RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q3/ATG/5
23 May 2002
(02-2846)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement
on Subsidies and Countervailing Measures
Replies to Questions Posed by AUSTRALIA1, the EUROPEAN COMMUNITIES2,
JAPAN3 and the UNITED STATES4 Regarding the Notification
of ANTIGUA AND BARBUDA5
The following communication, dated 1 May 2002, has been received from the Government of
Antigua and Barbuda.
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QUESTIONS FROM AUSTRALIA
Fiscal Incentives Act Cap 172 (December of 1975)
Free Trade and Process Zone Act
Q1. Under the Fiscal Incentives Act, Cap 172 of the Laws of Antigua and Barbuda, what are
the approved products manufactured which are granted tax holidays?  What types of activities
are undertaken by the different categories of enterprises and what determines how enterprises
are categorised?
Reply
Under the Fiscal Incentives Act, Cap 172 of the Laws of Antigua and Barbuda, the types of
activities undertaken by the different categories of enterprises are garments, galvanised roofing, rum,
beer, soft drinks, malta, windows, doors and furniture.
The relief from taxes, or “tax holiday period”, is granted on import duties, income tax and
export profits, depending on the group in which the enterprise is categorized.
Q2. Are the tax exemptions granted under the Hotel Aid Act contingent on export?  What
goods are captured by this Act?
                                                     
1 G/SCM/Q3/ATG/1
2 G/SCM/Q3/ATG/2
3 G/SCM/Q3/ATG/3
4 G/SCM/Q3/ATG/4
5 G/SCM/N/74/ATG, G/SCM/N/71/ATG.G/SCM/Q3/ATG/5
Page 2
Reply
The Hotel Aid Act deals with hotel services and does not deal with visible exports pertinent to
Article 27.4 of the Agreement on Subsidies and Countervailing Measures.   However, as a matter
clarification, goods captured under this act as “articles of hotel equipment” include items such asbeds, sofas, electric lamps and fittings, beach furniture, rugs, kitchen equipment, etc.
Q3. What is the nature of the exemption given under the Fisheries Act, Cap 173 and the
Consumption Tax Act 1993?  Are these exemptions contingent on the export of those products?
Are they import duty exemptions?
Reply
The Fisheries Act is not relevant to this notification or to Article 27.4 of the Agreement on
Subsidies and Countervailing Measures.
Q4. Could Antigua and Barbuda explain whet her the benefits received by enterprises
operating in the Free Trade and Processing Zone (FTPZ) are contingent on export?  Is a
company required to export the product from the FTPZ or from the customs territory of
Antigua and Barbuda in order to receive the tax exemption benefits?
Reply
(a) Technically, yes.
(b) To receive the tax exemption benefit export must be from the custom territory of
Antigua and Barbuda.
QUESTIONS FROM THE EUROPEAN COMMUNITIES
Fiscal Incentives Act Cap 172 (December of 1975)
Free Trade and Process Zone Act
Q1. Please indicate when the pr ogrammes came into operation.
Reply
The Fiscal Incentives Act Cap  172 came into effect in December 1975 and the Free Trade and
Processing Zone Act came into effect in 1994.
Q2. Please indicate whether the programmes provide for other forms of subsidies than
exemption of import duties and internal taxes (e.g. grants, provision of goods or services).
Reply
Neither the Fiscal Incentive Act nor the Free Trade and Process Zone Act provide other
incentives other than full or partial exemption from import duties and internal taxes.
Q3. The notification refers to an "Export C redit Guarantee scheme".  Does Antigua and
Barbuda consider this programme to be covered by the requirements laid down in G/SCM/39,
in particular that only programmes involving import duty and internal tax exemptions are
covered?  Please elaborate.G/SCM/Q3/ATG/5
Page 3
Reply
The Eastern Caribbean Central Bank (ECCB) offers Antigua and Barbuda exporters insurance
coverage against risks involved in exporting on commercial terms, under the Export Credit GuaranteeScheme.   This ECCB facility covers up to 80% of political and commercial risks.   Antigua and
Barbuda does not consider this programme to be covered by the requirements laid down in
G/SCM/39, in particular that only programmes in volving import duty and internal tax exemptions are
covered.  In this regard, request for extension of this was removed with the submission of a New and
Full notification pursuant to Article XVI.I of the GATT 1994 and Article 25 of the Agreement on
Subsidies and Countervailing Measures in February 2002.
