WORLD TRADE  
ORGANIZATION  G/SCM/N/186/LCA 
G/SCM/N/192/LCA 8 September 2009 
 
(09-4247) 
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  
 
Continuation of Extension under SCM Artic le 27.4 of the Transition Period for  
the Elimination of Export Subsidies Pursuant to the Procedures Contained  
in the General Council Decision in Document WT/L/691  
 
 
SAINT LUCIA 
   The following communication, dated 30 June 2009,  is being circulated at the request of the 
Delegation of Saint Lucia.   
 
_______________ 
 
  The Ministry of Commerce, Industry and Cons umer Affairs hereby submits to the Committee 
on Subsidies and Countervailing Measures Saint Lu cia's updated notification on current incentive 
programmes under Article XVI:1 of GATT 1994 and Articles 25 and 27.4 of the Agreement on 
Subsidies and Countervailing Measures.   There are no changes to the notified programmes since our last full report as at 30 June 2008, 
and consequently programmes remain  consistent with previous notif ications.  Saint Lucia has no 
programme of subsidies contingent upon the use of local goods. 
  Statistical information cannot be obtained in the format required, however Revenue Forgone 
and Import and Export figures have been provided.  
 Copies of all the relevant Acts were subm itted with our first full notification in 2001. 
  Not all elements of the notified progra mmes, including subsidies provided there-under 
necessarily involve export subsidies.   The attached are therefore without prejudice either to the legal 
status of the measures referred to under GATT 1994 and the SCM Agreement, the effects under the 
SCM Agreement or the nature of the measure itself. 
  The Ministry of Commerce, Industry and Consumer Affairs has sought and obtained 
assistance from the Commonwealth Secretariat to am end all of the incentives regulations to make 
them WTO compatible.  We expect all of the suggested amendments will be adopted by 2011. 
 G/SCM/N/186/LCA 
G/SCM/N/192/LCA Page 2 
 
 
  I. FISCAL INCENTIVES ACT 
1.   Title of the subsidy prog ramme, if relevant, or brief descr iption or identification of the 
subsidy  
 
 Fiscal Incentives Act, No. 15 of 1974 – An Act of Parliament to provide incentives to 
industry.  2. Period covered by the notification
 
 
 30 June 2009 
 3. Policy objective and/or purpose of the subsidy
 
 
To stimulate export performance, support i nvestment and economic activity, promote 
diversification in traditional  and non-traditional products. 
 4. Background and authority for the subsidy (inc luding identification of the legislation under 
 which it is granted  
  The Fiscal Incentives Act, No. 15 of 1974 was passed to give effect to an agreement on the 
harmonization of fiscal incentives to industry among CARICOM member countries. 
 5. Form of subsidy (i.e. Gr ant, loan, tax concessions, etc
.) 
  Income tax exemption; exemption from import duty; exemption from import duty on plant, 
machinery, spare parts and raw materials; exemp tion from income tax on export profits and an export 
allowance.  6. To whom and how the subsidy is provided (w hether to producers, to exporters, or others 
through what mechanisms; whether a fixed or fluctuating amount per unit; if the latter, how 
determined ) 
 
 Fiscal Incentives are provided to enterprises involved in manufacturing or processing, deep-sea fishing and shrimping where they form part of an integrated processing operation.  Applications 
for incentives under this Act are approved by the Ca binet of Ministers.  An approved enterprise may 
be granted a benefit if classified in one of the following categories: 
 
(a) Group I Enterprise 
(b) Group II Enterprise 
(c) Group III enterprise 
  Saint Lucia has no programme of subsidies contingent upon the use of local goods.  Since 
local value added refers to local labour and not goo ds, in our opinion this is not a prohibited subsidy 
under Article 3.2b of the ASCM.  While reference is made in our Fiscal Incentives Act No. 15 of 
1974 to local value added, this must not be confu sed with the generally accepted definition of local 
content.  Instead it reflects the concern of the Gove rnment of Saint Lucia that employment be created 
and that the economy be diversified.  Consequently , the provision is applied according to the number 
of local persons employed in a domestic enterpri se and expressed as a percentage of sales, for 
purposes of relief.   G/SCM/N/186/LCA 
 G/SCM/N/192/LCA 
 Page 3 
 
