WORLD TRADE  
ORGANIZATION  G/SCM/Q2/ARG/32 
27 April 2010 
 (10-2209) 
Committee on Subsidies and 
Countervailing Measures Original:   Spanish 
 
 
 
SUBSIDIES 
 
Replies to the Questions Posed by the UNITED STATES1 Regarding the  
New and Full Notifications of ARGENTINA2 
 
  The following communication, dated 23 April 2010, is being circulated at the request of the delegation of Argentina.  
_______________ 
 
  The United States submitted follow-up questions (document G/SCM/Q2/ARG/29) and subsequently further questions in relation to the following programmes:  
Questions posed in document G/SCM/Q2/ARG/29
: 
 
• Special Regime for Turnkey Exports 
• Import Regime for Used Production Lines 
• Imports of Goods Forming Part of Large-Scale Investment Projects 
• Cash Refund for Local Auto Parts 
 
Further questions (G/SCM/Q2/ARG/30 ): 
 
• Pre-Export and Post-Export Financing from  the BICE (Investment and Foreign Trade 
Bank) 
• Pre-Export and Post-Export Financing provide d by the State-owned Banco de la Nación 
Argentina (BNA) 
• Loans for Regional Exportable Production by the Federal Investment Council (CFI) 
• Incentives Regime to Improve the Co mpetitiveness of Local Auto Parts 
• Export Financing for Argentine Fisheries. 
 
 Firstly, it should be noted that none of the programmes mentioned by the United States were 
notified by the Argentine Government to the Committee on Subsidies and Countervailing Measures, 
given that Argentina considers that they do not c onstitute notifiable subsidies under Article XVI:1 of 
the GATT 1994 or Article 25 of the Agreement on Subsidies and Countervailing Measures.  
Nevertheless, Argentina has responde d to the United States' questions in order to contribute to the 
transparency of the multilateral trading system.  
 Below are the specific replies to the questions  posed by the United States for submission to 
the Committee on Subsidies and Countervailing Measures. 
                                                     
 
1 G/SCM/Q2/ARG/29 and G/SCM/Q2/ARG/30. 
2 G/SCM/N/155/ARG and G/SCM/N/186/ARG. G/SCM/Q2/ARG/32 
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F
OLLOW -UP QUESTIONS FROM THE UNITED STATES IN DOCUMENT G/SCM/Q2/ARG/29 : 
Special regime for turnkey exports  
 In response to the United States' questions, Ar gentina stated that its regime for turnkey 
exports cannot be classified as a "specific subsidy" under the WTO Subsidies Agreement.  
However, publicly available information indica tes that this programme would meet that 
definition.  Specifically, this programme provides a financial contribution in the form of import 
duty rebates, which confer a benefit upon the recipients.  Further, the above-mentioned subsidy appears to have several conditions, one of which is that the domestic component (physical goods 
and services) may not be less than 60 per cent of th e contractual f.o.b. value.  Argentina's reply 
also confirms that contracting must take the form  of "turnkey export contracts".  To the extent 
that the above-mentioned subsidy is contingent  upon export or upon the use of domestic over 
imported goods, this programme would appear to be deemed specifi c under Article 2.3 the 
Subsidies Agreement. 
 Please explain further why Argentina's reg ime for turnkey exports does not qualify as 
being subject to the notification requirements of Article 25 of the Subsidies Agreement.  In 
addition, please explain how this programme is  consistent with Article 3 of the Subsidies 
Agreement, given that subsidies under this prog ramme appear to be contingent upon export 
and the use of domestic over imported goods. 
Reply
 
 Argentina has already explained in document G/SCM/Q2/ARG/27 why it does not consider 
that the Special Regime for Turnkey Exports cons titutes a subsidy prohibited under Article 3 of the 
SCM Agreement, or required to be notified under Article 25 thereof.  In view of the additional 
questions posed by the United States, Argentina wish es to avail itself of this opportunity to further 
clarify, and state other grounds justifying, its position.  
 The Regime for Turnkey Exports seeks to promote the international provision of services, not 
domestic production or goods export.  Article 3 of Decree No. 870/03, which establishes this benefit, 
provides as follows:  
Article 3 – For the purposes of this Decree, "t urnkey exports" shall be understood to mean: 
 
 - Construction of a plant or structure; 
 - supply and installation of elements or goods to that end;  - management and supervision of assembly;  - development of working methods;  - assistance with start-up; 
 - training of operating personnel;  and 
 - provision of all services required to deliv er the final product to which the contract 
relates. 
 
