RESTRICTED  WORLD TRADE  
ORGANIZATION  G/SCM/W/542 
2 July 2007 
 (07-2798) 
Committee on Subsidies and 
Countervailing Measures  
 
 
 
ARTICLE 27.4 OF THE AGREEMENT ON SUBSIDIES AND 
COUNTERVAILING MEASURES 
 
Chairman's proposal for a draft decision  
of the General Council 
 
  Since April 2006, the Committee on Subsid ies and Countervailing Measures has been 
discussing proposals
1 to prolong the procedures contained in G/SCM/39 that authorize the Committee 
to adopt annual decisions to extend the transition period under Article 27.4 of the SCM Agreement  in 
respect of certain programmes of certain devel oping country Members.  In light of the views 
expressed by Members in informal consultations on these proposals, proponents tabled a text 
circulated on 19 April 2007 (JOB(07)/50) that wa s considered by the Committee at informal and 
formal meetings held on 26 April 2007.  The Ch airman indicated on that occasion that it was his 
understanding that this text was generally viewed as providing an excellent basis to reach agreement 
on this subject although certain aspects required further work.  The Chairman also noted that there 
was a generally shared view that the Comm ittee should aim to adopt a recommendation for 
consideration by the General Council at its meeting in  July, and that in order to meet this objective it 
was necessary to engage in an intensive drafting process.    
 Accordingly, I have held open-ended inform al consultations in May and June to discuss 
political as well as more technical issu es that remained to be resolved  with respect to the text in 
JOB(07)/50.  Based on the comments and suggestions made in those consultations, I submitted to the 
Committee a proposal for a text of a draft decision of the General Council (JOB(07)/78).  That text was discussed at a number of informal meetings held  in June.  The attached text is a revision of the 
draft in JOB(07)/78 that takes into account vi ews expressed by Members on that draft.   
 
 One issue which has been the subject of discussi on, but has not yet been fully resolved, is the 
timing of the notification of beneficiaries under the programmes for which continuations of extensions 
would be agreed by the Committee, as provided for in 1(e) of the attached draft procedures.  I am in 
close contact with the interested delegations, and I expect to be in a position to propose compromise 
language on this point within a few days.   
  In addition, in the course of the drafting pr ocess that took place in May and June, proposals 
have been submitted by the four Me mbers listed in Annex VII(b) of the SCM Agreement  that reserved 
rights under G/SCM/39.
2  I have convened several informal meetings to afford delegations an 
opportunity to exchange views on these proposals.  It is my sense that the scope of these proposals is 
viewed by many delegations as going beyond the scope of the proposals in G/SCM/W/535 and 537 
and in JOB/(07)/50.  I have therefore addressed  the issue of Annex VII(b) Members in a manner 
consistent with the relevant provision of the te xt proposed in JOB(07)/50 (which is based on the 
                                                      
1 Documents G/SCM/W/535 and 537 and addenda.   
2 Documents JOB(07)/100 and JOB(07)/110.   G/SCM/W/542 
Page 2  
 
  corresponding provision of G/SCM/39).  I also beli eve, however, that there is a recognition among 
Members that the draft decision proposed in the attached text addresses only certain measures of 
certain developing country Member s, and is without prejudice to the right of the Members in 
Annex VII(b) to pursue any proposals.    
 In conclusion, I propose that the Committee deci de to forward the attached draft decision to 
the General Council with the recommendation that the Council adopt the draft decision at its meeting of 25-26 July 2007.     
PABLO KLEIN 
Chairman 
 G/SCM/W/542 
Page 3 
 
 
  ARTICLE 27.4 OF THE AGREEMENT ON SUBSIDIES AND 
COUNTERVAILING MEASURES 
 
Decision of xx 2007  
 
 
DRAFT  
  
The General Council,  
 Having regard  to Articles IV:1 and 2 and IX:1 of th e  Marrakesh Agreement Establishing the 
World Trade Organization ("WTO Agreement") and Article 27.4 of the Agreement on Subsidies and 
Countervailing Measures  ("SCM Agreement ");   
 
