WORLD TRADE  
ORGANIZATION  G/SCM/N/155/BRA 
11 October 2007 
 (07-4369) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
New and Full Notification Pursuant to Article XVI:1 of the  
GATT 1994 and Article 25 of the Agreement on  
Subsidies and Countervailing Measures  
 
BRAZIL 
  
 The following notification, dated 8 October 2007, is being circulated at the request of the 
delegation of Brazil.    
_______________ 
 
 
 The following notification constitutes Brazil's subsidies notification for the fiscal years 
of 2005 and 2006.     This notification does not prejudge the nature or legal status of the programmes herein under 
GATT 1994 and Articles 1 and 2 of the Ag reement on Subsidies and Countervailing 
Measures (ASCM).  Data may reflect approximations, estimates or preliminary information.  
Technical or legal inaccuracies may have been inadve rtently introduced in the text in the attempt to 
make the description of the programmes sufficiently illu strative, but also straightforward and concise.  
For information purposes, Brazil has included certa in programmes which arguably are not specific 
within the meaning of the Agreement.    G/SCM/N/155/BRA 
Page 2  
 
  TABLE OF CONTENTS 
  
  Page
 
 
I. INDUSTRIAL INCENTIVES..................................................................................................3  
A. CAPACITY BUILDING AND COMPETITIVENESS ENHANCEMENT  
 IN INFORMATION TECHNOLOGY ..................................................................................................3  
B. INDUSTRIAL & AGRICULTURAL /CATTLE BREEDING TECHNOLOGY DEVELOPMENT 
PROGRAMME ............................................................................................................................... 4 
II. REGIONAL INCENTIVES.....................................................................................................5  
A. AMAZON DEVELOPMENT AUTHORITY AND NORTHEAST REGION  
 D EVELOPMENT AUTHORITY .......................................................................................................5  
B. INVESTMENT FUNDS FOR THE AMAZON , THE NORTHEAST REGIONS AND THE STATE OF 
ESPÍRITO SANTO (FINAM /FINOR /FUNRES )..................................................................................7  
C. CONSTITUTIONAL FUNDS FOR FINANCING THE NORTHEAST , THE NORTH  
 AND THE MIDWEST REGIONS (FNE/FNO/FCO)..........................................................................8  
D. DEVELOPMENT FUNDS FOR THE AMAZON AND THE NORTHEAST REGIONS (FDA/FDNE)........9  
III. FISHERIES INCENTIVES ...................................................................................................10  
A. PROGRAMME FOR DIESEL OIL SUPPORT ...................................................................................10  
 
  
  G/SCM/N/155/BRA 
 Page 3 
 
 
  I. INDUSTRIAL INCENTIVES 
A. CAPACITY BUILDING AND COMPETITIVENESS ENHANCEMENT IN INFORMATION TECHNOLOGY  
1. Title of programme  
  Capacity building and competitiveness enhanc ement in Information Technology and related 
fields.   
 2. Period covered by the notification
 
  From January 2005 to December 2006.   
 
3. Policy objective and/or purpose
 
  To encourage manufacturers of information technology goods to invest in research and development activities, create new products a nd improve the country's competitiveness.   
 
4. Legislation and authority
 
  Law 8248/91, firstly modified by Law 10176/01 and, more recently, altered by 
Law 11077/04.  
 Within their respective area of responsibility,  the Ministry of Finance, the Ministry of 
Development, Industry and Foreign Trade and the Ministry of Science and Technology manage the 
provision of benefits such as partial tax exemption a nd the follow up of the counterparts offered, such 
as research and development programmes execution.    
5. Form of subsidy
 
  Exemption or reduction of the indirect Tax on Industrialized Products (IPI) for information 
technology goods.     Reduction of IPI for raw materials, intermedia te goods and material from used packages.  To 
qualify for this regime, companies must invest at  least 5 per cent of the turnover from product sales 
(after the deduction of other indirect taxes) and th e value of the acquisition of the products benefited 
by the programme, in research and development activities.     According to a framework defined in the legislation, the incentives provided by the 
programme began to be phased out in March 2005 with a view to termination in 2019.   
 6. To whom and how the subsidy is provided
 
  Industrial enterprises, through tax credits provi ded by the Federal Government at the amount 
of due deductive taxes.   
 
