RESTRICTED  WORLD TRADE  
ORGANIZATION  G/SCM/M/57 
11 September 2006 
 (06-4319) 
Committee on Subsidies 
and Countervailing Measures  
 
 
MINUTES OF THE REGULAR MEETING 
HELD ON 25 APRIL 2006 
 
 
Chairperson:  Ms Victoria Campeanu (Romania) 
 
 
1. The Committee on Subsidies and Countervailing Measures ("the Committee") held a regular 
meeting on 25 April 2006. 
2. The Committee adopted  the following agenda:   
Page  
A. FYR OF MACEDONIA – REVIEW OF NEW LEGISLATIVE NOTIFICATION 
(G/SCM/N/1/MKD /1/SUPPL .1) .......................................................................................................2  
B. MEXICO – REVIEW OF NEW LEGIS LATIVE NOTIFICATION (G/SCM/N/1/MEX/SUPPL .2)..................2  
C. FOLLOW -UP WRITTEN QUESTIONS AS PART OF THE CONTINUING REVIEW OF 
NOTIFICATIONS OF NEW OR AME NDED LEGISLATION OR REGULATIONS .....................................2  
- G/SCM/Q1/CHN/57 – QUESTIONS FROM THE UNITED STATES REFERRING TO THE 
NOTIFICATION OF CHINA IN DOCUMENTS G /SCM/N/1/CHN/1/SUPPL .3 AND 
G/SCM/N/1/CHN/1/SUPPL .4 ..........................................................................................................2  
D. SEMI -ANNUAL REPORTS OF COUNTERVAILING ACTIONS (G/SCM/N/138) ....................................3  
E. PRELIMINARY AND FINAL COUNTERVAILING ACTIONS :  NOTIFICATIONS (G/SCM/N/136,  
G/SCM/N/37, G/SCM/N/139-141) ..................................................................................................3  
F. CONSTANT DOLLAR METHODOLOGY FO R GRADUATION FROM SCM ANNEX VII (B).....................4  
G. PERMANENT GROUP OF EXPERTS – ELECTION OF EXPERTS .........................................................4  
H. PROCEDURES FOR EXTENSIONS UNDER ARTICLE 27.4  OF THE AGREEMENT ON 
SUBSIDIES AND COUNTERVAILING MEASURES (G/SCM/W/535)...................................................4  
I. OTHER BUSINESS .......................................................................................................................10  
1. Export credit provided by China with respect to procurement of 
telecommunications equi pment by Tunisia ..........................................................................10  
2. Deadlines for the submission of relevant documents in the Article 27.4 process..............11  
J. DATE OF NEXT MEETING ............................................................................................................11  
K. ELECTION OF OFFICERS .............................................................................................................11  
 G/SCM/M/57 
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  A. 
FYR OF MACEDONIA – REVIEW OF NEW LEGISLATIVE NOTIFICATION 
(G/SCM/N/1/MKD /1/SUPPL .1) 
3. The Chairperson  recalled that items A and B of the ag enda dealt with the review of new 
notifications of countervailing duty legislation and/or regulations, in  accordance with the procedures 
adopted by the Committee at its special mee ting in April 1996 (document G/SCM/W/293).  These 
procedures provided, inter alia , that at each regular meeting the Committee would consider under the 
item "review of national legislation" notifications  of new or amended legislation not previously 
reviewed by the Committee circulated to Member s in all three WTO working languages at least six 
weeks prior to the scheduled date of the meeting.  Pursuant to that provision, there were two new 
notifications on the agenda of the present meeting, from the FYR of Macedonia and Mexico.   
4. Regarding the new notification received fro m the FYR of Macedonia, the Chairperson  noted 
that document G/SCM/N/1/MKD/Suppl.1 contained a notification of a Decision on Procedure and Method of Determination of Countervailing Duty that  had been published in the Official Gazette on 
28 April 2005.  The Committee had not received any written questions with respect to this 
notification. 
5. The Committee took note
 of the Chairperson's statement. 
B. MEXICO – REVIEW OF NEW LEGIS LATIVE NOTIFICATION (G/SCM/N/1/MEX/SUPPL .2) 
6. The Chairperson  noted that the Committee had received a notification from Mexico in 
document G/SCM/N/1/MEX/Suppl.2 concerning a De cree of the Ministry of the Economy that 
amended and supplemented various  provisions of the Foreign Trade Act.  The Committee had 
received no written questions on this notification.  
