WORLD TRADE  
ORGANIZATION   
G/SCM/Q2/ARG/35 
30 August 2012 
 (12-4679) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Questions Posed by the UNITED STATES Regarding the 
New and Full Notification of ARGENTINA1 
   The following communication, dated 15 August 2012,  is being circulated at the request of the 
Delegation of the United States.  
_______________ 
 
 
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 per cent 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 component (physical goods and services) may not be less than 60 per cent of the contractual f.o.b. value, and physical goods should represent at least 40 per cent of that 
value".
2  In response to previous questions, Argent ina has noted that the primary activities  
covered by "turnkey exports" are services-oriented, and therefore the program is not subject to the disciplines of the SCM Agreement.
3  
 
Question 1 
  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 
describe the nature of those changes.  
Import Regime for Used Production Lines 
Imports of Goods Forming Part of Large-Scale Investment Projects  
 Under the Import Regime for Used Producti on Lines, firms may be exempted from 
import duties and other taxes on imports of used  machinery, so long as the firm purchases new 
goods of domestic origin amounting to 30 per cent of the investment.  Two-thirds of the 
domestic origin amount must involve the purch ase of new machinery and equipment of local 
origin, and the other third may be included in repairs.  Similarly, under the Imports of Goods 
Forming Part of Large-Scale Investment Project s, firms may be exempted from tariffs on 
imports of capital goods for large investment pr ojects, so long as the firm purchases goods of 
                                                      
1 G/SCM/N/220/ARG. 
2 WT/TPR/S/176/Rev.1   
3 G/SCM/Q2/ARG/32.   G/SCM/Q2/ARG/35 
Page 2  
 
  domestic origin amounting to at least 30 per cent of the investment project.  Argentina has 
confirmed that, for both programs, the requirement of a specified level of domestic inputs is one 
of the various eligibility requirements for certain benefits under the programs.
4  
 Question 2 
 
 To the extent that benefits under this program  are based on the use of domestic over imported 
goods, please explain how this programme is consiste nt with Argentina's obligations under Article 3 
of the SCM Agreement.   Incentives to Improve the Compet itiveness of Local Auto Parts 
 
 In our questions on Argentina's previous notification
5, we provided a list of programs 
related to these auto-parts incentives and request ed confirmation as to whether the programs 
still exist, and if so, why they were not notifiab le pursuant to Article 25 of the SCM Agreement. 
 
Question 3 
 
 Argentina has yet to respond to these questions.  We look forward to a response to these 
questions.   
 
OTHER PROGRAMS 
 
 Publically available information, in cluding Argentina's most recent WTO TPR
6, indicates that 
certain incentives provided by the Government of Argentina may constitute subsidies subject to the 
notification requirement under Article 25 of the SCM Agreement. 
 
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 loans obtained  for this purpose; however, the proportion may 
not exceed 12 per cent of the effective annual rate on the loan amount.  
 
Question 4 
  Could Argentina please provide a full notification of this investment incentive or explain why 
it believes this program is not subject to the notifi cation requirements of the SCM Agreement?  To the 
extent the incentive takes into account a firm's ex port potential, please explain how the program is 
consistent with Argentina's obligations under Article 3 of the SCM Agreement. 
 
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 the SM E sector, aimed at the domestic market, with 
emphasis on import substitution, among other factors.  
  
                                                      
4 G/SCM/Q2/ARG/28, G/SCM/Q2/ARG/32.   
5 G/SCM/Q2/ARG/30.   
6 WT/TPR/S/176/Rev.1.    G/SCM/Q2/ARG/35 
 Page 3 
 
 
  Question 5 
 
Please provide a full notification of this investment incentive or explain why the program is 
not subject to the notification requirements of the SCM Agreement.  
 
Tierra del Fuego Special Tax and Customs Regime   
 
 The Tierra del Fuego Special Tax and Customs Regime provides various incentives for 
firms located in the special custom s 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 
 
Question 6 
 
Could Argentina please provide a full notification of these incentives or explain why it 
believes the incentives are not subject to the notif ication requirements of the SCM Agreement?  
 
Export Loans Under the Programme to Stimulate the Growth of Microenterprises and SMEs;  
and Loans for Purchases of Capital Goods of Do mestic Origin under the Program to Stimulate 
the Growth of Microenterprises and SMEs   
 
Argentina's Banco de la Nacion Argentina (BNA) provides financing for firms through 
operations destined for the purchase of new capital goods of domestic origin, as well as pre-
financing and/or financing of exports of goods and services, among other activities.  The financing is available up to 80 per cent of the price of the goods plus VAT, net of discounts and 
subsidies.   
Question 7 
 
Could Argentina please provide a full notification of these incentives or explain why it 
believes the incentives are not subject to the notific ation requirements of the SCM Agreement?  To 
the extent this program takes into account a firm 's purchase or use of domestic over imported goods, 
and/or its export potential, please explain how the progr am is consistent with Argentina's obligations 
under Article 3 of the SCM Agreement.  
__________