WORLD TRADE
ORGANIZATIONG/SCM/N/95/COL
G/SCM/N/99/COL
4 July 2003
(03-3611)
Committee on Subsidies and
Countervailing MeasuresOriginal:  Spanish
SUBSIDIES
New and full notifications pursuant to Article XVI.1 of the GATT 1994 and Article 25
of the Agreement on Subsidies and Countervailing Measures
Extension under SCM Article 27.4 of the Transition Period under Article 27.2(b)
for the Elimination of Export Subsidies
COLOMBIA
The following communication, dated 30 June 2003, has been received from the Permanent
Mission of Colombia.
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In fulfilment of Colombia's transparency commitment under paragraphs 8 and 10 (i) of the
Decisions adopted on 13 December 2002 in document s G/SCM/93 and G/SCM/94 and in accordance
with the provisions of Article 25 of the Agreement on Subsidies and Countervailing Measures, we
herewith submit the annual notification for the year 2002 concerning the programmes "Special
Import-Export System for Capital Goods and Spare Parts (SIEX)" and "Free-Zone Regime".
As will be appreciated from these notifications, Colombia is complying strictly with its
obligations not to modify these programmes at any time so as to make them more favourable,
including as to the scope, coverage and intensity of benefits, than they were as at 1 September 2001.
As Colombia has undertaken to reform its legislation no later than 30 June 2003 in order to
bring it into conformity with the above-mentioned decisions, we are appending to this communication
a copy of Resolution 011 of 2003 by means of which Colombia satisfied in advance its commitment
to dismantle the programme "Special Import-E xport System for Capital Goods and Spare Parts
(SIEX)."
With respect to its commitment to undertake the reform of its legislation on Free Zones, this
process has also already been begun with a dialogue between the Ministry of Trade, Industry and
Tourism and the various Free Zones located in different parts of the country.  As a result, a draft
decree, consideration of which is being finalized at the technical level between the Ministries of
Trade, Industry and Tourism and Finance and Public Credit, has been drawn up.  Once this procedure
is complete, the decree will be signed by the Mi nisters for the above-mentioned departments.  The
draft decree is appended hereto.
It is my Government's belief that the annual review to be carried out by the Committee at its
next meeting will permit the continuation of the extension during the year 2004 for the programmes
"Special Import-Export System for Capital Goods and Spare Parts (SIEX)" and "Free-Zone Regime",
in accordance with the terms of the Decisions adopted on 13 December 2002 in documents G/SCM/93
and G/SCM/94.G/SCM/N/95/COL
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A. SPECIAL IMPORT -EXPORT SYSTEM FOR CAPITAL GOODS AND SPARE PARTS (SIEX)
1. Description of the programme
This is a mechanism which provides for the duty-free import of capital goods and spare parts
intended for the installation, expansion or relocation of production units to be used in the manufacture
of export goods.  It also provides for the duty-free import of components to be used in the production
or assembly of capital goods or spare parts which are then used in the production of export goods.
2. Period covered by the notification
2002.
3. Policy objective and/or purpose of the subsidy
The objective of the programme is to stimulate Colombian exports, promote their
diversification and contribute to technology transfer through the importation of capital goods.
4. Background and authority for the subsidy
- Article 173(c) of Decree-Law 444 of 1967
- Decree 688 of 1967- Decree 631 of 1985
- Resolution 682 of 1995 of the Colombian Foreign Trade Institute (INCOMEX)
- INCOMEX Resolution 1860 of 1999- Resolution 1964 of 2001 of the Ministry of Foreign Trade- Resolution 0143 of 2002 of the Ministry of Foreign Trade- Resolution 1148 of 2002 of the Ministry of Foreign Trade- Resolution 011 of 2003 of the Ministry of Foreign Trade
5. Form of subsidy
Complete exemption from customs duties on the import of the goods.
6. To whom and how the subsidy is provided
All natural or legal persons responsible for production, export or trading enterprises or
non-profit entities registered in the National Register of Exporters are eligible.  The subsidy takes the
form of exemption from the payment of customs duties levied upon importation of the capital goods
and spare parts covered by the programme.G/SCM/N/95/COL
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7. Subsidy per unit
In view of the nature and coverage of the programme, there are no statistics available which
reflect the amount of the subsidy per unit.  However, the total amount of the customs duties that theGovernment forwent as a result of the benefits granted under the programme was US$60,808,105 in
2001 and US$34,995,196 in 2002.  Meanwhile, exports by the SIEX beneficiary companies totalled
US$5,630 million in 2001 and US$5,462 million in 2002.
8. Duration of the subsidy
Up to 31 December 2006, under paragraph 10 of the Decision adopted by the SCM
Committee (G/SCM/94).
