WORLD TRADE
ORGANIZATIONG/SCM/N/95/LCA
G/SCM/N/99/LCA
3 July 2003
(03-3572)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
New and Full Notification Pursuant to Article XVI:1
of the GATT 1994 and Article 25 of the Agreement
on Subsidies and Countervailing Measures
Extension Under SCM Article 27.4 of the Transition Period for the
Elimination of Export Subsidies Pursuant to the Procedures
in Document G/SCM/39
SAINT LUCIA
The following communication, dated 30 June 2003, has been received from the Ministry of
External Affairs, International Trade and Civil Aviation in Saint Lucia.
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We enclose our full notification in accordance with instructions contained in circular
G/SCM/39 regarding Article 27.4 of the Agreement on Subsidies and Countervailing Measures and
pursuant to Article 25 of the Agreement.  This notification reflects the status of the notifiedprogrammes as at 30 June 2003.
There are no changes to the notified programmes since our last report as at 1 September 2001
and they remain consistent with the notifica tion reported in circular G/SCM/N/74/LCA dated
29 April 2002.  St. Lucia has no programme of subsidies contingent upon the use of local goods.
Statistical Information cannot be obtained in the format required, however Revenue Forgone
and Import and Export figures have been provided.
Copies of all the relative Acts were submitted with our first full notification in 2001.Not all elements of the notified programmes, including subsidies provided thereunder,
necessarily involve export subsidies.  The attached are therefore without prejudice either to the legal
status of the measures referred to under GATT 1994 and the SCM Agreement, the effects under the
SCM Agreement, or the nature of the measure itself.G/SCM/N/95/LCA
G/SCM/N/99/LCA
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I. FISCAL INCENTIVES ACT
1. Title of the subsidy programme, if relevant, or brief description or identification of the
subsidy
Fiscal Incentives Act, No 15 of 1974 – An act of Parliament to provide incentives to industry.
2. Period covered by the notification
30 June 2003
3. Policy objective and/or purpose of the subsidy
To stimulate export performance, support  investment and economic activity, promote
diversification in traditional and non traditional products.
4.  Background and authority for the subsidy (including identification of the legislation  under
which it is granted)
The Fiscal Incentives Act, No 15 of 1974 was passed to give effect to an agreement on the
harmonization of fiscal incentives to industry among CARICOM member countries.
5. Form of subsidy (i.e. Grant, loan, tax concession, etc.)
Income tax exemption; exemption from import duty; exemption from import duty on plant,
machinery, spare parts and raw materials; exemption from income tax on export profits and an export
allowance.
6. To whom and how the subsidy is provided (whe ther to producers, to exporters, or others,
through what mechanisms; whether a fixed or fluctuating amount per unit; if the latter, how
determined)
Fiscal Incentives are provided to enterprises involved in manufacturing or processing, deep
sea fishing and shrimping where they form part of an integrated processing operation.  Applications
for incentives under this Act are approved by the Cabinet of Ministers.  An approved enterprise may
be granted a benefit if classified in one of the following categories:
(a) Group I Enterprise
(b) Group II Enterprise
(c) Group III Enterprise
St. Lucia has no program of subsidies contingent upon the use of local goods.  Since local
value added refers to local labour and not goods, in our opinion this is not a prohibited subsidy under
Article 3.1b of the ASCM.  While reference is made in our fiscal Incentives act No 15 of 1974 to local
value added, this must not be confused with the generally accepted definition of local content.  Instead
it reflects the concern of the Government of Saint Lucia that employment be created and that the
economy be diversified.  Consequently, the provision is applied according to the number of localpersons employed in a domestic enterprise and expressed as a percentage of sales, for purposes of
relief.G/SCM/N/95/LCA
G/SCM/N/99/LCA
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There are currently no plans in place to phase out these programmes which are essential for
the attraction of investment and the survival of the manufacturing sector.  We intend to continue to
implement the existing programmes in keeping with our WTO obligations, including provisions
governing the phase-out of such programmes.  However, this will have to be conducted over anextended period given the smallness and extreme fragility of our economy and manufacturing sector.
7. Subsidy per unit, or in cases where   this is not possible, the total amount budgeted for that
subsidy (indicating, if possible, the average subsidy per unit in the previous year) where
provision of per unit subsidy, information (for the year covered by the notification for the
precious year, or both) is not possible, a full explanation
It is not a practice to maintain records of revenue foregone in relation to fiscal incentives
granted.  Also, there are no provisions in the annual budget for either actual or estimated revenue
foregone.  However on the basis of information obta ined from the Ministry of Finance the following
represents a fair estimate of revenue forgone for fiscal years as indicated, to the nearest million:
1999 = EC$15.429;
2000 = EC$19.569;
2001 = EC$30.327;
2002 = EC$39.477.
8. Duration of the subsidy and/or any other limits attached to it, including date of
inception/commencement
Group I Enterprise -  15 years Tax Holiday
Group II Enterprise -  12 years Tax HolidayGroup III Enterprise -  10 years Tax Holiday
Enclave Enterprise -  15 years Tax HolidayAn enterprise with capital investment of not less than twenty-five million Eastern Caribbean
Dollars is considered as a “highly capital intensive industry”.  Such enterprises, where applicable, can
qualify for the same level of benefits as Enclave Enterprises.  The Fiscal Incentives Act became lawon 23 April 1974.
