WORLD TRADE  
ORGANIZATION  G/SCM/N/114/COL 
1 July 2004 
 
 (04-2834) 
Committee on Subsidies and Countervailing Measures Original:   Spanish 
  
 
SUBSIDIES 
 
Extension under SCM Article 27.4 of th e Transition Period under Article 27.2(b)
 
for the Elimination of Export Subsidies  
 
Updating Notification  
 
COLOMBIA 
  
 The following communication, dated 30 June 200 4, is circulated at the request of the 
delegation of Colombia. 
_______________ 
 
  In fulfilment of Colombia's transparency co mmitment under paragraphs  8 and 10(i) of the 
Decisions adopted on 13 December 2002 in documents  G/SCM/93 and G/SCM/94, and in fulfilment 
of the commitments undertaken in the Deci sions adopted on 8 December 2003 in documents 
G/SCM/93/Add.1 and G/SCM/94/Add.1,  we herewith submit the annual notification for the year 2003 
concerning the programmes "Special Import-Expor t System for Capital Goods and Spare Parts 
(SIEX)" and "Free-Zone Regime". 
 
 As will be appreciated from these notifications , Colombia is continuing to comply strictly 
with its obligations not to modify these programmes so as to make them more favourable, including as 
to the scope, coverage and inte nsity of benefits, than they were as at 1 September 2001. 
  It should be pointed out that Colombia issu ed Decree 1811 of 3 June 2004, in which measures 
were adopted to fulfil the commitments to dismantle  the SIEX programmes.  That Decree is annexed 
to this notification.   With respect to the commitment  to undertake the reform of its legislation on Free Zones, once 
agreement had been reached between the Ministry of  Trade, Industry and Tourism and the Ministry of 
Finance and Public Credit and the various actors of ci vil society in the free z ones located in different 
parts of the country, the President of the Republic of Colombia gave his approval to Law 863 of 2003, 
which, in Article 69, repealed Article 213 and Artic le 322(m) of the Tax Code, and also Article 15 of 
Law 109 of 1985 with regard to industrial users of goods  in free zones.  A copy of part of the above-
mentioned regulation is annexed hereto. 
 G/SCM/N/114/COL 
Page 2  
 
 A. 
SPECIAL IMPORT -EXPORT SYSTEM FOR CAPITAL GOODS AND SPARE PARTS (SIEX) 
1. Description of the programme 
 
 This is a mechanism which provides for the duty-free import of capital goods and spare parts 
intended for the installation, expans ion or relocation of production units to be used in the manufacture 
of export goods.  It also provides for the duty-free import of components to be used in the production 
or assembly of capital goods or spare parts which are then used in the production of export goods. 
 
2. Period covered by the notification 
  2003. 
 
3. Policy objective and/or purpose of the subsidy 
 
 The objective of the programme is to s timulate Colombian exports, promote their 
diversification and contribute to technology transfer through the importation of capital goods. 
 
4. Background and authority for the subsidy 
 
 - Article 173(c) of Decree-Law 444 of 1967  
 - Decree 688 of 1967 
  - Decree 631 of 1985   - Resolution 682 of 1995 of the Colomb ian Foreign Trade Institute (INCOMEX) 
 
 - INCOMEX Resolution 1860 of 1999   - Resolution 1964 of 2001 of the Ministry of Foreign Trade   - Resolution 0143 of 2002 of the Ministry of Foreign Trade 
 
 - Resolution 1148 of 2002 of the Ministry of Foreign Trade   - Resolution 011 of 2003 of the Ministry of Foreign Trade  
 - Decree 1811 of 2004 
 
5. Form of subsidy 
 
 Complete exemption from customs duties on the import of the goods.  6. To whom and how the subsidy is provided 
 
 All natural or legal persons responsible for production, expor t or trading enterprises or 
non-profit entities registered in the National Register of Exporters are eligible.  The subsidy takes the 
form of exemption from the payment of customs duties levied upon importation of the capital goods 
and spare parts covered by the programme. 
    G/SCM/N/114/COL 
 Page 3 
 
 
 7. Subsidy per unit 
 
 In view of the nature and coverage of the programme, there are no statistics available which 
reflect the amount of the subsidy per unit.  However, the total amount of the customs duties that the Government forwent as a result of the benefits  granted under the programme was US$34,995,196 in 
2002 and US$27,940,000 in 2003.  Meanwhile, exports by the SIEX beneficiary companies totalled 
US$5,462 million in 2002 and US$6,350 million in 2003.  
8. Duration of the subsidy 
  Up to 31 December 2006, under paragraph 10 of  the Decision adopted by the Committee on 
Subsidies and Countervailing Measures (G/SCM/94).  
9. Statistics on the impact of the programme 
 
