WORLD TRADE  
ORGANIZATION  G/SCM/Q4/LCA/6 
23 November 2006 
 
 (06-5652) 
Committee on Subsidies  
and Countervailing Measures Original:   English 
 
 
 
PROCEDURES FOR EXTENSIONS UNDER  
ARTICLE 27.4 OF THE AGREEMENT ON SUBSIDIES  
AND COUNTERVAILING MEASURES 
 
Replies to Questions Posed by CANADA1;  COLOMBIA2; 
JAPAN3;  PERU4 and the UNITED STATES5 
 
 
 The following communication, dated 21 November 2006, is being circulated at the request of 
the Delegation of Saint Lucia. 
 
_______________ 
 
 
CANADA  
 
Q1. 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 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
 
  Saint Lucia is of the view that document G/SC M/39 seeks to further clarify the procedures for 
extensions under Article 27.4 of the ASCM.  This  document neither reduces nor does it increase the 
balance of rights and obligations under the ASCM.     The first sentence of Article 27.4 mentions the phase out of export subsidies within the eight-
year period, “ preferably ” in a progressive manner.  Conseque ntly, it is Saint Lucia’s understanding 
that it is under no obligation to progressively elim inate subsidies but to adopt said approach “if 
possible”.  Should a developing country deem it nece ssary to apply export subsidies beyond the eight-
year period, Article 27.4 provides a mechanism for seeking an extension.  Document G/SCM/39 section 1(f) also provides for the possibility of seek ing a continuation of the extension pursuant to 
SCM Article 27.4, thereby taking into account the possibility that a developing country might (for 
economic, financial, and developmen t needs) require additional time to  eliminate export subsidies.   
 
                                                     
 
1 G/SCM/Q4/LCA/2 
2 G/SCM/Q4/LCA/1 
3 G/SCM/Q4/LCA/4 
4 G/SCM/Q4/LCA/5 
5 G/SCM/Q3/LCA/10-G/SCM/Q4/LCA/3/Rev.1 G/SCM/Q4/LCA/6 
Page 2  
 
   Saint Lucia is currently reviewing its incentives regime (with support from the 
Commonwealth Secretariat) and considers the request  for an extension (until the year 2018) essential 
to its efforts to implement recommendations/findi ngs in a manner consistent with the country’s 
economic development needs.  Q2. Could the proponents of both documents also 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 contained in G/SCM/W/535 refers only to the amendment of paragraph 1(e) of 
G/SCM/39.  The view of the proponents is to cont inue benefiting from the extension throughout 2018, 
based on their special economic, financial and de velopment needs.  Therefore, the rights and 
obligations contained in document G/SCM/39 an d Article 27.4 of the ASCM would remain 
unchanged.   While Saint Lucia is unable to predict the future , the country is of the view that the current 
review of the incentive regime will provide the framework for achieving a policy environment that 
fosters economic growth and development.     
  
Q3. 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 choice of the suggested date of 2018 should  be read in the light of the discussions that 
had taken place before the adoption of G/SCM/39.  At  that time, the proponents of this document had 
already explained their concerns and the reasons  to eliminate their programmes over a long enough 
timeframe, possibly extending over 20 years.  In th e light of those discussions and taking into account 
the relevant and legitimate financ ial, economic and development need s of Saint Lucia, the extension 
proposed in G/SCM/W/535 should be rega rded as an appropriate extension.   G/SCM/Q4/LCA/6 
 Page 3 
 
 
  COLOMBIA  
 
• Fiscal Incentives Act No. 15 of 1974  
• Free Zone Act No. 10 of 1999  
• Micro and Small Scale Business Enterprises Act No. 19 of 1988  
 
Q1. In the case of each of the programmes, please provide the most up-to-date information 
available regarding the number of beneficiary en terprises classified according to industrial 
sector. 
 
