WORLD TRADE  
ORGANIZATION  G/SCM/N/123/COL 
G/SCM/N/128/COL 5 July 2005 
 
 
(05-2918) 
Committee on Subsidies and Countervailing Measures  Original:   Spanish 
  
 
SUBSIDIES 
 
New and full notifications pursuant to Article  XVI.1 of the GATT 1994 and Article 25 of the 
Agreement on Subsidies and Countervailing Measures  
 
Extension under SCM Article 27.4 of the Tr ansition Period under Article 27.2(b) for  
the Elimination of Export Subsidies  
 
Updating Notification  
 
COLOMBIA 
   The following communication, dated 27 June 200 5, is circulated at the request of the 
delegation of Colombia. 
_______________ 
 
  In fulfilment of Colombia's transparency co mmitment under paragraphs  8 and 10(i) of the 
Decisions adopted on 13 December 2002 in documents  G/SCM/93 and G/SCM/94, and in fulfilment 
of the commitments undertaken in the Deci sions adopted on 8 December 2004 in documents 
G/SCM/93/Add.1 and G/SCM/94/Add.1,  we herewith submit the annual notification for the year 2003 
concerning the programmes "Special Import-Expor t System for Capital Goods and Spare Parts 
(SIEX)" and "Free-Zone Regime".   As will be appreciated from this notification, Colombia is continuing to comply strictly with 
its obligations not to modify these programmes so as to make them more favourable, including as to 
the scope, coverage and intens ity of benefits, than they were as at 1 September 2001. 
  In accordance with the above, Colombia issu ed Resolution No. 1914  of 8 September 2004 
regulating Decree 1811/04, which establishes the conditions for approval of requests for new 
programmes, or modifications to existing cap ital goods and spare parts programmes, up to 
3 December 2004.  A copy of the Resolution is attached. 
  With respect to the commitment  to undertake the reform of its legislation on Free Zones, once 
agreement had been reached between the Ministry of  Trade, Industry and Tourism and the Ministry of 
Finance and Public Credit and the various actors of ci vil society in the free z ones located in different 
parts of the country, the President of the Republic of Colombia gave his approval to Law 863 of 2003, 
which, in Article 69, repealed Article 213 and Artic le 322(m) of the Tax Code, and also Article 15 of 
Law 109 of 1985 with regard to industrial users of goods in free zones, thus giving effect to the 
notified schedule, which is set forth in the document. G/SCM/N/123/COL 
G/SCM/N/128/COL Page 2 
 
 
 A. 
SPECIAL IMPORT -EXPORT SYSTEM FOR CAPITAL GOODS AND SPARE PARTS (SIEX) 
1. Description of the programme 
 
 This is a mechanism which provides for the duty-free import of capital goods and spare parts 
intended for the installation, expans ion or relocation of production units to be used in the manufacture 
of export goods.  It also provides for the duty-free import of components to be used in the production or assembly of capital goods or spare parts which are then used in the production of export goods. 
 
2. Period covered by the notification 
 
 2004.  
3. Policy objective and/or purpose of the subsidy 
  The objective of the programme is to s timulate Colombian exports, promote their 
diversification and contribute to technology transfer through the importation of capital goods. 
 
4. Background and authority for the subsidy 
 
 - Article 173(c) of Decree-Law 444 of 1967 
 - Decree 688 of 1967 
 - Decree 631 of 1985  - Resolution 682 of 1995 of the Colomb ian Foreign Trade Institute (INCOMEX) 
 - INCOMEX Resolution 1860 of 1999  - Resolution 1964 of 2001 of the Ministry of Foreign Trade 
 - Resolution 0143 of 2002 of the Ministry of Foreign Trade 
 - Resolution 1148 of 2002 of the Ministry of Foreign Trade  - Resolution 011 of 2003 of the Ministry of Foreign Trade  - Decree 1811 of 2004  - Resolution 1914 of 8 September 2004 of the Ministry of Trade, Industry and Tourism  5. Form of the subsidy 
 
 Complete exemption from customs duties on the import of the goods.   
6. To whom and how the subsidy is provided 
 
 All natural or legal persons responsible fo r production, export or trading enterprises or non-
profit entities registered in the National Register of Exporters are eligible.  The subsidy takes the form 
of exemption from the payment of customs duties levied upon importation of the capital goods and spare parts covered by the programme.  7. Subsidy per unit 
 
