WORLD TRADE G/SCM/N/3/ZAF
G/SCM/N/16/ZAF
ORGANIZATION G/SCM/N/25/ZAF
23June1997
(97-2588)
Original: English Committee onSubsidies
andCountervailing Measures
SUBSIDIES
Notifications Pursuant toArticle XVI.1 oftheGATT 1994
andArticle 25oftheAgreement onSubsidies and
Countervailing Measures
SOUTH AFRICA
Thefollowing communication, dated 18June1997, hasbeenreceived from thePermanent
Mission ofSouth Africa.
_______________
Ihave thehonour tosubmit herewith, pursuant toArticle XVI:1 oftheGATT 1994 and
Articles25.2and25.1oftheWTOAgreementonSubsidiesandCountervailingMeasures,SouthAfrica's
firstandfullsubsidies notification, updated toJune1997.G/SCM/N/3/ZAF
G/SCM/N/16/ZAF
G/SCM/N/25/ZAF
Page2
TABLE OFCONTENTS
Page
1. LowInterest RateFinance Scheme (Life Scheme) ........................3
2. World Player Scheme.............................................4
3. Duty Credit Certificate Scheme forTextiles andClothing (DCC 's).............5
4. Contribution totheMaize Industry .................................7
5. Payment forRelief from Natural Disasters: Stock Feed Purchases Incentives ......8
6. Payment forRelief from Natural Disasters: Transport ofFodder ..............9
7. Payment forRelief from Natural Disasters: Transport ofWater ...............10
11. Payment forRelief from Natural Disasters: Water Quota Subsidies ............11
12. Payment forRelief from Natural Disasters: Boreholes ....................12
13. Payment forRelief from Natural Disasters: Interim Natural Grazing Recovery Scheme 13
14. Payment forRelief from Natural Disasters: Conversion ofMarginal Lands .......14G/SCM/N/3/ZAF
G/SCM/N/16/ZAF
G/SCM/N/25/ZAF
Page3
LOW INTEREST RATE FINANCE SCHEME (Life Scheme)
Period covered
To30June1996
Policy objective and/or purpose
Toassist companies withstructural adjustment through thepromotion ofnewinvestment in
larger projects (acquisition offixed assets).
Background andauthority
Administered bytheIndustrial Development Corporation (IDC), aparastatal body.
Form
Lowinterest ratefinance toprovide forbridging finance forlarge newinvestments.
Towhom andhowassistance isprovided
Available toindustrialists orgroups withtotalassets ofmore thanR1m,forfinancing projects
thatwill:
1. Create newand/or additional capacity generating salesofwhich 30%ormoreisdirected
towards exports;
2. result inareasonable number ofnewjobopportunities;
3. haveeconomic merit; and
4. notresult intheapplicant ’sfunding structure being unreasonably strained.
Amount ofsubsidy
Lower interest rateonloans, suspensive salesorlease finance, withamaximum ofR40m.
Inception dateandduration
Thescheme wasintroduced inApril 1991 withnotermination datefixed.
Statistical datapermitting anassessment oftrade effects ofthesubsidy
Amount ofloan Number ofloans
1July1995 to30June1996 R115.6 m 38
Thesubsidy effect isthedifference between actual andlower interest ratesontheabove amount.G/SCM/N/3/ZAF
G/SCM/N/16/ZAF
G/SCM/N/25/ZAF
Page4
WORLD PLAYER SCHEME
Period covered
To30June1996
Policy objective and/or purpose
Toassist manufacturers withstructural adjustment byacquiring new/additional fixed assets
(plant andequipment) toimprove productivity.
Background andauthority
Administered bytheIndustrial Development Corporation (IDC), aparastatal body.
Form
Lowinterest ratefinance tomodernise existing plantandequipment orestablishing anewplant,
toexpand existing industries andtheestablishment ofnewventures.
Towhom andhowassistance isprovided
Tomanufacturers unduly affected bytariff reform.
Amount ofsubsidy
Lower interest ratefinancing withamaximum ofR40million perproject.
Inception dateandduration
Thescheme wasintroduced inOctober 1995 withnotermination datefixed.
