RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/M/23
14 March 2000
(00-1016)
Committee on Subsidies
and Countervailing Measures
MINUTES OF THE SPECIAL MEETING
HELD ON 1-2 NOVEMBER 1999
Chairman:  Mr. J. Söderberg (Sweden)
1. The Committee on Subsidies and Countervailing Measures ("the Committee") held a Special
Meeting on 1 November 1999.
2. The Committee adopted the following agenda:
A. REVIEW OF 1998 NEW AND FULL SUBSIDY NOTIFICATIONS
(i) Canada (G/SCM/N/38/CAN)
(ii) Costa Rica (G/SCM/N/38/CRI)
(iii) Ecuador (G/SCM/N/38/ECU)
(iv) Egypt (G/SCM/N/38/EGY)
(v) European Communities (G/SCM/N/38/EEC + Adds.1-11, Add.12/Rev.1 and
13-15)
(vi) Gambia (G/SCM/N/38/GMB)
(vii) Ghana (G/SCM/N/38/GHA)
(viii) Guatemala (G/SCM/N/38/GTM)
(ix) India (G/SCM/N/38/IND
(x) Latvia (G/SCM/N/38/LVA)(xi) Mexico (G/SCM/N/38/MEX)
(xii) Poland (G/SCM/N/38/POL)
(xiii) Qatar (G/SCM/N/38/QAT)
(xiv) Slovenia (G/SCM/N/38/SVN)
(xv) Thailand (G/SCM/N/38//THA)
3. The Chairman recalled that the Committee had adopted procedures for the review of 1998
new and full subsidy notifications at its April 1998 meeting (G/SCM/18).  Under those procedures,
1998 subsidy notifications were to be reviewed in three special meetings to be held in conjunction
with the regular meetings of the Committee in Fall 1998, and in Spring and Fall 1999.  Onlynotifications distributed in all three working languages no less than 19 weeks before a meeting could
be reviewed at that meeting.  At this meeting, therefore, only notifications circulated no later than 21
June 1999 could be reviewed.  Accordingly, the Committee had before it fifteen notifications, which
were circulated before that deadline.  Pursuant to Committee procedures, the review of subsidy
notifications was to be conducted on the basis of written questions and answers provided before themeeting.  As had been indicated in WTO/AIR/1121, written questions regarding these notifications
had been due no later than 19 July 1999, and written answers had been due no later than 20 September
1999.  The review at the meeting was to be conducted on the basis of the written questions and
answers received.G/SCM/M/23
Page 2
4. The questions regarding Canada's notification can be found in the following document:
G/SCM/Q2/CAN/11 (Submitted by the EC)
             G/SCM/Q2/CAN/12 (Submitted by the United States)
5. The answers provided by Canada can be found in the following document:
G/SCM/Q2/CAN/13 (To questions  submitted by the EC)
G/SCM/Q2/CAN/14 (To questions submitted by the United States)
6. Written follow-up questions which were raised at the meeting regarding Canada's notification
can be found in the following document:
G/SCM/Q2/CAN/15 (Submitted to by the United States)
7. NO WRITTEN ANSWERS HAVE BEEN RECEIVED TO DATE FROM CANADA
8. The delegate of Canada stated that the questions of the United States would be helpful when
going back to the provinces and further consulting as to their obligations under the Agreement.
Canada agreed that the provinces are subject to the requirements of the Agreement.
9. The delegate of the European Communities appreciated Canada's answers to the EC
questions.  Concerning the Atlantic Enterprise Programme, Canada had said that contributions had
been made in the form of non-repayable contributions.  The EC delegate asked whether it would be
appropriate to characterize this as a grant.
10. The delegate of Canada responded that the contributions could be conditionally repayable or
non-repayable.  Canada would assume that a non-repayable contribution was probably equivalent to a
grant.
11. The delegate of the European Commission indicated that, having only received Canada’s
replies that morning, the EC reserved the right to pose additional follow-up questions at a later time.
12. The questions regarding Costa Rica's notification can be found in the following document:
G/SCM/Q2/CRI/6 (Submitted by the United States)
13. The answers provided by Costa Rica can  be found in the following document:
G/SCM/Q2/CRI/7 (To questions submitted by the United States)
14. The questions regarding Ecuador's notification can be found in the following document:
G/SCM/Q2/ECU/1 (Submitted by the United States)
15. The answers provided by Ecuador can  be found in the following document:
G/SCM/Q2/ECU/2 (To questions submitted by the United States)
16. The delegate of the United States sought clarification because Ecuador’s reply seemed to be
speaking to the legal issue of Article 27.4, whereas part of the United States’ question was whether
these programmes continued to exist, or whether the nil notification supplied by Ecuador meant that
these programmes did not exist, or that Ecuador did not consider these programmes to be subsidies
within the notification provisions of the Agreement.  Thus, the question was, leaving aside Article 27,G/SCM/M/23
Page 3
whether these programmes were in existence or whether in Ecuador's view they were simply not
notifiable subsidies?