7. The Committee took note  of the Chairperson's statement.  
C. FOLLOW -UP WRITTEN QUESTIONS AS PART OF THE CONTINUING REVIEW OF NOTIFICATIONS OF 
NEW OR AMENDED LEGIS LATION OR REGULATIONS  
- G/SCM/Q1/CHN/57 – QUESTIONS FROM THE UNITED STATES REFERRING TO THE 
NOTIFICATION OF CHINA IN DOCUMENTS G /SCM/N/1/CHN/1/SUPPL .3 AND 
G/SCM/N/1/CHN/1/SUPPL .4 
8. The Chairperson  recalled that the Committee's procedures for the review of notifications of 
legislation provided for the possibility to revert back  to a previously reviewed legislative notification 
if the Secretariat received written questions concerni ng such legislation no later than six weeks before 
the date of the meeting.  In that event, Memb ers receiving written questions must submit written 
answers to those questions no later than two weeks pr ior to the meeting directly to the Member posing 
the questions and to the Secretariat for circulation.  In this connection, she noted that in October 2005 
the Committee had received questions from the United States (G/SCM/Q1/CHN/57) regarding a previously reviewed notification from China.  Th e Secretariat had recently received answers to these 
questions from China. 
9. The delegate of China
 gave a brief introduction to the answers, which had been circulated in 
document G/SCM/Q1/CHN/58 dated 24 April 2006. 
10. The delegate of the United States  thanked China for providing oral responses at the meeting. 
11. The Committee took note  of the statements made.    G/SCM/M/57 
 Page 3 
 
 
 12. The Chairperson  stated that the Secretariat would shortly circulate a document detailing the 
relevant deadlines for the submission of document ation relating to the review of legislative 
notifications to be reviewed at the next regular  meeting of the Committee at the end of October 2006.1 
D. SEMI -ANNUAL REPORTS OF COUNTERVAILING ACTIONS (G/SCM/N/138) 
13. The Chairperson  noted that a request to submit semi -annual reports pursuant to Article 25.11 
of the SCM Agreement for the period 1 July-31 D ecember 2005 had been circulated to Members in 
document G/SCM/N/138.  Members who had submitted  semi-annual reports of countervailing actions 
were identified in paragraph 1 of document G/SCM/N/138/Add.1.  These four Members were: 
Canada;  the European Communities;  Mexico;  and the United States.  To the extent possible, the 
semi-annual reports had been transl ated and circulated to the Committee and were included in the 
documents made available for the meeting.  No tifications had been received from 42 Members 
(including China) stating that they had not take n any action during the last six months of 2005 and 
these Members were listed in paragraph 2 of the above document. 
14. The delegate of Ecuador  reported that he had just notif ied that his country had taken no 
countervailing measures during the last two semesters of 2005. 
15. The Chairperson  amended the count of countries not  having taken countervailing measures 
over the period 1 July-31 December 2005 to 43. 
16. The delegate of the United States  noted that several rather  large economies had not yet 
provided their semi-annual reports and said that he would be interested to know when these reports 
were likely to be submitted.  In respect to the re port from the European Communities, he noted that 
there was no date of imposition provided for the me asures currently in place but only a reference to 
the dates of issuance of the relevant regulati ons, which made it difficult to track how long the 
measures had been in place. 
17. The delegate of the European Communities  replied that this was an issue that had already 
been discussed in the context of the Committee on Anti-Dumping Practices and that clearly any 
resolution of the discussions in that context would be equally valid in the area of subsidies and 
countervailing measures. 
18. There were no comments or questions regardi ng the semi-annual reports of Canada, Mexico 
and the United States. 
19. The Committee took note  of the statements made. 
E. PRELIMINARY AND FINAL COUNTERVAILING ACTIONS :  NOTIFICATIONS (G/SCM/N/136,  
G/SCM/N/37, G/SCM/N/139-141) 
20. The Chairperson  stated that notifications of pre liminary and final countervailing actions, 
circulated in documents G/SCM/N/136, G/SCM/N/137 and G/SCM/N/139-141, had been received from Canada, the European Communities, Japan, Mexico and the United States. 
21. There were no comments or questions on these notifications.  
                                                     
 
1 See document G/SCM/W/536/Rev.1 of 8 May 2006. G/SCM/M/57 
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  F. 
CONSTANT DOLLAR METHODOLOGY FO R GRADUATION FROM SCM ANNEX VII (B) 
22. The Chairperson  reminded Members that, pursuant to the Doha Ministerial Decision on 
Implementation-Related Issues and Concerns (document WT/MIN(01) /17, para. 10.1) - in which 
Ministers agreed that Annex VII(b) to the Agreement on Subsidies and Countervailing Measures include the Members that are listed therein until th eir GNP per capita reaches US$1,000 in constant 
1990 dollars for three consecutive years - as of 1 January 2003, the methodology set forth in 
G/SCM/38, Appendix 2 applied.  In 2003, 2004 and 2005, the Secretariat circulated Notes, contained 
in documents G/SCM/110 & /Add.1 and 2, upda ting GNP per capita for Members listed in 
Annex VII(b).  The Chairperson added that the S ecretariat would circulate new updated calculations 
when the necessary World Bank data became availabl e, which was likely to happen within the next 
few weeks.
