WORLD TRADE
ORGANIZATIONG/SCM/N/71/BRA
G/SCM/N/95/BRA
30 July 2003
(03-4033)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
New and Full and Updating Notifications Pursuant to Article XVI:1
of the GATT 1994 and Article 25 of the Agreement on
Subsidies and Countervailing Measures
BRAZIL
The following communication, dated 28 July 2003, has been received from the Permanent
Mission of Brazil.
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The following notification provides details on federal programmes for fiscal years of
2000/2002.
This notification does not prejudge the nature of the programmes herein with respect to
Articles 1 and 2 of the Agreement on Subsidies.  Data may reflect approximations, estimates, or
preliminary information.  Technical or legal inaccu racies may have been inadvertently introduced in
the text given the attempt to make the description of  the programmes sufficiently illustrative, but also
straightforward and concise.  This notification may be supplemented, in due time, to incorporatefurther elements or clarifications.
TABLE OF CONTENTS
I. INDUSTRIAL TECHNOLOGY DEVELOPMENT PROGRAMME.................................1
II. REGIONAL I NCENTIV ES.....................................................................................................3
III. FINAM/F INOR................................................................................................................ .........5
IV. FNE/FNO/FCO ................................................................................................................. ........6
V. COMMENTS REGARDING DOCUMENT G/SCM/N/25/BRA-
G/SCM/N/38/BRA-G/SCM/N/48/ BRA-G/SCM/N/60/BRA: .................................................8
I. INDUSTRIAL TECHNOLOGY DEVELOPMENT PROGRAMME
1. Title of the subsidy programme if relevant or  brief description or subsidy identification
Industrial Technology Development Programme (PDTI) and Agriculture/Cattle Breeding
Technology Development Programme (PDTA). The objective is to provide incentive for research and
development in those areas.G/SCM/N/71/BRA
G/SCM/N/95/BRA
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2. Period covered by the notification:
From January 2000 to December 2002
3. Policy objective and/or purpose of subsidy:
To foster technological improvement for industrial and agricultural/cattle breeding
enterprises, through research and development initiatives, in order to enhance processes and  promote
industrial and agricultural training.  It also includes the building up of partnerships between research
centers, universities, institutes and enterprises.
4. Subsidy  background and authority (including identification of the legislation under
which it is granted):
Law No 8.661, dated 2 June 1993 establishes the Brazilian policy for technological training in
industry and agriculture and fiscal incentives for promoting research and development programmes inBrazilian enterprises.  Programmes and fiscal incentives under the above-mentioned law were
regulated by Decree No 949, dated 5 October 1993.  The Ministry of Science and Technology is
responsible for the administration of the programme.
5. Form of subsidy (i.e. grant, loan, concession):
Deductions of income tax due on the sum of the expenses in technological research and
development activities and of IPI (Tax on Industrialized Products) due on equipment, machinery and
devices directly allocated to research and technological development and also on instruments,
accessories and tools associated with those goods.
6. To whom and how the subsidy is provided (whether to producers, to exporters, or
others; through what mechanisms: whether a fixed or fluctuating amount per unit; if
the latter, how determined):
The beneficiaries are industrial and agricultural/cattle breeding enterprises.  The amount of
the subsidy is contingent upon the value of the expenses on research and development.  For instance,the amount of IPI tax break depends on the value of machinery and equipment acquired for research
and development purposes.
7. Subsidy per unit in cases where this is not possible, the total amount at the annual
amount budgeted for that subsidy (indicating, if possible, the average subsidy per unit inthe previous year). Where provision of per unit subsidy information (for the year
covered by the notification, for the previous year, or both) is not possible, a full
explanation:
Total subsidization under PDTA and PDTI amounted to R$13,8 million, in 2000; R$10,1
million, in 2001; and R$88 million, in 2002.   
