RESTRICTED  WORLD TRADE  
ORGANIZATION  G/SCM/M/68 
22 September 2009 
 (09-4436) 
Committee on Subsidies  
and Countervailing Measures  
 
 
MINUTES OF THE SPECIAL MEETING 
HELD ON 7 MAY 2009 
 
Chairman:  Mr. Jun Kazeki (Japan ) 
 
 
1. The Committee on Subsidies and Countervailing Measures ("the Committee") held a special 
meeting on 7 May 2009. 
2. The Committee adopted the agenda: 
A. DISCUSSION OF 2007  NEW AND FULL SUBSIDY NOTIFICATIONS NOT YET REVIEWED .................1  
2. Chile .......................................................................................................................... .................2  
3. Singapore ...................................................................................................................... .............2  
B. DISCUSSION OF 2007  NEW AND FULL SUBSIDY NOTIF ICATIONS ALREADY REVIEWED ................2  
1. European Communities........................................................................................................... .2 
2. Argentina ...................................................................................................................... .............2  
3. Japan.......................................................................................................................... ................2  
4. Paraguay....................................................................................................................... .............4  
C. QUESTIONS POSED BY MEXICO TO SOUTH AFRICA UNDER ARTICLE 25.8  OF THE SCM 
AGREEMENT REGARDING SOUTH AFRICA 'S MOTOR VEHICLE DEVELOPMENT SCHEME ...............5  
D. PROCEDURES FOR REVIEW OF 2009  NEW AND FULL SUBSIDY NOTIFICATIONS ...........................6  
 
3. Before moving on to the substantive di scussions for this meeting, the Chairman  informed 
Members that Mr. Müslüm Yilmaz was the new Secr etary of this Committee and Mr. Martin Goyette 
was the new Assistant Secretary. 
A. DISCUSSION OF 2007  NEW AND FULL SUBSIDY NOTIFICATIONS NOT YET REVIEWED  
4. The first agenda item was the review of the 20 07 new and full subsidy notifications not yet 
reviewed.  The Chairman stated that the Committee 's review of new and fu ll subsidy notifications 
took place pursuant to procedures that had been ad opted by the Committee in 2005 which could be 
found in document G/SCM/117.  In accordance with th ese procedures, the notifications that were on 
the agenda of this meeting were notifications that  had been circulated to Members in all three WTO 
working languages not later than 5 January 2009. 
5. Before moving to the review of these notifica tions, the Chairman stat ed that the Committee 
had received the 2007 new and fu ll subsidy notification of the United States the day before the 
meeting.  The Chairman stated that this notifi cation would be reviewed in the Committee in due 
course. G/SCM/M/68 
Page 2  
 
  2. Chile 
6. The 2007 new and full subsidy notificati on of Chile was contained in document 
G/SCM/N/155/CHL.  No questions had been received w ith regard to this notification.  No delegation 
took the floor to comment or ask questions on Chile's 2007 new and full subsidy notification. 
3. Singapore 
7. The 2007 new and full subsidy notification of Singapore was contained in document 
G/SCM/N/155/SGP.  No questions had been received w ith regard to this notification.  No delegation 
took the floor to comment or ask questions on Singapore's 2007 new and full subsidy notification. 
B. 
DISCUSSION OF 2007  NEW AND FULL SUBSIDY NOTIF ICATIONS ALREADY REVIEWED  
1. European Communities 
8. The 2007 new and full subsidy notification of the European Communities was contained in 
documents G/SCM/N/155/EEC and Addenda 1-27.  Questions posed by the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Matsu regarding the notification of the European 
Communities had been circulated in G/SCM/Q2/EEC /53.  The European Communities had replied to 
these questions in document G/SCM/Q2/EEC/56. 
9. The delegate of the Separate Customs Terr itory of Taiwan, Penghu, Kinmen and Matsu  
expressed appreciation for the answ ers the European Communities had provided to the questions of 
his delegation. 
10. The Committee took note  of the statement made. 
2. Argentina  
11. The 2007 new and full subsidy notification of Ar gentina had been circulated in document 
G/SCM/N/155/ARG.  Follow-up questions on this  notification had been submitted by the 
United States (G/SCM/Q2/ARG/29). 
12. The delegate of Argentina  stated that they had received the United States' questions on 
16 April 2009.  These were a series of follow-up que stions about matters discussed in the Committee's 
previous meeting.  He stated that their capital offici als were preparing their replies to the questions of 
the United States, dealing with four programmes.  He also stated that his delegation would send these replies to the United States in writing in the coming days. 
13. The delegate of the United States
 thanked Argentina for its cons ideration of the United States' 
questions and stated that his delegation was looking forward to seeing Argentina's replies. 
14. The Committee took note  of the statements made. 
3. Japan  
15. The 2007 new and full subsidy notificati on of Japan was contained in document 
G/SCM/N/155/JPN.  Follow-up questions on this notifi cation had been submitted by the United States 
(G/SCM/Q2/JPN/43). 
16. The delegate of Japan  thanked the United States for its questions.  The delegate of Japan 
stated that, as explained in G/SCM/Q2/JPN/40 and G/SCM/Q2/JPN/42, the programmes referred to  G/SCM/M/68 
 Page 3 
 