2 
23. The Committee took note  of the Chairperson's statement. 
G. PERMANENT GROUP OF EXPERTS – ELECTION OF EXPERTS  
24. The Chairperson  stated that her informal consultations  with the delegation of China had made 
it clear that the position of China had not altered concerning this matter and that China was still 
unable to support a decision to appoint the two candidates to the Permanent Group of Experts.  She 
proposed that the Committee revert to this matter at  the next regular meeting and that it might be 
useful for the new chairperson to have informal cons ultations prior to that meeting in order to try and 
resolve the issue. 
25. The delegate of the European Communities  said that he fully supported this suggestion.  Since 
there were proposals currently on the table in the Rules Negotiations to address possible new roles for 
the Permanent Group of Experts, a timely resolution of this matter was desirable. 
26. The Committee took note  of the statements made. 
H. PROCEDURES FOR EXTENSIONS UNDER ARTICLE 27.4  OF THE AGREEMENT ON SUBSIDIES AND 
COUNTERVAILING MEASURES (G/SCM/W/535) 
27. The Committee had before it a communication, circulated in document G/SCM/W/535, 
received from Antigua and Barbuda; Belize; Barbad os; Dominica; Dominican Republic; El Salvador; 
Fiji; Grenada; Jamaica; Mauritius; Papua New Guinea; St. Kitts and Nevis; St. Lucia; and St. Vincent 
and the Grenadines.  The delegate of Barbados  made an introductory statement on behalf of these 
delegations.  He recalled that in 2002, after le ngthy and in-depth consultations, the Committee had 
agreed that a number of developing countries that  met certain criteria, as established in document 
G/SCM/39, would qualify for an extension of th e use of certain export subsidy programmes under 
Article 27.4 of the SCM Agreement.  This "fast-tra ck decision" also foresaw an annual notification 
procedure as well as transparency and stand-still arrangements to ensure that there would be no 
increase in the benefits accorded under these progra mmes.  The characteristics and challenges of the 
co-sponsors of the proposal contained in G/SCM/ W/535 were well recognized and the programmes in 
question had proved very useful in terms of allo wing countries with very limited export base and 
diversification and with a miniscule share of worl d trade to orient key sectors and companies towards 
the production of designated export-oriented pro ducts, diversification of  production and output, 
enhanced access to financial assi stance, increased knowledge of e xport markets, and research and 
development for crafting of an export market.  Aside from these market-oriented results, the 
maintenance of these schemes had had positive sp ill-over effects on employment, poverty reduction 
and the development of an indi genous knowledge base - all positive externalities, particularly for 
                                                      
2 See document G/SCM/110/Add.3 of 9 May 2006.  G/SCM/M/57 
 Page 5 
 
 
 small economies.  The proposal in G/SCM/W/535 was relatively simple and straight-forward and did 
not seek to make any change to the legal text of the SCM Agreement nor allow for a different 
interpretation of the extension process.  The proposal  simply recognized the continued benefits that 
the use of these schemes would have for the economi es involved and, as a counterpoint, the limited, if 
virtually non-existent, negative impact the re tention of these programmes would have on other 
countries and on the world trading system as a whole,  and asked for an extension of the time-frame 
from 2007 to 2018.  The proposal did not envisage a change in the criteria for applicability nor did it seek to extend or broaden the scope of the proce dures in G/SCM/39 to include additional schemes or 
countries.  The importance of the transparency, notification and stand-still arrangements for the co-sponsors remained absolute and it was proposed that the methodology governing these transparency 
arrangements be maintained.   
28. The delegate of Barbados recognized that, despite  the fact that the proposal had been floated 
to some delegations beforehand, this was the first real opportunity that many delegations might have 
had to examine the proposal.  Hence he did not antic ipate a great deal of in-depth discussion at this 
meeting.  However, there would be a need for a seri es of informal meetings to be held prior to the 
Autumn meeting of the Committee to allow delegati ons to seek clarification on any specific questions 
they might have.  In this regard, he drew atte ntion to the expanse of documentation emanating from 
the earlier discussions within the Committee on the ex tension of the transition period, which gave a 
fluid and concise picture of the nature of the speci fic Article 27.4 fast-track programmes, a recount of 
the questions, responses and discussions surrounding these programmes, and an annual snap-shot of 
the financial state and beneficiaries of these gain s that could be gauged from the annual notification 
procedures which each of the co-sponsors had adhere d to.  While there had been no change to these 
programmes since 2002 and the present, as there w as a responsibility to respect the standstill 
arrangements, the co-sponsors remained open to discussion of any queries that delegations might 
have.   
