WORLD TRADE
ORGANIZATIONG/SCM/N/74/LCA
7 January 2002
(02-0051)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Requests Pursuant to Article 27.4 of the
Agreement on Subsidies and Countervailing Measures
Requests Pursuant to the Procedure in Document G/SCM//39
SAINT LUCIA
The following communication, dated 28 December 2001, has been received from the Ministry
of Foreign Affairs and International Trade in Saint Lucia.
_______________
The Ministry of External Affairs, International Trade and Civil Aviation wishes to refer to the
Decision of the Fourth WTO Ministerial Conference on Procedures for Extensions under Article 27.4
for Certain Developing Country Members (G/SCM/39).
Pursuant to the same, the Ministry hereby submits for the consideration of the Committee on
Subsidies and Countervailing Measures the documentation identifying the programmes for whichSaint Lucia is seeking an extension under Article 27.4 of the Agreement on Subsidies and
Countervailing Measures.G/SCM/N/74/LCA
Page 2
St. Lucia requests an extension of the period during which it may continue to apply export
subsidies under Article 27.4 of the agreement on Subsidies and Countervailing Measures (SCM
Agreement), as agreed by the Ministers at the Fourth Ministerial Conference in Doha,
(WT/MIN/(01)/17).
St. Lucia’s financial, economic and development strategy includes a number of incentive
programmes, which are currently in place and are designed to attract both local and foreign
investment.  These legislative measures are listed below without prejudice to either their legal status
under the GATT 1994 and the Agreement on Subsidies and Countervailing Measures, the effects
under that Agreement or the measure itself.
The Fiscal Incentives Act, No 15 of 1975 grants income tax holidays and exemptions from
import duty, tax exemptions on repatriation of profits and withholding tax.  Applications for incentive
benefits are submitted to the Ministry of Commerce, which advises the Cabinet of Ministers on the
level of concessions to be granted based on a variety of considerations.  These include, level of
employment, labour, capital invested, potential earnings and other resources.  The duration and
features of the tax holiday are subject to the discretion of the Cabinet of Ministers but may not exceeda period of 15 years.  In addition, under the Fiscal Incentives Act, provision is made, inter alia , for
income tax relief on export profits for enterprises that may no longer benefit from a tax holiday.
The Free Zone Act No 10 of 1999 , repealed and replaced the Customs Free Zone Act No 18
of 1983.  It provides for the establishment and operation of export processing zones in St. Lucia.Under that legislation, the Cabinet of Ministers may, by order designate any geographical area to be a
Free Zone.  This Act also establishes a Free Zone  Management Authority (FZMA), administered by a
board of directors comprising representatives from both the public and private sector.  The board is
responsible for granting licences to operate within the Free Zone areas. Enterprises conducting trade
and investment activities in manufacturing, financial services, telecommunications, professionalservices and other activities of a commercial nature may apply to operate within a Free Zone area.
Licences are specific to a business.  Imported goods entering a Free Zone for commercial purposes are
allowed duty free.  Fuels, equipment, furniture and supplies to be used within the Free Zone area are
also duty free.  Currently the main industrial Free Zone areas in St. Lucia are at Vieux Fort, Cul-de-
Sac and Odsan.
Individual companies operating outside a specific Free Zone area may also be granted Free
Zone Status.  This Status however is generally confined to the period during which an enterprise may
benefit from fiscal incentives under the Fiscal Incentives Act.
Free Zones may also be established for the distribution of goods.  The St. Lucia National
Development Corporation has built a Goods Distribution Free Zone to facilitate trade of intermediateand final goods for local and foreign manufacturers.  Commercial operations in the St. Lucia Goods
Distribution Free Zone began in April 2000.  This Free Zone area offers pharmaceuticals and
consumer goods, including clothing, electronics,  alcohol and cosmetics, exempt from any duty.