 Recalling that the Members of the Committee on Subsidies and Countervailing Measures 
("SCM Committee" or "Committee"), as directed by the Ministerial Conference
1 have granted, 
pursuant to the procedures set forth in document G/SCM/39, extensions pursuant to Article 27.4 of the SCM Agreement  of the transition period under Article 27.2(b) of the SCM Agreement  for the 
elimination of export subsidies, in respect of certain programmes of certain developing country 
Members;    
 
 Noting the proposals submitted by those developi ng country Members to extend the 
procedures contained in G/SCM/39;
2   
 
 Recognizing  the economic, financial and developmen t needs, as well as the capacity and 
administrative constraints, of those Members in  implementing their commitments pursuant to the 
SCM Agreement  in respect of the elimination of export subsidies;   
  On the basis of  the commitment of those Members to eliminate the export subsidies in 
question not later than 31 December 2015, with  no requests for extension beyond those foreseen 
pursuant to this Decision;   
 
 Decides  to adopt the following procedures.   
 
                                                     
 
1 Ministerial Decision on Im plementation-Related Issues and Concerns, (WT/MIN(01)/17), 
paragraph 10.6.   
2 See documents G/SCM/W/535 and G/SCM/W/537 and addenda.   G/SCM/W/542 
Page 4  
 
  PROCEDURES FOR CONTINUATION OF EXTENSIONS PURSUANT 
TO ARTICLE 27.4OF THE SCM AGREEMENT OF THE TRANSITION 
PERIOD UNDER ARTICLE 27.2(b) OF THE SCM AGREEMENT 
FOR CERTAIN DEVELOPING COUNTRY MEMBERS 
  
 The SCM Committee shall follow the proce dures set forth below in respect of the 
continuation of extensions pursuant to Article 27.4 of the SCM Agreement  ("SCM Article 27.4") of 
the transition period under Article 27.2(b) of the SCM Agreement  for certain programmes, identified 
in the Annex.
1   
 
1. Mechanism for continuation of extension 
(a) A Member that wishes to seek a continuation, for calendar year 2008, of the 
extension under SCM Article 27.4 for a progr amme listed in the Annex, shall submit 
a request to that effect to the SCM Comm ittee not later than 3 September 2007.  The 
request also shall include a reference to the WTO document containing the 
corresponding updating notification covering calendar year 2006, which the Member shall have submitted to the SCM Committee pursuant to 1(d) of G/SCM/39.
2   
(b) Not later than 26 October 2007, Members of the SCM Committee shall agree to 
continue the extensions, for calendar year  2008, for programmes listed in the Annex 
in respect of which requests have been s ubmitted pursuant to 1(a) and for which the 
Committee has verified, in its annual re view conducted pursuant to G/SCM/393, that 
the transparency and standstill requireme nts under G/SCM/39 were fulfilled during 
2006.   
(c) As provided for in SCM Article 27.4, the continuation of extensions by the 
SCM Committee pursuant to these procedures shall be subject to annual reviews in 
the form of consultations between th e Committee and the Members receiving 
continuations of extensions.  These annual re views shall be conducted on the basis of 
annual updating notifications from the Members in question, as referred to in 2(a).  
The purpose of the annual reviews shall be to verify that the transparency and standstill requirements set forth in 2 and 3 are being fulfilled.   
(d) During the period 2008-2012, Members of the SCM Committee shall agree to 
continue the extensions pursuant to these procedures , subject to verification through 
annual reviews as provided for in 1(c) that the transparency and standstill 
requirements set forth in 2 and 3 are being fulfilled.
4  The "last authorized period" 
referred to in the last sentence of SCM Article 27.4 shall not extend beyond 
31 December 2013, and the final two-year phase-out period provided for in the last 
sentence of SCM Article 27.4 shall end not later than 31 December 2015.   
                                                      
