants, preserved
2508 Other clays, andalusite, kyanite and sillimanite, whether or not calcined
2522 Quicklime, slaked lime and hydraulic lime, other than calcium oxide and hydroxide of heading
No. 28.25
2523 Portland cement, aluminous cement, slag cement, supersulphate cement and similar hydraulic
cements, whether or not coloured
2805 Alkali or alkaline-earth metals, rare-earth metals, scandium
2827 Chlorides, chloride oxides and chloride hydroxides, bromides and bromide oxides, iodides and iodide
oxides
2833 Sulphates;  alums;  peroxosulphates (persulphates)
2902 Cyclic hydrocarbons
2917 Polycarboxylic acids, their anhydrides, halides, peroxides and peroxyacids
2918 Carboxylic acids with additional oxyge n function and their anhydrides, halides
2924 Carboxyamide-function compounds;  amide-function compounds of carbonic acid
3004 Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses
3005 Wadding, gauze, bandages and similar articles, impregnated or coated with pharmaceutical
substances
3206 Other colouring matter;  preparations as specified in note 3 to this Chapter
3208 Paints and varnishes (including enamels and lacquers) based on synthetic polymers or chemically
modified natural polymers, dispersed …
3209 Paints and varnishes (including enamels and lacquers) based on synthetic polymers or chemically
modified natural polymers, dispersed or dissolved …
3302 Mixtures of odoriferous substances and mixtures with a basis of one or more of these substances
3304 Beauty or make-up preparations and preparations for the care of the skin (other than medicaments)
3307 Pre-shave, shaving or after-shave preparations, personal deodorants, bath preparations
3401 Soap; organic surface-active products, in the form of bars, cakes, impregnated paper
3503 Gelatin and gelatin derivatives;  isinglass;  other glues of animal origin
3506 Prepared glues and other prepared adhesives, not elsewhere specified or included
3808 Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators
3816 Refractory cements, mortars, concretes etc., other than products of heading No. 38.01
3902 Polymers of propylene or of other olefins, in primary forms
3904 Polymers of vinyl chloride or of other halogenated olefins, in primary forms
3905 Polymers of vinyl acetate or of other vinyl esters, in primary forms
3907 Polyacetals, other polyethers and epoxide resins, in primary forms
3917 Tubes, pipes and hoses, and fittings therefor, of plastics
3919 Self-adhesive plates, sheets, film, foil, tape, strip and other flat shapes, of plastics
3920 Other plates, sheets, film, foil and strip, of plastics, non-cellular and not reinforced
3922 Baths, shower-baths, wash-basins, bidets, lavatory pans, seats and covers
3923 Articles for the conveyance or packing of goods, of plastics;  stoppers, lids, caps and other closures
3924 Tableware, kitchenware, other household articles and toilet articles, of plastics
3926 Other articles of plastics and articles of headings Nos. 39.01 to 39.14G/SCM/Q3/COL/13
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Heading Description
4015 Articles of apparel and clothing accessories (includi ng gloves), for all purposes, of vulcanized rubber
4104 Leather of bovine or equine animals, without hair on, other than leather of heading No. 41.08 or
41.09
4407 Wood sawn or chipped lengthwise, whether or not planed, of a thickness exceeding 6 mm
4411 Fibreboard of wood or other ligneous materials, whether or not bonded
4418 Builders' joinery and carpentry of wood, including cellular wood panels
4811 Paper, paperboard, cellulose wadding and webs of cellulose fibres, coated
4818 Toilet paper, cleansing tissues, hand towels, tablecloths, serviettes, napkins
4901 Printed books, brochures, leaflets and similar printed matter, whether or not in single sheets
4903 Children's picture, drawing or colouring books
4909 Printed or illustrated postcards;  printed cards bearing personal greetings
5112 Woven fabrics of combed wool or of combed fine animal hair
5407 Woven fabrics of synthetic filament yarn, including woven fabrics obtained from materials of
heading No. 54.04
5603 Non-wovens, whether or not impregnated, coated, covered or laminated
6108 Women's or girls' slips, petticoats, briefs, panties, nightdresses, pyjamas and similar articles
6809 Articles of plaster or of compositions based on plaster
6813 Friction material and articles thereof (for example, sheets, rolls, strips, segments)
6902 Bricks, blocks, tiles and similar ceramic constructional goods
6904 Ceramic building bricks, flooring blocks, support or filler tiles and the like
6907 Unglazed ceramic flags and paving, hearth or wall tiles
6908 Glazed ceramic flags and paving, hearth or wall tiles
6909 Ceramic wares for laboratory, chemical or other technical uses
6910 Sinks, wash basins, wash basin pedestals, baths, bidets
6912 Ceramic tableware, kitchenware, other household articles and toilet articles, other than of porcelain or
china
7003 Cast glass and rolled glass, in sheets or profiles, whether or not having an absorbent layer
7004 Drawn glass and blown glass, in sheets, whether or not having an absorbent layer
7010 Carboys, bottles, flasks, jars, pots, phials
7019 Glass fibres (including glass wool) and articles thereof (for example, yarn)
7217 Wire of iron or non-alloy steel
7306 Other tubes, pipes and hollow profiles (for example, welded or riveted)
7317 Nails, tacks, drawing pins, corrugated nails, staples
7321 Stoves, ranges, grates, cookers (including those with subsidiary boilers)
7607 Aluminium foil (whether or not printed or with backing material)
8109 Zirconium and articles thereof, including waste and scrap
8201 Hand tools:  spades, shovels, mattocks, picks, hoes, forks and rakes
8413 Pumps for liquids, whether or not fitted with a measuring device;  liquid elevators
8418 Refrigerators, freezers and other refrigerating or freezing equipment
8428 Other lifting, handling, loading or unloading machinery
8438 Machinery, not specified or included elsewhere in this Chapter, for the industrial preparation of food
8484 Gaskets and similar joints of metal sheeting;  sets or assortments of gaskets and similar joints, put up
in envelopes or similar packings
8506 Primary cells and primary batteries
8536 Electrical apparatus for switchi ng or protecting electri cal circuits, for a voltage not exceeding
1,000 volts
8902 Fishing vessels;  factory ships and other vessels for processing or preserving fishery products
9021 Orthopaedic appliances, including crutches, surgical belts and trusses
9401 Seats, whether or not convertible into beds, and parts thereofG/SCM/Q3/COL/13
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Heading Description
9403 Other furniture and parts thereof
9405 Lamps and lighting fittings, and parts thereof, not elsewhere specified or included
9503 Other toys, reduced-size ("scale") models and similar recreational models, working or not
9602 Vegetable or mineral carving material;  moulded or carved articles of wax or gums
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