29. The delegate of Barbados stated that the co-s ponsors also wished to address, in a preliminary 
fashion, some of the issues that had been rai sed informally and which might benefit from some 
clarification.  As stated, the proposal was co-spons ored by a number of small, vulnerable economies.  
However, as noted in Footnote 2, the proposal did not wish to prejudice any action the other beneficiaries of the "fast-track" process might wish to propose, nor did it seek a decision that created a dedicated space for small, vulnerable economies.  The reality was that a number of small, vulnerable 
economies had pooled together their resources in an effort to submit a joint proposal for reasons of 
simplicity, economy and transparency.  The proposal e nvisaged a change in the date in paragraph 1(e) 
of G/SCM/39 from 2007 to 2018, and it did not seek to change or augment any other provision.  The proposal called for the preparation of an addendum  to document G/SCM/39 but the co-sponsors were 
flexible on the most appropriate and legally viable way to achieve this change.  The date of 2018 had 
been specified by the proponents after a certain degree  of internal analysis and dialogue with capitals.  
Although this date went beyond the timeframe anticip ated in the decision in G/SCM/39, that decision 
did anticipate, and make provision for, an extension, if the countries felt that the schemes remained important to the financial, econom ic and developmental needs of the proponents.  Most Members 
would appreciate the importance of having a clearly defined time-line, rather than seeking an extension on an annual, yet essentially ad hoc  basis.  The companies that benefited from these 
schemes would need to plan, prioritize and incorpor ate into their business strategy some degree of 
certainty and predictability that they could contin ue to utilise some of the provisions under these 
programmes.  Nonetheless, in the spirit of transpar ency and flexibility, the proponents were open to 
discussion of the specific date, including the questi on of a phase-out period.  This concept was not 
explicitly mentioned in the proposal  but the co-sponsors were of the view that a two-year phase-out 
period would remain a useful element. 
30. During informal consultations with other dele gations, the question had been asked why it was 
felt that an extension was necessary.  In this respect , the delegate of Barbados stated that apart from G/SCM/M/57 
Page 6  
 
  the importance of these programmes to the proponents'  development priorities, another aspect of the 
proposal concerned the need for countries to be ab le to benefit from what was hoped would be an 
enhanced market access regime, emanating from th is Round, which would permit the co-sponsors to 
support their small- and medium-sized enterprises and fledgling industries.  Subsidies were, of course, 
not the primary manner to achieve this objective but for the small economies these subsidy schemes 
were part of a total developmental package that could lead to enhanced capacity.  It was also 
necessary to recognize the limited growth of these econom ies in the past few y ears despite the use of 
these subsidy programmes, which was primarily due to their vulnerability to exte rnal shocks and even 
slight changes in global markets.  Some of the co-s ponsors had lost market space, been devastated by 
natural and man-made disasters and many of them were in a transition phase, which necessitated a 
move to new products and production techniques.   Although the subsidy schemes were not the 
panacea for these realities, they could help to steady and orient some of the small- and medium-sized 
enterprises towards confronting stru ctural problems and ultimately enabling them to benefit from the 
current developmental round.  He concluded by sa ying that the co-sponsors were willing to address 
any preliminary questions and that he looked forw ard to further discussion of the proposal in this 
Committee.  He asked that any questions be subm itted in writing to enable the co-sponsors to respond 
in the most effective manner.   
31. The delegate of Fiji
 stated that, as a co-sponsor, his country fully supported the statement 
made by Barbados regarding the proposal ci rculated in G/SCM/W/535.  He emphasized the 
importance attached by Fiji to an extension of th e transition period under Article 27.4 to strengthen 
Fiji's domestic manufacturing base, help in the creation of domestic employment and generate much-
needed foreign exchange earnings.  Tax incentiv es were closely embedded in Fiji's macroeconomic 
policy implementation as Fiji strived to attract fore ign direct investment.  Achieving Fiji's national 
development goals, which were aligned to the UN Millennium Development Goals, was a significant 
challenge and required flexible and accommodating trade rules.   
32. The delegate of El Salvador , as a co-sponsor of the proposal in G/SCM/W/535, wished to 
support the statement made by the delegate of Barb ados.  The procedures adopted in Doha, contained 
in G/SCM/39, have enabled El Salvador to mainta in incentives provided pursuant to legislation on 
free zones that are very important to El Salvador's  efforts to promote trade and diversify production.  
The proposed extension is of particular impor tance to a small and vulnerable economy such as 
El Salvador.   