 In view of the nature and coverage of the programme, there are no statistics available which 
reflect the amount of the subsidy per unit.  However, the total amount of the customs duties that the Government forwent as a result of the benefits granted under the programme was US$27.9 million in 
2003 and US$27.8 million in 2004.  Meanwhile, exports by the SIEX beneficiary companies totalled 
US$6,350 million in 2003 and US$7,926.6 million in 2004. 
  G/SCM/N/123/COL 
 G/SCM/N/128/COL 
 Page 3 
 
 
 8. Duration of the subsidy 
 
 Up to 31 December 2006, under paragraph 10 of  the Decision adopted by the Committee on 
Subsidies and Countervailing Measures (G/SCM/94). 
 
9. Statistical data on the impact of the programme 
 
Year Imports of capital 
goods under the 
programme 
(in millions of 
US$) Exports by companies 
benefiting from the 
notified programme 
(in millions of US$) Value of the 
incentive (fiscal 
sacrifice) 
(in millions of 
US$) Total 
Colombian 
exports 
(in millions of 
US$) 
1998 458.8 4,139.1 49.2 10,865 
1999 545.3 5,494.1 60.3 11,617 
2000 512.5 6,340.4 53.0 13,114 
2001 379.8 5,630.2 60.81 13,320 
2002 228.3 5,462.4 34.91 12,902 
2003 387.7 6,350.0 27.92 13,092 
2004 243.3 7,926.59 27.83 16,729 
 
 1 Source: Information System s Office, Ministry of Trade, Industry and Tourism. 
 2 Source: DIAN 
 3 Source: DANE-DIAN.  Prepared by the Office of Economic Research (OEE), Trade Ministry. 
 
B. FREE ZONE REGIME (ZF) 
 
1. Description of the programme 
 
 The Industrial Free Zones for Goods and Servi ces are specified geographical areas within the 
national territory, the purpose of which is to prom ote and develop the process of industrialization of 
goods and the supply of services intended primarily for foreign markets.  
2. Period covered by the notification 
  2004. 
 
3. Policy objective and/or purpose of the subsidy 
 
 The objective of the programme is to promote foreign trade, generate employment and foreign exchange and to serve as a focus for i ndustrial development in the regions concerned. 
 
4. Background and authority for the subsidy 
 
 - Law 7 of 1991  - Decree 2233 of 1996 
 - Decree 727 of 1997 
 - Decree 918 of 2001  - Law 677 of 2001  - Resolution 1001 of 2002 of the Ministry of Foreign Trade  - Law 863 of 2003, Article 69  G/SCM/N/123/COL 
G/SCM/N/128/COL Page 4 
 
 
 5. Form of the subsidy 
 
 For industrial users in the free zones, the proportionate share of revenue obtained from 
foreign market sales is exempted from income tax a nd supplementary taxes. Nor is the remittance tax 
applied to earnings from industrial activities carried ou t within the free zones.  Goods introduced into 
the free zones are considered to be outside the na tional territory for the pur poses of the customs duties 
applicable to imports and taxes on exports.  
6. To whom and how the subsidy is provided 
 
 The subsidy is granted to industrial users of goo ds, that is, to foreign or national legal persons 
legally established in Colombia with their own tax identification number, who carry out their 
activities – consisting in the manufacture, production, processing or assembly of goods for sale primarily on foreign markets – exclusively within th e respective free zone.  The subsidy is granted in 
the form of an exemption from income tax and supplementary taxes on the portion of the income 
obtained from foreign market sales.  
7. Subsidy per unit 
 
 No statistical information is available that  reflects the amount of the subsidy per unit. 
However, the total amount of the income and s upplementary tax exemption was US$53.5 million in 
2002 and US$13.5 million in 2003.  
8. Duration of the subsidy 
  Up to 31 December 2006, under paragraph 10 of  the Decision adopted by the Committee on 
Subsidies and Countervailing Measures (G/SCM/93).  
9. Statistical data on the impact of the programme 
 
Year Exports under the notified 
programme 
(in millions of US$) Value of the incentive 
(fiscal sacrifice) 
(in millions of US$) Total Colombian 
exports 
(in millions of US$) 
1998 341.9 13.0 10,865 
1999 359.0 19.2 11,617 
2000 471.2 40.9 13,114 
2001 329.0 48.2 1 13,320 
2002 369.7 53.5 1 12,902 
2003 389.6 13.51 13,092 
2004 132.3 42.91 16,729 
 
