./.RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/W/437
6 April 2001
(01-1756)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
QUESTIONS AND COMMENTS CONCERNING PROPOSALS
ON IMPLEMENTATION-RELATED ISSUES REFERRED TO
THE COMMITTEE IN THE 15 DECEMBER 2000
DECISION OF THE GENERAL COUNCIL
Questions and Comments of Canada
The following communication, dated 5 April 2001, has been received from the Permanent
Mission of Canada.
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Proposals by India and Colombia re: Definition of inputs consumed in the production process
The proposal, raised by both India and Colombia, gives rise to many questions.
For example, if a producer sells into both the export and the domestic markets, would there
not be a problem with excess drawback, since the duty relief should only be directed towards theproduction of exported goods?
How would the appropriate amortization rate for each capital good be determined?
Equipment may be used to produce a range of different products, and some may make more
use of the equipment than others.  How would the duty relief be allocated to each product?
Proposals by India re: using an aggregate and generalized rate of import duties in calculating
duty drawback
This proposal from the Government of India raises many questions.
In paragraph 2.7 of its proposal, the Government of India indicates that statistical information
should be collected, studied, and analyzed, then supplemented with published information and on-site
verifications of selected manufacturers, to determine the amount of various inputs required for themanufacture of one unit of the final product.  This would be used as a statistical norm, representing an
average for the industry.  Who would be responsible for conducting these studies - the investigating
authorities in a CVD investigation, or the exporting Member?  Also, when would these studies be
done  - in the context of a CVD investigation, or on an on-going basis?
Given that there can be significant variation in inputs used, depending on grade or other
product specifications, would the Government of Indi a propose establishing industry norms for all of
these possible variations?G/SCM/W/437
Page 2
Producers can vary in efficiency and production techniques resulting in different amounts of
inputs being consumed for the same product - how would this issue be addressed?
Would the aggregate and generalized rates be used even in instances where the producer in
question can satisfy the investigating authorities as to actual input utilization?
In paragraph 2.7, the Government of India recognizes that inputs may be sourced both
domestically and from imported sources, and that in such situations the aggregate and generalized rate
of remission would be proportionately reduced - on what basis would this reduction be made?
Proposal by Cuba, Dominican Republic, Egypt, Honduras, India, Indonesia, Malaysia,
Pakistan, Tanzania, Uganda, and Zimbabwe re: extending time period in Article 27.6
Canada has concerns regarding these proposals.  We feel that Article 27.6 presents some
operational difficulties.  Our view is, therefore, that any revisions that might exacerbate this situationshould be avoided.   In this context, we wish to understand the proposals better
First, we question how the time frame of five years was arrived at as a “reasonable time
frame” to guarantee that a developing country had reached a situation of export competitiveness in a
given product.  Moreover, if this five-year period is sufficient for this purpose, why would an
automatic re-inclusion provision, as discussed in paragraph 4 of the proposal, be required?  If a
country were to be “re-included” after falling below the 3.25 threshold, would they then have anotherfive-year period to determine export competitiveness?
We would also like to question an inconsistency in this Article that affects how it can be used.
The current definition of a “product”, for the purposes of this Article, is “a section heading” (i.e. four-
digit level) of the Harmonized System Nomenclature.  However, the four-digit level, in many cases,does not correspond with individual products, but rather can encompass two or more distinct products.
This seems to run counter to the intent of this arti cle, which is to recognize that developing countries
may become fully competitive in individual products, and that export subsidies provided to producers
of those products could harm the interests of other Members.
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