RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/W/505
27 March 2002
(02-1592)
Committee on Subsidies
and Countervailing Measures
MEMBERS' DIFFICULTIES IN MAKING SUBSIDY NOTIFICATIONS
Note from the Chairman on Members' Replies Submitted to
Date to Questions in Part B of Document G/SCM/W/473
I. INTRODUCTION
1. It is evident that many Members, irrespective of their level of economic development,
continue to have a poor record of compliance in respect of subsidy notifications.  Members will recall
that, with a view to facilitating the active involvement of the maximum number of Members
experiencing difficulties in making subsidy notifications and helping them to better identify anddefine the problems that they are facing, I circulated (in document G/SCM/W/473) a series of
questions concerning the presentational aspects of the subsidy notification questionnaire (G/SCM/6),
as well as the planned subsidy notification seminar.  Written answers to those questions were to have
been submitted by 5 February 2002.
1  Members who experience difficulties in making and submitting
their subsidy notifications were particularly and strongly encouraged to provide written answers tothese questions in order to fuel the Committee's discussion of these issues with a sufficient factual
basis in Members’ day-to-day experiences.
2. At the Committee's 13 March 2002 informal meeting, I undertook to circulate this brief note
summarizing the main points emerging from the answers to date to the questions in document
G/SCMW/473 and from that meeting.
II. MEMBERS THAT HAVE SUBMITTED WRITTEN RESPONSES TO DATE
3. To date, the following sixteen Members have submitted written responses to the questions
contained in document G/SCM/W/473:  Australia, Bangladesh, Bulgaria, Canada, Dominica, Egypt,
Estonia, European Communities, Indonesia, Macau, China, Mexico, Romania, St. Lucia, Switzerland,
Turkey and the United States .  All but one of these Members provided answers to some or all of the
questions on difficulties in notifying, in varying degrees of detail.
2
III. OVERVIEW OF RESPONSES TO DATE AND POSSIBLE WAYS FORWARD
4. While it is indeed difficult to summarize the sp ecific points raised thus far in the Committee's
consideration of the difficulties of notification, as I indicated at the 13 March 2002 informal meeting,
my sense is that two main groups of issues hindering Members' ability to make timely and proper
subsidy notifications seem to have emerged in responses to date:  logistical and more substantive
problems.  Members also offered insights on some general aspects of the subsidies notification
                                                     
1 I would take this opportunity to remind Members that, as indicated in the fax of 15 March 2002, any
new notification-related comments or submissions are to be submitted by 4 April 2002 and anyresponses/comments on these are due by 24 April 2002.
2 Macau, China explained that there has been no necessity for it to notify in accordance with the
questionnaire format.G/SCM/W/505
Page 2
format.  I have summarized these, without prejudice to the position of any Member, in sub-part C
infra .
A. LOGISTICAL PROBLEMS
5. Some Members have highlighted logistical problems of data-gathering, particularly where the
information comes from many sources, and especially where there are insufficient staff to handle theworkload involved.  In particular, Members identified the following logistical problems:
1. Resource constraints
(a) Staff
• shortage of both staff and sufficiently trained staff;
• difficulty integrating notification requirements with internal priorities;
(b) Information
3
• lack or limit of appropriate and/or current information;
• manual data collection from multiple sources;
• absence of central point for collection and synthesis of subsidy notification
information, including collection of subsidy information involving various
ministries and agencies;
• lack of resources needed to prepare, monitor and update required statistical
information
2. Difficulties in internal government coordination
• challenging and time-consuming requirements for inter-agency and -department
coordination, including with and among sub-federal agencies.
6. Here, it may be useful to focus on practical a pproaches to streamlining information-gathering
and compilation processes.
B. SUBSTANTIVE PROBLEMS
7. Members have also identified problems of a more substantive  nature, including:
1. Doubts or questions concerning the key subsidy concepts involved
• lack of expertise in determining whether and what to notify, including with respect to
definitions of "subsidy", "specificity", etc;
• difficulties in identifying (and gathering)  information that might be required to make
these determinations;
• difficulties estimating the amount of subsidy.
2. Difficulties and challenges of interpreting and organizing information and data to fit
within the existing notification format, e.g.
• difficulties supplying data and information on a calendar year -- as opposed to fiscal
year -- basis;
• available subsidies information does not correspond to questionnaire format;
                                                     
3 One Member observed in this context that if the collection and compilation of required information
could be done once, difficulties will be much less in making future notifications.G/SCM/W/505
Page 3
• difficulties in providing required information on subsidy per unit.
C. SUMMARY OF GENERAL COMMENTS ON NOTIFICATION FORMAT (G/SCM/6)
8. Members' comments on some general aspects of the subsidies notification format in G/SCM/6
include:
1. Possible simplification of notification format
• numerous Members considered that simplification of the notification questionnaire format is
essential or would most likely help, while simplification would make no significant difference
to at least two of the responding Members.  Some Members stated that simplicity of the
notification format is not the main problem in fulfilling notification requirements;
• numerous Members considered that any simplification must not undermine consistency with
the SCM Agreement  -- in particular, Article 25.3 -- or transparency, and must not cause
confusion;
• the aim should not be to reduce information to be notified but only to simplify its
presentation;
• simplification should be aimed towards requirements for submitted information rather than
the scope of the questions;
• answers could be provided in point form particularly when supported with copy of relevant
law.