33. The delegate of Papua New Guinea , as a co-sponsor, also fully supported the statement of 
Barbados.  Papua New Guinea utilized subsidies to su pport export-oriented companies, particularly in 
the mining sector, a vitally important area of its  economy.  Papua New Guinea had submitted annual 
notifications even though there had been no change to the programme in respect of which Papua New 
Guinea enjoyed an extension of the transition peri od.  The proposal to extend the procedures in 
G/SCM/39 simply recognized the continued benefi ts of the use of export subsidy schemes for 
development purposes.  Furthermore, given the small number of companies that were currently 
utilising the programmes, their negative impact on tr ading partners would be minimal.  The proposed 
extension until the year 2018 would enable countries like Papua New Guinea to undertake a thorough assessment of their policies to support affected  sectors with the aim of complying with WTO 
requirements.  At this point in time, limited re sources constrained the ability of these countries to 
assess the impact of an immediate phase-out of thei r export subsidies on individual companies and the 
economy as a whole.  
34. The delegate of Colombia
 stated that Colombia was currently not in a position to support the 
proposal in G/SCM/W/535 as it was still evaluating it.  While the co-sponsors had qualified themselves as small and vulnerable, they had not su bstantiated this qualification and it was not clear 
why all these countries should be considered small or vulnerable or both.  At least 40 per cent of the 
co-sponsors were economies that were heavily invo lved in international trade in services, which  G/SCM/M/57 
 Page 7 
 
 
 meant that these economies had an intrinsic strengt h in the production of services and were capable of 
generating growth and developmen t based upon the export of services.  This called into question the 
need for subsidies to support industrial development. She also considered that there were at least four 
different levels or sub-levels of economic development among the co -sponsors and that some of the 
countries in question were prosper ous and had very high per capita incomes.  Finally, the arguments 
presented regarding the need to maintain export su bsidy programmes would also apply to an economy 
such as that of Colombia and she wondered, in th is regard, how Members would react if Colombia 
were to ask for an extension under Article 27.4 to ap ply subsidies that Colombia had eliminated at the 
cost of great sacrifice to the private sector.  Colo mbia had learned from its experience that, if some 
sectors of the economy were favoured over other sectors, the favoured sectors would always find 
arguments why they should contin ue to receive subsidies.   
35. The delegate of Colombia stated that, apart from these general questions, her delegation had 
also specific questions for each of the co-sponsor s of the proposal in G/SCM/W/535, which her 
delegation would submit in writing.  The first question concerned which particular sectors had 
benefited in each of these countries from the subsidy schemes in question.  Secondly, she wished to 
know what the fiscal cost was of  each of these subsidy schemes and how each co-sponsor had taken 
that fiscal cost into account in its budget.  Thirdly, she asked for an assessment of the prospects of the 
specific sectors that benefited from the export s ubsidy schemes and an explanation of why those 
sectors necessitated an extension of subsidies until 2 018 instead of, for example, 2011 or 2035.  With 
reference to a point made by the delegate of Barb ados, she asked which studies had been carried out 
that showed that new products required the use of export subsidies and for how long such new 
products would necessitate export subsidies.  She concluded by saying that her delegation was 
concerned by the fact that in a number of re gular Committees and negotiating groups proposals were 
made by groups of Members that qualified themsel ves as small and vulnerable without providing any 
substantiation.  As a result, there were now firms in Colombia that considered that Colombia should 
also claim to be a small and vulnerable economy.  
36. The delegate of Antigua and Barbuda , speaking also on behalf of Dominica, Grenada, 
St. Kitts & Nevis, St. Lucia and St. Vincent & the Grenadines, stressed the importance of the proposal 
in G/SCM/W/535 to his country's economic growth  and development.  Antigua & Barbuda used 
export subsidy programmes to position itself in th e multilateral trading system and in the DDA 
negotiations.  He looked forward to the process of constructive discussion on the clarification of 
certain issues and to the ultimate support of the Committee to this proposal. 
37. The delegate of Costa Rica  stated that, as a beneficiary of the extension of the transition 
period pursuant to the procedures contained in docum ent G/SCM/39, his country reserved the right to 
request to be included in any decision to continue that extension.  He stressed that Costa Rica and 
some other Members that were not co-sponsors of the proposal under G/SCM/W/535 satisfied the criteria defined in paragraph 2 of G/SCM/39.  W ith regard to the various elements and criteria 
mentioned in the proposal in G/SCM/W/535 as characteristics of small, vulnerable economies, he 
considered that any discussion on an extension of  the decision in G/SCM/39 could only be guided by 
the criteria in paragraph 2 of that decision.  