Exporters may utilize the insurance and export credit guarantee facilities provided by the
Eastern Caribbean Central Bank (ECCB), which covers political and commercial risks.  Interest rates
on loans and other advances from commercial banks covered under the guarantee scheme are
generally lower than prevailing commercial rates.  Exporters may also receive export promotion
support from the OECS Export Development Unit (EDU).
The Tourism Incentives Act, No. 7 of 1996  allows for tax holidays to be granted to any
approved tourism product for a period approved and defined by the Cabinet of Ministers.  For
purposes of the Act a tourism product means any product that has been created by a tourism project; a
tourism project may mean a hotel, restaurant, booths or the establishment, restoration and preservationG/SCM/N/74/LCA
Page 3
of monuments, museums and things of a historical and or architectural merit.  The Act also provides
for waiver of import duty on building materials for the construction of approved tourism projects, or
for extensions or further development.  In the case of limited liability companies, shareholders or
debenture holders are not taxed on their dividends for a period of up to 2 years after the expiration of
the tax holiday.
Applications for incentives are submitted to the Ministry of Tourism, which advises the
Cabinet of Ministers on the level of concessions to be granted.  The following criteria are used in
assessing each tourism project for incentives:  ownership, land use, feasibility, environmental impact,
marketing plans and any other information including public comments.  On approval by Cabinet, a
Statutory Instrument is published in the Official Gazette declaring any service or facility, named
therein, to be an approved tourism product.
The Micro and Small Scale Business Enterprises Act No 19 of 1998  was enacted to
provide a legislative base for this sector and to make provisions for development support and financial
relief to micro and small scale businesses which operate in priority sectors in the economy and would
otherwise not benefit from concessions under the Fiscal Incentives Act No. 15 of 1974 and theIncome Tax Act No.1 of 1989.  To receive benefits under this Act small scale business enterprises
must be registered in accordance with the Companies Act of 1996, or registered under the
Registration of Business names Ordinance (CAP 247).  Enterprises must also show evidence that
serious efforts, as measured by financial ratio indicators, have been made to become more efficient,
must be engaged in environmentally sound activities, have achieved significant growth in the last two
years of operation as demonstrated by production, revenue, market share and other growth indicators.
Applications for concessions are forwarded to the Cabinet of Ministers for approval through
the Ministry of Commerce.  Relief is granted under the Fiscal Incentives Act No 15 of 1974.
However, in respect of Income tax, this is done in accordance with section 68 of the Income Tax Actof 1989.
The Micro and Small Scale Business Enterprises Act is administered by the Small Scale
Enterprise Development Unit (SEDU) of the Ministry of Commerce.  Micro and small scale
enterprises may also receive advice through SEDU in such areas as management, accounting,
marketing, production techniques or in other areas as required.
The Special Development Areas Act No. 2 of 1998  seeks to rectify uneven development in
St. Lucia by designating certain areas as special development areas as well as by providing relief to
persons carrying on specific activities in these areas and to other financiers.  Persons wishing to
establish a commercial presence or develop commercial  property in an area so designated must apply
to the Ministry of Finance.  All applications are approved by the Cabinet of Ministers.
Activities which may be considered are entered in the Second Schedule to the Act and
Enterprises are exempted from import duty, stamp duty and consumption tax for construction of new
buildings and the renovation or refurbishment of  existing structures.  They are also exempted from
land and house tax and stamp duty payable by vendors and purchasers on the initial purchase whetherthey are nationals of St. Lucia or not.  Non-natio nals are exempted from Aliens Land Holding Licence
Fee. Persons enjoying benefits under the Fiscal Incentives Act or the Tourism Incentives Act may not
be eligible to claim.G/SCM/N/74/LCA
Page 4
The aforementioned incentives are a critical feature of the economic, financial and
development strategy of Saint Lucia.  As the country seeks to diversify its economy beyond mono-
crop agriculture, it is essential that inducements be provided to stimulate investments in the areas of
manufacturing, tourism and other sectors. Past expe rience has adequately demonstrated that without
fiscal incentives and exemptions, the much-required investments will not materialize in these sectors.
__________