9. Statistics on the impact of the programme
Year Imports of capital
goods under the
programme (in
millions of US$)Exports by
companies
benefiting from
the notified
programme (in
millions of US$)Value of the
incentive (fiscal
sacrifice) (in
millions of US$)Total Colombian
exports (in
millions of US$)
1998 458.8 4,139.1 49.2 10,865
1999 545.3 5,494.1 60.3 11,617
2000 512.5 6,340.4 53.0 13,114
2001 379.8
2002 228.3
Source:  Information Systems Office, Ministry of Trade, Industry and Tourism.
B. FREE ZONE REGIME (ZF)
1. Description of programme
The Industrial Free Zones for Goods and Services are specified geographical areas within the
national territory, the purpose of which is to prom ote and develop the process of industrialization of
goods and the supply of services intended primarily for foreign markets.
2. Period covered by the notification
2002.
3. Policy objective and/or purpose of the subsidy
The objective of the programme is to promote foreign trade, generate employment and
foreign exchange and to serve as a focus for industrial development in the regions concerned.
4. Background and authority for the subsidy
- Law 7 of 1991
- Decree 2233 of 1996G/SCM/N/95/COL
G/SCM/N/99/COL
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- Decree 727 of 1997
- Decree 918 of 2001
- Law 677 of 2001
- Resolution 1001 of 2002 of the Ministry of Foreign Trade- Draft Decree of the Ministries of Trade, Industry and Tourism and Finance and
Public Credit
5. Form of the subsidy
For industrial users in the free zones, the proportionate share of revenue obtained from
foreign market sales is exempted from income tax and supplementary taxes.  Nor is the remittance tax
applied to earnings from industrial activities carried  out within the free zones.  Goods introduced into
the free zones are considered to be outside the national territory for the purposes of the customs duties
applicable to imports and taxes on exports.
6. To whom and how the subsidy is provided
The subsidy is granted to industrial users of goods, that is, to foreign or national legal persons
legally established in Colombia with their own tax identification number and who carry out their
activities – consisting in the manufacture, production, processing or assembly of goods for sale
primarily on foreign markets – exclusively within the respective free zone.  The subsidy is granted in
the form of an exemption from income tax and supplementary taxes on the portion of the incomeobtained from foreign market sales.
7. Subsidy per unit
No statistical information is available that reflects the amount of the subsidy per unit.
However, the total amount of the income and s upplementary tax exemption was US$48.2 million in
2001 and US$53.5 million in 2002.
8. Duration of the subsidy
Up to 31 December 2006, under paragraph 10 of the Decision adopted by the SCM
Committee (CG/SCM/93).
9. Statistical data on the impact of the programme
Year Exports under the
notified programme
(in millions of US$)Value of the incentive
(fiscal sacrifice)
(in millions of US$)Total Colombian
exports
(in millions of US$)
1998 341.9 13.0 10,865
1999 359.0 19.2 11,617
2000 471.2 40.9 13,114
2001 329.0 48.2113,319
2002 369.7 53.5212,901
                                                     
1  Source:  DIAN.
2  Source:  DIAN.G/SCM/N/95/COL
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MINISTRY OF FOREIGN TRADE
RESOLUTION NO. 0011 OF 8 JANUARY 2003
"Establishing provisions concerning Special Import-Export Systems
for Capital Goods and Spare Parts"
THE MINISTRY OF FOREIGN TRADE
In the exercise of its legal powers, and especially those conferred by Decree 2553 of 1999,
and in development of the provisions of Law 170 of  1994;  of Articles 173 (c) of Decree – Law 444 of
1967;  28 of Decree 631 of 1985;  5 of Decree 1208 of  1985;  3 of Decree 697 of 1990;  11 of Decree
2331 of 2001;  of Decrees 2680 of 1999, 2681 of 1999 and 2685 of 1999;  of Resolution No. 017 of1996 of the Higher Council of Foreign Trade; and of Resolution 1148 of 2002 of the Ministry of
Foreign Trade, and
WHEREAS:
In accordance with the provisions of Articles 5.3 and 5.6 of Decree 2553 of 1999, the
Ministry of Foreign Trade is responsible for the proper application of the provisions relating to
Special Import-Export Systems, referred to in Article 172ff of Decree – Law 444 of 1967 and
Decrees 688 of 1967, 631 and 1208 of 1985, and 697 of 1990, and for issuing regulations and
procedures designed to improve the competitiveness of the Colombian exportable offer on theexternal market.
