. /.   WORLD TRADE  
ORGANIZATION  TN/RL/GEN/177 
7 March 2011 
 (11-1125) 
Negotiating Group on Rules Original:   English 
  
 
AMENDMENT TO ARTICLES 27.2 AND 27.4 OF ASCM  
IN RELATION TO DEVELOPING COUNTRIES  
COVERED UNDER ANNEX VII 
 
Communication from India
 
  
 The following communication, dated 6 March 2011, is being circulated at the request of the 
Delegation of India.  
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  1. In accordance with the provision of Article  27.2(a) of the Agreement on Subsidies and 
Countervailing Measures (ASCM), the prohibition of pa ragraph 1(a) of Article 3 does not apply to 
developing country Members referred to in Annex VII of ASCM.  Annex VII contains the list of 
developing country Members that are not subject to  the provisions of Article 3.1(a) under two parts 
i.e. (a) Least-developed countries designated as such by the UN and (b) Developing countries viz.  
Bolivia, Cameroon, Congo, Cote d'Ivoire, Domini can Republic, Egypt, Ghana, Guatemala, Guyana, 
Honduras
1, India, Indonesia, Kenya, Morocco, Nicaragua , Nigeria, Pakistan, Philippines, Senegal, 
Sri Lanka and Zimbabwe. 
 
2. Subparagraph (b) of Annex VII states that each  of the above developing countries, which are 
the Members of the WTO, shall be subject to the pr ovisions which are applicable to other developing 
Members according to paragraph 2(b) of Article 27 when GNP per capita has reached US$1,000 per 
annum.    
3. Article 27.2(b) of ASCM states that the prohib ition of Article 3.1(a) shall not apply to other 
developing country Members for a period of 8 years from the date of entry into force of the WTO 
Agreement, subject to compliance w ith the provisions in Article 27.4. 
 4. The text of Article 27.2(b) lacks clarity as regards its application to those developing 
countries who graduate out of Annex VII when their GNP per capita has reached US$1,000 per 
annum.  The language and conditions prescribed under para graph 2(b) is in the context of a particular 
point of time i.e., the entry into force of the WTO Agreemen t.  It is obvious that the said condition 
cannot be applied to those developing country Me mbers who join paragraph 2(b) at a subsequent 
point of time after graduating out of Annex VII.  Further as per Article 27.4, any developing country 
Member referred to in paragraph 2(b) shall phase out  its export subsidies within the 8-year period, 
preferably in a progressive manner.  Article 27.4 also envisages, inter-alia , that if a developing 
country Member deems it necessary to apply such subs idies beyond the 8-year period, it shall not later 
than one year before the expiry of this period en ter into consultation with the Committee, which will 
                                                     
 
 1 Honduras has been included in this list pursuant to the General Council Decision on Implementation-
related issues and concerns, paragraph 6.1 (as contained in document WT/L/384) and the rectification and the 
process-verbal of rectification (as contained in documents WT/Let/366 and WT/Let/371).   TN/RL/GEN/177 
Page 2  
 
  determine whether an extension of this period is ju stified, after examining all the relevant economic, 
financial and development needs of  the developing country Member in question.  The provisions of 
Article 27.2 and 27.4 need to be read harmoniously  in respect of developing countries graduating out 
of Annex VII.  Therefore, it needs to be clarifie d that (i) the developing countries graduating out of 
Annex VII when their GNP per capita has reac hed US$1,000 per annum, shall have a period 
of 8 years from the year of graduating out of Anne x VII to phase out their export subsidies covered 
under Article 3.1(a) and (ii) such developing co untry Members will also be subject to similar 
conditions as in paragra ph 4 of Article 27.   
 
Textual Amendment 
 
5. India therefore proposes the following two textual amendments through footnotes to 
Article 27.2(b) and Article 27.4: 
 
(i) Footnote to Article 27.2(b)  
 
Footnote (x):   
"In the case of developing country Member s included in Annex VII, the 8-year 
period shall commence from the year in which they graduate out of Annex VII."  
 
(ii) Footnote to Article 27.4   
27.4 Any developing country Member  referred to in paragraph 2(b)
(y) shall phase out its 
export subsidies within the eight-year peri od, preferably in a progressive manner.... 
 
Footnote (y):  
 
"This will also include developing co untry Members who may graduate out of 
Annex VII."  
 
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