2. Possible inclusion in questionnaire of explanations or clarifications
• might be helpful if the questionnaire made clear scope of measures captured, including
through a manual, examples or an illustrative list;
• could avoid "overloading" the questionnaire with too many explanations either through
references to explanations found elsewhere (such as the WTO website) or throughsupplementary training.
3. Possible flexibility concerning notification format
• the use of the notification questionnaire (or one single) format is important and/or helpful to
ensure transparency;
• some degree of openness exists on flexibility of format as long as the substantive elements are
comprehensively addressed permitting a meaningful review;
• allowing a "free form" style in at least part of the questionnaire might be useful for more
transparency, particularly with respect to types of incentives that had indirect trade effects and
for which immediate accurate data results are not possible.
4. Utility of official websites
• information provided on websites may be a useful supplement, rather than a substitute or
exclusive source for notifications;
• no need for limits on substitution of information from referred websites;
• a simple reference to a website should not suffice.  Websites are subject to change and such
an approach might cause uncertainty as to wh at actually constitutes the information to be
reviewed;
• Some Members' official web-site information may be incomplete or non-existent.G/SCM/W/505
Page 4
5. Avoidance of duplication in notifications
• desirable to avoid duplication of notification requirements (especially in relation to
notifications under the Agreement on Agriculture );
• agricultural notifications should be presented only to the Committee on Agriculture.
IV. CONCLUSION
9. I wish to thank all of the Members that have responded to date for the written responses and
valuable insights that they have provided.  I feel they give us some useful indications of the
difficulties experienced by Members in providing subsidies notifications and the steps some believe
might be taken in order to alleviate these difficul ties and/or enhance the transparency and efficiency
of the process.
10. I have included, as an Annex to this note, a summary of specific comments received
concerning the subsidy notification format contained in document G/SCM/6.
11. I suggest that we discuss this note at the meeting of the Working Party on Subsidy
Notifications that we will hold during the course of our April-May meetings (on the morning of
30 April 2002).  This discussion will, of course, feed into our discussion of the subsidies notification
seminar for capital-based officials planned for November 2002, which will also be discussed at that
Working Party meeting.4  Members may wish to bear in mind the points raised in this paper in
finalizing the programme for the seminar, so that th ey can be addressed there as thoroughly as possible.
                                                     
4 Members will recall that, as discussed at the informal session at the 13 March 2002 meeting, a paper
containing budget estimates relating to the budgetary and logistical arrangements pertaining to the seminar,
including the number of Members that would be sponsored, the duration of the seminar and the preciseconditions relating to their participation.  This note is being circulated separately and will also be discussed atthe meeting of the Working Party on Subsidies Notifications.G/SCM/W/505
Page 5
ANNEX
SUMMARY OF SPECIFIC COMMENTS ON NOTIFICATION FORMAT (G/SCM/6)
Note :  The following is a summary of specific comments received concerning the subsidy notification
format contained in document G/SCM/6.  The possible changes to the format reflect, where available,
specific suggestions of Members, or where there were no such specific suggestions, ideas drawn from
the comments received.  These possible changes are without prejudice to the position of any Member,
and are intended simply to stimulate further discussion of the format.
1. Basic concepts:  Key concepts and definitions in the Agreement, underlying the
notification requirement.
• Problem identified:  Concepts and definitions necessary for proper preparation of notifications
may be unfamiliar to officials responsible for gathering and organizing the necessary data.
Possible change :  Introduce into the format examples and illustrations of the basic definitional and
conceptual elements (financial contribution, benefit, specificity).
2. General Rule 6:  "To the extent that subs idies are provided to specific products or
sectors, notifications of those subsidies sh ould be organized by product or sector."
• Problem identified:  Difficulty of organizing notification of horizontal programmes on the
basis of the products or sectors that receive the subsidies
Possible change :  Redraft General Rule 6 to explicitly require product- or sector-based notification
only for subsidies provided on that basis, thus al lowing for notification of horizontal programmes on a
programme basis:
"To the extent that subsidies are provided on the basis of specific
products or sectors, notifications of those subsidies should be
organized by product or sector".
• Comments:  For some Members this change could be very useful in facilitating preparation of
notifications; some believe that it would nevertheless be necessary to identify the products or
sectors subsidized under the programme; some Members are not sure whether this changewould help them, or have no problem with the current drafting; one Member sees no merit in
such a change, and is concerned over possible loss of transparency.
3. General Rule 7:  "To the extent that information called for in any question is not
provided, the response to that question shall explain why not".
• Problem identified:  Lack of certain information poses major difficulties in the preparation of
notifications.