 1 Source: DIAN.  G/SCM/N/123/COL 
 G/SCM/N/128/COL 
 Page 5 
 
 
 MINISTRY OF TRADE, INDUSTRY AND TOURISM 
 
REPUBLIC OF COLOMBIA 
 
 
Resolution No. 1914 of 8 September 2004 
 
 
Regulating Decree 1811 of 3 June 2004 
 
 
THE MINISTER FOR TRADE, INDUSTRY AND TOURISM 
 
 
 In the exercise of his legal powers, and especially those conferred by Decree 210 of 
3 February 2003, and  
WHEREAS 
 
 The Committee on Subsidies and Countervailing Measures of the World Trade Organization, 
through its decision of 13 December 2002, determin ed that the transition period under Article 27.2 (b) 
of the SCM Agreement for the elimination of export subsidies under the Special Import-Export 
System for Capital Goods and Spare Parts no tified by Colombia would not extend beyond 
31 December 2006, including the final 2-year period provided for in Article 27.4 of the SCM Agreement. 
 
 The Committee on Subsidies and Countervailing Measures of the World Trade Organization, through its decision of 8 December 2003 (G/SCM/94/ Add.1), determined that for projects approved 
under the Special Import-Export System as of that  date, payment of deferred VAT would not extend 
beyond 31 December 2006. 
 
 With a view to adopting the programme to dismantle export subsidies under the Special 
Import-Export System for Capital Goods and Sp are Parts, the National Government issued 
Decree 1811 of 3 June 2004, providing for measures  aimed at meeting the commitments undertaken 
in the World Trade Organization.   Decree 210 of 2003 establishes that it is for th e Ministry of Trade, Industry and Tourism, 
within its own sphere of competence, to design po licies relating to Special Import-Export Systems and 
their operation and to ensure the proper implementa tion of any such provisions as may be issued. 
 G/SCM/N/123/COL 
G/SCM/N/128/COL Page 6 
 
 
 HEREBY RESOLVES 
 
 
 ARTICLE 1 -  In accordance with Article 1 of Decree 1811 of 2004, the Foreign Trade 
Directorate of the Ministry of Trade, Indus try and Tourism may approve requests for new 
programmes or modifications to existing progra mmes relating to capital goods and spare parts under 
Article 173(c) of Decree-Law 444 of 1967, up to 31 December 2004 inclusive.   PARAGRAPH 1  -  For programmes relating to capital goods and spare parts under 
Article 173(c) of Decree-Law 444 of 1967 and approve d by the Foreign Trade Directorate of the 
Ministry of Trade, Industry and Tourism as of  3 June 2004 up to 31 December 2004 inclusive, 
certification of implementation, justification of in ability to implement or failure to implement the 
commitments undertaken by the user is required by 3 October 2006 at the latest.  
 PARAGRAPH 2  -  The Foreign Trade Directorate of the Ministry of Trade, Industry and 
Tourism may approve modifications of time limits  and quotas for existing programmes relating to 
capital goods and spare parts under Article 173(c) of  Decree-Law 444 of 1967, bearing in mind the 
maximum time limit for sending certification of impl ementation of, or failure to implement, the 
commitments provided for in the preceding paragraph.    ARTICLE 2 - EXPORT COMMITMENT FOR PROGRAMMES TO IMPORT 
CAPITAL GOODS UNDER ARTICLE 173(c).    Goods imported under Article 173(c) shall be 
used for the declared purposes and th e export commitment shall be equiva lent in physical units to at 
least 70 per cent of the increases in produc tion that are achieved up to 31 March 2006. 
 
 PARAGRAPH -     Imports of all capital goods for the provision of services directly linked 
to the production or export of goods creates an e xport commitment in United States dollars equivalent 
to one-and-a-half times the f.o.b. value of the authorized import quota. 
 
 ARTICLE 3  -  Programmes approved under Decree 1811 of 2004 shall be eligible for the 
tariff and tax benefits provided for in Article 14 of Decree 631 of 1985. 
 
 ARTICLE 4  - APPLICATION.   This Resolution shall enter into  effect as of the date of its 
publication and revokes any contrary provisions as may be contained in Resolutions 1860 of 1999, 
1964 of 2001 and 143 of 2002.  
FOR PUBLICATION AND IMPLEMENTATION 
 
Done in Bogotá, D. C., on 8 September 2004. 
   
JORGE HUMBERTO BOTERO 
  
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