RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/M/45
17 March 2003
(03-1522)
Committee on Subsidies
and Countervailing Measures
MINUTES OF THE SPECIAL MEETING HELD ON
13 AND 19 DECEMBER 2002
Chairman: H.E. Mr. Milan Hovorka (Czech Republic)
1. The Committee on Subsidies and Countervailing Measures (the "Committee") held a special
meeting on 13 and 19 December 2002.
2. The Airgram convening the meeting had been circulated in WTO/AIR/1990.  The purpose of
the meeting was to continue the Committee's consideration of the Article 27.4 requests that werepending before the Committee.  The Committee adopted the agenda, as set forth in the Airgram.
3. The Chairman stated that, since the Committee had last met on 22 November 2002, he had
been engaged in an intensive process of informal consultations with the delegations that had made
requests based on Article 27.4 alone -- Barbados, Colombia, El Salvador, Panama and Thailand --
along with other delegations that had expressed systemic, and other, interests in these requests,through the process of questions and answers exchanged in the Committee.
4. These consultations had been very useful, and he had been truly appreciative of the
constructive and open way in which the delegations had consistently participated in the informal
process.  The purpose of the consultations had been to try to identify common ground that could form
the basis for eventual decisions by the Committee in respect of the pending requests.  He was pleased
to report that these consultations had been fruitful, in that delegations had made considerable
substantive progress in respect of all of these pending requests.  That said, the process had been farfrom easy, and some of the requests had proved to be more complex and difficult than others.
5. As Members knew, he had sent a fax to Members the previous day, attached to which was a
Chairman's proposal for decision language to be applied in respect of the requests of Barbados,
El Salvador and Panama.  Copies of that proposal were available in the room.  As he had indicated in
the cover note accompanying that proposal, it had been his intention also to send to Members, on thesame day, additional documents addressing the requests of Colombia and Thailand.  Unfortunately, he
had been unable to do that, because he had been in informal consultations with a group of delegations
until quite late in the evening discussing possible approaches to those requests.  These consultations
had proved to be extremely productive, as there were now additional documents in the room for the
consideration of the Committee.
6. To introduce some of those papers, he started with the Chairman's proposal in respect of the
requests of Barbados, El Salvador and Panama.  As he had indicated, this was a text put forward by
him on his own responsibility, which he believed had a high probability to attract a consensus in the
Committee.  He based this assessment on his informal consultations in respect of these requests,
which had revealed a high degree of convergence among the delegations that had been taking anactive part in that informal process.  While, of course, the Committee had to go through the details of
the paper here in the full Committee, he believed that the approach outlined, and the accompanyingG/SCM/M/45
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Chairman's statement as presented in the cover note, reflected a basis that should be acceptable to all
in granting extensions for these programmes.  Of course, delegations had had very little time to look
at this proposal, and there would be an opportunity to go through all aspects of it once the Committee
converted to informal mode.
7. Turning to the request of Colombia based on Article 27.4 -- the request in respect of
Colombia's Transport Compensation Mechanism -- Members would note that there was no proposed
decision text.  Consultations were ongoing in respect of this request, but no basis for a consensus had
yet been identified.
8. That brought the Committee to the request of Thailand.  Members would note that there were
two documents concerning Thailand, both identified as Annex 2.  One document concerned
Thailand's Industrial Estate Authority of Thailand ("IEAT") programme, and the other concerned
Thailand's Board of Investment ("BOI") programme.  These documents were identified as "elementsof a possible scenario".  In other words, these were not proposals, as such.  Rather, they were intended
as aids for discussion, so that the Committee could proceed to consider Thailand's request in a
structured way.  He had taken this approach because, while there was, in his view, an increasing level
of understanding of Thailand's request and programmes, Members had not yet arrived at a true point
of convergence among the delegations that had taken an active part in the informal consultations.  Hewas nevertheless optimistic that the Members could increase the degree of convergence through
informal discussions, to the extent that they might be able to identify a concrete basis for formal
consideration by the Committee.
9. The delegate of Thailand thanked the Chairman for his continued and untiring efforts to
remove all concerns of interested delegations in respect of Thailand's request.  Thailand also
expressed appreciation to those delegations that engaged in bilateral and plurilateral consultations
under his Chairmanship.  Thailand also appreciated the assistance and hard work of the Secretariat.
Thailand wished to emphasize that, had it not encountered the financial crisis, Thailand would not
have made the request for extension.  Thailand had planned to phase out its export subsidies
programmes in the early 1990's, or even before it became a Member of the WTO.  The financial crisisin 1997 had devastating effects which led to a significant deterioration of every aspect of Thailand's
economic activities.  For instance, the investment index declined sharply form 79 in 1997 to 32 and 30
in 1997 and 1998, respectively.  Statistics also showed that exports had dropped dramatically in 1998,
making economic recovery difficult.  Consequently, the BOI and IEAT had had to suspend their plans
to phase out export subsidies.  However, Thailand had good faith intentions to abide by its
commitments under the SCM Agreement.  Thailand had notified all of its subsidies programmes in
detail, as required by Article 25 of the Agreement, regardless of whether or not they were exportsubsidies.  These notifications had been made in accordance with the guidelines provided in document
G/SCM/6.  Indeed, due to difficulties encountered since 1997, Thailand had to request an extension
under Article 27.4 of the Agreement.  Thailand had been engaged in intensive consultations with all
interested parties, and had provided all information, including responses to those questions posed by
Members.   Thailand believed that these consultations had been extremely productive.  Thailandhoped it would see some light in a few days.  As the Chairman had noted, Thailand had included all
the key elements of interest and concern to delegations in a comprehensive paper.  Thailand wished to
take this opportunity to touch upon some points relating to the IEAT programme.  In respect of the
IEAT programme, Thailand had made a request for the extension of the transition period for the
elimination of export subsidies in the form of import duty exemption on machinery, equipment, tools
and components essential for the production of goods, and of materials used for construction of
factories.  The aim of this request was to provide time for the amending legislation.  Disruptions
caused by the termination of this programme before the law was completely amended would only
hamper Thailand's effort to make amendments and to sustain its economy through this difficult time.