 
   There are currently no plans in place to phase out these programmes which are essential for 
the attraction of investment and the survival of the manufacturing sector.  We intend to continue to implement the existing programmes in keeping with our WTO obligations, including provisions governing the phase-out of such programmes.  Howe ver, this will have to  be conducted over an 
extended period given the smallness and extreme fragility of our economy and manufacturing sector. 
 7. Subsidy per unit, or in cases where this is not possible, the total amount budgeted for that 
subsidy (indicating, if possible, the average subsidy per unit in the previous year) where 
provision of per unit subsidy, information (for the year covered by the notification for the 
previous  
  It is not a practice to maintain records of revenue foregone in relation to fiscal incentives 
granted.  Also, there are no provisions in the annual budget for either actual or estimated revenue 
foregone.  However on the basis of information obt ained from the Ministry of Finance the following 
represents a fair estimate of revenue forgone for fiscal years as indicated, to the nearest million: 
  2006 - EC$43.6 (PROVISIONAL)  2007 - EC$46.5 (PROVISIONAL)  2008 - EC$37.8 (PROVISIONAL)  
8. Duration of the subsidy and/or any other limits attached to it, including date of 
inception/commencement  
  Group I Enterprise  - 15 years Tax Holiday  Group II Enterprise  - 12 years Tax Holiday 
 Group III Enterprise - 10 years Tax Holiday 
  Enclave Enterprise  - 15 years Tax Holiday 
 An enterprise with capital investment of not  less than twenty-five million Eastern Caribbean 
dollars is considered as a "highly capital intensive industry".  Such enterprises, where applicable, can 
qualify for the same level of benefits as Enclav e Enterprises.  The Fiscal Incentives Act became law 
on 23 April 1974. 
9. Statistical data permitting an assessment of th e trade effects of the subsidy.  The specific 
nature and scope of such statis tics is left to the judgment of the notifying member.  To the 
extent possible relevant such information in cluding statistics of production consumption, 
importers and exports of the s ubsidize product(s) or Sector(s)  
 
 It is not the practice to maintain records of revenue foregone in relation to fiscal incentives 
granted.  Also, there are no provisions in the annual budget for either actual or estimated revenue 
foregone.  However on the basis of information obt ained from the Ministry of Finance the following 
represents a fair estimate of revenue forgone for fiscal years as indicated, to the nearest million: 
 2006 - EC$43.6 (PROVISIONAL) 
 2007 - EC$46.5 (PROVISIONAL) 
 2008 - EC$37.8 (PROVISIONAL)   G/SCM/N/186/LCA 
G/SCM/N/192/LCA Page 4 
 
 
  10. Duration of the subsidy and/or any othe r limits attached to it, including date of 
inception/commencement  
  Group I Enterprise  -  15 years Tax Holiday 
 Group II Enterprise  -  12 years Tax Holiday 
 Group III Enterprise -  10 years Tax Holiday   Enclave Enterprise  -  15 years Tax Holiday  
 An enterprise with capital investment of not  less than twenty-five million Eastern Caribbean 
Dollars is considered as a "highly capital intensive industry".  Such enterprises, where applicable, can 
qualify for the same level of benefits as Enclav e Enterprises.  The Fiscal Incentives Act became law 
on 23 April 1974.  
11. Statistical data permitting an assessment of th e trade effects of the subsidy.  The specific 
nature and scope of such statis tics is left to the judgment of the notifying member.  To the 
extent possible relevant such information in clude statistics of production consumption, 
importers and exports of the s ubsidize product(s) or Sector(s ) 
 
 Exports    2006 – EC$251.14 million (Revised)   2007 – EC$297.92 million (PROVISIONAL)    
  2008 – EC$372.6 million (PROVISIONAL)   Imports (c.i.f.)  2006 – EC$1598.46 million (Revised) 
 2007 – EC$1662.31 million (PROVISIONAL)   
 2008 – EC$1772.8 million (PROVISIONAL) 
 
II. MICRO AND SMALL SCALE BUSINESS ENTERPRISES ACT 
 
1. Title of the subsidy progra mme, if relevant, or brief descr iption or identification of the 
subsidy  
 
 The Micro and Small Scale Business Enterprises Act, No. 19 of 1998.  An Act to provide 
support to micro and small-scale enterprises.     2. Period covered by notification
 
 
 30 June 2009  3. Policy objective and/or purpose of the subsidy
 
  To provide a legislative base for micro and small scale business enterprises, to make 
provision for developmental support and financial relief with resp ect to micro and small scale 
business enterprises.  4. Background and authority for the subsidy (inc luding identification of the legislation under 
which it is granted ) 
 
 The Government of Saint Lucia found it necessar y to encourage and support investment flows 
in this sub-sector, in order to promote economic activity particularly in the area of self-employment and contribute to the alleviation of poverty.   G/SCM/N/186/LCA 
 G/SCM/N/192/LCA 
 Page 5 
 
 
   Authority – Micro and Small Scal e Business Act No. 19 of 1998. 
 5. Form of subsidy (i.e. Gr ant, loan, tax concession, etc
.) 
 
 Similar to incentives provided in the Fiscal In centives Act, No. 15 of 1974, i.e. income tax 
exemption from import duty and exemptions from inco me tax on export profits.  However, income tax 
relief will be in accordance with secti on 68 of the Income Tax Act of 1989. 
 6. To whom and how the subsidy is provided (w hether to producers, to exporters, or others, 
through what mechanisms; whether a fixed or fluctuating amount per unit; if the latter, how 
determined ) 
  To micro and small-scale businesses as described in the Act.  Relief would be granted in a similar manner as pertains to the Fiscal Incentives Act, No. 15 of 1974. 
 