1 The programmes eligible for continuations of ex tensions under these procedures are programmes 
providing export subsidies in the form of full or partial exemptions from import duties and internal taxes for which the SCM Committee continued extensions of the transition period under SCM Article 27.4 for calendar 
year 2007 pursuant to the procedures in G/SCM/39.   
2 At the regular meeting of the Committee in April 2007, these Members were reminded to submit their 
updating notifications by 30 June 2007.   
3 The procedures in G/SCM/39 shall cease to be effec tive upon completion of this  2007 annual review.   
4 This extension mechanism shall cease to be effectiv e upon completion in 2012  of the annual review 
by the Committee to continue the extensions for calendar y ear 2013, such that there will be no basis for requests 
for extension beyond those foreseen in this Decision.    G/SCM/W/542 
 Page 5 
 
 
  (e) A Member receiving a continuation of an ex tension under these procedures shall take, 
from 1 January 2008, the necessary internal steps with a view to eliminating export 
subsidies under the programme before the end of the final two-year phase-out period 
provided for in the last sentence of SCM Article 27.4.  These steps shall include 
consultations with relevant government  bodies and organisations and any necessary 
technical and/or legal assessments, as well as a notification to each beneficiary under 
the programme indicating that no expor t subsidies within the meaning of 
SCM Article 3.1(a) will be granted or  maintained beyond the end of calendar 
year 2015.   
(f) A Member receiving a continuation of an  extension under these procedures shall 
provide, for transparency purposes, an action plan for eliminating export subsidies 
under the programme, as an integral pa rt of the annual updating notification 
submitted for the annual review  to be conducted in 2010.5  As part of this review, the 
SCM Committee shall undertake a mid-period assessment of each programme for which it has continued an extension under these procedures.  During this mid-period 
assessment, the SCM Committee shall take st ock of the steps undertaken as of that 
point by the notifying Member pursuant to  1(e), and shall discuss the action plan 
provided by the Member.   
(g) A Member receiving a continuation of an extension under these procedures may 
request the WTO Secretariat to provide technical assistance for eliminating export subsidies under the programme.   
2. Transparency 
(a) The annual updating notifications shall fo llow the agreed format for subsidy 
notifications under SCM Article 25 (found in  G/SCM/6/Rev.1).  Beginning with the 
updating notifications covering calendar y ear 2008, notifying Members also shall 
provide information regarding the actions they  have taken pursuant to 1(e) and 1(f).   
(b) During the annual reviews by the SCM Committee referred to in 1(c), notifying 
Members can be requested by other Me mbers to provide additional detail and 
clarification with a view to maintaining tran sparency in respect of the scope, coverage 
and intensity of benefits (the "favour ability") of the programmes in question
6 and the 
form of the subsidies provided thereunder;   and in respect of the actions taken 
pursuant to 1(e) and 1(f).  Any informati on provided in response to such requests 
shall be considered part of the notified information.   
(c) A Member receiving a continuation of an  extension under these procedures shall 
ensure transparency in respect of the fi nal two-year phase-out period provided for in 
the last sentence of SCM Article 27.4 by submitting updating notifications under 
paragraph 2(a), which shall be subject to annual review by the Committee.   
                                                      
5 The action plan shall indicate how the Member intends to eliminate export subsidies under the 
programme not later than the end of the final two-year phase-out period provided for in the last sentence of SCM Article 27.4, including information as to legislative changes, administrative amendments and/or other 
procedures as may be necessary, and whether any of these actions have been undertaken  or are in the process of 
being undertaken.   
6 The scope, coverage and intensity of benefits of the programmes in question will be determined on 
the basis of the legal instruments underlying the programmes.   G/SCM/W/542 
Page 6  
 