8. Duration of subsidy and/or any other time limits attached to it, including date of
inception/commencement:
The programme does not have a pre-established time limit.  Subsidies will solely benefit
enterprises engaged in PDTI or PDTA projects.G/SCM/N/71/BRA
G/SCM/N/95/BRA
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9. Statistical data permitting as assessment of the trade effects of the subsidy.  The specific
and scope of such statistics is left to the judgment of the notifying Member.  To the
extent possible, relevant and/or determinable, however, it is desirable that such
information includes statistics of production, consumption, imports and exports of thesubsidized product (s) or sector (s):
N. A.
II. REGIONAL INCENTIVES
“Superintendência para o Desenvolviment o da Amazônia” (SUDAM), the Amazon Region
Development Authority, was established by Law 5174, dated 27 October 1966.  “Superintendência para
o Desenvolvimento do Nordeste” (SUDENE), the Northeast Region Development Authority, was
established by Law 3692, dated 15 December 1959 (s ee below). Provisional Measures 2156-5 and
2157-5, of August 2001, extinguished SUDAM and SUDENE and the programmes they administered.
However, contractual obligations incurred prior to those measures will be upheld and disbursements
be made until 2013 by the development agencies which replaced both SUDAM and SUDENE(“Agência de Desenvolvimento do Nordeste – ADENE” and “Agência do Desenvolvimento da
Amazônia – ADA”).
1. Title of the subsidy
1 programme if relevant or brief description or identification of the
subsidy
Former SUDAM and SUDENE programs provide assistance to the economically disadvantaged
Amazon and Northeast Regions by means of tax breaks.
2. Period covered by the notification
January 2000 to December 2002.
3.  Policy objective and/or purpose of the subsidy
To reduce economic and social imbalances among the Brazilian regions by means of
compensatory mechanisms for the development of the North and Northeast Regions.
The area covered by SUDAM/ADA is denominated Legal Amazonia, or the Amazon Region,
and encompasses the States of Acre, Amapá, Amazonas, Mato Grosso, Pará, Rondônia, Roraima,
Tocantins and part of Maranhão.  The Amazon Region is an area of continental dimensions covering
5,046,143 square kilometers and corresponding to 59 per cent of the nation’s territory andapproximately 70 per cent of the so-called Pan-Amazon or Continental Amazon, which has a
                                                     
1 The Constitution of Brazil, in its article 3, item III of Title I, regarding the Fundamental Principles, considers that
"the fundamental objectives of the Federative Republic of Brazil are to eradicate poverty and substandard living conditionsand to reduce social and regional inequalities". In Section IV (article 43, paragraph 2, item III) of Chapter VII, Title III,which refers to the Organization of the State considers that "the regional incentives shall include, besides others, asprescribed by law, exemptions, reductions  or temporary deferment of federal taxes owed by individuals or by legal entities".
In article 151, item I, Section II of Title VI, regarding Taxation and Budget considers that "it is forbidden for the Union: to
institute a tribute which is not uniform throughout the entir e national territory (...), it being allowed to grant tax incentiv es
for the purposes of promoting the balanced social and economic development of the various regions of the country".  Inarticle 165, paragraphs 6 and 7, Section II of Chapter II, Public Finances, of the previous Title, considers that "the budget b ill
shall be accompanied by a regionalized statement on the effect on revenues and expenses, deriving from exemptions,
amnesties, remissions, subsidies and benefits of a financial, tributary and credit nature (§ 6).  The budget set forth (...) inconsistence with the pluriannual plan, shall include the functions of reducing interregional inequalities, according to
populational criteria (§ 7).G/SCM/N/71/BRA
G/SCM/N/95/BRA
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population of approximately 22 million inhabitants heavily concentrated in urban areas and scattered
widely across a vast rural area.  The jurisdiction of  SUDENE/ADENE encompasses the federal states
of Maranhão, Piauí, Ceará, Rio Gr ande do Norte, Paraíba, Pernambuco, Alagoas, Sergipe and Bahia, in
addition to an area of the State of Minas Gerais in cluded in the so-called “polígono das secas” (drought
area in Northeastern Brazil).
4. Background and authority for the subsidy (including identification of the legislation
under which it is granted)
Programmes, formerly administered by SUDAM and SUDENE, are now under the responsibility
of the Ministry if National Integration until they completely phase-out.  Law 9532/97 has regulated thetax exemptions and reductions. Provisional Measur e 2199/01 is the most recent regulation on the matter.
