WORLD TRADE  
ORGANIZATION  G/SCM/Q2/BRA/31 
4 May 2011 
 (11-2320) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
  
 
 
SUBSIDIES 
 
Replies to Questions Posed by TURKEY1 Regarding the New and Full  
Notification of BRAZIL2 
 
  The following communication, dated 2 May 2011, is being circulated at the request of the 
Delegation of the United States. 
 
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Programs Contingent Upon the Use of Domestic Goods
 
 
 According to the Brazil's latest Trade Polic y Review (TPR) Report dated May 11, 2009, 
(WT/TPR/S/212/Rev.1) Brazil provides subsidies contingent upon the use of domestic goods 
which are not notified in her latest new and fu ll notification to the Committee on Subsidies and 
Countervailing Measures (SCM). 
  According to the page 62, 63 and 64 of the TPR Report "the Export Financing 
Program" (PROEX) and "BNDES (the Brazilian Development Bank) EXIM" programs aim at 
financing Brazilian exports of goods and services at  conditions similar to those obtainable in 
international markets.  However, the value of th is financing seems to be contingent upon the use 
of domestic content. 
  According to the page 82 of the TPR Report;  FINAME Program, which is administered 
by the BNDES, provides financing at preferential conditions in order to acquire new machinery 
and equipment of domestic manufacture.  This  program appears to have domestic content 
requirements. 
 
Question  
 Please explain why these programs were not no tified to the Committee on SCM and how 
they are consistent with Brazil's obligations unde r the Article 3 and 25 of the SCM Agreement? 
 
                                                     
 
1 G/SCM/Q2/BRA/26. 
2 G/SCM/N/186/BRA. 
 G/SCM/Q2/BRA/31 
Page 2  
 
  Reply
 
  Such programmes do not imply benefit to the r ecipient, since they aim at financing Brazilian 
exports of goods and services at conditions compatible with those obtainable in international markets.  
Therefore, there is no benefit as define d by Article 1 of the SCM Agreement. 
 
The Development and Diversification of Exports of States Programme
 
  According to Brazil's TPR Report at page 83, the Development and Diversification of 
Exports of States Programme, (State Exporter Programme), states that export less than 
US$ 100 million annually benefit from the programme in order to increase exports of small 
businesses, expand the range of products exported, diversify export market s and the insertion of 
new businesses in the exporting process of these st ates.  The programme consists of a range of 
support activities.  
Question 
  Please explain why this program was not notified to the Committee on SCM and how 
they are consistent with Brazil's obligations unde r the Article 3 and 25 of the SCM Agreement? 
 Reply
 
 
 The objective of this programme was the disse mination of information about international 
business opportunities and the vocational training aiming at developing entrepreneurship skills, 
knowledge and awareness in the field of foreign tr ade and international business.  As such, it could 
not be characterized as a subsidy.  Furtherm ore, the programme is currently not active. 
 
Regional Subsidies  
  According to the Brazil's latest TPR Report, Brazil provides regional incentives other 
than the ones mentioned in her latest new a nd full notification to the Committee on SCM. 
  - Export-Processing Zones 
 
 At the page 61 of the TPR Report of Braz il companies located in the export-processing 
zones (EPZs) may benefit from several incentives.   According to the Report, firms operating in 
EPZs must export 80 per cent of the turnover rel ated to the sales of goods and services in order 
to benefit from the program.  Thus this pr ogram appears to be contingent upon export 
performance. 
 
 - Free Trade Zones  
 At the page 79 of the TPR Report of Brazil it is stated that "incentives to companies 
established in the ZFM (Manaus Free Trade Zone ) are in the form of tax suspensions, 
reductions or exemptions, granted by the fe deral and state government."  Moreover, ZFM 
beneficiaries may be subsidized related direct ly to the exports under the Special Western 
Amazon Export Programme (PEXPAM).   G/SCM/Q2/BRA/31 
 Page 3 
 
 
  Question 
  Please explain why these programs were not no tified to the Committee on SCM and how 
they are consistent with Brazil's obligations unde r the Article 3 and 25 of the SCM Agreement? 
 Reply
 
 
 As of November 2008, no EPZ was in operation.  As stated in the last  Brazilian Trade Policy 
Review, no benefits of the Programme have been granted. 
 
 Zona Franca de Manaus (ZFM) is a soci al-economic programme aiming at regulating 
economic activity in northern Brazil.  As such, it al so aims at sustainable development, land use and 
the planning of the occupation and economic utiliza tion of the territory.  Brazil understands it has no 
distortive effects on exports or imports, although some  independent evaluations  have claimed that it 
fosters net imports. 
 
 
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