Year Imports of capital 
goods under the 
programme (in 
millions of US$) Exports by 
companies 
benefiting from 
the notified 
programme (in 
millions of US$) Value of the 
incentive (fiscal 
sacrifice) (in 
millions of US$) Total Colombian 
exports (in 
millions of US$) 
1998 458.8 4,139.1 49.2 10,865 
1999 545.3 5,494.1 60.3 11,617 
2000 512.5 6,340.4 53.0 13,114 
2001 379.8 5,630.2 60.81 13,320 
2002 228.3 5,462.4 34.91 12,902 
2003 387.7 6,350.0 27.9 13,092 
 
 1Source:  Information Systems Office, Ministry of Trade, Industry and Tourism. 
 
B. FREE ZONE REGIME (ZF) 
1. Description of programme 
 
 The Industrial Free Zones for Goods and Servi ces are specified geographical areas within the 
national territory, the purpose of which is to prom ote and develop the process of industrialization of 
goods and the supply of services intended primarily for foreign markets. 
 
2. Period covered by the notification 
 
 2003.  3. Policy objective and/or purpose of the subsidy 
 
 The objective of the programme is to promote foreign trade, generate employment and foreign exchange and to serve as a focus for i ndustrial development in the regions concerned. 
 4. Background and authority for the subsidy 
 
 - Law 7 of 1991   - Decree 2233 of 1996 G/SCM/N/114/COL 
Page 4  
 
  - Decree 727 of 1997 
  - Decree 918 of 2001   - Law 677 of 2001 
 
 - Resolution 1001 of 2002 of the Ministry of Foreign Trade   - Law 863 of 2003, Article 69  5. Form of the subsidy 
 
 For industrial users in the free zones, the proportionate share of revenue obtained from 
foreign market sales is exempted from income tax a nd supplementary taxes.  Nor is the remittance tax 
applied to earnings from industrial activities carried ou t within the free zones.  Goods introduced into 
the free zones are considered to be outside the na tional territory for the pur poses of the customs duties 
applicable to imports and taxes on exports.  
6. To whom and how the subsidy is provided 
 
 The subsidy is granted to industrial users of goo ds, that is, to foreign or national legal persons 
legally established in Colombia with their own tax identification number and who carry out their 
activities – consisting in the manufacture, production, processing or assembly of goods for sale primarily on foreign markets – exclusively within th e respective free zone.  The subsidy is granted in 
the form of an exemption from income tax and supplementary taxes on the portion of the income 
obtained from foreign market sales. 
 
7. Subsidy per unit 
 
 No statistical information is available that reflects the amount of the subsidy per unit.  
However, the total amount of the income and s upplementary tax exemption was US$53.5 million in 
2002 and US$13.5 million in 2003. 
 
8. Duration of the subsidy 
 
 Up to 31 December 2006, under paragraph 10 of  the Decision adopted by the Committee on 
Subsidies and Countervailing Measures (G/SCM/93). 
 
9. Statistical data on the impact of the programme 
 
Year Exports under the 
notified programme 
(in millions of US$) Value of the incentive 
(fiscal sacrifice) 
(in millions of US$) Total Colombian 
exports 
(in millions of US$) 
1998 341.9 13.0 10,865 
1999 359.0 19.2 11,617 
2000 471.2 40.9 13,114 
2001 329.0 48.21 13,319 
2002 369.7 53.51 12,901 
2003 389.6 13.5 13,092 
                                                      
1  Source:  DIAN.  G/SCM/N/114/COL 
 Page 5 
 
 
 OFFICIAL JOURNAL 45.569 
 
DECREE 1811 
 
03/06/2004 
 
  By which measures are adopted for the fulfilm ent of the commitments undertaken within the 
World Trade Organization to dismantle out export subsidies.  
 The President of the Republic of Colombia, in the exercise of his constitutional and legal 
powers, especially those conferred on him by Artic le 189, paragraph 25, of the Political Constitution 
and subject to the provisions of Law 6 of 1971 and Law 7 of 1991, and   
WHEREAS 
 
 By Law 170 of 15 December 1994, the Congr ess of the Republic approved the Agreement 
Establishing the World Trade Organization (WTO);   The Agreement on Subsidies and Countervailing Measures, which forms part of the texts of 
the WTO Agreement, prohibits the granting of export subsidies; 
 