5. Form of the subsidy (i.e. grant. loan. tax concession)
Income tax exemptions and reductions.
6. To whom and how the subsidy is provided (whether to producers, to exporters, or
others: through what mechanisms: whether a fixed or fluctuating amount per unit: if
the latter, how determined)
Beneficiaries are industrial and agricultural enterprises with undertakings in the Amazon or
Northeast Regions.
7. Subsidy per unit, or in cases where this is not possible, the total amount or the annual
amount budgeted for that subsidy (indicating, if possible, the average subsidy per unit inthe previous year). Where provision of per unit subsidy information (for the year
covered by the notification, for the previous year, or both) is not possible, a full
explanation
Tax Exemption/Reduction (R$ thousand)
YEAR S U D A M SUDENE
2000 281,532 206,395
2001 299,560 291,977
2002 394,767 392,148
Source: National Treasury Secretariat
8. Duration of the subsidy and/or any other time limits attached to it, including data of
inception/ commencement
As of 2003, credit terms of subsidies granted by former SUDAM and SUDENE will be
adjusted to comply with the deadline of December 2013 established by law.
9. Statistical data permitting an assessment of the trade effects of the subsidy. The specific
and scope of such statistics is left to the judgment of the notifying Member. To the extent
possible, relevant an/or determinable, however,  it is desirable that such information
include statistics of production, consumption, imports and exports of the subsidized
product (s) or sector (s)
Not available.G/SCM/N/71/BRA
G/SCM/N/95/BRA
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III. FINAM/FINOR
1. Title of the subsidy programme if relevant or brief description or identification of the
subsidy
“Fundo de Investimento da Amazônia” (FINAM) and “Fundo de Investimento do Nordeste”
(FINOR) - Financial support for the development of the Amazon and Northeast Regions.
2. Period covered by the notification
January 2000 to December 2002
3. Policy objective and/or purpose of the subsidy
To reduce economic and social imbalances among the Brazilian regions by means of
compensatory mechanisms for the development of the North and Northeast Regions.
4. Background and authority for the subsidy (including identification of the legislation
under which it is granted)
The Secretariat of Federal Revenue and the National Treasury Secretariat of the Ministry of
Finance are charged with the funding mechanisms of resources of FINAM and FINOR. Programmes
previously administered by SUDAM and SUDENE are now under the responsibility of the Ministry of
National Integration - MI.
Banco da Amazônia (BASA) and Banco do Nordeste do Brasil (BNB) are the financial agents
of FINAM and FINOR.
The main legislation is the following: Laws 8167, dated 16.01.91; 9532, dated 10.12.97, and
9808, dated 20.07.99.
5. Form of the subsidy (i.e. grant. loan. tax concession)
Risk capital investments through primary subscription of debentures convertible into stock, at
a ratio of 70 per cent in convertible debentures and 30 per cent in nonconvertible debentures.  In 2000,
Provisional Measure 2058 extinguished nonconvertible debentures.
6. To whom and how the subsidy is provided (whether to producers, to exporters, or
others: through what mechanisms: whether a fixed or fluctuating amount per unit: if
the latter, how determined)
The beneficiaries are legal entities that receive incentives to implement a project considered
to be relevant to the region.  The project, in order to be implemented with FINAM and FINORfinancial assistance, should involve activities that foster regional development.G/SCM/N/71/BRA
G/SCM/N/95/BRA
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7. Subsidy per unit, or in cases where this is not possible, the total amount or the annual
amount budgeted for that subsidy (indicating, if possible, the average subsidy per unit in
the previous year). Where provision of per unit subsidy information (for the year
covered by the notification, for the previous year, or both) is not possible, a fullexplanation
FINOR/FINAM – Fiscal benefits (in lending)
(R$ thousand)
2000 2001 2002
FINAM 549,656 106,948 75,000
FINOR 428,748 119,529 174,322
                      Source: National Treasury Secretariat
8. Duration of the subsidy and/or any other time limits attached to it, including data of
inception/ commencement
Expiration is scheduled for December 2013 (Law 9532/97).