38. The delegate of Jordan
 stated that, pursuant to the procedures contained in G/SCM/39, Jordan 
had been granted an extension of the transition period for the elimination of export subsidies in 
respect of the partial or total exemption from income  tax of profits generate d by exports provided for 
by Law No. 57 of 1985.  Following consultations  with the private sector, his Government had 
concluded to support the proposal in G/SCM/W/535.  Because the programme in respect of which 
Jordan benefited from an extension of the trans ition period had proved to be very effective in 
enhancing the competitiveness of the firms in question,  they had insisted on the need to continue the 
extension.  If this proposal in G/SCM/W/535 was in tended to apply to all Members that currently 
benefited from an extension of the transition period, Jordan was willi ng to be considered a co-sponsor G/SCM/M/57 
Page 8  
 
  of the proposal.  If, on the other hand, the proposal did not cover all those Members, Jordan would 
request that the Committee grant Jo rdan a further extension of the transition period along the lines 
proposed in G/SCM/W/535.   
39. The delegate of the Dominican Republic
 said that the extension of the transition period under 
the procedures set forth in G/SCM/39 had enable d the Dominican Republic to develop a series of 
local industries that had generated important economi c and social benefits.  A continuation of this 
extension would make it possible to continue the development process in many sectors of the economy.  The requested extension until 2018 woul d provide the predictability necessary to promote 
further industrial development.  
40. The delegate of the United States
 noted that that the special pr ocedures adopted as part of the 
Doha Implementation Decision were an excellent example of the ability of the WTO and of this 
Committee to address specific concerns of developing  countries within the context of existing rules.  
The obligations of the Members which had taken advantage of these special procedures relating to 
notification, transparency and standstill had gene rally been faithfully undertaken and the annual 
review of the notifications and a pproval of extensions had proceeded smoothly.  However, at the time 
the original decision was taken, it was the view of the United States and others that after a seven year 
extension the prohibited subsidies in question woul d have ended.  Whilst he  understood the argument 
that subsidies might be beneficial in certain ci rcumstances for development, the subsidies at issue 
were export subsidies, considered by many to be the mo st trade and market distortive.  In light of this 
fact, his delegation questioned whether anothe r lengthy extension under the same terms and 
conditions could truly be justified.  He noted, in this regard, that the full extent of the benefits 
currently being provided and the companies and indu stries that were benefiting were not known, nor 
had the proponents indicated if there would be any limits on the growth of these programmes or 
whether there would be definitive plans to termin ate these programmes at the end of the requested 
extension period.  Nevertheless, he expressed hi s delegation's willingness to consult with the 
interested parties.  In this context, he noted th at the existing mechanism w as scheduled to remain in 
effect until the end of 2007, with a two-year phase-ou t period thereafter.  He appreciated the advance 
notice given by the proponents that there was a d esire to obtain a further extension of time to 
eliminate the subsidies in question.  
41. The delegate of Australia  stated that Australia had a great interest in the proposal contained in 
G/SCM/W/535 and in the fact that the proponents were seeking an extension within the parameters of 
Article 27.4 and not a permanent exemption from th e application under Article 3.1(a) of the SCM 
Agreement.  However, he felt that an extensi on until 2018 could present some problems in terms of a 
potential two-tier system of treatment amongst countries.  The decision adopted at the Doha Ministerial had had positive outcomes in terms of the transparency of export subsidy programmes, 
including transparency with regard  to the intensity or product coverage of the programmes. While he 
welcomed the fact that the proposal in G/SCM/W/535 did not suggest an expans ion of the coverage of 
programmes, the issue of the terms and conditio ns of any further extension required careful 
consideration, particularly in light of the extende d time period in question.  A critical issue in this 
regard was the intensity of the programmes.  He noted that paragraph 3 of G/SCM/39 referred to the 
intensity and favourability of the programmes and he  sought confirmation from the proponents of the 
proposal in G/SCM/W/535 that, although there was no change in scope, the intensity of the 
programmes would not increase.  He also requested further guidance from the proponents as to 
whether they intended to progressively phase-out th ese programmes in terms of their intensity or 
favourability or whether they were seeking what app eared to be a more permanent exemption.  He 
also noted that it was not entirely clear how th e proposal would be taken forward and whether a 
decision adopted by Ministers was envisioned.  
42. The delegate of the European Communities
 thanked the proponents for putting the matter 
before the Committee in good time.  The prohibition of  export subsidies was one of the corner stones  G/SCM/M/57 
 Page 9 
 
 
 of the SCM Agreement and he therefore instinctiv ely treated with caution any seeking of exemptions 
to the prohibition, especially given the length of th e extension that was sought in the current proposal.  
He could not share the belief expressed in paragra ph 6 of the proposal that fuller integration of 
economies was easily achieved by  creating exceptions to the rules, but he did understand the 
justifications that had been put forward.  He not ed that the co-sponsors of the proposal were a more 
limited section of the WTO membership than those who were eligible under the procedures contained 
in G/SCM/39 and that might or might not turn out  to be a relevant factor in the Committee's 
consideration of the proposal.  A decision by the Committee to further extend  the transition period 
would require consideration of additional conditions, for example, with respect  to the phase-out of the 
programmes in question, or clarifications of ex isting conditions, notably regarding the stand-still 
provisions.   