 Likewise, turnkey exports must involve the export of services comprising, at the very least, the following activities: 
 
 - Design, calculation and descriptive plans for construction, installation and systems; 
 - provision of documentation on work ing methods, procedures and controls; 
 - technical assistance for implementation;  and/or  - control and supervisi on of construction work.  G/SCM/Q2/ARG/32 
 Page 3 
 
 
   
 As can be seen, all the activities which this programme seeks to promote consist essentially of the provision of "services".  Argentina therefore ma intains that this regime is not subject to the 
disciplines of the SCM Agreement, the aim of wh ich is to regulate subsidies granted for the 
production and export of goods.  Argentina instead c onsiders that it could possibly be subject to 
disciplines on subsidies (currently non-existent) established within the framework of the General 
Agreement on Trade in Services (GATS).   For the reasons set forth above, Argentina cons iders that the programme under review can not 
be classified as a subsidy under Article 1 of the SCM Agreement (neither, therefore, as a subsidy 
prohibited under Article 3 thereof).  Consequent ly, Argentina is not required to notify it under 
Article 25 of this Agreement.  
Import regime for used production lines
 
 In response to the United States' questions, Argentina stated that this regime does not 
meet the definition of a specific subsidy set out in Articles 1 and 2 of the Subsidies Agreement.  
However, publicly available information indicat es that this programme meets these criteria.  
Specifically, this programme provides a financial contribution in the form of duty exemptions, 
which confer a benefit upon the recipients.  Further, Argentina's reply confirms that one of the requirements to be eligible for subsidies under this  programme is the use of domestic inputs.  To 
the extent that the above-mentioned subsidies are contingent upon the use of domestic over 
imported goods, this programme would appear to be deemed specific under Article 2.3 of the 
Subsidies Agreement. 
 Please explain further why Argentina's Import  Regime for Used Production Lines does 
not qualify as being subject to the notification requirements of Article 25 of the Subsidies Agreement.  In addition, please explain how this programme is consistent with Article 3 of the 
Subsidies Agreement, given that this programme appears to be contingent upon the use of 
domestic over imported goods. 
Reply
 
 When replying to the questions posed by  the United States contained in document 
G/SCM/Q2/ARG/27, Argentina also set out the reas ons why it considers that the Import Regime for 
Used Production Lines does not constitute a s ubsidy notifiable under Article 25 of the 
SCM Agreement.  In view of the renewal of this  question by the United States, Argentina wishes to 
provide further clarification with regard to the following:   Argentina considers that the regime unde r review is not inconsistent with the 
SCM Agreement.  Article 3.1(b) of this Agreemen t does prohibit "subsidies contingent ... upon the 
use of domestic over imported goods", but is desi gned to impede the application of measures 
preventing imported goods from being at a competitiv e disadvantage in relation to domestic goods.  
Argentina is of the opinion that this is not the ai m of the regime under review.  On the contrary, the 
benefit conferred by the programme in question is  the reduction to zero of the tariff on imports of 
capital goods intended for eligible investment proj ects (Article 8 of Resolution No. 511/2003).  
Consequently, a comprehensive analysis of the opera tion of the Programme demonstrates that its aim 
is precisely to expedite imports, not to displace them by domestic products. 
  Argentina therefore considers that the bene fit in question does not constitute a subsidy 
prohibited under Article 3.1(b) of the SCM Agreemen t.  Furthermore, this programme is not specific 
within the meaning of Article 2 of the SCM Agreem ent and, consequently, Argentina is not required 
to notify it pursuant to Article 25.2 thereof. G/SCM/Q2/ARG/32 
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Imports of goods forming part of large-scale investment projects
 
 In response to the United States' questions, Argentina stated that this programme does 
not meet the definition of a specific subsidy set out in Articles 1 and 2 of the Subsidies Agreement or a prohibited subsidy under Article 3.  However, this programme provides a 
financial contribution in the form of tariff reductions, which confer a benefit upon the 
recipients.  As such, this programme meets the definition of a subsidy set out in Article 1 of the Subsidies Agreement.  Further, Argentina's reply co nfirms that one of the requirements set by 
the implementing authority under this programme is the use of domestic inputs.  And while it is 
only one of a number of requirements set by the implementing authority, to the extent that the 
above-mentioned subsidies are conditioned upon th e use of domestic over imported goods, this 
programme would appear to be deemed specific under Article 2.3 of the Subsidies Agreement. 
 Please explain further why this programme does not qualify as being subject to the 
notification requirements of Article 25 of the Su bsidies Agreement.  In addition, please explain 
how this programme is consistent with Article 3 of the Subsidies Agreement, given that this 
programme appears to be contingent upon the use of domestic over imported goods. 
Reply
 
 As in the cases of the programmes referred to ab ove, Argentina has already explained why it 
considers that it is not required to notify the Import Programme for Goods Forming Part of Large-Scale Investment Projects.  Nevertheless, in view of the further questions posed by the United States, Argentina wishes to set out the following additional reasons. 
 