 
  by the United States were not related to progra mmes available to certain geographic regions or 
enterprises within the jurisdiction of the granting au thority.  Therefore, Japan was not obligated to 
notify them under Article 25 of the SCM Agreement.  Japan thought it was obvious that "specificity" 
was not automatically determined only from the fact th at relevant subsidies were granted to a region, 
because elements to determine "specificity" were not only "located within a designated geographical 
region" but also "limited to certain enterprises" in accordance with Article 2.2 of the SCM Agreement. 
17. With regard to "the specific criteria" to de termine the eligibility of measures which were 
taken under each Program and Act, th e delegate of Japan stated that his delegation did not have 
enough time to consider the United States' fo llow-up questions circulated in document 
G/SCM/Q2/JPN/43 dated 22 April 2009.  He stated that his delegation would submit a written answer 
in due course and presented the following su mmary information about such criteria: 
 (1) Aichi Prefecture's "Industrial Facilities Tax Abatement Program": 
 
Provided that a company which ran predetermined businesses acquired a building or land and that certain conditions, such as a lowe r limit of its total price, were satisfied, 
in an area designated by the governor with a view to promoting industrial facilities, 
such a company would be eligible  for tax relief under this Program. 
 
 (2) Aichi Prefecture's "Tax Incentive in Depopulated Areas Program":  
The Program, under predetermined conditions , provided tax relief for a company 
which established or extended its equipmen t used in a manufacturing, software, or 
hotel business, or for a person who ran a livestock or marine products company, in depopulated areas which were stipulated in the relevant law. 
  (3) Akita Prefecture's "Assistance for Site  Acquisition in Industrial Parks Program": 
 
Although a price deduction system, which t ook into account market prices, sales 
results, and so on, was established for le nding or sale of industrial parks, the 
eligibility for this Program was not limited to a specific business or a specific company. 
 
 (4) Akita Prefecture's "Tax Exemption Program": 
 The Program, under predetermined conditions , provided tax relief for a company 
which established or extended its equipmen t used in a manufacturing, software, or 
hotel business, or for a person who ran a livestock or marine products company, in 
depopulated areas which were stipulated in the relevant law. 
 
 (5) Mie Prefecture's "Subsidy System for New Businesses Development Program": 
 A company which conducted research a nd development on predetermined issues 
regarding fuel cell and hydrocarbon developm ent would be eligible for the subsidy 
under this Program. 
 