 Research Institutes, Centers and Laboratori es, through financial support from industrial 
enterprises which choose to outsource the execution of research projects.    7. Total amount
 
 
 Fiscal Year 2005:  R$ 1.87 million (1 million 870 thousand reais).    Fiscal Year 2006:  R$ 2.15 million (estimate).   G/SCM/N/155/BRA 
Page 4  
 
  8. Duration
 
  The programme will be phased out by 2019.    9. Trade Effects
 
 
 N.A.    B. I
NDUSTRIAL & AGRICULTURAL /CATTLE BREEDING TECHNOLOGY DEVELOPMENT 
PROGRAMME  
1. Title of programme  
  Industrial Technology and Agricultural/C attle Breeding Technology Development 
Programme (PDTI & PDTA). The objective is to pr ovide incentive for research and development in 
the above mentioned areas. 
 
2. Period covered by the notification
 
  From January 2005 to December 2006.    3. Policy objective and/or purpose
 
 
 To foster technological improvement for industrial and agricultural/cattle breeding 
enterprises, through research and development in itiatives, in order to create new projects and 
processes or improve existing projects, as well as promote industrial and agricultural training.  It also seeks to promote partnerships between research ce nters and universities, institutes and enterprises 
managed by the enterprises through a permanent infrastructure of technological management.   
 4. Legislation and authority
 
  The Industrial Technology and Agricultura l/Cattle Breeding Technology Development 
Programme (PDTI & PDTA) was established by Law 8661 of 2 June 1993 and regulated by 
Decree 949 of 5 October 1993.  The Ministry of Science and Technology is responsible for the 
administration of the programme.     Law 9532 (10 December 1997) reduced the benef its granted to enterprise's research and 
development programmes.  Law 10332 (19 Decemb er 2001) and Decree 4195 (11 April 2002) set 
forth provisions to enterprises which had projects approved under the PDTI/PDTA programmes.  This 
law was revoked in January 2006, thus terminating the programme.  Firms with ongoing projects were 
authorized to keep benefiting from PDTI/PDTA until their completion.    5. Form of subsidy
 
 
 Deductions of income tax due on the sum of  the expenses in technological research and 
development activities and of Tax on Industrialized  Products (IPI) due on equipment, machinery and 
devices directly allocated to research and technolog ical development and also on instruments, parts 
and tools associated with those goods.    G/SCM/N/155/BRA 
 Page 5 
 
 
  6. To whom and how the subsidy is provided  
  The beneficiaries are industrial and agricultural/cattle breeding enterprises.  The amount of the subsidy is proportional to the value of the ex penses on research and development.  For instance, 
the amount of the IPI tax break depends on the value of machinery and equipment acquired for 
research and development purposes.   
 7. Total amount
 
  Fiscal Year 2005:  R$ 34 million.   
 Fiscal Year 2006:  R$ 14 million (until June 2006).   
 8. Duration
 
  The programme was established in 1993 and was terminated in January 2006.  Only 
enterprises that had PDTI/PDTA projects approve d before January 2006 can still benefit from the 
programme.  The maximum time period for executing a project is five years.    9. Trade effects
 
  N.A.   
 
II. REGIONAL INCENTIVES 
A. A
MAZON DEVELOPMENT AUTHORITY AND NORTHEAST REGION DEVELOPMENT AUTHORITY  
 "Superintendência para o Desenvolvimento da Amazônia" (SUDAM), the Amazon Region 
Development Authority, was established by Law 5 174, dated 27 October 1966.  "Superintendência 
para o Desenvolvimento do Nordeste" (SUDENE), the Northeast Region Development Authority, was 
established by Law 3692, dated 15 December 1959.  Provisional Measures 2156-5 and 2157-5, of 
August 2001, extinguished both authorities and th e programmes they administered.  However, 
contractual obligations incurred prior to those m easures will be respected and disbursements will be 
made until 2013 by the development agencies wh ich replaced both SUDAM and SUDENE ("Agência 
do Desenvolvimento da Amazônia – ADA" and "A gência de Desenvolvimento do Nordeste – 
ADENE", respectively).1   
                                                      
1 On 3 January 2007, SUDAM and SUDENE were reestablished by Complementary Laws 124 
and 125.   G/SCM/N/155/BRA 
Page 6  
 
  1. Title of programme
2 
  Former SUDAM and SUDENE  programmes provide assist ance to the economically 
disadvantaged Amazon and Northeast re gions by means of tax breaks.   
 
