WORLD TRADE  
ORGANIZATION   
G/SCM/Q3/GTM/16 
19 October 2012 
 (12-5699) 
Committee on Subsidies and 
Countervailing Measures Original:   Spanish 
 
 
 
SUBSIDIES 
 
Continuation of Extension under SCM Artic le 27.4 of the Transition Period for 
the Elimination of Export Subsidies Pursuant to the Procedures Contained 
in the General Council Decision in Document WT/L/691 
 
Replies to the questions from COLOMBIA1 concerning the 
Updating Notification of GUATEMALA2 
 
 
 The following communication, dated 18 October 2012, is being circulated at the request of the delegation of Guatemala.  
_______________ 
  
Programmes: 
 
(1) Exemption from Company Tax;  exemption from customs duties and other import taxes, 
including Value Added Tax (VAT), on machinery, equipment, parts, components and 
accessories required for the production pr ocess of companies under special customs 
regimes. 
 
(2) Exemption from Company Tax;  exemption from customs duties and other import taxes, 
including Value Added Tax (VAT), on machinery, equipment, parts, components and accessories required for the production process  relating to activities of managers and users 
of free zones. 
 
(3) Exemption from Company Tax;  exemption from customs duties and other import taxes, 
including Value Added Tax (VAT), on machinery, equipment, parts, components and accessories required for the production process of commercial and industrial enterprises 
operating in the Industrial and Trade Free Zone (ZOLIC). 
 
Question 1  
 
 Has Guatemala explicitly notified the beneficiaries of the tax exemptions that pursuant 
to the obligations arising from the SCM Agreement and specifically in the light of 
Article 27.4 thereof, the measures will not be extended beyond 31 December 2015 and their dismantling will begin by 2013 at the latest?  If  so, what is the procedure for notifying these 
beneficiaries, and does Guatemala envisage any transition programme towards total 
                                                      
1 G/SCM/Q3/GTM/15. 
2 G/SCM/N/243/GTM. G/SCM/Q3/GTM/16 
Page 2  
 
  dismantling?  Have any domestic measures been taken yet to eliminate the subsidies?  Could 
you provide us with documentation relating to this process? 
 
Reply 
 
In notification G/SCM/N/211/GTM of 30 June 2 010, under the heading "III.  Description of 
action taken to date", Guatemala informed Member s of the WTO that in December 2009 the Ministry 
of the Economy had notified the beneficiaries of the special regimes.  
These notifications informed beneficiaries that the prohibited subsidies would not be granted 
beyond 31 December 2015, pursuant to paragraph 1(e) of Decision WT/L/61 of the General Council 
(the "General Council Decision").  The notifications  were transmitted to each beneficiary in a letter 
and the Ministry of the Economy keeps a list of these beneficiaries.  
As to whether Guatemala envisages any trans ition programme towards total dismantling of 
the prohibited subsidies, for the time being, various options are being considered in the context of the 
work on approving the necessary legislation to e liminate these prohibited subsidies before the end 
of 2015.  Guatemala already has a draft law which is  being examined by the Ministry of Finance and 
the Tax Administration Supervisory Authority.  
In any event, Colombia should bear in mind that nothing in Article 27.4 of 
the SCM Agreement or in the General Council Deci sion specifies the way in which this dismantling 
of export subsidy programmes should be conducte d during the period 2013-2015;  there is no 
requirement either that this disman tling should be gradual or progressive. 
 
Accordingly, and for the time being, there are no publicly available documents which 
Members could consult regarding the domestic me asures which Guatemala will adopt in order to 
implement its action plan.  Should such documents  become available to the public, Guatemala would 
be happy to forward copies to interested Members.  
Question 2  
 
 In the mentioned notification, the Governme nt of Guatemala replies to the question on 
the amount of the subsidy for the three programmes as follows:  " Subsidies are granted in 
accordance with the exporters' income, they cann ot therefore be quantified given that they vary 
each fiscal year ."  Similarly, in the request for information on statistical data, Guatemala 
replies, for the three programmes, as follows:  "N o such statistical information is available". 
 
In view of these replies, we would app reciate information on the mechanism which 
enables the Government of Guatemala to ensure that it has not increased the favourability of 
the notified programmes.  Also, without the ment ioned information, how can the Government of 
Guatemala ensure that the status quo of the programme is maintained?  Would it be possible to produce an estimate using as a basis the exempted CIF imports so that the magnitude of the 
subsidies granted can be established?  Could th is estimate be provided before the next meeting 
of the SCM Committee? 
 
Reply 
 
 Guatemala points out that Colombia had already posed this question at the regular meeting of 
the Committee on Subsidies and Countervailing Measures held in October 2010.  On that occasion, Guatemala replied that the subsidies granted were of  the type provided in Article 1.1(a)(ii) of the 
Agreement on Subsidies and Countervailing Measures.   G/SCM/Q3/GTM/16 
 Page 3 
 
