RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q3/COL/7
11 March 2002
(02-1231)
Committee on Subsidies and Countervailing Measures Original:  Spanish
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement on Subsidies
and Countervailing Measures
Replies to Questions Posed by Australia1, Switzerland2, the European Communities3,
Japan4, Canada5 and the United States6
The following communication, dated 7 March 2002, has been received from the Permanent
Mission of Colombia.
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REPLIES TO THE QUESTIONS POSED BY AUSTRALIA (G/SCM/Q3/COL/1)
1. Phase-out plan
Colombia's intention is to use the export incentives under the Special Import-Export System
for Capital Goods and Spare Parts (SIEX) and the Free Zone Regime (ZF) within the parameters
indicated in document G/SCM/W/471/Rev.1 and subj ect to the limitations relating to the scope,
coverage and intensity of benefits.
Now, given the nature of each one of the incentives for which an extension is being sought,
Colombia will adopt the legal provisions needed to ensure that their validity corresponds strictly to the
transition period granted.
2. Deferred VAT payment
Approval of programmes under the Special Im port-Export System for  Capital Goods and
Spare Parts is given taking account, inter alia , of a period within which the imports must be carried
out, following which the deferred tax payment takes place.  Bearing this in mind, the necessary legal
steps will be taken to ensure that this deferment does not take place for imports conducted during a
period subsequent to the time-limit established for the extension of the transition period indicated in
Article 27.4 of the Agreement on Subsidies.
                                                     
1 G/SCM/Q3/COL/1.
2 G/SCM/Q3/COL/2.
3 G/SCM/Q3/COL/3.
4 G/SCM/Q3/COL/4.
5 G/SCM/Q3/COL/5.
6 G/SCM/Q3/COL/6.G/SCM/Q3/COL/7
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3. Industry sectors to have benefitted from the free zones
The exports that benefit from the subsidization under the Free Zone Regime come mainly
from the clothing, food, metalworking, plastics, tannery  and footwear industries.  It should be pointed
out that of total Colombian exports for the year 2000, only 3.6 per cent benefitted from the free zonesincentive.
REPLIES TO THE QUESTIONS POSED BY SWITZERLAND (G/SCM/Q3/COL/2)
1. Statistics for 2001
It is fairly likely that the statistical data for 2001 will be available at the end of the first half of
this year.  If so, Colombia will submit its notification for that calendar year within the time-limit
established by the Committee on Subsidies in 1995 which, for 2001, is 30 June of this year.
2. Modifications to the Free Zone Regime and conditions for the granting of the subsidy
The free zone incentive has not been modified in such a way as to increase the benefits
granted thereunder. As regards the figures it should be noted that the share of exports carried out from
the free zones has remained in the vicinity of 3-4 per cent of total Colombian exports.
The incentive is granted to national and foreign companies without any distinction as to
scope, coverage, procedures, or any other aspect.
REPLIES TO THE QUESTIONS POSED BY THE EUROPEAN COMMUNITIES
(G/SCM/Q3/COL/3)
1. Date of entry into operation of the programmes
The Free Zone Regime entered into operation in Colombia in 1964.  However, it assumed its
present form on the basis of Law 7 of 1991.
The SIEX mechanism entered into operation by Decree 444 in 1967.
2. Coverage of the programmes and inclusion of  other forms of subsidies than exemption
of import duties and internal taxes.
No.  The nature of the subsidies granted under these programmes is described in
paragraphs B.5 and C.5 of Colombia's notif ication circulated in document G/SCM/N/71.
3. Use of domestic goods
The programmes do not establish any obligation for the beneficiaries to use domestic goods.
On the contrary, the Plan Vallejo programme aims to facilitate access to capital goods in foreignmarkets.
4. Rate of internal and import taxes
The average tariff for capital goods and spare parts in Colombia is about 10 per cent.
Income tax is 35 per cent on taxable income, and the exemption covers income from exports.G/SCM/Q3/COL/7
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5. Changes to the programmes
There have been no changes to the programmes since 1 September 2001.
6. Companies to have benefited as of 1 September 2001
The number of companies to have benefited as of 1 September 2001 is:
• SIEX:  704 companies
• Free zones:  97 companies (industrial users)
7. Phasing-out programme
See reply to question 1 of Australia.