  3. Standstill 
(a) Through the end of the final two-year phase-out period provided for in 
SCM Article 27.4, the programmes for whic h extensions are continued under these 
procedures shall not be modified so as to ma ke them more favourable than they were 
as at 1 September 2001, as specified in the notified information previously submitted 
pursuant to the procedures in G/SCM/39.  The continuation of an expiring 
programme without modification shall not be deemed to violate standstill.   
(b) The verification of standstill in respect of  the scope, coverage and intensity of 
benefits (the "favourability") of the programmes shall be based on the notified 
information referred to in 1(c), 2(a), 2(b) and 3(a).   
4. Product graduation on the basis of export competitiveness 
Notwithstanding these procedures, Articles 27.5 and 27.6 shall apply in respect of export 
subsidies for which extensions are con tinued pursuant to these procedures.   
5. Members listed in Annex VII(b) which reserved rights pursuant to the procedures in 
G/SCM/39 
If, during the period 2008-2015, the per capita GNP of a Member that reserved rights under 
paragraph 6(b) of G/SCM/39
7 reaches the level provided for in Annex VII(b) of the SCM Agreement  
such that the Member is no longer included in Annex VII(b)8, that Member shall be able to make use 
of these procedures as from the date at which its per capita GNP reaches that level and for the remainder of that period.
9  The effective date for the standstill requi rement referred to in 3(a) shall be 
the year in which that Member's GNP per capita re aches the level provided for in Annex VII(b) such 
that it is no longer included in Annex VII(b).   
                                                      
7 The Members that reserved rights, and the progr ammes in respect of which these rights were 
reserved, are identified in documents G/SCM/N/74/ BOL & Suppl.1, G/SCM/N/74/HND, G/SCM/N/74/KEN, 
and G/SCM/N/74/LKA.   
8 This paragraph shall be applied in accordance with  paragraph 10.1 of the Ministerial Decision on 
Implementation-Related Issues and Concerns (WT/MIN(01)/17).   
9 The issue of how to apply 1(e) and 1(f) of these procedures to a Member referred to in this paragraph 
shall be the subject of further consideration in the Committee.    G/SCM/W/542 
 Page 7 
 
 
  ANNEX 
  
LIST OF PROGRAMMES ELIGIBLE FOR CONTINUATION OF EXTENSIONS  
UNDER THE PROCEDURES
10, AND DOCUMENT REFERENCES FOR THE  
EXTENSION DECISIONS BY THE SCM COMMITTEE  
COVERING CALENDAR YEAR 2007  
  Antigua & Barbuda  
• Fiscal Incentive Act Cap 172 (December 1975) (G/SCM/50/Add.4) 
• Free Trade and Processing Zone Act No. 12 of 1994 (G/SCM/51/Add.4) 
 
Barbados  
• Fiscal Incentive Programme (G/SCM/52/Add.4) 
• Export Allowance (G/SCM/53/Add.4) 
• Research & Development Allowance (G/SCM/54/Add.4) 
• International Business Incentives (G/SCM/55/Add.4) 
• Societies With Restricted Liability (G/SCM/56/Add.4) 
 
Belize  
• Fiscal Incentives Act (G/SCM/57/Add.4) 
• Export Processing Zone Act (G/SCM/58/Add. 4) 
• Commercial Free Zone Act (G/SCM/59/Add.4) 
• Conditional Duty Exemptions Facility under Treaty of Chaguaramas (G/SCM/60/Add.4) 
 
Costa Rica  
• Free Zone Regime (G/SCM/61/Add.4) 
• Inward Processing Regime (G/SCM/62/Add.4) 
 
Dominica  
• Fiscal Incentives Programme (G/SCM/63/Add.4) 
                                                     
 
 10 Programmes for which the SCM Committee continued extensions of the transition period under 
SCM Article 27.4 for calendar year 2007 pursuant to the procedures in G/SCM/39.   It is recalled that the 
eligibility criteria in G/SCM/39 on the basis of which the original extension decisions pursuant to those 
procedures (for calendar year 2003) were taken for the listed programmes were as follows (footnotes omitted):   
"Programmes eligible for extension pursuant to these procedures, and for which Members shall 
therefore grant extensions for calenda r year 2003 [...], are export subsidy programmes (i) in the form of 
full or partial exemptions from import duties and intern al taxes, (ii) which were in existence not later 
than 1 September 2001, and (iii) which are provided  by developing country Members (iv) whose share 
of world merchandise export trade was not greater than 0.10 per cent, (v) whose total Gross National 
Income ("GNI") for the year 2000 as published by th e World Bank was at or below US$20 billion, (vi) 
and who are otherwise eligible to request an extension pursuant to Article 27.4, and (vii) in respect of which these procedures are followed."   
It is further recalled that, in respect of the above eligibility criteria, G/SCM/39 also provided that:   
"The criteria set forth in these procedures are solely  and strictly for the purpose of determining whether 
Members are eligible to invoke thes e procedures.  Members of the Co mmittee agree that these criteria 
have no precedential value or relevance, dire ct or indirect, for an y other purpose."   G/SCM/W/542 
Page 8  
 
