WORLD TRADE  
ORGANIZATION  G/SCM/Q2/BRA/14 
29 March 2006 
 (06-1431) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES  
 
Replies to Questions from the EUROPEAN COMMUNITIES1 
Regarding the New and Full Notification of BRAZIL2 
 
  The following communication, dated 27 March 2006, is being circulated at the request of the Delegation of Brazil.  
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  1.  GENERAL:  
 According to different press reports in January 2003, the Ministry of Development, 
Industry and Trade (MDIC) announced that th e government aimed to increase exports by ten 
per cent during this year, create 400,000 new export-related jobs, and strengthen official institutional support in terms of tr ade finance and export promotion. 
  The latest trade policy review of Brazil (WT/TPR/S/140) mentions on pages 78 to 87 a 
variety of export promotion programmes and in centives as well as export processing zones, 
which require that companies have to export 100 per cent of their production in order to be 
allowed to establish themselves.   The present notification does not mention any of these activities.  Can Brazil please explain how these goals were implemented and wh y the programmes figuring in the TPR are 
not included in the notification?  
Reply
 
 
 As the press reports divulged in the Brazilia n media, the Minister Luiz Fernando Furlan 
always announces to the journalists the export goals to be reached to each year.  These 
announcements are based on the projection of the numbers of the international trade, not having any relation with subsidies.  
 With regard to the promotion progra mmes and incentives in place during 2003/2004 and 
mentioned in the latest Trade Policy Review of Brazil (WT/TPR/S/140, pages 78-87), it should be recalled that, as previously clarified by Brazil (WT/TPR/M/140/Add.1, TPR of BRAZIL.  Minutes of Meeting.  Addendum.), such programmes and incentives are entirely consistent w ith the provisions of 
the Agreement on Subsidies and Countervailing Measur es.  They do not constitu te subsidies – reason 
for not including them in the New and Full Notification of Brazil.  
                                                     
 
1 G/SCM/Q2/BRA/13 
2 G/SCM/N/123/BRA G/SCM/Q2/BRA/14 
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   Moreover, concerning export processing zones (EPZ), Brazil once again would like to clarify 
that, within the Brazilian territory, there are no EPZ in operation or under consideration to become 
operative. 
 
2.  FISHERIES SECTOR  
1. Notification of the PROFROTA programme  
 
 Responding to a written question that the Eu ropean Communities put during Brazil’s fourth 
Trade Policy Review on the notification of the PR OFROTA programme (providing financing to the 
acquisition, construction, modernization, adaptati on and equipping of fishing vessels) the Brazilian 
authorities replied that "The PROFROTA programme is  expected to enter into force and to become 
operational in 2005 and its end is envisaged for 2007.  Notification under Article 25 of the ASCM will 
be made as soon as the programme enters into  force." (see document WT/TPR/M/140/Add.1 of 
15 February 2005 p. 87).  The European Comm unities note that "DECRETO Nº 5.095" of 
1 June 2004 implemented some of the provisions of  "LEI N° 10.849" of 23 March 2004, which is the 
basic law for the PROFROTA programme.  Th e European Communities also note that the 
aforementioned "DECRETO Nº 5.095" has been re placed by a new regulation (DECRETO Nº 5.474 
of 22 June 2005) which includes similar provisions as the previous one.  
Questions 
 
 Can Brazil clarify whether the PROFROTA programme was already operational in 2004 as a result of the publication of "DECRETO N° 5.095" of 1 June 2004?  
  If it was the case that the PROFROTA pr ogramme was already operational in 2004, 
could Brazil explain why it has not included in the notification?  
  Could Brazil provide additional informat ion concerning the actual status of the 
programme (e.g. whether funds have already been used for the financing of vessel construction 
and/or modernisation)? 
 Reply
 
 
 Although PROFROTA was first regulated in 2004 (Decreto Nº 5.095), the programme has 
become operational only in September 2005 (after th e publication of Decreto Nº 5.474 of June 2005). 
This is the reason for not including the programme in  the latest New and Full Notification of Brazil.  
 
 Concerning the actual status of the programme, no disbursement has been made so far and the 
Brazilian Government is still in the process of an alysing the applications submitted by private 
companies.  
2. Compatibility of the PROFROTA progr amme with Brazil’s proposals for new 
disciplines on fisheries subsidies 
 
 Brazil has submitted substantial negotiating pr oposals with regard to new disciplines for 
fisheries subsidies (see for example document TN/RL/W/176 of 31 March 2005).   Questions   Does Brazil consider that the PROFROTA programme fulfils all the conditions set out in the aforementioned mentioned document to benefit of Special and Differential Treatment for  G/SCM/Q2/BRA/14 
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  developing countries?  More specifically, are each  and every one of the fisheries in which funded 
vessels will operate, covered by Fisheries Manage ment Bodies (Regional, International)?  
  If yes, could Brazil specify the fish sp ecies and the corresponding fisheries bodies?  
 
 Has Brazil made an assessment on whether the PROFROTA programme could result in 
a subsidized fleet tonnage in excess of 5 per cent of the limits and contingencies of fishing managerial schemes established under relevant int ernational organizations, or whether the total 
"ad valorem" subsidization of a fleet exceeds 5 per cent of the value the production of a fishery in which Brazil does not operate under the limit s and contingencies of fishing managerial 
schemes established under relevant international organizations? 
  Has Brazil assessed whether the PROFROTA programme could have negative impacts 
on what Brazil calls "fisheries patently at risk"?  
 How will Brazil make sure that PROFROTA financing does not cover operating losses 
of fishing companies and that these funds do no t benefit Illegal, Unreported and Unregulated 
(IUU) fishing? 
 
Reply
 
 
 Although the Brazilian Government recogni ses the progress achieved so far in the 
negotiations on fisheries subsidies, it should be note d that at this juncture one can not foresee or 
prejudge the results of said negotiations and the ev entual rules agreed upon for subsidisation in the 
fisheries sector. In that context the proposal subm itted by Brazil is a "work in progress" and has been 
continuously refined with special regard to sugges tions formulated by participant delegations during 
the Rules Group meetings.  Therefore, once new rul es are established, Brazil will be most eager to 
discuss the compliance of PROFROTA with the multilateral disciplines.       
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