This IEAT programme had greatly helped to correct the persisting problem of income inequality inthe country, where 28.2 per cent of the total population still lived on less than $2 a day.  ThisG/SCM/M/45
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programme had created about 370,000 jobs for local people around the country, and provided a place
for skill enhancement and development necessary to sustain employment, promote better career
opportunities and raise the standard of living.  It was also very important to note that the Thai
government was in the process of tariff restructuring.  Indeed, most, if not all, import duties on
machinery would be reduced to zero per cent in 2003.  Consequently, benefits currently granted bythe IEAT in the form of exemption of certain operators from import duties on machinery under the
programme did not make a significant difference in comparison with other operators not under the
programme.  In this regard, Thailand wished to express its firm intention, as it had already done in the
course of its plurilateral discussions with interested delegations, to phase out the export subsidies
under this programme by the end of 2005.  Thailand hoped to try to accelerate this process.  However,
pending the law amendment effort, the IEAT would exercise its administrative power to reduce the
percentage of export requirement to 20 per cent, beginning in January 2003.  The estimated amount ofannual value of exports benefiting under the IEAT comprised only 6.8 per cent of total Thai annual
export value.
10. In respect of the BOI programme, the delegate of Thailand stated that the BOI had also
experienced the same difficulties as the IEAT programme in terms of the financial crisis.  For the BOI
programme, Thailand was requesting an extension of the exemption from corporate income taxgranted to operators that submitted their applications before August 2000.  Thailand wished to
emphasize that there were no export subsidies being granted to new applicants for BOI investment
incentives since then.  The extension was deemed crucial for Thailand to prevent the deterioration of
confidence in government development plans as a re sult of benefits being terminated prior to the
agreed time-frame and to provide investors the time n eeded for adjustment.  Particularly in the current
unstable economic environment, failure to obtain an extended transitional period would bring about
economic difficulties as a result of investors' loss of confidence and high unemployment.  At the
request of certain Members, Thailand had tried to calculate the estimated amount of subsidies under
the BOI programme.  Thailand estimated that these amounted to 0.9 per cent of the annual export
value of products benefiting from the programme.  Thailand wished to emphasize that this figure wasthe maximum amount of estimated subsidies, on the assumption that every company under the
programme made a profit in the year 2000.  In fact, during that period, almost all companies had
suffered in the financial crisis.  Coupled with the devaluation of the Thai currency, the situation for
companies was ever worse.  Many, if not all, companies, were still in debt and had been unable to
achieve better economic performance than the level achieved prior to the economic crisis.  There was,
therefore, no profit for which to claim exemption from corporate income tax.  In other words,
companies had not yet received export subsidies, in terms of economic value, as the estimateassumed.  These figures could demonstrate that export subsidies under the two programmes of
Thailand at issues, including the IEAT, would have an insignificant adverse effect on world trade.
Thailand wished to reaffirm that the BOI had no intention to make any modification to the
programmes during the extension period, and the fi nal two years of phasing out, that would make
them more favourable than they were at present.  Thailand also wished to provide adequatetransparency in respect of the operation of the programmes in question by providing notifications on
an annual basis.  In this light, Thailand wished to re-state that no export subsidies were granted in
respect of agricultural products, fisheries or steel.  Thailand also wished to emphasize again that the
request for extension of the transition period for elimination of export subsidies provided by the BOI
was purely for technical, financial, economic and development purposes.  Thailand had no intention tocreate trade distortion.  The implementation of Thailand's commitments in the past, with the subsidy
notifications Thailand had regularly submitted to the SCM Committee and the progressive elimination
of some major subsidy measures through successive efforts to amend relevant laws indicated
Thailand's strong intention to carry out its commitments.  Thailand hoped that that its true intention
and good faith compliance would draw sympathetic and positive consideration from all Membersconcerned so as to grant the BOI the requested extension under Article 27.4 of the SCM Agreement.G/SCM/M/45
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11. The Chairman suggested that he would suspe nd the formal meeting in order to proceed in
informal mode, and to resume at an appropriate time.
12. The Committee took note of the statements made and agreed  to proceed accordingly.  The
meeting was suspended.
13. When the special meeting resumed in the afternoon of 13 December 2002, the Chairman
stated that he understood that, based on the discussions that had taken place amongst Members, the
Committee seemed to be ready to take action with regard to the requests submitted by Barbados, El
Salvador and Panama based on Article 27.4 alone.  Members had been able to establish a kind of
common approach with regard to the Article 27.4 requests of those three countries.  It was the
Chairman's intention to start considering respect ive decisions with a statement indicating his
understanding of the situation when he put these decisions before the Committee for consideration.