 
   According to paragraph 1(d) of the General Council Decision, continuation of the extensions 
is subject to fulfilment of the tran sparency and standstill requirements. 
  Likewise, pursuant to paragraph 2(b) of the General Council Decision, during the annual 
reviews by the SCM Committee referred to in para graph 1(c), notifying Members can be requested by 
other Members to provide additional detail and clarif ication with a view to maintaining transparency 
in respect of the "scope, coverage and intensity of  benefits (the 'favourability') of the programmes in 
question".   Moreover, footnote 6 to the General Council Deci sion provides that "The  scope, coverage and 
intensity of benefits of the programmes in ques tion will be determined on the basis of the legal 
instruments underlying the programmes."   In fact, Guatemala has no statistical inform ation quantifying the amount of benefits under 
each programme notified.  This is not recent.  Gu atemala has consistently stated this in all its 
notifications since the first one. 
  In addition, Guatemala does not find any backing for the linkage which Colombia is 
apparently making between the amount of gove rnment revenue foregone and the concept of 
"favourability" established in the General Council Decision.  
 For Guatemala, the variability of the amount  of government revenue  foregone cannot be 
considered part of the "scope, cove rage and/or intensity of benefits " of the programmes in question.  
Furthermore, these amounts are not determined on the basis of the legal instruments underlying the programmes.  
 Guatemala would understand that there would be  an increase in favourability if, for example, 
the programmes were to add other benefits not covered in the le gislation notified, which would 
modify the existing benefits to make them more favourable or if such benefits were granted to 
beneficiaries not originally taken into account in the legislation notified.   Nevertheless, the fact that a greater or lesser amount of government  revenue is foregone 
because of the greater or lesser volume of exports  benefiting from these programmes does not mean 
that the favourability of the progr ammes has increased or decreased. 
  Colombia may therefore rest assured that, while the legislation notified has not been amended 
to make it more favourable to beneficiaries, Gu atemala has not increased the favourability of its 
programmes and has thus has complied with its obligations under the General Council Decision. 
 
Question 3 
 
 The Government of Guatemala states that the Working Group within the Ministry of 
the Economy in charge of proposing options for bringing the programmes which come under 
Article 27.4 of the SCM Agreement into conformity with the Agreement carried out a number 
of activities with different entities, and following these activities, drew up a report containing specific recommendations (page 1, indent (a)). 
 
 Could the Government of Guatemala please tell us what the main recommendations 
produced by this working group are, and if they  are directed towards dismantling the subsidies 
within the time-frame established at the multilateral level? 
 G/SCM/Q3/GTM/16 
Page 4  
 
  Reply 
 
 The report drawn up by the Working Group within  the Ministry of the Economy is constantly 
being revised and improved;  it is being used as the basis for preparing draft legislation.  For the moment, this document is not available to the public .  In any event, Guatemala can confirm that its 
objective is, precisely, dismantling of the prohibited subsidies within the time-frame determined in the 
General Council Decision.  
Question 4  
 
 In indent (c) on page 2, the Government of Guatemala mentions that " [a] final version of 
the draft law is due to be sent to the General Se cretariat of the President's Office in August or 
September 2012 for approval and referral back to the Congress ".  Given that the SCM Committee 
meeting is taking place in October, and the indica ted time-period will be over, it would be useful 
to have an update on the draft law.  Genera lly speaking, we would like to know how the 
Government of Guatemala has planned to dismantle the subsidies in such a way as to ensure 
that they are not applied beyond 2015.  We would also like to know if anything specific has been 
planned to that end.  When does Guatemala intend to submit the action plan mentioned in paragraph 1(f) of Decision WT/L/691? 
 
Reply 
  The action plan mentioned in paragraph 1 (f) of the General Council Decision was submitted 
by Guatemala on 30 June 2010 and circulated to Members on 7 July the same year under the 
symbol G/SCM/N/211/GTM.  
 As regards the draft law to be submitted to the General Secretariat of the President's Office in 
September this year, when preparing these replies, this draft was being reviewed by the Ministry of Finance and the Tax Administration Supervisory Authority.   It is expected that the draft law to be put 
before the Congress of the Republic may be finalized at the end of October 2012.  When submitted to 
the Congress of the Republic, this draft law will become  available to the public and Guatemala will be 
happy to provide interested Members with a copy;  or it may be viewed directly on the Congress of 
the Republic's website:  http://www.congreso.gob.gt . 
 
 Despite the foregoing, in accordance with the ac tion plan notified by Guatemala, it had been 
planned to undertake the legislative procedure fo r approval of the new legislation from 1 July 2012 
to 30 June 2014.  Guatemala considers that a few months' delay in putting the draft law before the 
Congress of the Republic will not retard approval of the necessary legislation in order to comply with 
its obligations under the SCM Agreement and the Ge neral Council Decision.  According to the action 
plan, it is expected to notify Members of the WTO of  the legislation approved one year before the end 
of 2015.  
Question 5  
 
 Guatemala dos not include in its notificati on any information as to whether it has 
introduced the changes to the original programme  and whether it has increased the number of 
companies involved in the programmes.  We would be grateful if Guatemala could inform the Committee or send information in this respect before the SCM Committee meeting. 
  G/SCM/Q3/GTM/16 
 Page 5 
 
 
  Reply 
 
 As indicated in the latest notification, during the period 2011-2012, Guatemala did not increase the favourability of the programmes and can confirm that these programmes have not been 
modified either. 
 
 As to the number of companies involved in these programmes, it should be pointed out that the legislation underlying them is still in force.  Nothing therefore preven ts any company that so 
requests, is eligible and meets the requirements laid down in the legislation from benefiting from 
these programmes.  As a measure of transparency, however, the decisions on eligibility by the 
Ministry of the Economy clearly state that the export subsidies will not be granted 
beyond 31 December 2015.  Guatemala can therefore confirm that new companies have joined the 
programmes in question, and also that the benef its enjoyed by some companies have expired. 
 
__________