2. Period covered by the notification
 
  From January 2005 to December 2006.    3. Policy objective and/or purpose
 
 
 To reduce economic and social imbalances between the Brazilian regions by means of 
compensatory mechanisms for the development of the North and Northeast Regions.     The area covered by SUDAM/ADA is denominated "Legal Amazônia", or the Amazon 
Region, encompassing the states of Acre, Amapá, Amazonas, Mato Grosso, Pará, Rondônia, Roraima, 
Tocantins, and part of the state of Maranhão.  The Amazon Region is an area of continental 
dimensions covering 5,046,143 square kilometers and corres ponding to 59 per cent of Brazil's 
territory and approximately 70 per cent of the so -called Pan-Amazon or C ontinental Amazon, which 
has a population of approximately 22 million inhabita nts heavily concentrated in urban areas and 
scattered widely across a vast rural area.  The jurisdiction of SUDENE/ADENE encompasses the states 
of Piauí, Ceará, Rio Grande do Norte, Paraíba, Pe rnambuco, Alagoas, Sergipe, Bahia and Maranhão, in 
addition to the north of State of Espírito Santo and an  area of the state of Minas Gerais included in the 
so-called "polígono das secas" (drought area in Northeastern Brazil).   
 4. Legislation and authority
 
 
 Programmes, formerly ad ministered by SUDAM and SUDENE, are now under the 
responsibility of the Ministry of National Integra tion.  Law 9532/97 regulates  the tax exemptions and 
reductions. Provisional Measure 2199/01 is th e most recent regulation on the matter.   
 5. Form of subsidy
 
 
 Income tax exemptions and reductions.    6. To whom and how the subsidy is provided
 
 
 Beneficiaries are industrial and agricultural enterprises with undertakings in the Amazon or 
Northeast Regions.   
                                                      
2 The Constitution of Brazil, in its article 3, item III of Title I, regarding the Fundamental Principles, 
considers that "the fundamental objectives of the Federative Republic of Brazil are to eradicate poverty and 
substandard living conditions and to reduce social and regional inequalities".  In Section IV (article 43, 
paragraph 2, item III) of Chapter VII, Title III, which refe rs to the Organization of th e State considers that "the 
regional incentives shall include, among others, as pres cribed by law, exemptions, reductions or temporary 
deferment of federal taxes owed by individuals or by lega l entities".  In article 151, item I, Section II of Title VI, 
regarding Taxation and Budget considers that "it is forbidden for the Union:  to institute a tribute which is not 
uniform throughout the entire national territory (...), it being allowed to grant tax incentives for the purposes of 
promoting the balanced social and economic development of the various regions of the country".  In article 165, paragraphs 6 and 7, Section II of Chapter II, Public Fina nces, of the previous Title, considers that "the budget 
bill shall be accompanied by a regionalized statement on the effect on revenues and expenses, deriving from 
exemptions, amnesties, remissions, subsidies and benefits of a financial, tributary and credit nature (§ 6).  The budget set forth (...) in consistence with the pluriannual plan, shall include the functions of reducing 
interregional inequalities, according to population criteria (§ 7)".    G/SCM/N/155/BRA 
 Page 7 
 
 
  7. Total amount  
 
Tax Exemption/Reduction (R$ million) 
 
Fiscal Year SUDAM SUDENE 
2005 636.47 933.24 
2006 856.75 1,256.23 
 Source:  National Treasury.   
 