  Dominican Republic  
• Law No. 8-90 to "Promote the Establishment of New Free Zones and Expand Existing Ones"  
(G/SCM/64/Add.4) 
 
El Salvador  
• Export Processing Zones and Marketing Act, as amended (G/SCM/65/Add.4) 
 
Fiji 
• Short-Term Export Profit Deduction (G/SCM/66/Add.4) 
• Export Processing Factories/Export Processing Zones Scheme (G/SCM/67/Add.4) 
• The Income Tax Act (Film Making and Audio Visual Incentive Amendment Decree 2000) 
(G/SCM/68/Add.4) 
 
Grenada  
• Fiscal Incentives Act No. 41 of 1974 (G/SCM/69/Add.4) 
• Statutory Rules and Orders No. 37 of 1999 (G/SCM/70/Add.4) 
• Qualified Enterprises Act No. 18 of 1978 (G/SCM/71/Add.4) 
 
Guatemala  
• Exemption from Company Tax, Customs Duti es and Other Import Taxes for Companies 
under Special Customs Regimes (G/SCM/72/Add.4) 
• Exemption from Company Tax, Customs Duties and Other Import Taxes for the Production 
Process Relating to Activities of Managers and Users of Free Zones (G/SCM/73/Add.4) 
• Exemption from Company Tax, Customs Duties and Other Import Taxes for the Production 
Process of Commercial and Industrial Enterprises Operating in the Industrial and Free Trade 
Zone (G/SCM/74/Add.4) 
 
Jamaica  
• Export Industry Encouragement Act (G/SCM/75/Add.4) 
• Jamaica Export Free Zone Act (G/SCM/76/Add.4) 
• Foreign Sales Corporation Act (G/SCM/77/Add.4) 
• Industrial Incentives (Factory Construction) Act (G/SCM/78/Add.4) 
 
Jordan  
• Partial or Total Exemption from Income Tax of Profits Generated from Exports under Law 
No. 57 of 1985, as amended (G/SCM/79/Add.4) 
 
Mauritius  
• Export Enterprise Scheme (G/SCM/80/Add.4) 
• Pioneer Status Enterprise Scheme (G/SCM/81/Add.4) 
• Export Promotion (G/SCM/82/Add.4) 
• Freeport Scheme (G/SCM/83/Add.4) 
 
Panama
 
• Official Industry Register (G/SCM/84/Add.4 
• Export Processing Zones (G/SCM/85/Add.4) 
 
Papua New Guinea  
• Section 45 of the Income Tax (G/SCM/86/Add.4)  G/SCM/W/542 
 Page 9 
 
 
  St. Kitts and Nevis  
• Fiscal Incentives Act No. 17 of 1974 (G/SCM/90/Add.4) 
 
St. Lucia  
• Fiscal Incentives Act No. 15 of 1974 (G/SCM/87/Add.4) 
• Free Zone Act, No. 10 of 1999 (G/SCM/88/Add.4) 
• Micro and Small Scale Business Enterprises Ac t, No. 19 of 1998 (G/SCM/89/Add.4) 
 
St. Vincent & Grenadines  
• Fiscal Incentives Act No. 5 of 19 82, as amended (G/SCM/91/Add.4) 
 
Uruguay  
• Automotive Industry Export Promotion Regime  (G/SCM/92/Add.4) 
 
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