17. The delegate of Ecuador stated that Ecuador’s answer was quite clear as was the question put
by the United States.  In response to the observation by the delegate of the United States, Ecuador
reiterated that it had notified the situation fully on its subsidy programmes and provided informationunder paragraph 1 of Article XVI of GATT 1994 and Article 25 of the Agreement on Subsidies and
Countervailing Measures.  The programmes referred to in the questions posed by the United States
were inoperative for various reasons, primarily of a budgetary and fiscal nature, according to the
Ministries of Finance and Foreign Trade, and the Central Bank, although this would not prevent
Ecuador from eventually applying these programmes if necessary.  Ecuador's notifications under
Article 27.4 of the Agreement would be submitted at an appropriate time.  Concerning the
programmes, the Fondos Financeiros programme was at the time inoperative pursuant to the StateBank and Monetary Regime Law of 7 May 1992.  The export credit, FOPEX, had not been in
operation since 1994 for budgetary and fiscal reasons.  The same was true with respect to loans from
the Fund for the Development of Exportable Pro duction, FDEP, since 1997.   Tax credit certificates
for exports had not been implemented because of the Law on Internal Taxation of December 1989.
18. The questions regarding Egypt's notification can be found in the following document:
G/SCM/Q2/EGY/2 (Submitted by the United States)
19. The answers provided by Egypt can be found in the following document:
G/SCM/Q2/EGY/3 (To questions submitted by the United States)
20. The questions regarding European Communities' notification can be found in the following
document:
G/SCM/Q2/EEC/17, 18 (Submitted by the United States)
21. The answers provided by European Communities can be found in the following document:
G/SCM/Q2/EEC/19 (To questions submitted by the United States)
22. No questions or comments were posed concerning Gambia's notification.
23. No questions or comments were posed concerning Ghana's notification.
24. No questions or comments were posed concerning Guatemala's notification.
25. No questions or comments were posed concerning India's notification, before or at the
meeting.  The delegate of the United States stated that the United States reserved the right to ask
questions of India at a later date.  Subsequent to the meeting the US submitted written questions
which can be found in the following document:
G/SCM/Q2/IND/8 (submitted by the United States)
26. NO WRITTEN ANSWERS HAVE BEEN RECEIVED TO DATE FROM INDIA .
27. The questions regarding Latvia's notification can be found in the following document:
G/SCM/Q2/LVA/1 (Submitted by the United States)G/SCM/M/23
Page 4
28. The answers provided by Latvia can be found in the following document:
G/SCM/Q2/LVA/2 (To questions submitted by the United States)
29. The questions regarding Mexico's notification can be found in the following document:
G/SCM/Q2/MEX/12 (Submitted by Chile)
G/SCM/Q2/MEX/13/Rev.1 (Submitted by the United States)G/SCM/Q2/MEX/14 (Submitted by the EC)
30. The answers provided by Mexico can be found in the following document:
G/SCM/Q2/MEX/15 (To questiions from Chile, the EC and the
United States)
31. The delegate of the European Communities noted that Mexico, in its oral replies, had stated
that certain programmes were not prohibited by the Agreement.  The EC did not believe that
notification related to the question of whether or not programmes were prohibited by the Agreement,
but to whether subsidies were specific and therefore notifiable under Article 25.  Also, regarding the
Maquila programme, Mexico had referred to footnote 1 of the Agreement.  Under the Maquila
programme it was possible for manufacturers in certain zones to be able to import machinery, which
was not consumed in the production process, without the payment of import duty and taxes. The ECsuggested that this clearly fell outside the ambit of footnote 1 or the exceptions of Annex I under the
Agreement.   The EC reserved the right to pose written question on these issues after reviewing
Mexico's written answers.
32. The questions regarding Poland's notification can be found in the following document:
G/SCM/Q2/POL/8 (Submitted by the United States)
33. The answers provided by Poland can be found in the following document:
G/SCM/Q2/POL/9 (To questions submitted by the United States)
34. No questions were posed concerning Qatar's notification.
35. The questions regarding Slovenia's notification can be found in the following document:
G/SCM/Q2/SVN/6 (Submitted by the United States)
36. The answers provided by Slovenia can  be found in the following document:
G/SCM/Q2/SVN/7 (To questions by the United States)
37. The questions regarding Thailand's notification can be found in the following document:
G/SCM/Q2/THA/8 & Corr.1 (Submitted by the EC)
G/SCM/Q2/THA/9 (Submitted by the United States)
38. The answers provided by Thailand can be found in the following document:G/SCM/M/23
Page 5
G/SCM/Q2/THA/10 (To questions  submitted by the United States and the EC)
39. The delegate of the United States, regarding import duty exemptions on industrial estates,
understood Thailand’s answer to be that because the import duty exemptions were available for all
firms and industries wishing to be located in the industrial estates, Thailand considered this
programme not to be specific in the sense of Article 2 of the Agreement.  The United States askedThailand to elaborate on whether the programme was specific on a regional basis.
