RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/W/461
3 September 2001
(01-4190)
Committee on Subsidies and
Countervailing MeasuresOriginal:  Spanish
IMPLEMENTATION-RELATED ISSUES REFERRED TO THE
COMMITTEE AT THE REQUEST OF THE CHAIRMAN OF
THE GENERAL COUNCIL ON 31 JULY 2001
Communication from El Salvador
The following communication, dated 31 August 2001, has been received from the Permanent
Mission of El Salvador.
_______________
Please find attached a proposal from El Sa lvador on economic and social development
programmes for circulation at the informal meeting of the Committee on Subsidies and
Countervailing Measures on 11 September, in the context of the new implementation issues referredto the Committee by the General Council, and specifically the proposal by Jamaica.
_______________
Economic and social development programmes
• Trade liberalization and investment attraction are major factors in bolstering sustainable
democracy by ensuring more and better development opportunities in terms of employment,health, education and security of the population.
• As a major contributing factor to this end, developing countries have established economic
and social development programmes aimed at reducing the problems of poverty by providing
better employment opportunities and hence ensuring greater prosperity and welfare for theirpeople.
• These programmes are carried out through various schemes, such as Free Zones.
• Under these programmes, developing countries establish incentives to attract productive
investment into their territory, as a major, vital factor for attaining their objectives.
• The incentives provided under these programmes include exemption from payment of internal
taxes in their territory, as a way of attracting investment which would otherwise be unlikely totake place there.
• Developing countries do not have the resources to spend on subsidizing exports or to be able
to support their production sectors through WTO-compatible internal aids, and therefore the
only way they can encourage investment is by forgoing the levying of domestic taxes, in orderG/SCM/W/461
Page 2
to be able to reduce poverty and overcome the lack of opportunities for the economically
disadvantaged sections of the population.
• These programmes enable them to open up new and greater employment opportunities for
their people, especially the poorer sectors, w ho can thereby obtain the incomes enabling them
to raise their living standards and gain better access to health and education.  In particular,these programmes make a great contribution to opening up opportunities for women, who are
often the family head, and constitute the majority of the employees resulting from the
investment under these programmes.
• The employment opportunities generated by these programmes contribute enormously to
improving and bolstering a growing climate of security of the population and to stemmingmigration towards developed countries in search of employment opportunities.
• Altogether, these programmes have become one of the most important tools which developing
countries can use to transfer real benefits to their people and ensure a climate of opportunityfor income, health, education and security.
• Clearly, the function served by these programmes, far from being trade-related, is to provide
greater economic and social well-being for the population, which is one of the loftiest, as well
as the most just and legitimate, of aspirations.
• The important multilateral trading system established under the WTO must ensure that all
countries, and particularly the developing and least-developed countries, can obtain real
benefits for their people through trade and investment;  it must never become a system that
restricts or prohibits its members, and least of all the developing or least-developed countries,
from being able to implement and maintain economic and social development programmes ofthe kind described above.
• These programmes must be reviewed from the standpoint of their vital positive economic and
SOCIAL impact on the population of developing countries and not as schemes affectinginternational trade.
Proposal
Pursuant to Article IX, paragraph 2, of the Marrakesh Agreement Establishing the World
Trade Organization, it is recommended that the General Council or the Ministerial Conference should
adopt the following interpretation:
ECONOMIC AND SOCIAL DEVELOPMENT PROGRAMMES ADOPTED BY
DEVELOPING AND LEAST-DEVELOPED COUNTRIES ARE VITALLY IMPORTANT
TOOLS FOR THEM TO ATTAIN THEIR LOFTY, LEGITIMATE AND JUST OBJECTIVES
OF ENSURING GREATER WELL-BEING FOR THEIR PEOPLES, BY ATTRACTINGINVESTMENT WHICH FOSTERS THE GENERATION OF GREATER EMPLOYMENT
OPPORTUNITIES, THEREBY OBTAINING HIGHER INCOMES FOR THEIR CITIZENS,
IMPROVING ACCESS TO HEALTH AND EDUCATION AND BOLSTERING THEIR
SECURITY.
THE INCENTIVES CONTAINED IN THESE ECONOMIC AND SOCIAL
DEVELOPMENT PROGRAMMES, EXEMPTING INVESTORS COVERED BY SUCHPROGRAMMES FROM PAYMENT OF INTERNAL TAXES, WHICH ARE ONE OF THE
MAJOR ELEMENTS FOR ATTRACTING SUCH INVESTMENT, SHALL NOT BEG/SCM/W/461
Page 3
CONSTRUED TO BE EXPORT SUBSIDIES WITHIN THE MEANING OF THE
AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES, PROVIDED THAT:
1. THEY ARE PART OF AN ECONOMIC AND SOCIAL DEVELOPMENT
PROGRAMME IMPLEMENTED BY A DEVELOPING ORLEAST-DEVELOPED COUNTRY;
2. SUCH PROGRAMMES ARE IN FORCE ON 31 DECEMBER 2001;
3. THESE INCENTIVES ARE NOT INCREASED BEYOND THE LEVELS OF
EXEMPTION CONTAINED IN THE PROGRAMMES ON
31 DECEMBER 2001;
4. THE PROGRAMMES ARE NOTIFIED TO THE TRADE AND
DEVELOPMENT COMMITTEE.
__________