43. The delegate of Ecuador  stated that his delegation was currently carefully studying the 
proposal in document G/SCM/W/535.  Apart from the distinction which Ec uador supported between 
developing countries and least-developed countries, Ecuador had always opposed any principle of 
discrimination among developing coun tries.  Thus it was very difficult for Ecuador to support an 
extension of the transition period as requested in  the proposal in G/SCM/W/535, especially because 
Ecuador granted no subsidies to its industrial or agricultural sectors and had made tremendous 
sacrifices in its economy in order to become a Member of the WTO.  Notwithstanding these difficulties, Ecuador was  competitive and successful  in the area of international trade.   
44. The delegate of Malaysia
 noted that the co-sponsors of the proposal in G/SCM/W/535 were 
looking only for an extension of time to maintain  the subsidies programme under Article 27.4 of the 
SCM Agreement, whereas all other notifications su ch as annual reviews were to remain in tact.  
Malaysia would like a little more time to study the im plications of the proposal and would be ready to 
partake in any further discussions on the matter to he ar further explanations on each co-sponsor's need 
for the extension and why an extens ion until the year 2018 was requested. 
45. The delegate of Canada  stated that Canada was still considering the proposal in 
G/SCM/W/535 and that his comments were therefor e of a general and preliminary nature.  He 
recalled that the objectives of the procedures agreed under G/SCM/39 were to provide an extension of 
the phase-out period of Article 27.4 for export subsid y programmes of a number of Members with the 
aim of helping those Members to ultimately fulfil  their WTO obligations.  In this regard, he was 
interested to know what efforts had been made to  phase out the programmes by the end of the period 
provided in the procedures, why those efforts had not been successful, and how they would be more 
successful in the future.  He further noted that the requested extension far outstripped the previous 
extensions granted in Doha.  Like Australia, his delegation also wondered how the proposal would be 
taken forward.   
46. The delegate of Mauritius  stated that many of the programme s referred to in the proposal in 
G/SCM/W/535 had played an important role in the socio-economic and financial needs of the 
proponents' economies and continued to do so.  Th e extension being sought would give the Members 
in question adequate comfort and space to meet thei r obligations with respect to these programmes.  
He also wished to emphasise that his country was fully committed to meeting the transparency 
requirements if the additional ex tension was to be granted. 
47. The delegate of Japan  stated that Japan understood the development needs of the smaller 
economies and that the procedures in G/SCM/39 had b een established to meet t hose needs.  However, 
the proposal in G/SCM/W/535 for a further extens ion of the transition period required careful 
consideration in order not to impair the balan ce of rights and obligations among WTO Members, 
bearing in mind that some Members had already el iminated their export subsidies pursuant to the 
procedures in G/SCM/39.  G/SCM/M/57 
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  48. The delegate of Barbados
 said that he appreciated the understanding shown by many 
delegations for the particular concerns underlying the proposal in G/SCM/W/535.  In respect of the 
points made by Colombia and Ecuador, he stated that the proponents were open to having informal 
discussions with those delegations.  Regarding the issue of the definition of small, vulnerable 
economies, he stated that it was widely recognized  in the WTO that the countries that had made the 
proposal in G/SCM/W/535 were small economies and that WTO Members collectively had 
recognized, through the Ministerial Declarations adopted at the Doha and Hong Kong Ministerial 
Conferences, that the concept of small, vulnerabl e economies was a valid one and that there was a 
need to find some kind of methodology to deal w ith the specific problems a nd characteristics of these 
economies.  Although the concept of small economies was mentioned in the narrative sector of the 
proposal in G/SCM/W/535, the operative part of th e proposal did not mention that concept.  The 
proposal also contained a footnote that acknowle dged that there were other Members currently 
benefiting from an extension of the transition pe riod under G/SCM/39 and that specifically indicated 
that the proposal was without prejudice to any deci sion that those other beneficiaries might wish to 
take.  As stated in the intervention, the co-sponsor s were not seeking a dedicated space or a decision 
based on small economies specifically.  He looke d forward to receiving in writing the specific 
questions raised by the delegation of Colombia a nd felt that these could proba bly be dealt with more 
effectively in an informal context.   