Statistical datapermitting anassessment oftrade effects ofthesubsidy
Amount ofloans Number ofloans
1October 1995 to30June1996 R365.4 m 21G/SCM/N/3/ZAF
G/SCM/N/16/ZAF
G/SCM/N/25/ZAF
Page5
DUTY CREDIT CERTIFICATE SCHEME FOR TEXTILES AND CLOTHING (DCC ’s)
Period covered
To30June1996
Policy objective and/or purpose
Toenable andencourage manufacturers toreduce ranges andspecialise toagreater extent in
order tohelpthem become more competitive, toimprove productivity andtraining withaview to
achieving international standards.
Background andauthority
Introduced byGovernment aspartofalong-term strategic planfortherestructuring ofthe
textile andclothing industries. Thescheme isadministered interms ofaprovision intheCustoms
andExcise Act,1964, asamended.
Form
Rebate ofcustoms dutypayable oncertain imports.
Towhom andhowassistance isprovided
Exporters oftextile andclothing earndutycredit certificates onthebasis oftheirexports of
products falling under thescheme. Thecertificate allows these exporters credit tothevalue ofthe
certificate onduties payable onimports ofcertain textile andclothing products. Thevalue ofthe
certificate (duty credit) iscalculated asapercentage ofthe"export salesvalue" oftheexports. The
granting ofbenefits interms ofthescheme issubject toeachapplicant participating inandachieving
targets setinterms ofaProductivity Performance Monitoring Scheme (PPMS) andspending annually
atargeted amount equal toatleast4%oftheirwage billontraining.
Amount ofsubsidy
Dutycredit certificates tothevalue ofabout R111million wereissued fortheperiod April 1993
toMarch 1994, about R89million fortheperiod April 1994toMarch 1995andabout R100million
fortheperiod April 1995 toMarch 1996
Inception dateandduration
TheScheme wasintroduced on1April 1993.G/SCM/N/3/ZAF
G/SCM/N/16/ZAF
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Page6
Statistical datapermitting anassessment oftrade effects ofthesubsidy
Total textiles andclothing imports andexports (excluding wool fibre):
Exports R(million) Imports (Rmillion)
1994 1,892.2 3,164.9
1995 1,423.7 3,778.3
1996 1,812.0 4,233.2G/SCM/N/3/ZAF
G/SCM/N/16/ZAF
G/SCM/N/25/ZAF
Page7
CONTRIBUTION TOTHE MAIZE INDUSTRY
Period covered
1996/1997 Financial year
Policy objective and/orpurpose
Torepay thedebt, oftheMaize Industry, thatoccurred because ofexport losses during the
1980'sunder thesingle channel marketing system administered bytheMaize Board.
Background andauthority
Department ofAgriculture
Form
Financial assistance
Towhom andhowassistance isprovided
Annual payments aremade totheMaize Board infavour ofproducers.
Amount ofsubsidy
R50million
Inception dateandduration
Since 1986
Statistical datapermitting anassessment oftrade effects ofthesubsidy
Thefollowing payments weremade since1986inthisregard; 1986/87 R31.0million, 1987/88
R91.0million, 1990/91 R62.0million, 1991/92 R442.6 million, 1993/94 R36.6million, 1994/95
R37.3million, 1995/96 R37.6millionG/SCM/N/3/ZAF
G/SCM/N/16/ZAF
G/SCM/N/25/ZAF
Page8
PAYMENT FOR RELIEF FROM NATURAL DISASTERS: STOCK
FEED PURCHASES INCENTIVES
Period covered
1996/97 Financial year
Policy objective and/or purpose
Toenable livestock producers tomaintain anucleus herdduring extended drought periods
Background andauthority
Department ofAgriculture
Form
Financial assistance
Towhom andhowassistance isprovided
Assistanceisgiventolivestockfarmersbywayofafinancialcontribution.Assistanceisprovided
bygovernment totheproducers inproclaimed drought disaster areas through aspecific drought relief
scheme within certain strictcriteria. TheNational drought committee determines when disaster drought
circumstances prevail. Themeasure entails arebate onthetransportation ofanimal feedtoareas that
weredeclared asadisaster drought areas. Aidincludes aStatecontribution tomaintain anucleus herd
aswellasanincentive forthereduction oflivestock.