While the decisions should not be understood to legally preclude those Members -- Barbados, ElSalvador and Panama-- from seeking a further extension, if that proved to be necessary, the decisions
were based on the firm intention of the Members concerned to take all necessary steps with a view to
phasing out export subsidies under the programmes no later than 31 December 2005.  Possibilities for
technical assistance by the Secretariat would be explored so as to assist those Members in identifying
the necessary steps to be taken.  The Chairman would remain in touch with the delegations concernedwith a view to facilitating the implementation of the decisions.  These three delegations knew the
Chairman and knew what he meant by this.   He intended to be engaged with a view to facilitating the
Members' compliance with these decisions and he was grateful for the possibility of providing
technical assistance to those three delegations so that they could phase out their respective
programmes before the end of 2005.
14. Before proceeding, he thought he should clar ify one point which had been raised during the
informal discussions regarding the use of the term "legal rights" in the last paragraph of these
decisions to be taken at this session.  If his understanding was correct, the point had been raised by the
delegation of the United States.  With respect to this specific issue, he wished to state that he believed
the clear understanding of Members was that the term "legal rights" in this paragraph of the decisionhad the same meaning as "rights" under the Agreement in the sense that Members usually used this
term within the WTO.
15. He was confident that, with that qualification, the Committee could now proceed to consider
the decisions.  Starting with the requests in respect of the programmes of Barbados, the Chairman
indicated that the first programme in respect of which there was a draft decision before the Committeewas the Export Grant and Incentive Scheme.  Members might recall that the Committee had had a
rather interesting discussion during the informal session when delegations were commentingspecifically on various programmes, and it was his intention to say the following in respect of the
Export Grant and Incentive Scheme of Barbados.  He believed that any determination of the existence
and nature of a subsidy could only be made in terms of the relevant provisions of the SCM
Agreement.  The decisions taken here related only to extending periods during which the
Article 3.1(a) prohibition did not apply to certain notified programmes.  Thus, he believed that theshared view of Members was that the Committee's decision to grant extension on the transition period
in respect of the Export Grant and Incentive Scheme was without prejudice to whether the programme
involved export subsidies.
16. The Committee approved extensions of the transition period for the following programmes.
The document symbols of the decision documents are shown in parentheses.
Barbados
• Export Grant and Incentive Scheme (G/SCM/95)G/SCM/M/45
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• Export Rediscount Facility (G/SCM/96)
• Export Credit Insurance Scheme (G/SCM/97)
• Export Finance Guarantee Scheme (G/SCM/98)
El Salvador
• Export Reactivation Law (G/SCM/99)
Panama
• Tax Credit Certificate (G/SCM/100)
17. The Chairman stated that, on this very positive note, he wished to express his sincerest thanks
to delegations for their flexibility and patience with the Chairman and obviously for their constructive
support.  As he had mentioned during the final session of the General Council on 10 December 2001,
this was an important moment, not just for the three delegations concerned, but also for the
Committee and, he thought, for this institution.  Th is was obviously not yet the conclusion of the
agenda of the meeting.  There remained the request by Colombia in respect of its Transport
Compensation Mechanism, as well as the request of Thailand in respect of the IEAT and BOIprogrammes.  It was his intention to continue his consultations in this respect, and to resume the
special meeting on 19 December, in the afternoon.   In the meantime, he wished to ask the delegation
of Thailand to once again review the situation with a view to considering what additional information
might be provided to the Committee and, at the same time, he wished to ask the other Members of the
Committee to exercise the necessary political will and flexibility and to be ready to join him in
informal consultations.
18. The delegate of El Salvador wished to thank th e Chairman and the Secretariat for their efforts
throughout this entire process so as to come up with this positive result.  He also wished to thank all
Members of this Committee for the flexibility that they had evinced in adopting this decision.  His
delegation wished to state that, in spite of this decision, El Salvador reserved to itself the right, under
Article 27.4, to request a further extension should that prove necessary on the conditions expressed by
the Chairman in his introductory statement.
19. The delegate of Panama wished to say how grateful his delegation was to the Members of the
Committee for having worked together with Panama so smoothly towards this very successful result.
Above all, his delegation wished to say how grateful it was to the Chairman and to the Secretariat,
because Panama knew that they had worked extremely hard to come up with this result, a result which
was so relevant to Panama.  On a more personal note, he also wished to wish the Chairman a veryMerry Christmas.
20. The delegate of Barbados, too, wished to express his delegation's gratitude to the Chairman
and to the Secretariat for all the hard work which had been done, particularly over the preceding
month.  Barbados wished to express its gratitude to the Members of the Committee for their
understanding and their flexibility which had brought the Committee to a positive conclusion in itsdiscussions.  Barbados had found the exercise way useful and enlightening and it now had a much
better understanding of the implications of the SCM Agreement.  Barbados highly appreciated the
suggestion made by the Chairman about the Secretariat providing technical assistance to the
respective delegations.  Barbados would make full use of it, as soon as it was available, in order to
look at Barbados' programmes to see what adjustment s, if any, needed to be made.  In due course,
Barbados would, of course, be informing the Committee of the outcome of that exercise.