Reply  
 
Fiscal Incentives Act No. 15 of 1974  
 
No. of Beneficiaries :   2001   120 
    Currently 155  Current Beneficiary Industries :  
• Beverages (Beer, Rum, Malt, Water, Fruit Juices, Teas) 
• Food (Pasta, Agro-processed Products, Dairy Products) 
• Garment (T-Shirts, School Uniforms) 
• Furniture (Wooden, Upholstered, beddings) 
• Electrical Assembly (CATV Filters, Inductors, Thermostat, Transformers) 
• Arts and Craft (Basketry, Wood Craft, Jewellery, Leather Craft, Ceramics) 
• Information Technology (Call/Telemarketing Centres, Data Capture and Conversion) 
• Plastic (Plastic Bags) 
• Chemicals (Paint, Household Chemicals, Perfumes, Insec ticides, Industrial Gases) 
• Construction (Doors, Windows, Roofing Mate rials, Solar Water Heaters, Aggregates). 
 
Free Zone Act No. 10 of 1999
 
 
No. of Beneficiaries :   2001   5 
    C u r r e n t l y  1 3  
 Current Beneficiary Industries (Distribution Sector)
: 
• Pharmaceuticals and Health Care Products 
• Furniture and Household Appliances 
• Food and Beverage 
• Electronic Components 
• Construction and Road Building Equipment 
• Hotel Supplies 
• Material and Components for Pre-fabricated Wooden Homes 
• General Merchandise (Clothing, Perfu mes, Cigarettes, Spare Parts) 
 
Micro and Small Scale Business Act of 19 of 1998  
 
 The information requested is not available. 
 
Q2. Please explain why, under the above progra mmes, which have been in place for over 
ten years, it is still not possible to dismantle the prohibited subsidies. 
 G/SCM/Q4/LCA/6 
Page 4  
 
  Reply
 
  The Fiscal Incentives Act, the Micro and Small Scale Business Act and the Free Zone Act are 
key components of Saint Lucia’s investment prom otion framework and efforts to diversify its 
economy.  They are central elements of the Gove rnment’s broad economic policy goals of increasing 
foreign exchange generation a nd savings, diversifying the ec onomic base and creating new 
employment opportunities.     Given the importance of these programmes to  its economic growth and development, 
Saint Lucia (with the other proponents of G/SCM/39 w ho were in a similar pos ition) had argued for a 
transitional period of 20 years in order to phase out subsidies, recognising that - as small vulnerable 
economies highly susceptible to external shocks - th is timeframe would have provided sufficient time 
for undertaking the necessary adjustments.  During th e period of the existing waiver, Saint Lucia has 
had to contend with the combined effects of, inter-alia , natural disasters, the global economic 
repercussions of 9/11 particularly given the country ’s geographical proximity to the United States of 
America and significant trading linkages with the latte r, and spiralling oil prices.  Regrettably, these 
factors have severely impeded Saint Lucia’s progr ess towards phasing out of prohibitive subsidies.   
  Saint Lucia is committed to fulfilling its WTO obligations and in respect of the ASCM, the 
country - with support from the Commonwealth Secretar iat - is currently engaged in a review of its 
incentives regime.  The extension would provide the necessary “space” for completion of this work 
and implementation of recommendations/findings. 
 
Q3. The basis for requesting the extension is th at Saint Lucia is a small, vulnerable economy 
which suffers from the combined effect of diseconomies of scale caused by the small size of its economy and administration and by its physical isol ation.  If the above distorting factors are not 
brought under control before 2018, would there be a request for a new extension for the phasing 
out of the prohibited subsidies?  Please explain why these characteristics of Saint Lucia 's economy prevent the country from complying fully  and satisfactorily with WTO export subsidy 
disciplines.  
Reply
 
 
 At this time, it is not anticipated that ther e would be need for a further extension of the 
phasing out period beyond 2018.  Furthermore, it is exp ected that the current re view of the incentives 
regime would result in reform that is consistent with WTO rules on Subsidies. 
 Q4. Please explain why the situation giving ri se to the request for extension requires the 
granting of prohibited subsidies until the year 2018, rather than an earlier date.  
Reply
 
  The choice of the suggested date of 2018 should  be read in the light of the discussions that 
had taken place before the adoption of G/SCM/39.  At  that time, the proponents of this document had 
already explained their concerns and the reasons  to eliminate their programmes over a long enough 
timeframe, possibly extending over 20 years.  In th e light of those discussions and taking into account 
the relevant and legitimate financ ial, economic and development need s of Saint Lucia, the extension 
proposed in G/SCM/W/535 should be rega rded as an appropriate extension. 
 
