RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q3/VCT/6
21 May 2002
(02-2778)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement
on Subsidies and Countervailing Measures
Replies to Questions Posed by AUSTRALIA1,
the EUROPEAN COMMUNITIES2, JAPAN3, CANADA4 and the UNITED STATES5
Regarding the Notification of ST. VINCENT AND THE GRENADINES6
The following communication, dated 24 April 2002, has been received from the Permanent
Mission of St. Vincent and the Grenadines.
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Replies to questions posed by Australia
Q1. Under the Fiscal Incentives Act, what types of activities are undertaken by the different
categories or groups of enterprises?  What determines how enterprises are categorized ?
Reply  
Manufacturing and agro-processing.
Enterprises are categorised as follows:
(see section 2 of the Act):
Group I Enterprise  – local value added is fifty per centum or more of the amount realized
from the sale of an approved product.
Group II Enterprise  – local value added is twenty-five per centum or more but less than
fifty per centum of the amount realized from the sale of an approved product.
Group III Enterprise  – local value added is ten per centum or more but less than twenty-five
per centum of the amount realised from the sale of an approved product.
                                                     
1 G/SCM/Q3/VCT/1
2 G/SCM/Q3/VCT/2
3 G/SCM/Q3/VCT/3
4 G/SCM/Q3/VCT/4
5 G/SCM/Q3/VCT/5
6 G/SCM/N/74/VCT, G/SCM/N/71/VCTG/SCM/Q3/VCT/6
Page 2
Enclave Enterprise -  An enterprise producing exclusively for export to countries outside the
common Market.
Capital Intensive Enterprise – An investment of not less than EC$25 million
This requirement is based on the process, not the raw material used.  It is therefore in
conformity with Article 3.1(b) of the SCM Agreement.
Q2. Document G/SCM/N/71/VCT notes the level of subsidies granted in 1995 to
1997.  Could St. Vincent & Grenadines confirm that these figures represent total revenue
foregone?
Reply
The revenue foregone also includes concessions granted under the Fiscal Incentive Act # 5 of
1982 and under the Hotels Aid Act #16 of 1988.  This sum includes Revenue foregone under the
Hotel Aids Act since it was impossible to separate the concessions under the Fiscal Incentive Actfrom the data.
Replies to Questions Posed by the European Communities
Q1. Please indicate when the pr ogrammes came into operation.
Reply
The programme came into operation in August 1982.
Q2. Please indicate whether the programmes pr ovides for other forms of subsidies than
exemption of import duties and internal taxes (e.g. grants, provision of goods or services).
Reply
No.
Q3. The notification refers to "concessionary credits funded or guaranteed by the Caribbean
Development Bank".  Does St. Vincent and the Grenadines consider this programme to be
covered by the requirements laid down in G/ SCM/39, in particular that only programmes
involving import duty and internal tax ex emptions are covered?  Please elaborate.
Reply
Reference paragraph three (3) of the cover note G/SCM/N/71/VCT.  Subsequent review
indicated that this programme does not apply to export subsidies and is therefore not applicable under27.4 
Q4. Do the programmes provide for a condition to use domestic goods?  If yes, please
describe the relevant provision.G/SCM/Q3/VCT/6
Page 3
Reply
The conditions of the Fiscal Incentive Programme for "local value added" do not constitute a
requirement to use domestic over imported goods.  As stated in the Act, the "local value added" is the
amount by which the sales of an approved product exceeds:
(i) The aggregate amount of the value of imported raw materials
(ii) Wages and / or salaries paid to persons non-national of a CARICOM member state;
(iii) Interest, management charges and other income payments to non-residents in a
CARICOM member state;  and
(iv) Depreciation on the imports of plants, machinery and equipment.
Q5. The programme "Fiscal Incentives Act No. 5 of 1982" appears to contain a condition for
"local value addition".  Does this constitute a requirement to use domestic over imported
goods?  Please explain.
Reply
The Act does not stipulate that there is any obligation to use local raw material.
Q6. Please indicate the rate of import duty or internal tax exemption as of
1 September 2001.
Reply
St. Vincent ant the Grenadines import duty range form 0-40 per cent.
Corporate Income tax is 35 per cent.Consumption Tax 15 – 25 per cent.
Q7. Please describe changes to the programmes since 1 September 2001, if any. In
particular, indicate any changes to the rate of exemption or the coverage of the programmes e.g.
in terms of products, location etc.
Reply
None.
Q8. Please indicate for each programme how many companies have benefited from the
programmes as of 1 September 2001.
Reply
Fiscal Incentive Programme:  -  Twelve (12) companies benefited to date.
Hotel Aids Act :  -  Ten (10) Hotels.
Q9. Please elaborate on when and how St. Vinc ent and the Grenadines intends to phase out
the programmes.
Reply
St. Vincent and the Grenadines is mindful of its obligation under the SCM Agreement to
phase out these programme in accordance with the WTO Agreements.G/SCM/Q3/VCT/6
Page 4
Replies to Question Posed by Japan
Fiscal Incentives Act No. 5 of 1982 amended by Act 20 of 1987 and Act 16 of 1991
This Act seems to include a requirement for local value added.  Could Saint Vincent and
the Grenadines please explain its confor mity with Article 3.1(b) of the ASCM?
Reply
The conditions of the Fiscal Incentives Programme for “local value added” do not constitute a
requirement to use domestic over imported goods.  As stated in the Act, the “local value added” is the
amount by which the sales of an approved product exceeds:
(i) The aggregate amount of the value of imported raw materials (whether regional or
extra-regional);
(ii) Wages or/and salaries paid to persons non-national of a CARICOM member state;
(iii) Interest, management charges and other income payments to non-residents in a
CARICOM member state; and
(iv) Depreciation on the imports of plant, machinery and equipment.
This requirement is based on the process not the raw material used.  It is therefore in
conformity with Article 3.1(b) of the SCM Agreement.
Replies to Question Posed by Canada
How many recipient companies/industrial park s, etc. operate under the Fiscal Incentives
Act No. 5 programme?
Reply
Twenty (20) companies have benefited under the Fiscal Incentive Programme.
Replies to Questions Posed by the United States
Fiscal Incentives Act No. 5 of 1982
Q1. Because exemptions from import duties and internal taxes under this programme are
granted for up to 15 years, please explain how St. Vincent would modify these programmes so
that subsidies do not extend beyond any extension period provided.
Reply
St. Vincent and the Grenadines is mindful of its obligations under the SCM Agreement to
phase out these programme in accordance with the WTO Agreement.
Q2. In light of the local value-added requirements for some of the benefits provided under
this programme, please comment on whether this  programme constitutes a prohibited subsidy
under Article 3.1(b) of the Agreement on Subsidies and Countervailing Measures.G/SCM/Q3/VCT/6
Page 5
Reply
The conditions of the Fiscal Incentives Programme for “local value added” do not constitute a
requirement to use domestic over imported goods. As stated in the Act, the “local value added” is the
amount by which the sales of an approved product exceeds:
(i) The aggregate amount of the value of imported raw materials (whether regional or
extra-regional);
(ii) Wages or/and salaries paid to persons non-national of a CARICOM member state;
(iii) Interest, management charges and other income payments to non-residents in a
CARICOM member state; and
(iv) Depreciation on the imports of plant, machinery and equipment.
This requirement is based on the process not the raw material used. It is therefore in conformity with
Article 3.1(b) of the SCM Agreement.
Q3. Please provide the customs duty and intern al tax rates companies would normally pay
absent this programme.
Reply
The Import Duty range from 0-40 per cent.  Corporate Income is Tax 35 per cent.
Consumption Tax from 15–25 per cent
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