21. The representative of Peru wished to thank the Chairman for his efforts, which had made it
possible to achieve these decisions on these programmes.  Peru also wished to underscore, andG/SCM/M/45
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support, the comments which accompanied the adoption of these decisions, to the effect that, as the
Chairman had said, these decisions were based on the firm intention of the Members concerned to
take all necessary domestic steps so as to remove their export subsidies under the programmes which
had now been extended not later than the 31  December 2005.
22. The delegate of Ecuador wished, very briefly, along with congratulating friends from sister
countries in connection with the extensions given to these subsidies programmes, also to avail of this
opportunity to echo what had been said by the delegation of Peru.  Ecuador's sentiments had been
properly reflected by Peru.  Ecuador wished to make this perfectly clear.
23. The Chairman wished to join others in expressing gratitude to his fellow colleagues from the
Secretariat.  He suggested that the Committee suspend the special meeting until 19 December.
24. The Committee took note of the statements made and agreed  to proceed accordingly.  The
meeting was thus suspended.
25. When the Committee resumed its special meeting on 19 December, the Chairman recalled
that this was a resumption of the special meeting dated 13 December 2002, which had been suspended
in respect of the pending requests of two Members, Thailand and Colombia, for extension of the
export subsidy transition period pursuant to Article 27.4 of the SCM Agreement, alone.  Since that
meeting, the Chairman had been consulting informally with delegations in respect of these requests,and he believed that considerable progress had been made.  To structure the Committee's discussion,
he proposed first to take up the request of Thailand, to report on where Members were, based on his
consultations, and to introduce the proposals for decision text that he had sent to Members the day
before by fax.  He would also report on the status of the pending request of Colombia in respect of
one programme (the Transport Compensation Mechanism).
26. The Committee so agreed.
27. The Chairman first recalled, in respect of Thailand, that at the 13 December session, he had
presented two papers, one for the Industrial Estate Authority of Thailand programme, or "IEAT", and
one for the Board of Investment programme, or the "BOI".  Those papers had not constituted
proposals on his part, as he had not identified a sufficient level of convergence in respect of anypossible approach to allow him to make proposals as  such.  Rather, he had presented those papers as
elements of possible scenarios for the Committee's approach to each programme, which he thought
would be a useful basis for detailed technical discussion.  He had found the discussions of the
Committee on these programmes at the meeting to be very useful, particularly in identifying and
clarifying the areas of interest and concern that remained for a number of Members.  He knew that
Members had been pursuing these issues with Thailand bilaterally since the 13 December session, and
these issues had also provided a focal point for his consultations since then.
28. On the basis of his consultations he had now been able to put forward, for the consideration of
the Committee, his own proposals for decision.  These had been faxed to the Committee the previous
day.  Slightly amended versions were available in the room.  He believed that consultations had by
now advanced to the point where these texts had a good chance to attract a consensus, subject, of
course, to such modifications as might emerge in the discussions during this session.
29. He believed that it would be most efficient now  for him to present those texts one by one.  He
would explain the main provisions, and, after that , would invite comments on each text in turn,
paragraph-by-paragraph.   Turning to the text for the IEAT programme, he recalled that the main
issues raised at the 13 December session had had to do with the question of product coverage, with the
percentage export requirement, and with the level of ambition of the legislative action plan that hadbeen submitted by Thailand as part of its notified information.  In addition, and linked to theG/SCM/M/45
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legislative action plan, an overarching interest of a number of delegations had been to obtain as strong
an assurance as possible that the extension would be  a simple "one-plus-two" formula, with no further
requests for extension from Thailand.
30. Starting with product coverage of the IEAT programme, various delegations had raised
questions as to whether agricultural products, steel products and fisheries products were subsidizedunder the programme.  Thailand had pointed out in document G/SCM/Q3/THA/17 that none of these
products received subsidies under either programme.  He wished to point out in this respect that, after
further discussion in informal consultations, Thailand had submitted a supplement to that document,
circulated as G/SCM/Q3/THA/17/SUPPL. 1, which indicated Thailand’s intention not to subsidize
these products under either the IEAT or the BOI programmes, during the extended transition period.
His conclusion, which seemed to be shared by Members, was that this would be the best way to
address the issue of product coverage, rather than referring to it in the decision text itself.
31. Turning now to the decision text, the first five paragraphs should look familiar to everyone, as
they were identical to those in the decisions ad opted by the Committee on 13 December in respect of
the Article 27.4-based requests of Barbados, El Salvador and Panama.  The first new element in the
text for IEAT was in the sixth paragraph, the one beginning “Noting the statement of Thailand...”.
This paragraph, as discussed on 13 December, simply clarified the nature of the export subsidiesunder the programme in respect of which Thailand had requested the extension.
32. In the seventh paragraph, which began “Noting further”, subparagraph (i) took up the issue of
the export requirement percentage.  In particular, some delegations had indicated that they would wish
to see a firm commitment to reduce the export requirement percentage not only as of 1 January 2003,
but then further thereafter.  After some discussion, the suggestion here was that Thailand wouldcommit to reducing this percentage to 10 per cent as from 1 July 2004.  In other words, this would cut
the export requirement percentage by half at the mid-point of the three-year period envisioned under
the "one-plus-two" formula.  Then, at the end of  this paragraph, some text had been introduced to
make it explicit that not only would the export requirement be cut as indicated, but that Thailand
would so notify all of the investors under the programme by the end of January 2003.
