RESTRICTED
WORLD TRADE G/SCM/Q2/NIC/2
15January 1997
ORGANIZATION(97-0110)
Original: Spanish Committee onSubsidies andCountervailing Measures
SUBSIDIES
Replies toQuestions posed bytheEUROPEAN COMMUNITY1
Regarding theNewandFullNotification ofNICARAGUA2
Thefollowing communication, dated 6January 1997, hasbeenreceived fromthePermanent
Mission ofNicaragua.
_______________
1. Could Nicaragua explain whythese programmes were notnotified totheWTO?
Decree LawNo.37-91 of21August 1991, asamended on20March 1992 byDecree 22-92,
enacted inNicaragua theExport Promotion Law, which willexpire on31December 1997.
Presidential Decree No.46-91 isknown asthedecree forthecreation ofFreeZones.
On30June1995Nicaragua submitted itsfirstWTO notification concerning subsidies inwhich
itstates that"inaccordance withArticle XVIoftheGATT 1994, Nicaragua notifies theCommittee
onSubsidies andCountervailing Measures thatitdoesnotgrant onitsterritory ormaintain subsidy
measures orspecific subsidies ofthekinddescribed inArticle 1.1andArticle 2oftheAgreement on
Subsidies andCountervailing Measures." Thisnotification ismade incompliance withtheprovisions
ofArticle 25.6oftheAgreement onSubsidies andCountervailing Measures."
Nicaragua isintheprocess ofupdating thisnotification andwillinclude theresults ofthelegal
analysis thatiscurrently being made oftheExport Promotion LawandFreeZone Law.
2. Could Nicaragua supply anotification under Article 25,using thestandard format?
Yes,Nicaragua isintheprocess ofupdating itsnotification ofJune1995 onsubsidies and
countervailing measures andwillinclude theresults ofthelegalanalysis currently being made ofthe
Export Promotion LawandFreeZone Law.
Thenotification willbemade using themodel questionnaire indocument G/SCM/6 ofthe
Committee onSubsidies andCountervailing Measures, dated 9August 1995.
1G/SCM/Q2/NIC/1.
2G/SCM/N/3/NIC.
./.G/SCM/Q2/NIC/2
Page2
3. Could Nicaragua clarify what thecriteria foreligibility areandhowprojects areselected
forgovernment subsidies?
Decree LawNo.37-91 of21August 1991, asamended on20March 1992 byDecree 22-92,
ontheExport Promotion Law, explains thatthecriteria foreligibility ofprojects areasfollows:
Under Article 20oftheLaw, projects areevaluated bytheMinistry oftheEconomy and
Development oftheRepublic, andmust meetthefollowing criteria:
(a) Sizeoftheproject;
(b) consistency withthecountry 'seconomic development objectives andstrategy;
(c) generation ofaninflow offoreign exchange;
(d) technological contribution oftheproject;
(e) creation ofemployment;
(f) useofdomestic rawmaterials andparts;
(g) environmental protection andconservation ofnatural resources.
Other eligibility requirements are:
(1) Theproduct should beconsidered non-traditional andnotbeincluded inthe
listoftraditional products (cotton products, coffee beans, sugar, wood inthe
rough, beef,lobster andshrimp other thansea-farming products, salted hides,
goldandsilver);
(2) exports mustgotothecountries outside theCentral American region, andfulfil
oneofthefollowing requirements:
(a) annual exports ofatleast25percentofoutput;
(b) annual exports ofatleastUS$250,000 (f.o.b. value).
(3) netforeign exchange earnings ofatleast35percentofthef.o.b. value of
exports;
(4) signing ofanexport contract with theMinistry oftheEconomy and
Development.
4. With respect tothesupport forexport activity programmes, could Nicaragua provide
thetimetable ofhowthese subsidies willbephased out?
Thebenefits granted bytheExport Promotion Lawwillexpire on31December 1997. In
exceptional cases, involving projects withalongleadtimeandexecution period, theNational Export
Promotion Commission mayextend theestablished timetable foruptotwoyears (1998 and1999) with
the5percentbenefit specified for1997.