G/SCM/Q2/ARG/37  
23 April 2014  
(14-2474)  Page: 1/4  
Committee on Subsidies and Countervailing Measures  Original: Spanish  
 
  SUBSIDIES 
REPLIES TO QUESTIONS POSED BY THE UNITED STATES1 REGARDING 
THE NEW AND FULL NOTIFICATION OF ARGENTINA2 
The following communication, dated 22 April 2014, is being circulated at the request 
of the delegation of Argentina.  
_______________ 
  Question 1 
 
Special Regime for Turnkey Exports  
Under this program, exporters of complete  industrial plants or engineering works 
receive a certain amount of additional drawback if, inter alia , the domestic component 
is not less than 60% of the contractual f.o.b. value. Specifically, according to Argentina's 
latest WTO Trade Policy Review (TPR), one of the conditions for receiving the additional 
drawback is that "the domestic compon ent (physical goods and services) may not 
be less than 60% of the contractual f.o.b. value, and physical goods should represent 
at least 40% of that value".
3 In response to previous questions, Argentina has noted 
that the primary activities covered by "t urnkey exports" are services-oriented, 
and therefore the program is not subject to the disciplines of the SCM Agreement.4 
 
The United States remains concerned about the requirement, under this program, of the 
use of domestic over imported goods. Are there changes to this program being contemplated? If so, please descri be the nature of those changes. 
 
Reply 1 
 As Argentina has already indicated in previous replies
5, this regime is not covered by the 
disciplines of the Agreement on Subsidies and Countervailing Measures and is therefore 
not subject to the notification requirement established in that Agreement.  
Question 2 
 Import Regime for Used Production Lines 
Imports of Goods Forming Part of Large-Scale Investment Projects 
 Under the Import Regime for Used Prod uction Lines, firms may be exempted 
from import duties and other taxes on import s of used machinery, so long as the firm 
purchases new goods of domestic origin  amounting to 30% of the investment. 
Two-thirds of the domestic origin amount must involve the purchase of new machinery 
and equipment of local origin, and the other th ird may be included in repairs. Similarly, 
                                               
1 G/SCM/Q2/ARG/35. 
2 G/SCM/N/220/ARG. 
3 WT/TPR/S/176/Rev.1. 
4 G/SCM/Q2/ARG/32. 
5 G/SCM/Q2/ARG/26 of 11 October 2007, G/SCM/Q2/ARG/28 of 23 October 2008 
and G/SCM/Q2/ARG/32 of 27 April 2010. G/SCM/Q2/ARG/37 
- 2 - 
  under the Imports of Goods Forming Part  of Large-Scale Investment Projects, 
firms may be exempted from tariffs on impo rts of capital goods for large investment 
projects, so long as the firm purchases goods of domestic origin amounting to at least 
30% of the investment project. Argentin a has confirmed that, for both programs, 
the requirement of a specified level of domest ic inputs is one of the various eligibility 
requirements for certain benefits under the programs.6 
 
To the extent that benefits under this prog ram are based on the use of domestic over 
imported goods, please explain how this program is consistent with Argentina's obligations under Article 3 of the SCM Agreement.  
Reply 2 
 
The Import Regime for Used Production Lines ended on 30 April 2013 pursuant 
to Decree No. 2622/2012. 
 In Argentina's view, the Program on Goods Forming Part of Large-Scale Investment Projects is not 
covered by the prohibition under Article 3 of the Agreement on Subsidies and Countervailing 
Measures, given that the aim is not to grant competitive advantages to domestic products over imported ones, but to promote the modernization of the production structure.  
Question 3 
 Incentives to Improve the Compet itiveness of Local Auto Parts 
 
In our questions on Argentina's previous notification
7, we provided a list of programs 
related to these auto-parts incentives an d requested confirmation as to whether 
the programs still exist, and if so, why they were not notifiable pursuant to Article 25 
of the SCM Agreement.  Argentina has yet to respond to these ques tions. We look forward to a response 
to these questions. 
 Reply 3 
 The programs were not notified to the Committee on Subsidies and Countervailing Measures, as Argentina does not consider them to constitute notifiable subsidies under Article 25 of the 
Agreement on Subsidies and Countervailing Measures. 
 The current legislation is not aimed at export subsidization but at the reconstruction of the automotive value chain, which was disjointed by the crises occurring between 1995 and early 
2002. This value chain is relevant not only in term s of its contribution both to industrial gross 
product and to raising the technological level of those who, directly or indirectly, participate in its activities, but because of its considerable impact on the Argentine labour market, given the 
direct and indirect sources of work that it generates. 
 This can clearly be seen in practice. The regime has not distorted import flows but has instead 
contributed to their expansion, since its benefits are aimed at new production platforms which 
are highly dependent on imports.  Question 4 
 
OTHER PROGRAMS  
Publically available information, incl uding Argentina's most recent WTO TPR
8, indicates 
that certain incentives provided by the Government of Argentina may constitute 
subsidies subject to the notification requir ement under Article 25 of the SCM Agreement. 
 