33. Subparagraph (ii) and (iii) -- concerning the standstill and transparency commitments -- were
the same as the corresponding paragraphs in the decisions for Barbados, El Salvador and Panama that
had been adopted on 13 December.
34. The eighth paragraph was new, and was intended to address the requests of Members that
Thailand undertake, as swiftly as possible, the necessary steps to amend the legislation underlying the
IEAT, in particular, to submit the necessary legislative amendments to the House of Representatives
by 31 December 2003, with a corresponding modified work plan of IEAT Act amendment to besubmitted to the Committee not later than 31 March 2003.  He noted that the drafting in the text
before the Committee was slightly different from that in the text faxed out the day before, but he
assumed that this change would pose no difficulty for anyone.  The 31 March date for the modified
work plan was intended to allow the Thai government to undertake the necessary inter-agency
consultations to ensure that the plan, as modified, would accurately reflect the intentions of the Thaigovernment as to the steps and deadlines involved.  This paragraph also emphasized the overall three-
year time-frame for the IEAT programme, by indicating that calendar years 2004 and 2005 would
constitute the final two-year phase-out period for the programme.
35. The ninth paragraph also was new, and was again related to the intention of a number of
interested Members that the extension should be only for one year, with the final two-year phase-outas provided for in the second sentence of Article 27.4.G/SCM/M/45
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36. The tenth paragraph, the operative one, was substantively identical to those Article 27.4
decisions adopted on 13December.  The final two paragraphs were the same as well.
37. Turning to the proposal in respect of the BOI programme, he noted, as an overall comment,
that, here again the Committee was dealing with a "one-plus-two" formulation, although with some
important differences from that for IEAT.  Now look ing at the specifics, he did not think that the
Committee needed to dwell on the first five paragraphs, which were the same as for the IEAT
programme, nor on the sixth paragraph, which again simply clarified the nature of the export subsidies
in respect of which the extension of the programme was requested by Thailand.
38. Turning now to the seventh paragraph, in subparagraph (i), one new element, in the first line,
was that there was now an explicit commitment on the part of Thailand not to approve any new
projects involving provision of export subsidies under the programme.  This commitment was in
addition to the overall commitment on standstill which was the subject of the remainder ofsubparagraph (i).
39. Subparagraph 7(ii) was completely new, and was intended to address, in a concrete way, an
idea that had been raised in the 13 December discussion.  In particular, this idea was that Thailand
would undertake to provide by a date certain, early in 2003, certain information items on which
various delegations consider that they had not yet obtained all necessary details for full transparencyin respect of this programme and the export subsidies thereunder.  Some of those delegations had now
put their information requests down on paper, and his idea was that all such requests, from all
interested delegations, could be compiled into a single document, which as subparagraph (ii)
indicated, would have the symbol  of G/SCM/Q3/THA/18.  As indicated, under the approach in this
subparagraph, Thailand would undertake to make every effort to submit all of this requestedinformation no later than 15 April 2003, so that it could be considered at the Committee’s Spring
2003 meeting.  Here, the Chairman wished to emphasize that the list of requested information
remained open.  Any delegation that considered th at it still needed information regarding the BOI
programme was requested to kindly inform the Committee during this session, or, at the latest, submit
in writing any items for inclusion in that document by close of business on Monday, 23 December.The Thai delegation, for its part, had indicated that it would make every effort to provide all of the
information by the date indicated, while noting that there might be some items for which full details
might not be available.  The drafting that he propose was intended to take account of this possibility
as well.
40. Next, in subparagraph 7(iii), the beginning phrase was new, and was simply intended to
clarify that the information referred to in subparagraph (ii) was something beyond the overall
transparency requirement, which was identical to that in the other Article 27.4 decisions taken lastFriday, 13 December.
41. The eighth and operative paragraph needed no comment.  The ninth paragraph was new, and
was intended just to recall that, along with the extension to be granted, came the final two years
provided for in Article 27.4  It was his understanding that delegations would appreciate hearing from
Thailand as to how Thailand intended to phase out this programme.  He would be inviting the Thai
Ambassador to take the floor on this point a little later in the meeting.
42. Next, the tenth paragraph, which began “It is understood that”, was intended not to prejudice
anyone's position in regard to the information that had been submitted by Thailand, including that
which had been circulated as G/SCM/Q3/THA/17.   There, Thailand had included Annex 5, which
indicated Thailand’s ideas as to the phase-out of the export subsidies under this programme.  SomeMembers had indicated that they could not accept the final termination date of 2011, which was
reflected in that Annex, and they wanted to ensure  that no cross reference to that document in thisG/SCM/M/45
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decision would imply their agreement to such a phase-out schedule.  That was the purpose of this
tenth paragraph.
43. The final two paragraphs had not changed and really needed no comment.
44. That concluded the Chairman's detailed introduction of these two proposals.  He then opened
the floor for any general comments by delegations, and then for more detailed comments on the text,paragraph by paragraph.  As no delegation wished to speak, the Chairman concluded that the
Committee had now found a full consensus in respect of the IEAT programme and in respect of the
BOI programme.
45. The Chairman drew Members' attention to the list of requested information in the draft of
document G/SCM/Q3/THA/18, and asked whether any Member wished to add something to that list,
or to make any changes to any item already listed th ere.  He also reminded delegations that the final
deadline for any additions to the list was close of business Monday, 23 December, and that theseshould be submitted to the Secretariat in writing.  As no delegation asked for the floor, the Chairman
believed that the Committee had reached the point where it could take the decisions in respect of the
two programmes of Thailand.