 The programme under review follows similar l ogic to that of the Import Regime for Used 
Production Lines, described above, in that its resulti ng benefit is also a reduction of import duties on 
machinery, equipment and facilities within the frame work of a project to im prove the competitiveness 
of the applicant companies (Articles 1, 10 and 11 of Resolution No. 256/2000, updated text).  
Argentina considers that, as in the case of the progr amme studied in the preceding section, this type of 
investment incentive is not covered by the prohib ition under Article 3.1(b) of the SCM Agreement, 
given that the aim of the programme is not to grant competitive advantages to domestic products over 
imported ones, but, quite the contrary, to facilita te the importation of foreign goods by exempting 
them from import duties.  
 For the reasons set forth above, Argentina considers that the subsidy in question does not 
constitute a subsidy prohib ited under Article 3.1(b) of the SC M Agreement.  Furthermore, this 
programme is not specific within the meaning of Ar ticle 2 of the SCM Agreem ent and, consequently, 
Argentina is not required to notify it pursuant to Article 25.2 thereof.  Cash refund for local auto parts
 
 In response to the United States' questions, Argentina stated that this programme is 
consistent with Article III of the GATT 1994 as we ll as Article 3 of the Subsidies Agreement.  
However, Argentina's reply confirms this pr ogramme provides a benefit to the auto parts 
industry in the form of a "payment of a cash refund on the value of purchases of local auto parts, i.e. those with a non-local content of no t more than 30 per cent".  As such, the subsidies 
under this programme appear to be contingent upon the use of domestic over imported goods.  
If so, this programme would be deemed specific under Article 2.3 of the Subsidies Agreement. 
 Please explain further why this programme does not qualify as being subject to the 
notification requirements pursuant to Article 25 of  the Subsidies Agreement.  In addition, please  G/SCM/Q2/ARG/32 
 Page 5 
 
 
  explain how this programme is consistent with Article 3 of the Subsidies Agreement, given that 
this programme appears to be contingent upon the use of domestic over imported goods. 
Reply  
 The regime established pursuant to Decree  No. 774/05 is no longer in force given that, 
pursuant to Resolution No. 166/06, the period of validity of the regime and the period for the 
submission of projects was 5 July 2005 to 5 July 2008.  It should be noted that the beneficiaries of the 
programme were Ford, General Motors , Toyota, Renault and Dana S.A. 
 
FURTHER QUESTIONS SUBMITTED BY THE UNITED STATES (G/SG/Q2/ARG/30 ): 
 As a general matter, it appears that Arge ntina administers several subsidy programmes 
that were not included in this subsidy notifica tion.  For example, Argentina's 2007 WTO Trade 
Policy Review provided information on several s ubsidy programmes, including the following: 
• Pre-Export and Post-Export Financing fr om the BICE (Investment and Foreign 
Trade Bank). 
• Pre-Export and Post-Export Financing pr ovided by the State-owned Banco de la 
Nación Argentina (BNA). 
• Loans for Regional Exportable Production by the Federal Investment 
Council (CFI). 
• Incentives to Improve the Compet itiveness of Local Auto Parts. 
• Export Financing for Argentine Fisheries from Banco Nación. 
 For each of these programmes, please explain whether the programme still exists and, if 
so, why the programme is not notifiable pursu ant to Article 25 of the Subsidies Agreement. 
 
Reply  
• Pre-Export and Post-Export Financing Cred it Lines from the BICE (Investment and 
Foreign Trade Bank) and Banco de la Nación  Argentina (BNA), and Loans for Regional 
Exportable Production by the Federal Investment Council (CFI) 
 Argentina considers that it is not required to notify these programmes under Article 25.2 of 
the SCM Agreement given that, to the extent that all these programme s establish objective criteria or 
conditions for the granting of credit, they can not be considered "specific" within the meaning of 
Article 2.1 of the SCM Agreement. 
 