REPLIES TO THE QUESTIONS POSED BY JAPAN (G/SCM/Q3/COL/4)
1. Relationship between the SIEX for machiner y and the SIEX for capital goods and spare
parts
The acronym SIEX corresponds to the Spanish for Special Import-Export System.  The
expressions "SIEX for machinery" and "SIEX for capital goods and spare parts" are equivalent in
Spanish.  Consequently we confirm that the notification of 1995, the request for the extension of theperiod and the notification submitted in December refer to the same programme.
As regards the most recent statistics, for the year 2000 the value of the incentive was
US$53 million, as indicated in Colombia's notification (paragraph B.9 of document
G/SCM/N/71/COL).
2. Effective period of the SIEX to an individual corporation
The period during which a company benefits from the SIEX is variable.  It depends on the
import plan approved by the authorities of the requesting company.
3. Major industries receiving benefit from the SIEX
The main beneficiary sectors are those producing articles of apparel, food, textiles and plastic
goods, as well as the printing and publishing sector and the coal, ferro-nickel and petroleum
industries.
The main countries of origin of the imports carried out under this programme are:
Percentage
Countries 1998 1999 2000 2001
United States 51.03 62.91 68.25 65.83
Germany 8.11 5.81 5.09 12.37
United Kingdom 6.15 3.21 3.54 3.76
Brazil 2.52 1.93 0.68 3.50
Italy 6.02 1.87 1.47 2.17
Japan 2.63 3.40 2.96 2.05G/SCM/Q3/COL/7
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4. Statistical data concerning the SIEX
The benefits granted to companies under the SIEX are included in Colombia's notification of
December 2001 (paragraph B.9 of document G/SCM/N/71/COL).
5. Authorities responsible for administering the SIEX
The entities involved in operating the SIEX are the Ministry of Foreign Trade and the
National Customs and Excise Directorate (DIAN).
6. Concrete examples of the application of the SIEX
If a company exporting product X that has been admitted to the SIEX on the basis of the
import plan submitted needs to import one of the capital goods included in the plan for its production
process, that import will be entirely duty free, with VAT payments deferred (paragraph B.1 of
document G/SCM/N/71/COL).
7. Possibility of concurrent benefits
One and the same company cannot receive benefits under the SIEX and the Free Zone
Regime at the same time.
8. & 9. Statistics regarding the amount of exportation and the number of corporations in the
free zones.
A table of exports from the free zones during the year 2000 is attached hereto as Annex 1.
REPLIES TO QUESTIONS POSED BY CANADA (G/SCM/Q3/COL/5)
1. How long have these programmes existed?
See the reply to question 1 of the European Communities.
2. What are the levels of benefit, i.e., is there a full exemption from taxes or do companies
pay a percentage of regular rates?
There is full exemption from taxes, except in the case of the SIEX, where the payment of
VAT is deferred.
4. Are there estimates of government revenue forgone?
Estimates of fiscal sacrifice were provided in the subsidies notifications submitted by
Colombia in December 2001 (document G/SCM/N/71/COL).
5. Are there any direct payouts to companies e.g. percentage of payroll taxes refunded?
The Special Import-Export System for Capital Goods and  Spare Parts and the Free Zone
Regime do not generate any direct payment to companies or tax refunds, since they are structured as
exemptions from import taxes and internal taxes.
6. Who can take advantage of these programmes, e.g. industry sectors, agriculture, certain
regions?G/SCM/Q3/COL/7
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Any exporter of goods whose manufacture involves the use of capital goods may take
advantage of the Special Import-Export System.
As regards the free zones, these are located in various regions of the country, and the
companies wishing to avail themselves of the free zone benefits must set themselves up within thelimits of these zones.
7. Are there requirements to qualify for tax exemption benefits, e.g. minimum investment,
number of local employees, etc.?
There are no requirements as to the minimum investment, number of jobs generated, etc.
8. Please identify total exports that benefit from these programmes and the percentage of
national exports (annually since the Uruguay Round) under each programme.
The benefits granted to companies through the SIEX and Free Zones Regime are described in
Colombia's notification of December 2001 (paragraphs B.9 and C.9 of document G/SCM/N/71/COL).
9.  How many recipient companies/industrial parks, etc. (annually since the Uruguay
Round) exist under each programme?
See the reply to question 6 of the European Communities.
10. Can a company benefit from more than one of the three programmes at a time.
See the reply to question 7 of Japan.