46. The Committee approved the extension of the transition period for the following programmes
of Thailand.  The document symbols of the decision documents are indicated in parentheses.
• Industrial Estate Authority of Thailand (G/SCM/101)
• Board of Investment Programme (G/SCM/102)
47. Taking up the third programme of Thailand, the Export Market Diversification programme,
the Chairman recalled that Thailand had sought an extension in view of the fact that the programme
would cease by the end of 2003.  However, in the absence of a consensus to grant such an extension,Thailand would, in any case, have the final period referred to in Article 27.4, as 1995-2002 would bethe last authorized period as referred to in that provision.  This final period, by itself, would extend
past the final expiry date indicated by Thailand for the programme.  Therefore, in brief, there was no
need to obtain a consensus in the Committee to grant an extension for the year 2003 in respect of
Thailand's Export Market Diversification programme.  He knew that the Committee joined him in
looking forward to receiving updated information co ncerning this programme pursuant to Article 25
during the course of 2003, particularly as to Thailand's progress in ending the programme by the end
of 2003.
48. The Committee took note of the Chairman's statement.
49. The representative of Thailand stated that her delegation wished to take this opportunity to
express Thailand's sincere thanks and appreciation for the Chairman's enormous dedication and
tireless efforts in finding a solution to Thailand's request for extension under Article 27.4 of the SCM
Agreement.  The Chairman had indeed shown his leadership as Chairman to Members, that he was
more than capable of guiding this Committee until Members found a solution acceptable to all
Members concerned.  Thailand also wished to express its gratitude to delegations which had made
statements in support of Thailand's requests for extensions during the past months.  Her delegation's
sincere thanks were also extended to the Secretariat, which had been working closely with the
Chairman and Members, particularly the Thai delegation, during the past weeks.
50. Thailand had the pleasure of informing the Committee that Thailand had tried very hard to
provide all the necessary information and available data in responding to questions that Members had
submitted on several occasions.  Thailand had not been aware that its responses had confused someG/SCM/M/45
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Members.  Thailand was content that, finally, its efforts had not come to no avail at all, since some
Members had sympathy for Thailand.
51. As far as Thailand's request for the extension of the transition period for export subsidies was
concerned, Thailand had on several occasions – in formal and informal mode -- indicated the initiative
that Thailand had taken to eliminate export subsidies even before becoming a Member of thisOrganization.  Thailand would continue to do so.  For the BOI programme, in particular, Thailand
would explore ways and means to expedite the BO I phase-out programme as indicated in Annex 5 of
document G/SCM/Q1/THA/17.  One possibility would be to eliminate the condition on export
requirements and to consider withdrawal of the benefit with the export requirement.  Detail of the
modalities would be reflected in Thailand's responses to questions by April 2003.  In this regard,
Thailand wished to reaffirm its commitment to fulf il its obligation under the WTO Agreement.  Last
but not least, Thailand wished to thank all delegations for their understanding and their support forThailand's request.
52. The delegate of the European Communities stated that the European Communities had given
close attention to all requests made under Article 27.4 of the SCM Agreement and was glad that the
process in 2002 had nearly reached a conclusion that all WTO Members could join a consensus.  He
wished to join the delegate of Thailand in paying  tribute to the Chairman's chairmanship which had
brought about this result.
53. Concerning Thailand's request to extend the BOI programme, and while being prepared to
join the consensus which had just been reached, the European Communities thought that it was
regrettable that this decision -- unlike all the other decisions the Committee had taken over the past
weeks -- had not set a clear timetable for the elimination of export subsidies under the programme.Members were aware of the circumstances which had led to this result.
54. The European Communities also thanked Thailand for its statement.  However, the European
Communities thought it worthwhile to place on record that, during 2002, the Committee had had to
deal with a large number of requests for which it had a clear Ministerial mandate and to which it and
its Members had to give priority.  On these programmes, the Committee had now made clear itsexpectations for 2003 and future years.  As a result of this work, less attention had been given to
Thailand's request than might otherwise have been the case.  Also, and it was clear from the decision,
certain information had been lacking which Members had considered to be necessary for the proper
assessment of the BOI Programme.  The European Communities would be following this issue all the
more closely in 2003 looked forward to constructive discussions on the elimination of export
subsidies under this programme in full respect of the provisions of the SCM Agreement.