40. The delegate of Thailand stated that the exemp tions were not specific in a regional sense, as
they were available for all regions that were willing to follow the terms of the industrial estate
programme.
41. The delegate of the European Communities thought that it was fairly clear that if a subsidy
was limited to firms that happened to locate in a certain place and by consequence of doing so
obtained certain advantages, then it was difficul t to see how the subsidy would not be regionally
specific.  The delegate posed as an example Italy granting subsidies which were only available to
firms located in Sicily.  This would clearly be a regional subsidy.  One might argue that any firm that
so wished could locate in Sicily, but that did not alter the fact that not all firms in Italy would be
located in Sicily.  Clearly those that were located there would get better treatment than those that were
not.  This was the basis of regional specificity.  This issue had been raised before in discussingspecificity, and there was no other reasonable interpretation.  There might be a scheme that was
limited to firms operating in the textile sector, and it might be argued that any firm could diversify
into textile production.  But, if a subsidy were limited to one sector, it would be limited in fact to
certain firms.  Only certain firms would be producing textiles, in the same way that only certain firms
would be located in Sicily, and only certain firms w ould be located in industrial states in Thailand.
The EC asked the Committee to think more carefully about the issue of specificity, particularly on a
regional basis.
42. The delegate of  Brazil reserved the right to present questions on notifications that had already
been reviewed by the Committee.  A number of questions were in the process of being translated.
43. The delegate of the European Communities noted, regarding those Members that had reserved
the right to ask further questions, that in the view of the EC any such questions would not be within
the framework of the procedure for the review of new and full notifications.  The EC’s understanding
was that the procedure had been agreed with appropriate deadlines for answering questions, and that
the basic review was to be conducted at the Committee’s special meetings, on the basis of those
questions and answers.  In the EC’s view, any fu rther questions should be considered to be on an
informal basis, where Members would answer the questions as and when they had the opportunity.
44. The Chairman stated that there was always the possibility to follow up with written questions
on statements that had been made and that Members had the right to do so.  He agreed with the EC,
however, that Members should respect the agreed procedures in review of these notifications.
45. The Chairman concluded the review of the 1998 new and full notifications on the agenda.  He
reminded delegations that, if they desired written answers to their oral follow-up questions, they
should submit these questions in writing to the notif ying Member and to the Secretariat within two
weeks, i.e., by 17 November 1999.  Written answers to follow-up questions would be due within four
weeks thereafter, i.e., by 15 December 1999.
46. The Chairman recalled that this special mee ting was the last scheduled meeting to review
1998 new and full notifications.  Unfortunately, many delegations had not yet provided a notification.
An updated list of Members who had and had not submitted their notifications, to be included in theCommittee’s annual report was available.  It was extremely distressing that nearly one-and-one-halfG/SCM/M/23
Page 6
years after the due date, only 52 Members had made this required notification.  More than 80
Members had not submitted a notification.  These non-notifiers included numerous important trading
countries in all regions of the world.  This was a very poor record of compliance with the basic
transparency obligation of the SCM Agreement.  The Chairman invited Members to report on the
status of their notification.
47. The delegate of Thailand stated that the only  remaining notification due from Thailand was in
regard to countervailing actions, and that it would be forwarded in the very near future.
48. The Chairman noted that Malaysia had indicated that its notification was to be submitted
soon.
49. The Chairman then raised the question of the procedure that the Committee should follow in
reviewing the remaining 1998 new and full notifications, i.e., those that had been received too late to
be included on the agenda for this meeting, a nd any that would be received in the future.
50. Given that this was the last special meeting for review of these notifications, the Chairman
proposed that thenceforth the Committee review 1998 new and full notifications during its regular
meetings, otherwise following the agreed procedures with respect to timing, and with respect to the
question and answer process.  1998 new and full notifications circulated in all three languages at least
19 weeks before a regular meeting would be placed on the agenda of that meeting.  Written questionswould be due no later than 15 weeks before the meeting, and written answers no later than six weeks
before the meeting, and the discussion at the meeting would be focused on follow-up issues.  A
Member would not be required to provide written answers in advance of a meeting to any questions
received after the deadline for questions.  A notifying Member presenting its written answers after the
deadline for answers would need to present those answers in full orally at the meeting.
51. The Committee agreed to the procedure proposed by the Chairman.
52. The Chairman noted that in keeping with this decision of the Committee, 1998 new and full
notifications not yet reviewed that were circulated in all three languages no later than 28 December
1999 would be on the agenda for review at the Committee’s Spring 2000 regular meeting.  Written
questions would be due not later than 25 January 2000, and written answers to those questions notlater than 28 March 2000.
53. The meeting was adjourned.
__________