G/SCM/N/253/SLV  
G/SCM/N/260/SLV  
8 July 2013  
(13-3561)  Page: 1/5  
Committee on Subsidies and 
Countervailing Measures Original: Spanish  
 
  SUBSIDIES 
 
NEW AND FULL NOTIFICATION PURSUANT TO ARTICLE XVI:1 OF THE  
GATT 1994 AND ARTICLE 25 OF THE AGREEMENT ON  
SUBSIDIES AND COUNTERVAILING MEASURES 
CONTINUATION OF EXTENSION UNDER SCM ARTICLE 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 
EL SALVADOR  
 
The following notification, dated 28 June 2013, is be ing circulated at the request of the delegation 
of El Salvador. 
 
_______________ 
  
I. "EXPORT PROCESSING ZONES AND MARKETING ACT, AS AMENDED" 
(REFERRED TO HEREINAFTER AS "FREE ZONE AND INWARD-PROCESSING WAREHOUSE PROGRAMME") 
Pursuant to paragraph 10.6 of the Decision on Implementation-Related Issues and Concerns set 
forth in document WT/MIN(01)/17, the request for an extension of the transition period under the procedures laid down in document G/SCM/39 and the WTO General Council Decision 
in document WT/L/691, and the SCM Committee Decisions contained in documents 
G/SCM/65, G/SCM/65/Add.1, G/SCM/65/Add.2, G/SCM/65/Add.3, G/SCM/65/Add.4, G/SCM/65/Add.5, G/SCM/65/Add.6 G/SCM/65/Add.7, G/SCM/65/Add.8, G/SCM/65/Add.9 and G/SCM/65/Add.9/Corr.1, and G/SCM/65/Add.10, concerning the Free Zone 
and Inward-Processing Warehouse Programme, El Salvador is pleased to submit this notification 
relating to the programme, in accordance with paragraph 2(a) of document WT/L/691.
1 
 
El Salvador hereby wishes to confirm that, pursuant to paragraph 3(a) of document WT/L/691, the 
Free Zone and Inward-Processing Warehouse Programme satisfies the standstill requirements established therein. 
 