Possible change :  No specific change has been proposed, as the main problem seems to be
unavailability of information, rather than the need to explain this.
• Comments:  Comments focused on how best to implement this general rule in making
notifications.  One suggestion was that a comment  could be inserted, with an undertaking to
provide information at a later time.  A number of comments emphasized the importance ofproviding the required explanations, no matter what simplifications of the format might beG/SCM/W/505
Page 6
made.  One delegation indicated that even providing the required explanations posed
difficulties.
4. Item 2:  "Period covered by the notification".
• Problem identified:  Certain Members' programmes operate on a fiscal, rather than calendar,
year basis.  The 30 June deadline for presentation of notifications thus complicates
preparation of the notification, and its comparis on with other Members' notifications, as data
for some portion of the fiscal year are provided ahead of the normal calendar-year based
notification schedule.
Possible change :  Addition of a general rule addressing the question of notifying on a fiscal year
basis.  Such a rule could indicate that the period to be covered by the notification should be the mostrecently-completed calendar or fiscal year, and that  in the latter case, the start and end dates of the
fiscal year should be specified.
5. Items 3-7:
"3. Policy objective and/or purpose of the subsidy.
4. Background and authority for the subsidy (including identification of the
legislation under which it is granted).
5. Form of the subsidy (i.e., grant, loan, tax concession, etc.)
6. To whom and how the subsidy is provided (whether to producers, to exporters
or others; through what mechanism; whether a fixed or fluctuating amount per
unit; if the latter, how determined).
7. Subsidy per unit, or in cases where this is not possible, the total amount of 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, orboth) is not possible, a full explanation."
• Problems identified:  (a) Possible duplication/overlap of certain items (3 and 4
 – legislation
may refer to policy objective; 5 and 6 – form of subsidy and how subsidy is provided; 6 and 7
– fixed or fluctuating amount per unit and subsidy per unit); (b) difficulties in identifying
recipients of subsidies, particularly for fiscal incentives; (c) Item 7 – difficulties in identifying
actual amounts of subsidy provided, especially for fiscal incentives and officially supported
export credits (for some Members, estimates are considerably easier to compile).
Possible changes :  Ideas for possible drafting changes are shown below:
(a) Duplication/overlap of items:  introduction of language, possibly via a new General
Rule, or a redrafting of General Rule 4 ("The content of notifications should besufficiently specific to enable other Members to evaluate the trade effects and to
understand the operation of the notified subsidies"), indicating that where formatting
a notification in accordance with the specified items is difficult, provision of the
information in another format is acceptable.  Any such other format would need to
include the content described in items 3-7, sufficient to clarify the nature, operationG/SCM/W/505
Page 7
and magnitude of the notified programme.  (Keying the information to the specified
items might be useful in this regard.)
(b) Identification of recipients (item 6):  Introduction of language in item 6 clarifying that
identification of individual recipients is not necessary, but rather categories ofrecipients based on how the programme operates (e.g., sectors, industries, exporters,
producers of specified products, employers of certain numbers of employees, etc.).
(c) Statistical data on amount of subsidization (item 7):  Introduction of language
clarifying that where actual data of the type specified are not available, a full
explanation of the reasons should be provided (e.g., for fiscal incentives, no specific
amounts are budgeted or recorded), as well as an estimate of the requestedinformation, or another estimate reflecting the magnitude of the subsidization, with a
full description of the basis of and rationale for the estimate.
6. Item 9:
"9. Statistical data permitting an assessment of the trade effects of the subsidy.  The
specific nature and scope of such statistics is left to the judgement of the notifying
Member.  To the extent possible, relevant and/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):
(a) for the three most recent years for which statistics are available;
(b) for a previous representative year, which, where possible and
meaningful, should be the latest year  preceding the introduction of the
subsidy or preceding the last ma jor change in the subsidy."
• Problem identified:  Unavailability of, or difficulties in compiling, the required information.
Some Members do not maintain or have access to statistics on production and consumption,
some Members have difficulties in obtaining the relevant trade flow information due to the
manner in which certain subsidies are provided (horizontal or multi-product programmes,
programmes operating at the sub-national level, etc.).  In spite of these difficulties, a numberof Members attach importance to trade effects information in reviewing notifications.
Possible change :  Introduction of more flexibility into the language of this item.  Ideas for possible
drafting changes are shown below:
9. Statistical data permitting an assessment of the trade effects of the subsidy.  The
specific nature and scope of such statistics is left to the judgement of the notifying Member,on the basis of its data availability and the nature of the programme.  Where actual data are not
available, estimates, or aggregated trade flow  information, should be provided along with a
full description and explanation.  To the extent possible, relevant and/or determinable, it is
desirable that such information include statistics on imports and exports (broken down if
possible by products and/or sectors receiving subsidies); production and consumption data
also are useful.  Such data should be provided, as available:
(a) for the three most recent years for which statistics are available;
(b) where possible and meaningful (i.e., in the case of a recently-introduced or –modified
subsidy), for a previous representative year, i.e, before the subsidy was introduced or
modified.
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