8. Duration  
 
 In 2005, credit terms of subsidies granted by former SUDAM and SUDENE started being 
adjusted to comply with the deadline of December 2013 established by law.   
 9. Trade effects
 
 
 N.A.   
 B. I
NVESTMENT FUNDS FOR THE AMAZON , THE NORTHEAST REGIONS AND THE STATE OF 
ESPÍRITO SANTO (FINAM /FINOR /FUNRES ) 
1. Title of programme  
 
 "Fundo de Investimento da Amazônia" (A mazon Investment Fund – FINAM), "Fundo de 
Investimento do Nordeste" (Northeast Regi on Investment Fund – FINOR) and "Fundo de 
Recuperação Econômica do Estado do Espírito Santo" (Fund for the Economic Recovery of the State 
of the Espirito Santo – FUNRES).    
2. Period covered by the notification
 
  From January 2005 to December 2006.    3. Policy objective and/or purpose
 
 
 To reduce economic and social imbalances between the Brazilian regions by means of 
compensatory mechanisms for the development of th e North (Amazon) and Northeast regions and for 
the state of Espírito Santo.    4. Legislation and authority
 
 
 FINOR and FINAM previously administered  by SUDAM and SUDENE are now under the 
responsibility of the Ministry of National Integration – MI. Banco da Amazônia S.A. – BASA and Banco do Nordeste do Brasil S.A. – BNB are respectively the financial agents of the Funds.  FUNRES is administered by Grupo de Recuperação Econômi ca do Estado do Espírito Santo – GERES and Banco 
de Desenvolvimento do Espírito Santo S.A. is the financial agent of this fund.   
  The Federal Revenue Secretariat and the Nati onal Treasury Secretariat of the Ministry of 
Finance are charged with the funding mechanisms of resources to FINAM, FINOR and FUNRES.     The main legislation is the following:  Law 8167, of 16 January 1991;  Law 9532, of 
10 December 1997, Law 9808, of 20 July 1999 and Decree-lay 880, of 18 September 1969.   G/SCM/N/155/BRA 
Page 8  
 
  5. Form of subsidy
 
  Risk capital investments through pr imary subscription of debentures convertible into stock, at 
a ratio of 70 per cent in convertible debentures and 30 per cent in non-convertible debentures.  
In 2000, Provisional Measure 2058 extinguish ed the non-convertible debentures.   
 
6. To whom and how the subsidy is provided
 
  The beneficiaries are legal persons that implemen t a project considered to be relevant to the 
region.  The project, in order to be implem ented with FINAM, FINOR and FUNRES financial 
assistance, should involve activities that foster regional or local development.   
 7. Total amount
 
 
FINOR/FINAM/FUNRES Fiscal benefits (R$ million) 
 
Fiscal Year FINAM FINOR FUNRES 
2005 7.43 22.75 5.07 
2006 17.55 35.39 4.99 
 Source:  National Treasury.   
 
8. Duration  
 
 Expiration is scheduled for December 2013 (Law 9532/97).    9. Trade effects
 
 
 N.A.   
 C. C
ONSTITUTIONAL FUNDS FOR FINANCING THE NORTHEAST , THE NORTH AND THE MIDWEST 
REGIONS (FNE/FNO/FCO) 
1. Title of programme  
 
 "Fundos Constitucionais de Financiamento do Nordeste, do Norte e do Centro-Oeste" 
(FNE/FNO/FCO):  Constitutional Funds for Financ ing the Northeast, the North, and the Midwest 
Regions.    2. Period covered by the notification
 
 
 From January 2005 to December 2006.    3. Policy objective and/or purpose
 
 
 To reduce economic and social imbalances between the Brazilian regions by means of 
compensatory mechanisms for the development of the North, Northeast and Midwest regions.   
 
4. Legislation and authority  
  The Ministry of National Integration and the Deliberative Council of the Development 
Authorities of the North and Northeast Regions  and the Deliberative Council of the Midwest  G/SCM/N/155/BRA 
 Page 9 
 
 
  Constitutional Financing Fund are the authorities.  Th e financial agents of the Funds are Banco da 
Amazônia S.A., Banco do Nordeste do Brasil S.A. and Banco do Brasil S.A.   
  The relevant legislation is the following :  Law 7827, of 27 September 1989, as amended by 
Law 10177, of 12 January 2001.
3   
 
5. Form of subsidy  
  Loans.    
6. To whom and how the subsidy is provided
 
  According to the legislation, the beneficiar ies of loans backed by Constitutional Fund 
resources are producers and companies, whether natural or legal pers ons, as well as production 
cooperatives, that carry out productive activities in the crop/livestock, mineral, industrial and agro-
industrial, tourism, infra-structure, commerce and service sectors of the North, Northeast and Midwest 
Regions.    7. Total amount
 
 
FCO/FNE/FNO Contracted loans (R$ million) 
 
Fiscal Year FCO FNE FNO 
2005 1,468.08 4,173.93 976.32 
2006 1,444.35 4,588.18 986.26 
 Source:  Ministry of National Integration.   
 