                                               
6 G/SCM/Q2/ARG/28, G/SCM/Q2/ARG/32. 
7 G/SCM/Q2/ARG/30. 
8 WT/TPR/S/176/Rev.1. G/SCM/Q2/ARG/37 
- 3 - 
  Financing of VAT on Investment 
 This program provides financing of the full  amount of VAT paid on new capital goods 
purchases that strengthen export potential.  The government pays lending institutions 
a percentage of the interest on bank lo ans obtained for this purpose; however, 
the proportion may not exceed 12% of the ef fective annual rate on the loan amount. 
 
Could Argentina please provide a full noti fication of this investment incentive 
or explain why it believes this program is no t subject to the notification requirements 
of the SCM Agreement? To the extent the in centive takes into account a firm's export 
potential, please explain how the program is  consistent with Argentina's obligations 
under Article 3 of the SCM Agreement. 
 Reply 4 
 The program established pursuant to Decree No. 779/1995 ended on 31 December 2005.  
Question 5 
 National Fund for Microenterprise and SME Development (FONAPyME)  
Argentina provides financing for investments in new and used fixed assets and working 
capital for goods or service projects in th e SME sector, aimed at the domestic market, 
with emphasis on import subs titution, among other factors. 
 
Please provide a full notification of th is investment incentive or explain why 
the program is not subject to the notification requirements of the SCM Agreement. 
 
Reply 5 
 FONAPyME is not subject to the notification requirements of the Agreement on Subsidies 
and Countervailing Measures, as it does not constitute a subsidy under Articles 1 and 2 of that 
Agreement. The financing provided is intended for the purchasing of new assets and not for working capital or export funding. 
 
Question 6  
Tierra del Fuego Special Tax and Customs Regime 
 The Tierra del Fuego Special Tax and Cust oms Regime provides various incentives 
for firms located in the special customs regime, including the following: 
 
 VAT exemptions 
 Capital and profit tax exemptions 
 Import duty and VAT exemptions on capital goods 
 Tariff exemptions or reductions 
 Additional tax refunds on exports transported by sea. 
Could Argentina please provide a full noti fication of these incentives or explain 
why it believes the incentives are not su bject to the notification requirements 
of the SCM Agreement?  
Reply 6 
 
The Regime does not constitute a subsidy with in the meaning of the Agreement on Subsidies 
and Countervailing Measures and is therefore no t subject to the notification requirement. 
 G/SCM/Q2/ARG/37 
- 4 - 
  Question 7 
 Export Loans Under the Programme to Stim ulate the Growth of Microenterprises 
and SMEs; and Loans for Purchases of Capital Goods of Domestic Origin under 
the Program to Stimulate the Growth of Microenterprises and SMEs.  
 Argentina's Banco de la Nación Argentina (BNA) provides financing for firms through 
operations destined for the purchase of ne w capital goods of domestic origin, as well 
as pre-financing and/or financing of ex ports of goods and services, among other 
activities. The financing is available up to  80% of the price of the goods plus VAT, 
net of discounts and subsidies. 
 
Could Argentina please provide a full noti fication of these incentives or explain 
why it believes the incentives are not su bject to the notification requirements 
of the SCM Agreement? To the extent this program takes into account a firm's purchase 
or use of domestic over imported goods, an d/or its export potential, please explain 
how the program is consistent with Argentina's obligations under Article 3 
of the SCM Agreement. 
 Reply 7 
 
Argentina considers that it is not required to notify these programs, as they do not constitute 
a subsidy within the meaning of Articles 1 and 2 of the Agreement on Subsidies and Countervailing Measures. Furthermore, in view of the characteristics of these programs, they do not constitute 
a prohibited subsidy within the meaning of Article 3 of that Agreement. 
 
__________