7. Subsidy per unit, or in cases where this is not possible, the total amount budgeted for that 
subsidy (indicating, if possible, the average subsidy per unit in the previous year) where 
provision of per unit subsidy, information (for the year covered by the notification for the 
precious year, or both) is not possible, a full explanation  
 
 There is no available data. 
 8. Duration of the subsidy and/or any other limits attached to it, including date of 
inception/commencement  
 
 In accordance with terms in the Fiscal  Incentives Act of 1974, as applicable. 
 9. Statistical data permitting an assessment of the trade efforts of  the subsidy.  The specific 
nature and scope of such statis tics is left to the judgment of the notifying member.  To the 
extent possible relevant and/or determinable however it is desirable that such information 
include statistics of production consumption,  importers and exports  of the subsidize 
product(s) or Sector(s ) 
  There is no available data.  
III.  FREE ZONE ACT 
 
1. Title of the subsidy programme , if relevant, or brief descripti on or identification of subsidy
 
  An Act of Parliament for the establishment and operation of Free Zones in Saint Lucia. 
 2. Period covered by the notification
 
 
 30 June 2009.  3. Policy objectives and/or purpose of subsidy
 
 
 To foster commerce, trade and investment with other countries; to promote economic growth 
and development and related matters.   G/SCM/N/186/LCA 
G/SCM/N/192/LCA Page 6 
 
 
  4. Background and authority for the subsidy (inclu ding, identification of the legislation under 
which it is granted ) 
  The Free Zone Act, No. 10 of 1999 was enacted as the result of the desire of the Government 
to stimulate growth in trade, increase employment  levels through the creation of new ventures and to 
improve the distribution of income.  5. Form of subsidy (i.e. gr ant, loan, tax concession, etc
.) 
 
 Exemption from import duty and other charges on plant, machinery and equipment, raw 
materials and goods to be sold or exported within the Free Zone Area.   Special Income Tax Concessions.  
 Tax Credits in accordance with the number of nationals employed on a continuous basis. 
  Exemption from income tax during the first 5 years of operations.   Total net losses over the 5-year tax holiday may be carried forward and deducted against 
profits in the 3 years following the tax holiday. 
 
 Proceeds from sale of stock or other partial or  complete ownership are also exempted from 
income tax.  6. To whom and how the subsidy is provided (w hether to producers, to exporters, or others, 
through what mechanisms; whether a fixed or fluctuation amount per unit; if the latter; how 
determined ) 
  To businesses established within a designated Free Zone Area.    Through tax concessions  and revenue foregone. 
 
7. Subsidy per unit, or in cases where this is not possible, the total amount budgeted for that 
subsidy (indicating, if possible, the average subsidy per unit in the previous year) where 
provision of per unit subsidy, information  (for the year covered by the notification for the 
precious year, or both) is not possible, a full explanation  
 
 The Free Zone Area became operational in Ju ly 2000.  To date, the only tenants are 
merchants and distributors. There are no industr ies or manufacturers operating from that site. 
 8. Duration of the subsidy and/or any other limits attached to it, including date of 
inception/commencement  
 
 Income Tax – 5 years from date of establishment within the Free Zone Area.   Income Tax Credits – Indefinite.  However subj ect to qualifications as prescribed in the Act.  
Import duty and associated charges – For the duration of tenancy. 
  G/SCM/N/186/LCA 
 G/SCM/N/192/LCA 
 Page 7 
 
 
  9. Statistical data permitting an assessment of the trade efforts of  the subsidy.  The specific 
nature and scope of such statis tics is left to the judgment of the notifying member.  To the 
extent possible relevant and/or determinable however it is desirable that such information 
include statistics of production consumption,  importers and exports  of the subsidize 
product(s) or Sector(s ) 
  There is no data available to date in the format required.  10. Transparency Provisions in Accordance with General Council Decision of 27 July 2007
 
 
 Saint Lucia has taken preliminary action in accordance with the General Council's Decision of 
27 July 2007, as stipulated in WT/L/691.   Beneficiaries of the programme have been notif ied of its elimination by the end of 2015.  
Such beneficiaries were notified individua lly and via the various industry associations. 
  A national consultation with stakeholders from the Government and the private sector will be 
convened in the last quarter of 2009 to further discuss the matter and consider approaches to phasing out the elements of the programme that ar e incompatible with world trade rules. 
 
 Saint Lucia prefers a sub-regional approach to implementing its obligations in this regard.  
Hence, the results from the national consultation will feed into an OECS strategy for elimination of 
the subsidy.   Technical assistance from the WTO Secret ariat will greatly assist Saint Lucia in 
implementing its obligations in accordance with the above-referenced Decision by the General 
Council. 
__________