WORLD TRADE  
ORGANIZATION  G/SCM/N/114/LCA 
6 July 2004 
 (04-2888) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
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  
 
Updating Notification  
 
SAINT LUCIA 
 
  The following communication, dated 30 June 2004,  is being circulated at the request of the 
Ministry of External Affairs, Internationa l Trade and Civil Aviation in Saint Lucia. 
 
_______________ 
 
 
 The Ministry of External Affairs, Internati onal Trade and Civil Aviation hereby submits to 
the Committee on Subsidies and Countervailing Measures Saint Lucia’s updated notification on current incentive programmes under Article XVI:1 of GATT 1994 and Articles 25 and 27.4 of the 
Agreement on Subsidies and Countervailing Measures. 
  There are no changes to the notified programm es since our last report as at 30 June, 2003 and 
consequently programmes remain consistent with the notification reported in WTO documents 
G/SCM/N/95/LCA and G/SCM/N/99/LCA dated 3 July, 2003.  Saint 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 relevant Acts were subm itted 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/114/LCA 
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 I. FISCAL INCENTIVES ACT 
 
1.   Title of the subsidy prog ramme, if relevant, or brief descr iption 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 2004 
 3. Policy objective and/or purpose of the subsidy
 
  To stimulate export performance, support i nvestment and economic activity, promote 
diversification in traditional  and non-traditional products. 
 4. Background and authority for the subsidy (inc luding identification of the legislation under 
which it is granted  
  The Fiscal Incentives Act, No. 15 of 1974 2as pass ed to give effect to an agreement on the 
harmonisation of fiscal incentives to industry among CARICOM member countries. 
 5. Form of subsidy (i.e. Gr ant, loan, tax concessions, etc
.) 
  Income tax exemption; exemption from import duty; exemption from import duty on plant, 
machinery, spare parts and raw materials; exemp tion from income tax on export profits and an export 
allowance.  6. To whom and how the subsidy is provided (w hether 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 Ca binet 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   Saint Lucia has no programme of subsidies contingent upon the use of local goods.  Since 
local value added refers to local labour and not goo ds, in our opinion this is not a prohibited subsidy 
under Article 3.2(b) of the ASCM.  While referenc e is made in our Fiscal Incentives Act No. 15 of 
1974 to local value added, this must not be confu sed with the generally accepted definition of local 
content.  Instead it reflects the concern of the Gove rnment of Saint Lucia that employment be created 
and that the economy be diversified.  Consequently , the provision is applied according to the number 
of local persons employed in a domestic enterpri se and expressed as a percentage of sales, for 
purposes of relief.   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  G/SCM/N/114/LCA 
 Page 3 
 
 
 implement the existing programmes in keeping with our WTO obligations, including provisions 
governing the phase-out of such programmes.  Howe ver, this will have to  be conducted over an 
extended 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 
previous  
  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 obt ained from the Ministry of Finance the following 
represents a fair estimate of revenue forgone for fiscal years as indicated, to the nearest million: 
 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 Holiday Group III Enterprise - 10 years Tax Holiday  
Enclave Enterprise  -  15 years Tax Holiday 
  An enterprise with capital investment of not  less than twenty-five million Eastern Caribbean 
dollars is considered as a “highly capital intensive i ndustry”.  Such enterpri ses, where applicable, can 
qualify for the same level of benefits as Enclav e Enterprises.  The Fiscal Incentives Act became law 
on 23 April 1974. 
 9. Statistical data permitting an assessment of th e trade effects of the subsidy.  The specific 
nature and scope of such statistics is left to the judgement of the notifying member.  To the 
extent possible relevant such information in cluding statistics of production consumption, 
importers and exports of the s ubsidize product(s) or Sector(s ) 
 
 It is not the 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 obt ained from the Ministry of Finance the following 
represents a fair estimate of revenue forgone for fiscal years as indicated, to the nearest million: 
 
 2002 – EC$141.8  2003 – EC$144.5 (PROVISIONAL)  10. Duration of the subsidy and/or any othe r limits attached to it, including date of 
inception/commencement  
 
 Group I Enterprise  - 15 years Tax Holiday  Group II Enterprise  - 12 years Tax Holiday  Group III Enterprise - 10 years Tax Holiday  
 Enclave Enterprise  - 15 years Tax Holiday 
  An 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 G/SCM/N/114/LCA 
Page 4  
 
 qualify for the same level of benefits as Enclav e Enterprises.  The Fiscal Incentives Act became law 
on 23 April, 1974.  11. Statistical data permitting an assessment of th e trade effects of the subsidy.  The specific 
nature and scope of such statis tics is left to the judgment of the notifying member.  To the 
extent possible relevant such information in clude statistics of production consumption, 
importers and exports of the s ubsidize product(s) or Sector(s ) 
  Exports   2001 – EC$101.09 million     2002 – EC$106.14 million     
    2003 – EC$104.84 million (PROVISIONAL) 
  Imports (c.i.f.)   2001 – EC$  834.81 million     2002 – EC$  834.22 million        2003 – EC$1,068. 62 million (PROVISIONAL) 
 
II. MICRO AND SMALL SCALE BUSINESS ENTERPRISES ACT 
 
1. Title of the subsidy progra mme, if relevant, or brief descr iption 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 2004 
 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 resp ect to micro and small scale 
business enterprises. 
 4. Background and authority for the subsidy (inc luding identification of the legislation under 
which it is granted ) 
 
 The Government of Saint Lucia found it necessar y 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 Scal e Business Act No. 19 of 1998. 
 
5. Form of subsidy (i.e. Gr ant, loan, tax concession, etc
.) 
  Similar to incentives provided in the Fiscal In centives Act, No. 15 of 1974, i.e. income tax 
exemption from import duty and exemptions from inco me tax on export profits.  However, income tax 
relief will be in accordance with secti on 68 of the Income Tax Act of 1989. 
  G/SCM/N/114/LCA 
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 6. To whom and how the subsidy is provided (w hether 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. 
 9. Statistical data permitting an assessment of the trade efforts of  the subsidy.  The specific 
nature and scope of such statis tics 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 descripti on or identification of subsidy
 
  An Act of Parliament for the establishment and operation of Free Zones in Saint Lucia. 
 
2. Period covered by the notification
 
  30 June 2004.  
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 (inclu ding, 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. gr ant, 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. G/SCM/N/114/LCA 
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 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.  6. To whom and how the subsidy is provided (w hether 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 Ju ly 2000.  To date, the only tenants are 
merchants and distributors. There are no industr ies 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 subj ect 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 statis tics 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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