WORLD TRADE  
ORGANIZATION  G/SCM/Q4/URY/5 
5 February 2007 
 (07-0487) 
Committee on Subsidies and 
Countervailing Measures Original:   Spanish 
 
 
 
PROCEDURES FOR EXTENSIONS UNDER ARTICLE 27.4 
OF THE AGREEMENT ON SUBSIDIES AND 
COUNTERVAILING MEASURES 
 
Replies to the Questions Posed by Japan1, Canada2 
and Peru3 
   The following communication, dated 2 February 20 07, is being circulated at the request of the 
delegation of Uruguay. 
 
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JAPAN 
 
1. Please show the reasons why the lengthy exte nsion of 11 years is indispensable uniformly 
for all the export subsidy programmes referred to in the above documents. 
 
Reply
 
 
 See the reply to Question 3 posed by Canada.  
2. Please explain, one by one for each of th e export subsidy programmes referred to in the 
above documents, how each of those export  subsidy programmes are integrated in the 
development strategies of the relevant Member, why a further extension beyond 2007 is 
necessary for its economic and fina ncial needs, and why the extension period has to be through 
to the end of 2018.  
Reply
 
 
 The extension is being requested for onl y one programme, as explained in document 
G/SCM/N/146/URY.  The reasons why it is necessary to  maintain the programme are set forth in the 
replies to Questions 2 and 3 posed by Canada.  
CANADA 
 
1. Recalling that the objective of G/SCM/39 was to provide an extension of the transition 
period for the progressive elimination of export subsidy programmes of a number of Members, as called for in Article 27.4 of the SCM Agreement, we would ask the proponents of 
                                                     
 
1 G/SCM/Q4/URY/1. 
2 G/SCM/Q4/URY/2. 
3 G/SCM/Q4/URY/3. G/SCM/Q4/URY/5 
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  G/SCM/W/535 and G/SCM/W/537 to inform the Committee on Subsidies and Countervailing 
Measures of the individual efforts, if any, they  have undertaken to gradually bring these export 
subsidy programmes into conformity with their WTO obligations.   
Reply
 
 
 The Eastern Republic of Uruguay considers that document G/SCM/39 merely sets out the fast-track procedure for approving extensions und er Article 27.4 of the SCM Agreement.  The 
document neither decreases nor increases rights an d obligations under the Agreement on Subsidies 
and Countervailing Measures.  Neither document G/SCM/39 nor Article 27.4 of the SCM Agreement 
calls for progressive elimination of export subsidy programmes, so we consider that the incentives 
programme we are implementing is fully in compli ance with our WTO obligations and, moreover, it 
is clear that progressive elimination is not mandatory.   Nevertheless, the Uruguayan Government has made efforts, with the implementation of 
common industrial policies in MERCOSUR, to bring about adequate incorporation of its automotive 
sector into the regional market, with harmonious inte gration into the region's production chains.  Once 
these efforts bear fruit, the stage will be set to begin the progressive dismantling of subsidy programmes.  2. Could the proponents of both documents al so explain how further extension of this 
phase-out period would ensure that these efforts a re finally successfully undertaken in order to 
avoid a similar situation at the end of any ne w extended phase-out period for certain export 
subsidy programmes?     
  
Reply
 
 
 The proposal in documents G/SCM/W/535 and G/SCM/W/535/Add.1 refers only to the amendment of paragraph 1(e) of document G/SCM/39.   The proponents' objective is to continue 
benefiting from the extension until 2018 because of our special needs in respect of regional market 
integration.  The rights and obligations set out  in document G/SCM/39 and Article 27.4 of the 
SCM Agreement would, therefore, remain unchanged. 
 
 The relevant decisions will be made on the basis of developments in MERCOSUR 
community industrial policies and in accordance wi th the procedures and time-frames laid down in 
the aforementioned provisions.  3. Recalling that the previous extension of the phase-out period for certain export subsidy 
programmes was for an additional period of 6 years, could the proponents of both documents explain the rationale for a proposed extension of 11 years?    
Reply
 
 
 The proposed date of 2018 should be viewed in  the light of the discussions that took place 
prior to adoption of G/SCM/39.  At that time, th e proponents of this document had already explained 
their concerns and the reasons for phasing out th eir programmes over a sufficiently long period of 
time, approximately 20 years.  Bearing in mind these discussions, the extension proposed in document G/SCM/W/535 should not be treated as or made out to be a very long extension because in fact the 
conditions which existed and justifie d the extension in 2001 still exist. 
  One of the main objectives in proposing the da te of 2018 for renewal of the extension period 
is to guarantee predictability and certainty for busines s people and investors in order to offset the lack  G/SCM/Q4/URY/5 
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  of a clearcut industrial policy in MERCOSUR.  Only  a sufficiently long period of time would meet 
this important objective.   The programme notified by the Eastern Republic  of Uruguay has had a very positive effect, 
since it has enabled the beneficiary industrial activity,  in a context of significant trade liberalization in 
the sector, to re-orientate its activities towards e xportation and to remain operative, with the real 
possibility of integration into regional productio n chains once the necessary policy framework is 
developed.   Finally, it is important to note that the propo sed extension concerns a longer transition period 
under the same conditions as those negotiated in th e Uruguay Round agreements  and subsequently at 
the Doha Ministerial Conference.  Members should th erefore bear in mind that this new extension is 
being requested because of the specific integration need s that were put forward to justify the extension 
and the fast-track procedure adopted in document G/SCM/39.  
 So as to ensure that the proponents are able to become fully integrated and obtain real benefits 
from the multilateral trading system, development st rategies should be designed for the medium and 
long term.  
PERU  
 
1. Do the co-sponsors of proposal G/SCM/W/535 intend to extend only the programmes which have been notified to date under Ar ticle 27.4 of the Agreement on Subsidies and 
Countervailing Measures and which are included in Annex A of their proposal or do they intend to include any other export subsidy progr amme which fulfils the criteria set forth under 
Article 2 in document G/SCM/39? 
 Reply
 
  As stated in documents G/SCM/W/537/Revs. 1 and 2, the request for an extension would be 
applicable to all Members and to existing progr ammes complying with paragraph 2 of document 
G/SCM/39.   
 
2. Under what laws and enabling regulations are the programmes listed in Annex A of the 
proposal implemented?  
Reply
 
 
 The programmes which Uruguay wishes to main tain under the requested extension are not 
listed in Annex A of the proposal.   Nevertheless, the laws and enabling regula tions for the programmes can be found in the 
annual notifications regarding the procedures set forth in document G/SCM/39.  The annual 
notification for 2006 is document G/SCM/N/146/URY. 
 
3. Which sectors and products benefit from the programmes? 
 
Reply
 
 
The only sector to benefit is the industry which pr oduces vehicles for the transport of goods and/or 
passengers and parts thereof.  G/SCM/Q4/URY/5 
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  4. What amount is disbursed by the St ate to the programmes listed in Annex A? 
 
Reply
 
  The duty generated between 1 January 2005 and 31 December 2005 amounts to 
US$17,678,000. 
 
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