However, on further examination, this programme may be covered by Article 27.4 of the
Agreement on Subsidies and Countervailing Measures.  We remain uncertain as to whether the terms
fall within the sphere of an export subsidy, or wi thin the ambit of Annex One (I) (j) of the Agreement
on Subsidies and Countervailing Measures.  We therefore reserve this issue for further review.
Q4. Do the programmes provide for a condition to use domestic goods?  If yes, please
describe the relevant provision.
Q5. The programme described under "programme I" in G/SCM/N/71/ATG refers to a
condition for "local value addition".  Does this constitute a requirement to use domestic overimported goods?  Please explain.
Reply
The conditions in the Fiscal Incentives Programme for “local value added” do not constitute a
requirement to use domestic over imported goods. As stated in the Act, the “local value added” is the
amount by which the sales of an approved product exceeds:
(i) The aggregate amount of the value of imported raw materials (whether regional or
extra-regional);
(ii) Wages and/or salaries paid to persons non-national of a CARICOM member state;(iii) Interest, management charges and other income payments to non-residents in a
CARICOM member state;  and
(iv) Depreciation on the imports of plant, machinery and equipment.This requirement is based on the process not the raw material used.  It is therefore in
conformity with Article 3.1 (b) of the Agreement on Subsidies and Countervailing Measures.
Q6. Please indicate the rate of import duty or internal tax exemption as of
1 September 2001.
Reply
This information has never been collected.  To collect this information would require
resources in terms of manpower hours and overtime, which the present fiscal budget and
administrative constraints do not allow for.  These are typical issues for countries such as Antigua and
Barbuda with populations of approximately 60,000, high indebtedness and capacity constraints which
hampers such things as the collection of such data.G/SCM/Q3/ATG/5
Page 4
For the future, however, the Government of Antigua and Barbuda is seeking to implement
ASYCUDA.   With the implementation of ASYCUDA, it is envisaged that the information on the
value of revenue forgone for companies operating under the Fiscal Incentive, will be available.
Q7.  Please describe changes to the programmes since 1 September 2001, if any. In
particular, indicate any changes to the rate of exemption or the coverage of the programmes e.g.
in terms of products, location etc.
Reply
No.  There has been no change to the programmes since 1 September 2001.
Q8. Please elaborate on when and how Antigua and Barbuda intends to phase out these
programmes.
Reply
Antigua and Barbuda is mindful of our obligation under the WTO to phase out these
programmes.  We are reviewing the legislation with this regard in line with an effort by countries of
the region to harmonise their legislation.
QUESTION FROM JAPAN
Fiscal Incentives Act Cap 172 (December of 1975)
Free Trade and Process Zone Act
Q. While the Fiscal Incentives Act Cap 172 and the Free Trade and Processing Zone Act
No. 12 of 1994, which Antigua and Barbuda referred in G/SCM/N/71/ATG, seem to have
already been effective in 1997, Antigua and Barbuda notified in G/SCM/N/16/ATG on
9 May 1997 that there were no measures which require notification under Article 25.  Could
Antigua and Barbuda please explain this contradiction.
Reply
Antigua and Barbuda is among those countries that do not have the capacity to deal
effectively with WTO matters.  Prior to 1997, there was no one in the Ministry with sufficient
exposure and training to understand our commitments under the WTO Agreements, in particular theAgreement of Subsidies and Countervailing Measures.  We did not notify earlier due to this lack of
technical capacity to understand our obligations under this Agreement.  However, we now have a
greater measure of appreciation for the Agreement due to various training and technical assistance
programmes provided and/or organized by the WTO.