                                               
1 El Salvador's notifications pursuant to Article 27.4 of the Agreement on Su bsidies and Countervailing 
Measures were circulated as documents G/SCM/N/38/SLV/Suppl.1-G/SCM/N/ 48/SLV/Suppl.1-G/SCM/N/60/SLV/Su ppl.1-G/SCM/N/71/SLV/Suppl.1; 
G/SCM/N/95/SLV-G/SCM/N/99/SLV; G/SCM/N/114/SLV and G/SCM/N/114/SLV/Corr.1; G/SCM/N/123/SLV-G/SCM/N/128/SLV; G/SCM/N/ 146/SLV; G/SCM/N/155/SLV-G/SCM/N/160/SLV; 
G/SCM/N/177/SLV; G/SCM/N/186/SLV-G/SCM/N/192/SLV;  G/SCM/N/211/SLV and G/SCM/N/211/SLV/Add.1; 
G/SCM/N/220/SLV-G/SCM/N/226/SLV and G/SCM/N/220/SLV/Corr.1-G/SCM/N/226/SLV/Corr.1, and G/SCM/N/243/SLV. G/SCM/N/253/SLV • G/SCM/N/260/SLV 
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  1. Title of the subsidy programme, if relevant , or brief description or identification 
of the subsidy 
Incentives for firms operating in free-trade zones or in inward-processing warehouses. 
2. Period covered by the notification 
2012. 
3. Policy objective and/or purpose of the subsidy 
No changes have been made to the programme since the last updating notification. 
4. Background and authority for the subsidy (including identification 
of the legislation under which it is granted) 
A. BACKGROUND  
For the reasons set out in previous notifications, El Salvador needs to improve the welfare of its 
people. The benefits deriving from the programme, by creating opportunities to maintain and raise 
employment levels and, by extension, to impr ove the welfare of the Salvadoran people, are 
therefore essential for the country's economic and social development. 
In this context, with a view to creating favourable conditions for sustained economic growth, 
El Salvador is developing and implementing mechanisms to stimulate aggregate demand, enhancing its exportable supply and creating a macroeconomic environment conducive 
to the establishment of investment in the country. The programme of incentives to firms operating 
in free zones or inward-processing warehouses is part of a strategy that seeks to create more and better jobs for Salvadorans, while reducing the country's reliance, in terms of its balance of payments, on family remittances from the United States. 
By the end of 2012, the programme in question  benefited 242 exporting companies, 62.8% of 
which were foreign while the rest  were domestic. The number of people directly employed under 
the Export Processing Zones and Marketing Act rose to 77,037, which made it possible 
for the same number of households to enjoy a secure income and access to social security, 
education, healthcare, a pension plan and other benefits. Another 154,074 jobs were created indirectly, thus making a total of around 23 1,111 new jobs overall, equivalent to 8.75% 
of the Salvadoran labour force. It should be noted that around 83% of the jobs created through 
this programme are held by women, a large percentage of whom are heads of household and the main income providers in their respecti ve families. The programme thus ensures better 
living conditions for one of the most vulnerable sectors of Salvadoran society. 
It should be noted that 66.9% of all companies operating in free-trade zones or inward-processing 
warehouses belong to the apparel manufacturing industry offering "full package" services and to the in-bond assembly ( maquila ) industry, which represents the country's leading export sector, 
bringing in US$1,106 million in foreign curre ncy in 2012, i.e. 20.71%  of the total value 
of El Salvador's exports to the world. This sector also accounted for 12% of El Salvador's 2012 Industrial GDP, reflecting its importance in terms of the country's trade balance performance 
and economic activity. 
Companies in the above-mentioned sector which operate under this programme have production 
chains that promote greater value-added produc tion, for instance through the "full package" 
concept, thereby encompassing textile and logistics enterprises and small-scale suppliers of inputs. 
It should be emphasized that this industry is considered the most fully integrated in 
the Central American region. Technological progress has also been made in this sector, especially with regard to yarn and fabric production processes. 
Lastly, the programme is of particular interest  to El Salvador since the effects of the 2008-2009 
recession have not yet been overcome. It should be  noted that the impact of the financial crisis 
and the contraction in international demand have resulted not only in a reduction in credit to the 
private sector, which in turn discouraged supply in strategic sectors such as construction, G/SCM/N/253/SLV • G/SCM/N/260/SLV 
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  manufacturing and tourism, but also in a significant fall in unilateral current account transfers and 
international trade flows. Gross Domestic Product (GDP) saw an increase of 1.2% in real terms 
over its 2011 year-end value, but still fell short of the 2008 rate of 2.4%. Attempts to achieve economic growth levels in line with the needs of  the population were hampered by the rise in 
prices of oil derivatives and other basic consumer commodities and by Tropical Depression 
Twelve-E, in October 2011, which caused damage of around US$1,300 million, adversely affecting sectors such as services, construction and agriculture and destroying entire hectares of staple 
grain, fruit and vegetable crops. 
At year-end 2012 manufacturing had increased 1.5%, which was less than the 2011 level. Also of 
note is the fact that, in this same period, exports of traditional products, coffee and sugar, fell by 22% and 35%, respectively. These export declines  were due to falls in international prices for 
these agricultural commodities. This produced a substantial social and economic impact 
on the country, since these sectors account for 20% of total exports to the rest of the world and generate more than 100,000 direct jobs for small farmers and "campesinos". 
Although the Salvadoran economy has begun to sh ow signs of gradual recovery, it has not yet 
seen a return to the conditions which prevailed before the effects of the international crisis become apparent. According to the Central Reserve Bank, the country's production industry responds to 
US market stimuli with a delay of three to four quarters, taking into account the fact that 46.3% 
of El Salvador's exports are destined for the US market and that remittances from the US, which totalled US$3,910.9 million in December 2012, repr esent 16.4% of Salvadoran GDP. Exports of 
goods accounted to US$5,339.1 million, an increase of 0.6% compared with the same period of 
the previous year. In the context of a slow economic recovery and an uncertain 
outlook for strategic input markets, the programme in question remains a key factor for our country's sustained development in the face of the economic challenges facing us 
in the short and medium term. 
B. A
UTHORITY  
No changes have been made to the programme since the last updating notification. 
5. Form of the subsidy (i.e. grant, loan, tax concession, etc.) 
No changes have been made to the programme since the last updating notification. 6. To whom and how the subsidy is provided (whether to producers, to exporters, 
or others; through what mechanism; wh ether a fixed or fluctuating amount 
per unit; if the latter, how determined)  
No changes have been made to the programme since the last updating notification. 7. Subsidy per unit, or in cases where this is not possible, the total amount 
or the annual amount budgeted for that  subsidy (indicating, if possible, 
the average subsidy per unit in the previo us year). Where prov ision of per-unit 
subsidy information (for the year covered by  the notification, for the previous year, 
or both) is not possible, a full explanation. 
Given the nature and scope of the programme, no statistical data reflecting the amount 
of incentives per unit are available. 
8. Duration of the subsidy and/or any other ti me-limits attached to it, including date 
of inception/commencement 
This will be in line with the international obligations undertaken by El Salvador, in particular under 
the SCM Agreement. G/SCM/N/253/SLV • G/SCM/N/260/SLV 
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  9. Statistical data permitting an assessmen t 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 an d/or determinable, 
however, it is desirable that such inform ation include statistics on the production, 
consumption, imports and exports of the subsidized product(s) or sector(s). 
(See Annex 1) 10. Information concerning the steps taken pursuant to paragraphs 1(e) and 1(f) 
of the Procedures for Continuation of  Extensions Pursuant to Article 27.4 
of the SCM Agreement of the Transition Period under Article 27.2(b) of the SCM Agreement for Certain De veloping Country Members contained 
in the General Council Decision in document WT/L/691. 
As indicated in previous notifications, in 2012 an d the first months of 2013 the Interinstitutional 
Committee continued working on the preliminary draft Export Processing Zones and Marketing Act with a view to furthering the country's developm ent and fulfilling its international commitments. 
This process continued to benefit from private-sector participation in the working group set up to 
this end in conjunction with trade associations linked to the free-zone regime. As a result, a preliminary draft Act was submitted to the Legislative Assembly for discussion in October 2012, 
and the legislative body approved Legi slative Decree 318 on 21 February 2013. 
The "Free Zone and Inward-Processing Warehouse Programme" will be in force 
until 31 December 2015, in accordance with the 2007 General Council Decision contained in document WT/L/691. 
   