 Furthermore, none of these programmes constitu tes a prohibited subsidy under Article 3 of 
the SCM Agreement, given that the credits are gr anted at interest rates similar to those which 
recipients would have to pay if they borrowed on in ternational capital markets in order to obtain funds 
of the same maturity and other credit terms and de nominated in the same currency, and do not secure 
a "material advantage", as provided for in point (k ) of the Illustrative List in Annex I to the 
SCM Agreement.  Furthermore, to the extent that  all these programmes establish objective criteria or 
conditions for the granting of credit, they can not be considered "specific" within the meaning of 
Article 2.1 of the SCM Agreement.  G/SCM/Q2/ARG/32 
Page 6  
 
   The following is a brief analysis of the cond itions for the granting of credit under each of the 
programmes under review.  
• Pre-Export and Post-Export Financing from the BICE 
 - Pre-export financing 
 
Beneficiaries Exporters, producers and manufacturers, service providers. 
Coverage Primary products, manufactured products of agricultural and industrial origin, and 
services in general destined for the foreign market. 
Amount to be financed Up to 75% of the f.o.b. value of the export or amount of the services. 
Minimum amount to be 
financed US$20,000 
Maximum amount to be 
financed US$2,000,000 
Term Adapted to the productive cycle, dispatch and negotiation of payment instruments 
for exported goods and services. 
 
 - Post-export financing  
Beneficiaries Production sectors 
Coverage Primary products, manufactured products of agricultural and industrial origin, 
durable goods and capital goods. 
Amount to be financed Up to 100% of the f.o.b. value. 
Minimum amount to be 
financed US$20,000 for capital goods, durable goods, services and other goods. 
US$200,000 for industrial plants and turnkey projects.  
Maximum amount to be 
financed US$3,000,000 for capital goods, durable goods, services and other goods.  
US$15,000,000 for industrial plants and turnkey projects. 
Term In accordance with the agreed time-frame fo r the export effected and in conformity 
with foreign exchange regulations. 
 
• "Pre-Export and Post-Export Financing provide d by the State-owned Banco de la Nación 
Argentina (BNA)" 
 Firstly, Argentina would like to clarify that  the programmes in question were not mentioned 
in its Trade Policy Review (WT/TPR/S/176). 
 
 Secondly, it advises that no "post-financing" credit line exists.   Finally, Argentina wishes to report that Banc o de la Nación Argentina provides two credit 
lines for foreign trade - "pre-financing" and "finan cing" - which finance operations relating to both 
agricultural and industrial goods, the characteristics of which depend both on the sector and on the 
loan amount.  
The following is a brief analysis of the conditions for granting credit under each of the 
programmes in question. 
  G/SCM/Q2/ARG/32 
 Page 7 
 
 
  Pre-export financing : 
 
The "pre-export financing" granted by the Banco de la Nación Argentina (BNA) is a loan in 
foreign currency, granted prior to the shipment of the goods to be exported, to finance the various 
stages of the production and marketing of the export goods. 
 
This credit line is intended for exporters fro m the agricultural, industrial and mining sectors 
which are customers of the BNA and have an approved credit limit.  
The benefits conferred by the BNA under this credit facility include the provision of loans in 
United States dollars of up to 80 per cent of the f.o.b. value and designed to secure working capital for 
a period of up to 180 days.  In certain circumstances,  this period may be extended to 270 or 360 days, 
depending on the production cycle of the goods to be exported.  Export financing
: 
 
This "financing" is in foreign currency for th e forward sale of goods of Argentine origin on 
foreign markets with payment in cash.  
To this end, the BNA has a medium and long-term export financing scheme for capital goods 
and turnkey export contracts, "without recourse", a nd a short-term export financing scheme for goods 
in general (includes durable consumer goods), "w ith recourse" or "without recourse" (forfeiting). 
 
• "Loans for Regional Exportable Production by the Federal Investment Council (CFI)" 
Scope Financing of exports and of activities li nked to the production of export goods. 
Beneficiaries Micro-enterprises and SMEs which export, produce and/or supply goods or 
inputs. 
Amount to be financed Maximum of US$150,000 per firm, up to 70% of the total investment. 
Conditions / Benefits Pre-export financing:  Up to 180 days 
Post-export financing:  Up to 18 months 
Interest rate LIBOR + 1% 
Executing agency/ 
implementing authority Federal Investment Council (CFI) 
Duration Indefinite 
 
• "Export Financing for Argentine Fisheries" 
 Firstly, Argentina would like to clarify that this programme was not mentioned in its Trade 
Policy Review (WT/TPR/S/176).   Argentina also wishes to report that there is no credit line for fisheries sector exports. 
 
 
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