Our commitment to the multilateral process is clearly limited by our capacity constraints.
This is inevitable for small capacity constrained countries with a population such as ours.G/SCM/Q3/ATG/5
Page 5
QUESTIONS FROM THE UNITED STATES
Fiscal Incentives Act Cap 172 (December of 1975)
Free Trade and Process Zone Act
Q1. Could Antigua and Barbuda please explain whether these programmes provide any
other incentives apart from the full or partial exemption from import duties and internal taxes?
Reply
Neither the Fiscal Incentive Act nor the Free Trade and Process Zone Act provide other
incentives other than full or partial exemption from import duties and internal taxes.
Q2. By what criteria does the government determine an "approved product" under the
Fiscal Incentives Act?
Reply
There are no specific “approved products” or activities undertaken by the different categories.
Products are approved on the decision of the Cabinet.  Enterprises are categorized based on the
amount of value added.
The following criteria are used to grant ‘approved product” status under the Fiscal Incentives
Act, Cap 172 of 1975:
(i) Manufacture of the product locally must have a positive effect on employment and
wages;
(ii) Manufacture of the product must utilize excess manufacturing capacity and meet
demand locally and in export markets;
(iii) Manufacture of the product must utilize skills available locally.
Q3. Please provide the normal customs duty, consumption tax and income tax rates
companies would normally pay absent these programmes.
Reply
The table below shows the normal customs duty, consumption tax and income tax rates
companies would normally pay.
Sectors Inputs Customs Duty Consumption
taxIncome tax
Garment Fabric 5% 15% 25%
Fasteners 5% 30%
Thread 5% 15%
Furniture Wood 5-15% 15% 25%
Screws 5% 15%
Roofing Material 5% 15% 25%
Paint 15% 15%G/SCM/Q3/ATG/5
Page 6
Q4. Incentives under the Fiscal Incentives Act range from between 10 to 15 years.  Please
explain how Antigua and Barbuda would modify these programmes so that the subsidies do not
extend beyond any extension period provided.
Reply
Antigua and Barbuda intend to assess the Fiscal Incentives Act, being mindful to phase out
these programmes along the lines of our WTO obligations.
Q5. Some incentives under the Fiscal Incentives Act appear to be contingent upon the use of
domestic goods.  Please comment on whether this aspect of the programme constitutes a
prohibited subsidy under Article 3.1(b) of the Agreement on Subsidies and CountervailingMeasures.
Reply
The conditions in the Fiscal Incentives Programme for “local value added” do not constitute a
requirement to use domestic over imported goods. As stated in the Act, the “local value added” is the
amount by which the sales of an approved product exceeds:
(i) The aggregate amount of the value of imported raw materials (whether regional or
extra-regional);
(ii) Wages and/or salaries paid to persons non-national of a CARICOM member state;(iii) Interest, management charges and other income payments to non-residents in a
CARICOM member state;  and
(iv) Depreciation on the imports of plant, machinery and equipment.This requirement is based on the process not the raw material used.  It is therefore in
conformity with Article 3.1 (b) of the Agreement on Subsidies and Countervailing Measures.
Q6. Does the Government of Antigua and Barbuda maintain information or estimates on the
revenue foregone under these programmes?
Reply
This information has never been collected.  To collect this information would require
resources in terms of manpower hours and overtime, which the present fiscal budget and
administrative constraints do not allow for.  These are typical issues for countries such as Antigua and
Barbuda with populations of approximately 60,000, high indebtedness and capacity constraints which
hampers such things as the collection of such data.
For the future, however, the Government of Antigua and Barbuda is seeking to implement
ASYCUDA.   With the implementation of ASYCUDA, it is envisaged that the information on the
value of revenue forgone for companies operating under the Fiscal Incentive, will be available.
Q7. How long can companies granted a licence to operate in the FTPZ enjoy incentives
under this programme.G/SCM/Q3/ATG/5
Page 7
Reply
In perpetuity provided that they maintain the provisions of the agreement to which the
incentives were granted.
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