49. The delegate of Barbados further stated that  the proponents of the proposal in G/SCM/W/535 
were not seeking a permanent exemption.  The f act that, with the technical assistance of the 
Secretariat,  Barbados had been able to phase-out  subsidy programmes for which it had been granted 
an extension of the transition period based on Article  27.4 alone showed that the proponents were not 
opposed in principle to the concept of a phase-out  of export subsidy programmes.  Because small 
developing economies often lacked the expertise n ecessary to carry out a legal assessment of how to 
remove the export subsidy component of a progra mme, continued availability of such technical 
assistance was important.  He stressed that proponent s had acted in good faith and that their request 
for a further extension stemmed from developments th at were not foreseen at the time of the adoption 
of the decision in G/SCM/39.  In reply to the dele gate of Colombia, it was his understanding that the 
decision in G/SCM/39 was the result of discussion of a proposal put forward by a group of small economies and that Colombia had also benefited from  this decision by being able to retain certain 
programmes for a period of time.  Finally, he ask ed if delegations could submit any questions in 
writing.   
50. In response to a proposal by the Chairperson to hold informal consultations on this matter, the 
delegate of Colombia
 stated that it was ready and available fo r any kind of consultations but that the 
most productive way of moving forward would be on the basis of a questionnaire, which Colombia 
would be preparing in the near future. 
51. The Committee took note  of the proposal made in document G/SCM/W/535 and of the 
statements made and agreed  that informal consultations would take place at an appropriate time to 
provide delegations with the opportunity to conti nue the exchange of views on this proposal.   
I. OTHER BUSINESS  
1. Export credit provided by China with respect to procurement of telecommunications 
equipment by Tunisia  
52. The delegate of the European Communities  stated that he would like to discuss a matter 
which the EC considered to be of primary importan ce with regard to a subsidized export credit from 
China to Tunisia in the framework of an inte rnational call for bidding for telecommunications 
equipment.  According to information received, the Chinese Government had provided Chinese companies participating in the call for tender a fina ncial facility on terms and conditions that appeared  G/SCM/M/57 
 Page 11 
 
 
 to be more favourable than the accepted benchmar ks under the SCM Agreement.  As an Italian 
company was participating in the above-mentioned tender, both the Tunisian and Chinese authorities 
had been requested by the Italian authorities to c onfirm that the informati on was correct through an 
official note verbale  to the Tunisian Government and the Chinese Embassy in Tunis, and through a 
letter to the Chinese Ministry of Co mmerce and the Exim Bank.  As yet,  no replies had been received. 
The OECD Secretariat had also been informed.  As  the deadline for the tenders was very close, the 
EC wished to protect its legitimate interests and wa s therefore raising this matter in the Committee as 
a matter of urgency.  The delegate of the EC noted that the Chinese offer appear ed to be in prohibition 
of export subsidies under Article 3 of the SCM Agreem ent, and wished to draw Members' attention to 
this issue.  He requested China to describe the terms of the export credit in question and to explain 
how it intended to bring the measure into  conformity with its WTO obligations. 
53. The delegate of China  stated that his delegation had onl y received this information very 
recently and that it had taken note of the concern of the EC.  This was a very particular case, and his 
delegation would look into the matter prior to discussing it with the EC. 
54. The Committee took note  of the statements made.  
2. Deadlines for the submission of relevant documents in the Article 27.4 process  
55. The Chairperson  presented the deadlines for the submission of documentation in relation to 
the Article 27.4 process.  She stated that Member s would recall that at the October 2005 meeting, the 
Committee had agreed on the dates for its mandate d reviews of the standstill and transparency 
commitments relating to the extension of the tran sition period for certain Members' export subsidy 
programmes.  To allow for an exchange of ques tions and answers prior to the Autumn 2006 meeting 
of the Committee, Members were requested to s ubmit the required notification by 30 June 2006 .  The 
Chairperson also wished to remind the Committe e that any written questions would be due by 
1 September 2006  and that any written responses s hould be submitted by 6 October 2006 . 
56. The Committee took note  of the Chairperson's statement.  
J. DATE OF NEXT MEETING  
57. The Chairperson  stated that the next regular meeting of the Committee would be held during 
the week of 23 October 2006 and that the precise date would be announced in due course. 
58. The Committee took note  of the Chairperson's statement. 
K. ELECTION OF OFFICERS  
59. The Chairperson  recalled that the Chairman of the C ouncil for Trade in Goods had carried out 
informal consultations on the nomination of Chai rpersons for the different bodies operating under the 
auspices of the Council for Trade in Goods and that  the proposed nominations had been duly noted by 
the Council.  As concerned this Committee, the Chairman of the Council for Trade in Goods had 
proposed the nomination of Mr. Keiya Iida of Japan as Chairperson of the Committee. 
60. The Committee elected  Mr. Iida as Chairperson by acclamation. 
61. Regarding the position of Vice-Chairpers on for the Committee, the Chairperson  reported that 
she had conducted some informal consultations, th rough the Secretariat, and on that basis it was 
proposed that Mr. Pablo Klein of Mexico be elected as Vice-Chairperson of the Committee. G/SCM/M/57 
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  62. The Committee elected
 Mr. Klein as Vice-Chairperson by acclamation. 
__________