9. Statistical data permitting an assessment of the trade effects of the subsidy.  The specific
and scope of such statistics is left to the judgment of the notifying Member.  To the
extent possible, relevant an/or determinable, however, it is desirable that suchinformation include statistics of production, consumption, imports and exports of the
subsidized product (s) or sector (s)
Not available.
IV. FNE/FNO/FCO
Constitutional Funds for the Financing of the Northeast, the North and the Midwest Regions
1. Title of the subsidy programme if relevant or brief description or identification of the
subsidy
“Fundos Constitucionais de Financiamento do Nordeste, do Norte e do Centro-Oeste”
(FNE/FNO/FCO):  Constitutional Funds for the Fi nancing of the North, Northeast and Midwest
Regions.
2. Period covered by the notification
January 2000 to December 2002.
3.  Policy objective and/or purpose of the subsidy
 To reduce economic and social imbalances among the Brazilian regions by means of
compensatory mechanisms for the development of the North, Northeast and Midwest Regions.G/SCM/N/71/BRA
G/SCM/N/95/BRA
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4. Background and authority for the subsidy (including identification of the legislation
under which it is granted)
The Ministry of National Integration and the Deliberative Council of the Development
Authorities of the North, Northeast Regions and the Deliberative Council of the Central-West
Constitutional Financing Fund are the authorities.
The relevant legislation is the following (art. 14 of Law 7827/89, as amended by Law 10177,
dated 12 January 2001).
Banco da Amazônia S.A. (BASA), Banco do Nordeste do Brasil S.A (BNB) and Banco do
Brasil S.A. are the financial agents of the Funds.
5. Form of the subsidy (i.e. grant. loan. tax concession)
Loans.
6. To whom and how the subsidy is provided (whether to producers, to exporters, or others;
through what mechanisms; whether a fixed or fluctuating amount per unit; if the latter,
how determined)
According to the terms of art. 4 of Law 7827, the beneficiaries of loans backed by
Constitutional Fund resources are producers and companies, whether individual persons or legal
entities, as well as production cooperatives, that carry out productive activities in the crop/livestock,
mineral, industrial and agro-industrial sectors of the North, Northeast and Central-West Regions.
7. Subsidy per unit, or in cases where this is not possible, the total amount or the annual
amount budgeted for that subsidy (indicating, if possible, the average subsidy per unit in
the previous year). Where provision of per unit subsidy information (for the year
covered by the notification, for the previous year, or both) is not possible, a full
explanation
2000 2001 2002
FCO 294.960 1.014.704 1.456.514
FNE 586.383 315.614 257.653
FNO 718.260 472.504 612.730
      Source: National Treasury Secretariat
8. Duration of the subsidy and/or any other time limits attached to it, including data of
inception/ commencement
Loans backed by Constitutional Financing Fund resources have been granted since
September 1989.
9. Statistical data permitting an assessment of the trade effects of the subsidy.  The specific
and scope of such statistics is left to the judgment of the notifying Member.  To the
extent possible, relevant an/or determinable, however, it is desirable that such
information include statistics of production, consumption, imports and exports of the
subsidized product (s) or sector (s)G/SCM/N/71/BRA
G/SCM/N/95/BRA
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N.A.
V. COMMENTS REGARDING DOCUMENT G/SCM/N/25/BRA-G/SCM/N/38/BRA-
G/SCM/N/48/BRA-G/SCM/N/60/BRA:
The previous notification made by the Brazilian Government mentioned three additional
programmes:
(a) BEFIEX Special Export Programmes (“Programas Especiais de Exportação – BEFIEX”) -
No new programmes have been approved since 1990.  The existing contracts continued to
apply until 31 December 2002, as the programme was being discontinued.  As previously
notified, all contracts terminated on 31 December 2002;
(b) Steel Industry – The IPI (tax on industrialized products) tax break programme for the
Brazilian steel industry was in force until 31 December 1996, when it was discontinued and
all contracts terminated;  and
(c) The Export Financing Programme PROEX (“Pr ograma de Financiamento às Exportações”) –
It  has been reviewed and its criteria redefined under CMN Resolution 2799/2000 to
implement the determinations of the panel Brazil-Export Financing Programme for Aircraft
(WT/DS46).
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