 Moreover, in light of Saint Lucia’s review of  the fiscal incentives re gime it is acknowledged 
that sufficient time is necessary for implementation of recommendations/findings in a manner that is 
conducive to Saint Lucia’s continued economic gr owth and development, and consequently the 
overall wellbeing of the country and its people.  G/SCM/Q4/LCA/6 
 Page 5 
 
 
  JAPAN  
 
Q1. 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
 
  It should be noted that all of Saint Lucia’ s programmes generally sh are the same objectives, 
structure and design.  Similarly, the economic impe ratives that necessitate su ch intervention prevail 
almost uniformly in the economies of other proponent s of G/SCM/W/535.  Hence, the rationale of a 
uniform timeframe is supported by the similariti es that exist between programmes and the intended 
policy effects they focus on.  Moreover, all propo nents face the same structural weaknesses which 
justify the proposed extension.    It must also be acknowledged that Saint Lu cia, like the other proponents of G/SCM/W/535, 
has suffered the adverse impacts of multiple extern al shocks.  The combined effects of multiple 
natural disasters, the (negative) impact of 9/11 on key economic sectors in particular the tourism 
industry and to a lesser extent the agricultural sector , and the doubling of the world market price for 
oil have all contributed to the deceleration of Saint Lucia and the other proponents’ (of 
G/SCM/W/535) insertion into the global economy. Regrettably, these shocks have setback the 
realisation of policy outcomes, desired and contemplated in G/SCM/39.  
 
Q2. Please explain, one by one for each of th e export subsidy programmes referred to in the 
above documents, how each of those export subs idy programs are integrated in the development 
strategies of the relevant Me mber, why a further extension beyond 2007 is necessary for its 
economic and financial needs, and why the extens ion period has to be through to the end of 
2018.  
Reply
 
  The Fiscal Incentives Act, the Micro and Small Scale Business Act and the Free Zone Act are 
key components of Saint Lucia’s investment prom otion framework and efforts to diversify its 
economy.  They are central elements of the Gove rnment’s broad economic policy goals of increasing 
foreign exchange generation a nd savings, diversifying the ec onomic base and creating new 
employment opportunities.    As will be noted from the information provide d below, that the respective Acts address 
specific and key segments of the economy: 
 Fiscal Incentives Act  - Manufacturing/processing including deep sea fishing and shrimping where 
they form part of an integrated processing operati on, but does not include ag riculture and tourism. 
 Free Zone Act – Trade and Investment activities such as dist ribution, financial services, insurance 
services, warehousing, professional services. 
 Micro and Small Scale Business Act  - benefits are limited to: 
• micro business enterprises in which not more than 5 persons are employed, whose annual 
turnover do not exceed EC$100,000.00 and w hose net assets do not exceed EC$75,000.00; 
and  
• small scale business enterprises in which not more that 50 persons are employed, whose 
annual turnover does not exceed EC$1,00 0,000.00 and whose assets do not exceed 
EC$500,000. G/SCM/Q4/LCA/6 
Page 6  
 
   
 The choice of the suggested date of 2018 should be understood in light of the discussions that 
had taken place in 2000/2001 and led to the adoption of G/SCM/39 (the decision that allowed for the 
extension).  At that time, the proponents of G/SC M/39 had expressed concern that a short extension 
would not allow time for the necessary structural transformation.  Specifically, it was suggested that a 
timeframe of sufficient duration, and adequate to  allow for sectoral and macro-economic adjustment 
was required. In this context, the proponents offere d that 20 years would be adequate.  In light of 
those discussions, the initiative currently unde rway in Saint Lucia (with support from the 
Commonwealth Secretariat) to revise the incentives  regime, and taking into account the legitimate 
fiscal, economic and development needs of Saint Lu cia, the extension proposed in G/SCM/W/535 
should be regarded as an appropriate extension.   G/SCM/Q4/LCA/6 
 Page 7 
 