  G/SCM/N/253/SLV • G/SCM/N/260/SLV  
- 5 - ANNEX 1 
COMPARATIVE TABLE 
(in US$ million) 
 
Source: International Monetary Fund, Centra l Reserve Bank, Ministry of the Economy. 
 
__________  2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 
(a) World exports 7,782.600 7.510.600 7,837,800 8,937,700 11,196,100  12,640,600  14,716,900 17,019,465  19,693,890  20,854,876  18,713,353  21,876,684  22,427,572 
(b) Salvadoran exports 2,950.5 2.864.0 2,995.0 3,128.0 3,305.0 3,418.0 3,707.0 3,979.9 4,549.2 3,797.3 4,499.2 5,308.8 5,339.1 
(c) (b)/(a) 0.0379% 0.0381% 0.0382% 0. 0350% 0.0295% 0.0270% 0.0251% 0.0234% 0. 0231% 0.0240% 0.0240% 0.0242% 0.0238% 
(d) Salvadoran net maquila  
exports 456.00 489.00 474.00 494 465 616 620 564 647 648 666.4 1,201 1,106 
(e) (d)/(a) 0.0059% 0.0065% 0.0060% 0. 0055% 0.0042% 0.0049% 0.0042% 0.0033% 0. 0033% 0.0041% 0.0035% 0.0054% 0.0049%