55. The representative of Peru wished, like other delegations, first to thank the Chairman for his
diplomatic skill as well as his impartiality, patience and understanding of all the interests which all
Members had identified in this process.  He also  wished to thank Ms. Morgan and Ms. Hainsworth of
the Secretariat for their patience and assistance.  He thought both of the Chair's proposals -- which had
been a very important element in reaching consensus -- were rather balanced and it was with great
pleasure that Peru had given its agreement, bearing in mind the economic, financial anddevelopmental needs of Thailand.  From the beginning, Peru had participated in the process of
consultation carried out by the Chairman.  Peru was grateful for the flexibility and understanding
shown by the Thai delegation, in particular, on the possibility of curtailing the period of retention of
the BOI programme.  Peru would pursue with gr eat interest the follow-up on this and was very
grateful for the understanding shown and which appeared in both declarations.  His delegation wasparticularly glad to highlight the commitments of Thailand regarding the maximum period, the
intention to curtail the process so as to dismantle the subsidies and the period that had been agreed by
the Committee.  Peru also wished to highligh t the commitment assumed by Thailand to provide
detailed information as requested by Members.G/SCM/M/45
Page 11
56. The delegate of Japan wished to join his colleagues in welcoming the decision and in
congratulating the Thai delegation for making this decision to grant an extension.  He especially
wanted to thank the Chairman and the Secretariat for their tremendous work, numerous meetings and
time to get countries together and to take into account different views on this subject.  He thought that
without the Chairman's leadership, the Committee would probably not have reached this decision.  Hewished to note that Japan welcomed the efforts by Thailand in this exercise, especially in preceding
few days, and its commitments to provide further information, which he thought, significantly
contributed to the transparency of the programmes.  His delegation thought that the decisions which
had just been taken struck a very good balance between the needs and interests of various countries in
this room.  Again, he wished to congratulate Thailand on this decision.
57. The delegate of Ecuador wished to begin by conveying his delegation's sincere gratitude to
the Chairman and to Ms. Morgan and Ms. Hainsworth  for the effective administration of this issue,
particularly the last stage from September of this year.  Ecuador considered that they had made it
possible to bring the positions of the parties closer together and achieve a balance of interests where
the Chairman had managed to achieve a consensus.  The result was the approval of Thailand's request
under Article 27.4 of the SCM Agreement.  Ecuador also wished to thank the Thai delegation for the
efforts made in this last phase, which had made it possible for delegations to clarify doubts andquestions in this process so that the decisions in respect of the programmes could be approved.
58. Finally, he also wished to point out that this month ended the eight-year period under the
SCM Agreement during which developing countries which maintained prohibited subsidies should
"progressively" -- as it said in the Agreement -- di smantle them.  This was the rule.  Ecuador was now
concerned that it was possibly entering into a phase in which developing countries that felt that thiseight year period should be extended and had been granted an extension might not want to
progressively dismantle their export subsidies.  Thailand had indicated that, in August 2000, Thailand
had approved projects which involved export subsidies.  Three years after, Ecuador, and other
delegations, had asked for clarifications about these programmes and had asked that the coverage of
these programmes be reduced.  These concerns still existed in the minds of his delegation, and ofsome others.  While Ecuador acknowledged the serious economic difficulties that Thailand had faced
and Ecuador sympathized with Thailand,  Ecuador wa s also a developing country.  Therefore, they
had to respect their export subsidy commitments.  His delegation had constantly voiced its concern for
the duration of these two programmes, and particul arly the BOI programme.  Ecuador felt that the
time had come to have a level playing field, where all countries could benefit from economic
liberalization under competitive, equal conditions, also in terms of access to the international market.
Therefore, Ecuador congratulated Thailand, and, of course, understood the reasons why they hadasked for the extension.  Ecuador, nevertheless wished to indicate that, for the reasons already stated,
Ecuador would not find it possible to grant further extensions which would go beyond 2005, as had
been hinted at in some of the information notified by Thailand, particularly with respect to the BOI
programme.  Ecuador would continue to assess the dismantling of this programme in the future and
would analyze whatever information was provided by Thailand in the future.  He also wished toexpress thanks for the statement just made by the distinguished Ambassador of Thailand.  He thought
that she had addressed at least a good part of the concerns voiced by his delegation.
59. The delegate of the United States, like others, wished to express his delegation's appreciation
to the Chairman for his persistent efforts to brin g about a solution, not only in respect of these two
Thai programmes -- which he saw as a sort of compilation of a tremendous amount of work -- but alsoin respect of all the Article 27.4 requests that had been before the Committee.  His delegation also
wanted to express its appreciation to Ms. Morgan and Ms. Hainsworth, for wading through countless
papers and fielding telephone calls on numerous technical questions.  As other delegations, the
United States also wished to express its appreciation to the Ambassador and the delegation of
Thailand for their efforts, particularly in the last phase of this process.  His delegation welcomed andplaced considerable value on Thailand's efforts to provide further information about the BOIG/SCM/M/45
Page 12
programme.  They also welcomed Thailand's firm intention to submit further amendments to its plan
by the end of 2003 and looked forward to receiving its modified work plan.  The United States
thought that the decisions taken at this meeting were examples of the WTO's ability to deliver
solutions in a practical and pragmatic manner to countries that faced Implementation troubles.
60. The delegate of Australia first wished to give her delegation's sincere thanks to the Chairman
and to the Secretariat for their considerable efforts in handling this issue.  Australia also wanted to
take this opportunity to thank Thailand for it s efforts in providing information on these two
programmes and for their flexibility in bringing forward the end-date of their IEAT programme, their
agreement to progressively reduce the export requirement of this programme and the commitment not
to request a further extension.  Australia also thanked Thailand for agreeing to make every effort to
provide further information on the BOI programme and its statement, made during this session, that
Thailand intended to accelerate the phase-out of this programme.  Finally, Australia wished tocongratulate Thailand on the adoption of these decisions.