9. Statistical data permitting an assessment of the trade eff ects of the subsidy.  The specific
nature and scope of such statistics is left to the judgment of the notifying member.  To the
extent possible relevant such information include statistics of production consumption,
importers and exports of the subsidize product(s) or Sector(s)
Exports 2000 – EC$145.48 million
(ditto) 2001 – EC$103.47 million    (PROVISIONAL)
Imports (c.i.f.) 2000 – EC$ 959.40 million
(ditto) 2001 – EC$ 820.41 million   (PROVISIONAL)G/SCM/N/95/LCA
G/SCM/N/99/LCA
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II. MICRO AND SMALL SCALE BUSINESS ENTERPRISES ACT
1. Title of the subsidy programme, if relevant, or brief description or identification of the
subsidy
The Micro and Small Scale Business Enterprises Act, No. 19 of 1998.  An Act to provide
support to micro and small scale enterprises.
2. Period covered by notification
30 June 2003
3. Policy objective and/or purpose of the subsidy
To provide a legislative base for micro and small scale business enterprises, to make
provision for developmental support and financial relief with respect to micro and small scalebusiness enterprises.
4. Background and authority for the subsidy (including identification of the legislation under
which it is granted)
The Government of St. Lucia found it necessary to encourage and support investment flows in
this sub-sector, in order to promote economic activity particularly in the area of self-employment and
contribute to the alleviation of poverty.
Authority – Micro and Small Scale Business Act No. 19 of 1998.
5. Form of subsidy (i.e. Grant, loan, tax concession, etc.)
Similar to incentives provided in the Fiscal Incentives Act, No. 15 of 1974, i.e. income tax
exemption from import duty and exemptions from income tax on export profits.  However, income tax
relief will be in accordance with section 68 of the Income Tax Act of 1989.
6. To whom and how the subsidy is provided (whe ther to producers, to exporters, or others,
through what mechanisms; whether a fixed or fluctuating amount per unit; if the latter, how
determined)
To micro and small scale businesses as described in the Act.  Relief would be granted in a
similar manner as pertains to the fiscal Incentives Act, No. 15 of 1974.
7. Subsidy per unit, or in cases where this is not possible, the total amount budgeted for that
subsidy (indicating, if possible, the average subsidy per unit in the previous year) where
provision of per unit subsidy, information (for the year covered by the notification for the
precious year, or both) is not possible, a full explanation
There is no available data.
8. Duration of the subsidy and/or any other limits attached to it, including date of
inception/commencement
In accordance with terms in the Fiscal Incentives Act of 1974, as applicable.G/SCM/N/95/LCA
G/SCM/N/99/LCA
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9. Statistical data permitting an assessment of the trade efforts of the subsidy.  The specific
nature and scope of such statistics is left to the judgment of the notifying member.  To the
extent possible relevant and/or determinable however it is desirable that such information
include statistics of production consumption, importers and exports of the subsidize
product(s) or Sector(s)
There is no available data.
III. FREE ZONE ACT
1. Title of the subsidy programme, if relevant, or brief description or identification of subsidy
An Act of parliament for the establishment and operation of  Free Zones in St. Lucia.
2. Period covered by the notification
30 June 2003.
3. Policy objectives and/or purpose of subsidy
To foster commerce, trade and investment with  other countries; to promote economic growth
and development and related matters.
4. Background and authority for the subsidy (including, identification of the legislation under
which it is granted)
The Free Zone Act, No. 10 of 1999 was enacted as the result of the desire of the Government
to stimulate growth in trade, increase employment levels through the creation of new ventures and to
improve the distribution of income.
5. Form of subsidy (i.e. grant, loan, tax concession, etc.)
Exemption from import duty and other charges on plant, machinery and equipment, raw
materials and goods to be sold or exported within the Free Zone Area.
Special Income Tax Concessions.
Tax Credits in accordance with the number of nationals employed on a continuous basis.
Exemption from income tax during the first 5 years of operations.Total net losses over the 5 year tax holiday may be carried forward and deducted against
profits in the 3 years following the tax holiday.
Proceeds from sale of stock or other partial or complete ownership are also exempted from
income tax.G/SCM/N/95/LCA
G/SCM/N/99/LCA
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6. To whom and how the subsidy is provided (whe ther to producers, to exporters, or others,
through what mechanisms; whether a fixed or fluctuation amount per unit; if the latter; how
determined)
To businesses established within a designated Free Zone Area.
       Through tax concessions and revenue foregone.7. Subsidy per unit, or in cases where this is not possible, the total amount budgeted for that
subsidy (indicating, if possible, the average subsidy per unit in the previous year) where
provision of per unit subsidy, information  (for the year covered by the notification for the
precious year, or both) is not possible, a full explanation
The Free Zone Area became operational in July 2000.  To date, the only tenants are
merchants and distributors. There are no industries or manufacturers operating from that site.
8. Duration of the subsidy and/or any other limits attached to it, including date of
inception/commencement
Income Tax – 5 years from date of establishment within the Free Zone Area.Income Tax Credits – Indefinite.  However subject to qualifications as prescribed in the Act.
Import duty and associated charges – For the duration of tenancy.
9. Statistical data permitting an assessment of the trade efforts of the subsidy.  The specific
nature and scope of such statistics is left to the judgment of the notifying member.  To the
extent possible relevant and/or determinable however it is desirable that such information
include statistics of production consumption, importers and exports of the subsidize
product(s) or Sector(s)
There is no data available to date in the format required.
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