Amount ofsubsidy
R17.7million
Inception dateandduration
Since 1986/87
Statistical datapermitting anassessment oftrade effects ofthesubsidy
Thefollowing payments weremade since1986inthisregard; 1986/87 R40.1million, 1987/88
R69.2million, 1988/89 R73.2million, 1989/90 R10.5million, 1990/91 R9.5million, 1991/92
R57.2million, 1992/93 R97.1million, 1993/94 R143.6 million, 1994/95 R45.8million, 1995/96
R83.9million.G/SCM/N/3/ZAF
G/SCM/N/16/ZAF
G/SCM/N/25/ZAF
Page9
PAYMENT FOR RELIEF FROM NATURAL DISASTERS: TRANSPORT OFFODDER
Period covered
1996/97 Financial year
Policy objective and/or purpose
Toenable livestock producers indrought stricken areas tocontinue feeding theirherd.
Background andauthority
Department ofAgriculture
Form
Financial assistance
Towhom andhowassistance isprovided
Assistanceisgiventolivestockfarmersbywayofafinancialcontribution.Assistanceisprovided
bygovernment totheproducers inproclaimed drought disaster areas through aspecific drought relief
scheme within certain strictcriteria. TheNational drought committee determines when disaster drought
circumstances prevail. Themeasure entails arebate onthetransportation ofanimal feedandanimals
inareas thatweredeclared adisaster drought area.Aidconsists ofarebate of75%onthetransportation
costs ofregistered animal feedandlicks.
Amount ofsubsidy
R373,000
Inception dateandduration
Since 1986/87
Statistical datapermitting anassessment oftrade effects ofthesubsidy
Thefollowing payments weremade since1986inthisregard; 1986/87 R3.3million, 1987/88
R6.8million, 1988/89 R2.9million, 1989/90 R5.4million, 1990/91 R0.5million, 1991/92
R7.9million, 1992/93 R22.3million, 1993/94 R17.2million, 1994/95 R4.0million, 1995/96
R1.8million.G/SCM/N/3/ZAF
G/SCM/N/16/ZAF
G/SCM/N/25/ZAF
Page10
PAYMENT FOR RELIEF FROM NATURAL DISASTERS: TRANSPORT OFWATER
Period covered
1996/97 Financial year
Policy objective and/or purpose
Aidtocattle andtohumans indrought stricken areas
Background andauthority
Department ofAgriculture
Form
Financial assistance
Towhom andhowassistance isprovided
Assistance ismainly tolivestock farmers bywayofafinancial contribution fortheprovision
ofemergency drinking water tocattle andhumans inareas thataredeclared asemergency drought
areas. Thegeneral criteria arethatthere hastobelessthan15litres ofwater perperson perday
available andlessthan60litresperanimal perday.Thiscondition hastoprevail in10%ofthedistrict.
Amount ofsubsidy
R15,800
Inception dateandduration
Since 1992/93
Statistical datapermitting anassessment oftrade effects ofthesubsidy
Thefollowing payments weremade since1992inthisregard; 1992/93 R10.9million, 1993/94
R2.5million, 1994/95 R0.08million, 1995/96 R0.08million.G/SCM/N/3/ZAF
G/SCM/N/16/ZAF
G/SCM/N/25/ZAF
Page11
PAYMENT FOR RELIEF FROM NATURAL DISASTERS: WATER QUOTA SUBSIDIES
Period covered
1996/97 Financial year
Policy objective and/or purpose
Toenable producers onirrigation schemes tosurvive drought conditions, toenable them to
keeptheirfarmlabourers andtoprevent collapse oftheinfrastructure oftheregion. Theaimisto
assist thefarmer, hisfamily andhisworkers withtheirmostbasic needs. Thesubsidy isnotmeant
tofinance production orfarmdebt.
Background andauthority
Department ofAgriculture
Form
Financial Assistance
Towhom andhowassistance isprovided
Assistance isgiven toirrigation farmers bywayofafinancial contribution. Assistance is
provided bygovernment totheproducers onstatewater schemes, through aspecific drought relief
scheme andafteraninvestigation. Strict criteria areapplied. Regarding theabove measure thegeneral
norm foradrought condition wasdeclared when afarmer wasnotabletoproduce oneyear’sproduction
inthree consecutive years according tothelongtermmean. Thewater quota inthatyearshould be
lessthan10%ofthenormal quota. Thequota intheprevious twoyears mustbelessthan100% of
anormal year’squota. Thesubsidy isderived from thegross margin thatwould havebeenrealized
from aproduction of50%ofthenormal water quota minus thegross margin thatwould havebeen
realised from thedryland production thereof.
