. /.WORLD TRADE
ORGANIZATIONG/SCM/Q3/COL/24
29 October 2003
(03-5748)
Committee on Subsidies and
Countervailing MeasuresOriginal:  Spanish
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement on Subsidies
and Countervailing Measures
Questions Posed by Peru
The following communication, dated 27 October 2003, has been received from the Permanent
Mission of Peru.
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Notification of the Special Import – Export System for Capital Goods and Spare Parts (SIEX)
• It should be made clear how it is determined which capital goods exempt from customs duties
are used in the production of export goods.  Capital goods are indivisible and it is impossible
to tell which capital goods imported under the regime are used for the production of export
goods or for the production of goods for the domestic market.
• It is important to ascertain which markets receive exports effected by companies benefiting
under SIEX, bearing in mind that the latter have accounted for more than 40 per cent of total
exports.
Notification of the Free-Zone Regime (ZF) (2002)
• Regarding the Free-Zone Regime, it should be made clear whether it implies extraterritoriality
(zones considered to lie outside national territory for customs purposes), in which case no
duties would be paid and the notified quantities of total subsidies would therefore be
under-estimated because of the failure to consider unpaid duties.
• Regarding the Free-Zone Regime (ZF), it is also important to make clear which factors have
been responsible for the increased value of the incentive (fiscal sacrifice) under thisprogramme since 1998 and at the same time why exports under the notified programme have
been declining.
• It is necessary to ascertain what other types of tax exemptions are granted to companies
operating in the free zones.  The document refers only to the exemption from income tax and
supplementary taxes on that part of their inco me that is obtained from sales to foreign
markets.  Among other things, no reference is made to income from domestic sales (where
cleared for domestic consumption), which constitutes a subsidy on production and domestic
sales, and could constitute a cross-subsidy affecting the competitiveness of Colombian
products.G/SCM/Q3/COL/24
Page 2
Legislative Reform of the SIEX – Ministry of Foreign Trade Resolution No. 0011
• It is necessary to make clear what is meant by the reference in Resolution No. 0011 of
8 January 2003 to the exclusion from the reduction commitment of the special import – exportsystem for the export of services and the programmes for the export of finished goods covered
by Annex I of the WTO Agreement on Agriculture.
These could not be considered to include subsidies on capital goods used in the production of
agricultural goods because they would continue to be covered by the WTO Agreement on Subsidies
and Countervailing Measures, and not by the Agreement on Agriculture.
If the reference is to subsidies on agricultural  products, attention should be drawn to the fact
that, in its last notification to the Committee on Agriculture, document G/AG/N/COL/26 (28 May2001), Colombia notified that it did not apply any export subsidies between 1 January and
31 December 1999, and between 1 January and 31 December 2000.  It has to be asked whether
Colombia is perhaps seeking to re-impose subsidies on agricultural products.
• With regard to Resolution No. 0011 of 8 January 2003 on the SIEX Programme, clarification
is required as to what degree of discretion is implicit in the paragraph under Article 2.
If criteria of national economic interest aimed at strengthening the competitiveness of the
exportable supply were applicable, could the restriction on the annual value of subsidies for 2000 be
disregarded?  If the criterion of proper application of the corresponding programmes in the light of the
country's commitments to the WTO is upheld, it is not at all clear whether these are alternativecriteria.
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