The Committee on Subsidies and Countervailing Measures of the World Trade Organization,
through its decision of 13 December 2002, determined that the transition period under Article 27.2 (b)
of the SCM Agreement for the elimination of export subsidies under the Special Import-Export
System for Capital Goods and Spare Parts notified by Colombia shall not be extended beyond
31 December 2006, including the final 2-year period provided for in Article 27.4 of the SCMAgreement.
Appropriate measures must be adopted to comply with the above-mentioned decision in
respect of Special Import-Export Systems for the Capital Goods and Spare Parts programmes
established by Article 173 (c) of Decree Law 44 4 of 1967 and other related legislation, without
including the programmes of the Special Import-Export System for the export of services and the
programmes for the export of finished goods covered by Annex I of the Agreement on Agriculture of
the World Trade Organization.
The above-mentioned decision places Colombia under an obligation not to modify the Special
Import-Export System for Capital Goods and Spare Part s so as to make it more favourable, including
as to the scope, coverage and intensity of benefits, than it was as at 1 September 2001.
HEREBY RESOLVES
ARTICLE ONE :  The General Directorate for Foreign Trade of the Ministry of Foreign
Trade may only consider, assess and approve applications for new programmes or modifications to
existing programmes relating to capital goods and spare parts under Article 173 (c) of Decree 444 of
1967 and supplementary legislation up to 30 November 2006, inclusive.G/SCM/N/95/COL
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PARAGRAPH :  The approval of applications for new programmes or modifications of
existing programmes relating to capital goods and spare parts may not provide for imports under those
programmes beyond 31 December 2006.
ARTICLE TWO :  Each year, the General Directorate of Foreign Trade may only approve
programmes or modifications of existing programm es relating to capital goods and spare parts under
Article 173 (c) of Decree 444 of 1967 and suppleme ntary legislation up to the annual value of the
subsidy for the year 2000 notified by Colombia to the Committee on Subsidies and Countervailing
Measures of the World Trade Organization.
PARAGRAPH :  The General Directorate for Foreign Trade shall grant the approvals referred
to in this article on the basis of criteria of national economic interest aimed at strengthening the
competitiveness of the Colombian exportable offer on the external market and ensuring the relevance,
stability and proper application of the corresponding programmes in the light of the country's
commitments to the World Trade Organization.
ARTICLE THREE :  The period for demonstrating to the General Directorate of Foreign
Trade of the Ministry of Foreign Trade compliance with the obligations assumed under new
programmes or modifications of existing programm es relating to capital goods and spare parts under
Article 173 (c) of Decree 444 of 1967 and other supp lementary legislation shall be governed by the
relevant rules in force.
ARTICLE FOUR :  Applications for Special Import-Export System programmes whose final
export products correspond to the services sector or are covered by Annex I of the Agreement on
Agriculture of the World Trade Organization shall be  excluded from the requirements of Articles One
and Two of this Resolution.
ARTICLE FIVE :  This Resolution shall enter into effect from the date of its publication in
the Official Journal and revokes any contrary provisions.
FOR PUBLICATION AND IMPLEMENTATION
Done in Bogotá D.C., on 8 January 2003-07-14
JORGE HUMBERTO BOTERO ANGULO
Minister of Foreign TradeG/SCM/N/95/COL
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MINISTRY OF TRADE, INDUSTRY AND TOURISM
DECREE NUMBER           OF 2003
"Partially amending Decree 2233 of 1996"
THE PRESIDENT OF THE REPUBLIC OF COLOMBIA
In the exercise of his constitutional powers, and especially those conferred by paragraphs 11
and 25 of Article 189 of the Political Constitution, and in development of the provisions of Law 7 of
1991, and
WHEREAS:
The Committee on Subsidies and Countervailing Measures of the World Trade Organization,
through Decision G/SCM/93 of 13 December 2002, has approved the maintenance by Colombia of
export subsidies such as the exemption of revenue for free zones up to 31 December 2006.
In the SCM Committee decision of 13 December 2002, Colombia undertook to ensure
compliance with the international agreements in conf ormity with the laws and regulations within the
framework of the aforesaid decision.
The Colombian authorities will adopt appropriate actions to comply with this decision and
will undertake the reform of the legislation to bring it into conformity with the decision.
HEREBY DECREES:
ARTICLE ONE :  Article 54 of Decree 2233 of 1996 shall read as follows:  "Article 54:  For
industrial users in the Industrial Free Zone for Goods and Services, the proportionate share of revenue
obtained from foreign market sales is not exempted from income tax and supplementary taxes."
ARTICLE TWO :  The Ministry of Trade, Industry and Tourism shall establish the
requirements and procedures necessary for the implementation of this decree.
ARTICLE THREE :  This decree shall enter into effect on 1 January 2007.
FOR PUBLICATION AND IMPLEMENTATION
Done in Bogotá D.C. on
MINISTRY OF FINANCE AND PUBLIC CREDIT
MINISTRY OF TRADE, INDUSTRY AND TOURISM
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