REPLIES TO THE QUESTIONS POSED BY THE UNITED STATES (G/SCM/Q3/COL/6)
1. Similarity in magnitude and level of development
The comparability of Colombia in terms of level of development with the countries that have
requested an extension under the G/SCM/39 procedures is corroborated, inter alia , by the fact that
according to the World Bank classification, it be longs to the same medium-low income category.
As regards share in world trade, it should be noted that the term used in the Decision on
Implementation was "similar order of magnitude", not equal volume.  In other words, total Colombian
exports, in comparison to world trade, are of a similar order of magnitude to those of the countries
that requested an extension under the special procedure set forth in document G/SCM/39.  Similarly,it is important to recall that in interpreting the conditions for the extension of Colombia's period of
transition, account should be taken of the context of the discussions on implementation in the
framework of the Doha Ministerial Conference.
2. Scope of Strategic Export Plan
The Strategic Export Plan did not establish additional programmes beyond those notified, nor
did it increase the level of assistance in force at the time it was developed.  The plan was conceived
essentially as a means of bringing the different State entities together in a coordinated effort with a
view to minimizing the institutional factors under mining the competitiveness of Colombian exports.G/SCM/Q3/COL/7
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3. Possible additional extensions
Colombia's intention is to continue in its effort  to minimize the impact of certain externalities
on its export performance so that it can eliminate the export incentives that may contain a subsidy
component.
4. Changes to the Tax Reimbursement Certificate programme
The principal changes introduced by Decree 033 of 2001 consisted in:
• Reducing the percentage levels of the Tax Reimbursement Certificate, thereby
eliminating the subsidy component of the programme;
• eliminating certain products that previously benefitted from the programme;
• modifying the time-limit for the application for recognition of the Tax
Reimbursement Certificate, reducing it from six months to three months, from the
date of the foreign currency refund;
• reducing the validity period for Tax Reimbursement Certificates from two years to
one;
• fixing a ceiling of 15 per cent of the total CERT budget for any given tariff heading.
These modifications entered into force on 12 January 2001.  It should be noted that Colombia
is not requesting an extension of the transition period for this instrument.
5. Recent changes to the free zones
Decree 918 of 2001 introduced the following changes:
• The Ministry of Foreign Trade was made responsible for following up the investment
and development commitments of users operating in the free zones, especially with
respect to infrastructure, control systems and promotion schemes, in order to
guarantee their competitiveness;
• the requirements for obtaining the declaration of existence of an industrial free zone
for goods and services and for obtaining the status of free zone user were modified;
• a regime was set up for the penalization of customs offences committed by users
operating in the industrial free zones for goods and services.
These changes entered into force on 22 May 2001.Law 677 of 2001 did not introduce any changes to the Free Zone Regime.
6. VAT deferral, multi-year nature of the SIEX
See reply to question 1 of Australia.G/SCM/Q3/COL/7
Page 7ANNEX 1:  REPLIES BY COLOMBIA TO THE QUESTIONS POSED IN CONNECTION WITH
ITS REQUEST PURSUANT TO ARTICLE 27.4 OF THE AGREEMENT ON SUBSIDIES
AND COUNTERVAILING MEASURES AND PARAGRAPH 10.6 OF THE
MINISTERIAL DECISION ON IMPLEMENTATION-RELATED
ISSUES AND CONCERNS (WT/MIN/01/17)
COLOMBIAN EXPORTS ACCORDING TO FREE ZONE NUMBER OF INDUSTRIAL USERS
Dollars
 Free zone                1998                1999                2000           1998           1999               2000
 Barranquilla       140,222,443        93,577,861       115,675,237               42               40                    33
 Santa Marta        11,821,085          5,629,481          2,896,413                 7                 8                      8
 Cartagena        42,957,245        84,031,418        67,006,855                 8                 8                      8
 Palmaseca        68,621,983        64,896,654       158,019,979               13               16                    11
 Cucuta        22,899,836        34,721,816        34,721,816                 3                 2                      2
 Bogotá          8,035,773        26,119,874        29,512,408                 5                 6                      8
 Rionegro        23,760,283        32,438,345        39,052,463               16               13                    18
 Pacifico        23,631,035        17,600,563        24,318,373                 5                 9                      9
 Candelaria                     -                     -                     -                -                -                    -
 Malambo                     -                     -                     -                -                -                    -
 Arauca                     -                     -                     -                -                -                    -
 Quindio                     -                     -                     -                -                -                    -
Total       341,949,683       359,016,012       471,203,544               99            102                    97
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