 
  PERU  
 
Q1. 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  
 
 The proposal contained in G/SCM/W/535 a nd G/SCM/W/535/Add.1 refers only to the 
amendment of paragraph 1(e) of G/SCM/39.  Ther efore, the intention of the sponsors of these 
documents is to continue benefiting from the exte nsion until the end of 2018.  Consequently, the 
conditions specified in G/SCM/39 would remain unc hanged, and this clearly excludes the possibility 
to include any further programmes. 
  
Q2. Under what laws and enabling regulations are the programmes listed in Annex A of the 
proposal implemented?  
Reply
 
 
• Fiscal Incentives Act, No 15 of 1974 
• Micro and Small Scale Business Act, No. 19 of 1998 
• Free Zone Act, No.10 of 1999 
 
Q3. Which sectors and products benefit from the programmes? 
 
Reply  
 
 Fiscal Incentives Act  - Manufacturing/processing including deep sea fishing and shrimping 
where they form part of an integrated processi ng operation, but does not include agriculture and 
tourism.   Micro and Small Scale Business Act  – As above; however, benefits are limited to micro 
business enterprises in which not more than 5 pe rsons are employed, whose annual turnover do not 
exceed EC$100,000.00 and whose net assets do not exceed EC$75,000.00; and small scale business 
enterprises in which not more that 50 persons ar e employed, whose annual turnover does not exceed 
EC$1,000,000.00 and whose as sets do not exceed EC$500,000. 
  Free Zone Act – Trade and Investment activities such as distribution, financial services, 
insurance services, warehousing, professional services. 
 
Q4. What amount is disbursed by the St ate to the programmes listed in Annex A? 
 
Reply
 
 
 Government intervention in support of domestic  industry largely takes the form of revenue 
forgone.  The (approximate) figures which have been provided within Saint Lucia’s annual 
notifications to the WTO, in keep ing with G/SCM/39, are as follows: 
 G/SCM/Q4/LCA/6 
Page 8  
 
   
REVENUE FORGONE 
LEGISLATION 
2003 
EC$ m 2004 
EC$ m 2005 
EC$ m 
Fiscal Incentives Act  No. 15 of 1974  
23.479  
24.67  
25.54 
Micro and Small Business Act No. 19 of 1998  
Not Available  
Not Available  
Not Available 
Free Zone Act  No. 10 of 1998  
Not Available  
Not Available  
Not Available 
  G/SCM/Q4/LCA/6 
 Page 9 
 
 
  UNITED STATES  
 
Q1. Please describe what efforts Saint Lucia  has made to phase out the programme within 
the extension period that has already been granted, as provided under the “Procedures for 
Extension Under Article 27.4 for Cert ain Developing Country Members”.6  Please further 
describe how Saint Lucia  will continue to ensure that the programme will be phased out, if an 
additional extension were granted.   
 
Reply  
 
 Saint Lucia, with support from the Commonwealth  Secretariat, has embarked on a review of 
its incentives regime with a view to becoming WTO compliant.     The extension is necessary in order to ensure that Saint Lucia is able to implement the 
outcome of this review exercise in a manner that is consistent with its ec onomic development needs, 
as recognised in the preamble of the Marrakesh Agreement. 
 