61. The delegate of Canada stated that his delegation was very pleased that the Committee had
reached a consensus on this work and his delegation noted the flexibility that all parties involved in
the discussions had shown. It had very constructive.  Canada also joined the others in thanking the
Chairman, and Ms. Morgan and Ms. Hainsworth of th e Secretariat, for the hard work that they had
done.  The Chairman had been instrumental in having the Committee reach this decision at this
meeting.  Canada agreed with the European Communities that it was unfortunate that there were no
details on the decision for the final phase of the BOI programme.  However, Canada did note the Thai
Ambassador's commitment to expedite the phase-out of the BOI plan.  Canada would be following the
developments on these programmes very closely in 2003 and had placed great importance on theinformation request that was associated with these decisions.
62. The representative of Chinese Taipei stated that Chinese Taipei was pleased with the outcome
regarding Thailand's request.  Chinese Taipei wished to thank the Chairman for his leadership and the
Secretariat for their hard work and Members for their understanding and flexibility.  As he had
mentioned on 13 December, Thailand had already made every effort to comply with the requirementsof the SCM Agreement.  Chinese Taipei thought that it was fair that Thailand be given an extension
for a period of time, and believed that Thailand would duly progress in accordance with its
commitments under the Agreement.
63. The delegate of Colombia wished to congratulate Thailand for this achievement.  He thought
that, more than any other delegation in the room, he understood fully the importance of this for
countries such as Thailand and Colombia.  This had meant a momentous quantity of work, which the
Chairman had devoted to reaching this very positive result, as well as the approval of this request.  Hehoped that the Ambassador of Thailand would use the coming days and weeks to rest after all this
hard work.
64. The Committee took note of the statements made.
65. The Chairman stated that this brought the Committee to the final pending request, and the
final item of business on the agenda of this meeting, namely the request of  Colombia in respect of the
Transport Compensation Mechanism.  This request of Colombia, which was based on Article 27.4
alone, had been the subject of consultations that he had been holding over these past months.  While
various scenarios and possibilities had been explored in an open way in respect of this request, he had
been unable to identify the basis for a consensus to grant this extension.  Here again, it was clear that
Members understood that, in this situation, Colombia would have the final two years referred to in the
last sentence of Article 27.4, that is, until the end of 2004, to phase out this programme, as 1995-2002
would constitute the last authorized period referred to in that provision.  He was sure that theG/SCM/M/45
Page 13
Committee looked forward to receiving updated information concerning this programme under
Article 25, during the coming two years.
66. The delegate of Colombia wished to express his gratitude for all the efforts that the Chairman
had made and for all the professionalism that the Chairman had demonstrated in this process.
Members were fortunate to have him as a Chairman in this Committee.  Furthermore, Members werevery fortunate to have Ms. Morgan and Ms. Hainsw orth in the Secretariat, supporting the Chairman
and helping out delegations at all times.  It is true that thanks to these three, the Committee had been
able to bring quite a successful end to this process, even though Colombia had not received the
approval that it would have liked to have seen.  It was quite difficult for Colombia to understand the
reason for this refusal.  As he has already explained, this programme, in actual fact, was one that did
not bring about any distorting effect on trade, trade with any of its trading partners.  Nonetheless,
Colombia did reaffirm its commitment to this system.  The Committee's decision, as always, would becomplied with, just as Colombia had always complied with all the commitments in the WTO.
67. The representative of the European Communitie s wanted, in a less formal context than had
been the case in his earlier statement, to ex tend once again his delegation's warmest thanks to
Chairman, the Secretariat and to all Members of the Committee.  Particularly for him, as a relative
new-comer to Geneva, this had been a very instructive process, and there was a great atmosphere inthis Committee.  He wished to express that appreciation very warmly.
68. The representative of Barbados wished to echo the remarks made by his EC colleague.  This
was actually his first Committee in Geneva.  If every Committee after it functioned the way this one
did -- with such a committed Chairman and Secretariat – he thought he would have a very fruitful stay
in Geneva.  He thanked Ms. Morgan and Ms. Hainswor th in the Secretariat for their help in respect of
the work of the Committee, especially in terms of Barbados' requests.
69. The Chairman wished to express his gratitude for the kind words expressed by a number of
delegations.  He was not sure whether he was worthy of the appreciation and generosity.  Delegations
had been working extremely hard throughout the whole process.  The outcomes had come from them
and they had been extremely successful in giving the Chairman directions to guide the Committeethrough the extremely delicate terrain that the Committee had travelled during the past year.  He
would go on to say that perhaps the most enriching part of this exercise had been the personal links
that had been developed.  Quite often, positions of delegations had differed.  Delegates had been
pursuing their own country's interest, and had b een working under instructions coming from their
respective capitals, but they had still managed to retain mutual respect, goodwill and friendship.  He
thought that this was very important.  This was the reason that the Committee's common goal had
been crowned by a success.  He also wished to ex tend the tribute given to the Chairman to his fellow
colleagues from the Secretariat, without whom these collective achievements would be unthinkable.
He wished to take this opportunity to thank Mr . Woznowski, Ms. Morgan, Ms. Hainsworth and any
others, including the translators and interpreters, for their hard work and their dedication and service
in the interest of the organization.  They had always been by his side ready to advise him so that he
could cope with a number of extremely technical and complex issues.  On this positive note, hewished to thank delegations once again for the level of engagement and the level of discussion.  He
wished everyone happy holidays and, obviously, he looked forward to working with delegations
during the remaining part of his term as Chairman.
70. The Committee took note of the statements made.   The meeting was adjourned
.
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