. /.RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/W/449
23 May 2001
(01-2617)
Committee on Subsidies and
Countervailing MeasuresOriginal:  Spanish
QUESTIONS AND COMMENTS CONCERNING  PROPOSALS ON
IMPLEMENTATION-RELATED ISSUES REFERRED TO THE
COMMITTEE IN THE 15 DECEMBER 2000 DECISION
OF THE GENERAL COUNCIL
Replies by COLOMBIA to Questions from the UNITED STATES1
The following communication, dated 22 May 2001, has been received from the Permanent
Mission of Colombia.
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In document G/SCM/W/445, published by the Secretariat on 9 May 2001, the United States
posed a number of questions which we shall answer below:
1. What does Colombia's proposal cover?  Does it cover both indirect taxes and import
taxes?
Reply
Yes, it covers both indirect taxes and import taxes.  Since the proposal concerns capital goods
under competitive conditions, it covers all of the taxes applied to those goods.
2. Is Colombia's proposal limited to tax exemptions under item (h)?
Reply
No. Item (h) was referred to, both in the initial document and in the replies to the questions
raised, as an element to be considered among the numerous arguments to justify addressing the
subject of capital goods.  It is important to dist inguish between the arguments put forward to explain
the different reasons why the proposals submitted should be considered, and the actual coverage of
the proposals.
3. The proposal refers to tax deferrals as well as exemptions.  By "deferral", do you mean
an exemption that is contingent upon export?
Reply
Yes, this could be understood as one of the meanings of the word "deferral".  In this
connection it is important to consider that items (g), (h) and (i) of the Illustrative List of Export
                                                     
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Page 2
Subsidies mention different types of fiscal operations – exemption, remission, drawback or deferral –
and it is our understanding that the Agreement treats them equally.
4. Regarding the coverage of item  (h), could Colombia please elaborate on the incentives it
has in mind and what it means by "structu red incentives for export companies whose
production is intended partly but not exclusively for the international market"?  Would it be
possible to specialize capital goods imports to produce for export?  If so, on what basis?
Reply
As regards the first part of the question, we understand that in certain developing countries,
these incentives are granted exclusively to exportin g companies in accordance with their performance
on the international market.
To that extent, the incentive would not be st ructured on the basis of the identification of
capital goods imports intended for export.
At the same time, it is our understanding that these incentives do not prohibit the imported
goods from being used for domestic production.  This is an element which would support the
consistency of these instruments with the central idea of the Illustrative List as regards tax treatment.
5. Would export-only companies qualify for tax exemption on capital goods imports under
Colombia's proposal?  If so, on what basis?  If not, would such an exporter qualify if footnote 61
were amended?
Reply
The reply to the first question is affirmative.  The incentive could be granted to an export-only
company, and we understand that in many developing countries this condition is indispensable.
As regards the effect of amending footnote 61 to deal with export incentives for capital goods,
we think that this is an alternative which, in addition to covering the different taxes, would also apply
to the different types of operations that we would like to cover:  exemption, remission, deferral or
drawback.
Nevertheless, it is important to bear in mind that we are ready to consider any alternatives that
Members may suggest in this connection, because we believe that there are a number of paths to be
explored in our effort to ensure that the developing countries are given access to capital goods in
competitive conditions.
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