Q2. Please describe changes to the programme since 2001.  Also, please provide any updated 
or revised implementing legislation, and an y relevant amendments, unde r this programme and 
any accompanying regulations and decrees.   
 Reply
 
  While there have not been any major changes to the programme since 2001, Saint Lucia anticipates that the outcome of the review work cu rrently being undertaken will undoubtedly result in 
modification to the incentives regime - including amendments to legislation and accompanying 
regulations and decrees.  Such amendments shall not violate the transparency  and standstill  
provisions of G/SCM/39.  
Q3. How many beneficiaries of this pr ogramme were there in 2001?  How many 
beneficiaries are there currently under the prog ramme?  What types of industries currently 
benefit under the programme? 
 Reply
 
 
Fiscal Incentives Act No. 15 of 1974  
 No. of Beneficiaries :   2001   120 
    Currently 155  Current Beneficiary Industries :  
• Beverages (Beer, Rum, Malt, Water, Fruit Juices, Teas) 
• Food (Pasta, Agro-processed Products, Dairy Products) 
• Garment (T-Shirts, School Uniforms) 
• Furniture (Wooden, Upholstered, beddings) 
• Electrical Assembly (CATV Filters, Inductors, Thermostat, Transformers) 
• Arts and Craft (Basketry, Wood Craft, Jewellery, Leather Craft, Ceramics) 
• Information Technology (Call/Telemarketing Centres, Data Capture and Conversion) 
• Plastic (Plastic Bags) 
• Chemicals (Paint, Household Chemicals, Perfumes, Insec ticides, Industrial Gases) 
                                                     
 
6 G/SCM/39 G/SCM/Q4/LCA/6 
Page 10  
 
  • Construction (Doors, Windows, Roofing Mate rials, Solar Water Heaters, Aggregates). 
 
Free Zone Act No. 10 of 1999
 
 
No. of Beneficiaries :   2001   5 
    C u r r e n t l y  1 3  
 Current Beneficiary Industries (Distribution Sector)
: 
• Pharmaceuticals and Health Care Products 
• Furniture and Household Appliances 
• Food and Beverage 
• Electronic Components 
• Construction and Road Building Equipment 
• Hotel Supplies 
• Material and Components for Pre-fabricated Wooden Homes 
• General Merchandise (Clothing, Perfu mes, Cigarettes, Spare Parts) 
 
Micro and Small Scale Business Act of 19 of 1998  
 The information requested is not available. 
 
Q4. Did Saint Lucia undertake any commitments to provide export subsidies to new 
beneficiaries beyond the year 2009?  If so, please indicate the number of such beneficiaries by 
the year in which those commitments extend.  
Reply
 
 
EXPORT SUBSIDIES BEYOND 2009  
 
YEAR # OF BENEFICIARIES 
2010 2 
2011 1 
2012 1 
TOTAL 4 
 
Q5. If available, please provide the amount of the subsidy provided under the programme 
for each year from 2001 through 2005.   
 
Reply  
 
 Government intervention in this respect is  primarily revenue forgone.  The (approximate) 
figures which have been provided within Saint Luci a’s annual notifications to the WTO, in keeping 
with G/SCM/39, are as follows:   G/SCM/Q4/LCA/6 
 Page 11 
 
 
   
REVENUE FORGONE LEGISLATION 
2003 
EC$ m 2004 
EC$ m 2005 
EC$ m 
Fiscal Incentives Act  No. 15 of 1974  
23.479  
24.67  
25.54 
Micro and Small Business Act No. 19 of 1998 N/A N/A N/A 
Free Zone Act  
No. 10 of 1998 N/A N/A N/A 
 
Q6. Please explain whether exports by qualif ying companies to CARICOM members are 
eligible for the benefits provided under this progra mme.  If not, please explain what benefits, if 
any, such exports to CARICOM countries are elig ible for, and the reason for differentiating 
among exports to CARICOM members and other exports.    
Reply
 
  Exports to CARICOM Member States do not as a rule receive any special benefits.  Under the 
Fiscal Incentives Act No. 15 of 1974 there is no di fferentiation between appr oved products exported 
and approved products sold on the local market.  Moreover, there is no incentive specifically 
earmarked for exports neither to CARICOM Member States nor to any third country. 
 
Q7. Please explain whether there are any requirements that the receipt of benefits is 
contingent upon the use of domestic over imported goods.   
 
Reply
 
  There are no requirements that the receipt of benefits is contingent upon the use of domestic over imported goods. 
 
__________