8. Duration  
  Loans backed by Constitutional Financi ng Fund resources have been granted since 
September 1989.  The Constitutional Funds have no pre-established time limits.   
 9. Trade effects
 
 
 N.A.    D. D
EVELOPMENT FUNDS FOR THE AMAZON AND THE NORTHEAST REGIONS (FDA/FDNE) 
1. Title of programme  
 
 "Fundo de Desenvolvimento da Amazônia" (FDA), Amazon Development Fund, and "Fundo 
de Desenvolvimento do Nordes te" (FDNE), Northeast Region Development Fund.   
 2. Period covered by the notification
 
 
 From January 2005 to December 2006.    3. Policy objective and/or purpose
 
  To provide funding for productive investme nts in the areas covered by SUDAM and 
SUDENE (see p. 7).   
                                                     
 
3 See also Complementary Law 125, of 3 January 2007.   G/SCM/N/155/BRA 
Page 10  
 
  4. Legislation and authority
 
  Authorities are the Ministry of National Integration, SUDAM/ADA, SUDENE/ADENE and the Deliberative Council of the Development Author ities of the North and Northeast Regions.  Banco 
da Amazônia S.A. and Banco do Nordeste do Brasil S.A. are the financial agents of the Funds.   
 
 The relevant legislation is Provisional Measu res 2156-5 and 2157-5 (articles 4, 5 and 6 of 
both).
4    
 5. Form of subsidy
 
 
 Loans in the form of convertible debentures.    6. To whom and how the subsidy is provided
 
 
 The beneficiaries of loans backed by Deve lopment Fund resources are enterprises that carry 
out productive activities in the sectors of crop/liv estock, mineral, industrial and agro-industrial, 
tourism, and infra-structure in th e Amazon and Northeast regions.   
 7. Total amount
 
 
FDA/FDNE Contracted loans (R$ million) 
 
Fiscal Year FDA FDNE 
2005 - - 
2006 502.56 - 
 Source:  Agência de Desenvolvimento da Amazônia (ADA).   
 
8. Duration  
  Loans backed by Development Fund resour ces have been granted since 2006 with the 
deadline of December 2013.    
9. Trade effects
 
  N.A.    
III. FISHERIES INCENTIVES 
A. P
ROGRAMME FOR DIESEL OIL SUPPORT  
1. Title of programme  
  Programme for Economic Subvention to the Price of Diesel Oil Used by Fishing Vessels.   
 
2. Period covered by the notification
 
  From January 2005 to December 2006.   
                                                     
 
4 As amended by article 19 and 16 of Law Complementary 125 and 124, dated 3 January 2007.    G/SCM/N/155/BRA 
 Page 11 
 
 
  3. Policy objective and/or purpose  
  To equalize the price of diesel  oil paid by national fishing vessels with the international market 
price.    
4. Legislation and authority
 
  The Programme was established by Law 9445, of 14 March 1997, regulated by Decree 4969, of 30 January 2004, and by the Secretariat fo r Aquaculture and Fisheries (SEAP) Normative 
Instruction 18, of 28 August 2006.  The Secretaria t is responsible for the administration of the 
programme.   
 5. Form of subsidy
 
  The reimbursement of the difference (if below 25 per cent) between the diesel oil price paid 
by the beneficiary and the international market price.   
 6. To whom and how the subsidy is provided
 
  Recipients:  Fishing vessel owners or charte rs (natural or legal persons);  professional 
fishermen and fishing industries.  
 
 Benefits will be granted when there is a diffe rence of up to 25 per cent between the price of 
the fuel paid by national vessels and the international market price.   
 7. Total amount
 
 
 Fiscal Year 2005:  R$ 6.250 million.    Fiscal Year 2006:  R$ 19.530 million (this fi gure includes payments related to previous 
years).   
 
8. Duration
 
 
 Not defined.    9. Trade effects
 
 
 N.A.   
  
__________