 By virtue of the provisions on special and di fferential treatment for developing countries, a 
grace period of eight years from the entry into force of the WTO Treaty was granted for the dismantling of such subsidies.  That  period expired on 1 January 2003; 
 
 Under that Agreement developing countries we re given the possibility of requesting an 
extension upon expiry of the transition period.  The WTO Committee on Subsidies and  Countervailing Measures, by document G/SCM/94 of 17 December 2002, granted Colombia an 
extension of the transition period up to 31 December 2003;   The extension was granted to Colombia on the condition that export subsidies would be 
eliminated without fail by 31 December 2006 at the latest; 
  Colombia is obliged to dismantle the e xport subsidies under the Special Import-Export 
System for Capital Goods and Spare Parts (SIEX) by 31 December 2006 at the latest, without including the programmes for the export of servi ces and the programmes for the export of finished 
goods covered by Annex 1 to the WTO Agreement on Agriculture; 
  A programme to dismantle the export subsidi es under the Special Import-Export System for 
Capital Goods and Spare Parts (SIEX) must be adopted, so that requests for new programmes may 
only be approved up to 31 December 2004 inclusive,  
 
HEREBY DECREES 
  Article 1.  The Ministry of Trade, Industry and Tourism may only approve requests for new programmes or modifications to the existing prog rammes for capital goods and spare parts mentioned 
in Article 173(c) of Decree-Law 444 of 1967 up to 31 December 2004 inclusive. 
 
 Article 2.  In the case of the programmes for capital goods and spare parts mentioned in 
Article 173(c) of Decree-Law 444 of 1967 that are a pproved after the enactment of this Decree, the 
deferred VAT payments must be made before 31 December 2006. 
 G/SCM/N/114/COL 
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  Article 3.  The programmes whose final export products correspond to the services sector or 
are covered by Annex 1 to the WTO Agreemen t on Agriculture shall be excluded from the 
requirements of Articles 1 and 2 of this Decree.   Article 4.  This Decree shall enter into fo rce as of its publication and revokes all provisions 
contrary to it.   
  For publication and implementation.  
Done in Bogotá, D.C, on 3 June 2004. 
  
ÁLVARO URIBE VÉLEZ 
 
 
 
Minister for Finance and Public Credit,    Alberto Carrasquilla Barrera  
 Minister for Trade, Industry and Tourism,   Jorge Humberto Botero Angulo  
 Director of the National Planning Department,   Santiago Javier Montenegro Trujillo  
  G/SCM/N/114/COL 
 Page 7 
 
 
 LAW 863 OF 2003 
(29 December) 
 
Establishing tax, customs, fiscal and inspection re gulations with a view to stimulating economic 
growth and the reorganization of public finances 
 
The Congress of Colombia 
 
HEREBY DECREES: 
 
CHAPTER VII 
Application and waivers 
 
 Article 69.  Application and Waivers.  This law shall enter into force as of the date of its 
publication and revokes the following provisions:  Article  85, section 2;  Article 90-1;  Article 127-1, 
paragraph 3;  Article 242;  Ar ticle 243;  Article 366-1, section 2;  Article 384;  Article 443,  
Article 499-1;  the expression "and shall only apply tax discriminatory measures in the cases mentioned in Article 618" of Artic le 511;  Article 555-1, section 4;  the paragraph of Article 651; 
Article 689-1, section 2, Article 869(d) and (e) of the Tax Code;  Article 272 of Law 223 of 1995;  the 
paragraph of Article 121 of Law 488 of 1998;  th e paragraph of Article 1 of Law 677 of 2001;  
Article 61 of Law 788 of 2002. 
 
 As of 31 December 2006, Article  213 and Article 322(m) of th e Tax Code and Article 15 of 
Law 109 of 1985 with regard to the industrial u sers of goods in free zones shall be revoked.   
 President of the Senate of the Republic,  Germán Vargas Lleras.  
Secretary General of the Senate of the Republic, 
Emilio Ramón Otero Dajud.  
President of the Chamber of Representatives, 
Alonso Acosta Osio.  
Secretary-General (E.) of the Chamber of Representatives,  
Jesús Alfonso Rodríguez Camargo.  
 
REPUBLIC OF COLOMBIA – NATIONAL GOVERNMENT 
 For publication and implementation 
Done in Bogotá, D. C.,  on 29 December 2003. 
ÁLVARO URIBE VÉLEZ 
Minister for Finance and Public Credit,  Alberto Carrasquilla Barrera.  
__________