Amount ofSubsidy
R4.5million
Inception dateandduration
Since before 1986/87
Statistical datapermitting anassessment oftrade effects ofthesubsidy
Thefollowing payments weremade since1986inthisregard; 1986/87 R3.3million, 1987/88
R2.4million, 1988/89 R0.8million, 1989/90 R0.4million, 1990/91 R0.7million, 1991/92
R1.0million, 1992/93 R1.7million, 1993/94 R7.4million, 1994/95 R3.8million, 1995/96
R1.0million.G/SCM/N/3/ZAF
G/SCM/N/16/ZAF
G/SCM/N/25/ZAF
Page12
PAYMENT FOR RELIEF FROM NATURAL DISASTERS: BOREHOLES
Period covered
1996/97 Financial year
Policy objective and/or purpose
Sinking ofboreholes intimes ofdrought.
Background andauthority
Department ofAgriculture
Form
Financial assistance
Towhom andhowassistance isprovided
Assistance ismainly given tolivestock farmers bywayofafinancial contribution forthesinking
ofboreholes foremergency drinking water forcattle andhumans inareasthataredeclared asemergency
drought areas. Thegeneral criteria arethatthere hastobelessthan15litres ofwater perperson
perdayavailable andlessthan60litres peranimal perday. Thiscondition hastoprevail in10%of
thedistrict.
Amount ofsubsidy
R42,900
Inception dateandduration
Since 1992/93
Statistical datapermitting anassessment oftrade effects ofthesubsidy
Thefollowing payments weremade since1992inthisregard; 1992/93 R15.7million, 1993/94
R40.0million, 1994/95 R3.1million, 1995/96 R0.2million.G/SCM/N/3/ZAF
G/SCM/N/16/ZAF
G/SCM/N/25/ZAF
Page13
PAYMENT FOR RELIEF FROM NATURAL DISASTERS: INTERIM NATURAL
GRAZING RECOVERY SCHEME
Period covered
1996/97 Financial year.
Policy objective and/or purpose
Thisisatemporary measure untilanatural grazing recovery scheme comes intoeffect toassist
livestock farmers who, inspecific areas arecompelled toallow theirnatural grazing which hasbeen
damaged byprolonged drought, thetimetorecover.
Background andauthority
Department ofAgriculture
Form
Financial assistance
Towhom andhowassistance isprovided
Financial assistance isgiven tolivestock farmers bywayofafinancial contribution. Only
those farmers withnatural grazing thathasbeenadversely affected bydrought andfarmers whoobtain
60%ormoreoftheirincome frommeat, wool/mohair andmilkqualify forassistance under thisscheme.
Areas havetobedeclared drought disaster areas. Incentives aregiven forstock reduction (valid for
twomonths), forthereduction ofstock below thelongtermcapacity ofafarmunitupto50%of
thenotified longtermcapacity.
Amount ofsubsidy
R8,800
Inception dateandduration
Since 1994/95.
Statistical datapermitting anassessment oftrade effects ofthesubsidy
Thefollowing payments weremade since1994inthisregard; 1994/95 R22.3million, 1995/96
R8.9million.G/SCM/N/3/ZAF
G/SCM/N/16/ZAF
G/SCM/N/25/ZAF
Page14
PAYMENT FOR RELIEF FROM NATURAL DISASTERS: CONVERSION
OFMARGINAL LANDS
Period covered
1996/97 Financial year
Policy objective and/or purpose
Toenable producers toreduce marginal ploughed lands where cropproduction isrisky and
toconvert itintomore suitable pastures.
Background andauthority
Department ofAgriculture
Form
Financial assistance
Towhom andhowassistance isprovided
Assistance isgiven tolivestock farmers bywayofafinancial contribution toestablish perennial
pastures ’and/or perennial leguminous pastures inacroprotation system onlandnormally usedfor
dry-land grain production, inorder toadjust thefarming systems. Insodoing, reducing theexcessive
dependence onwheat production inthewinter rainfall areas anddependence onmaize production in
certain marginal cropproduction areas. Theowner hastosubmit awritten undertaking, nottoplough
overtheplanted pasture for6years.
Amount ofsubsidy
R9.5million
Inception dateandduration
Since 1987/88
Statistical datapermitting anassessment oftrade effects ofthesubsidy
Thefollowing payments weremade since1987inthisregard; 1987/88 R0.6million, 1988/89
R12.7million, 1989/90 R30.3million, 1990/91 R51.9million, 1991/92 R52.5million, 1992/93
R49.1million, 1993/94 R52.1million, 1994/95 R25.4million, 1995/96 R16.8million.