 (6) "Underdeveloped Area Industrialization Act": 
 The purposes of this Act were to achieve a well-balanced development of the national 
economy through providing more employ ment opportunities and reducing the 
economic gap between regions by pr omoting industrial development in 
underdeveloped areas.  Regarding a specific area, the Minister of Land, G/SCM/M/68 
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  Infrastructure, Transport, and Touris m designated an "Underdeveloped Area 
Industrialization District" upon an appli cation by a prefectual governor, following 
deliberation by the National Land Council.  
 (7) "Peninsula Development Promotion Act": 
 
The purpose of this Act was to achieve deve lopment of peninsular areas which were 
in a relatively poor condition in terms of  the living environment and industrial 
infrastructure because of geographical constraints, compared with other areas.  The Minister of Land, Infrastructure, Transport and Tourism, the Minister of Internal 
Affairs and Communications, and the Minister  of Agriculture, Forestry and Fisheries 
would designate an area, according to this Act, upon an application by a prefectual governor.  
 (8) "Chubu Region Development Act": 
 
The purpose of this Act was to achieve a nd establish a well-balanced development of 
the Chubu region, which should occupy an important position in the Japanese industrial economy.  The area at issue covered the Chubu region, as a whole, which consists of Toyama, Ishikawa, Fukui, Naga no, Gifu, Shizuoka, Aichi, Mie and Shiga 
prefectures.  The Chubu Region Development Plan was determined by the Minister of 
Land Infrastructure Transport and Tourism, after consultation with the National Land 
Council and deliberation by rele vant administrative organs.  
 18. The delegate of the United States
 thanked Japan for its answers to the United States' 
questions.  He stated that the United States still had a fundamental disagreem ent on the interpretation 
of Articles 2.1 and 2.2 of the SCM Agreement.  In  the view of the United States, if the granting 
authority provided subsidies to a particular region under its jurisdiction, there would be specificity 
within the meaning of Article 2.2 of the SCM Agreement.  That was the entire point of having Article 2.2 in the Agreement.  The delegate of th e United States pointed out that Japan seemed to 
argue that even if a subsidy programme was limited to a certain region, that would not be enough to 
find specificity.  It seemed to be Japan's view th at one also had to show within that region the 
programme at issue was limited to cer tain enterprises or industries.  The delegate of the United States 
stated that Japan was reading a second specificity test into Article 2.2.  The entire point of Article 2.2 
was that a subsidy would be specific if it was limite d to a specific region.  He stated that if one 
accepted Japan's point of view, Article 2.2, whic h only dealt with regional specificity, and not 
specificity as set out under Article 2.1 of the SC M Agreement, would become redundant.  He stated 
that if Japan laid out its interpretation of Articles 2.1 and 2.2 together, perhap s one could continue this 
discussion.   
19. The delegate of Japan
 stated that his delegation would s ubmit written answers in due course, 
taking into consideration explana tions made by the United States. 
20. The Committee took note  of the statements made. 
4. Paraguay 
21. The 2007 new and full subsidy notification of Paraguay was contained in document 
G/SCM/N/155/PRY. 
22. Follow-up questions on this notification ha d been submitted by the United States 
(G/SCM/Q2/PRY/7).  The Chairman stated that Pa raguay had submitted its replies to these questions  G/SCM/M/68 
 Page 5 
 
 
  the day before the meeting.  Copies of Paraguay's answers, which would shortly be circulated as 
G/SCM/Q2/PRY/8, were available at the back of  the room for the information of delegations. 
23. The delegate of the United States  stated that his delegation had not had sufficient time to 
analyse Paraguay's replies and that it was looking forw ard to seeing the translated versions of such 
replies.  He asked whether the de legation of Paraguay would be in a position to introduce its replies at 
the meeting. 
24. With regard to Question 1 from the United States, the delegate of Paraguay  stated that the 
answer to this question required a brief bac kground history of Law 60/90, going back to the 
promulgation in 1989 of Decree Law No. 19/89 which ha d coincided with the fall of the dictatorship, 
the aim being to create incentives fo r capital investment.  Until that time, there were provisions in 
force that imposed levies on Paraguayan goods export s.  New instruments were therefore sought to 
incorporate policies for boosting the depress ed economy, and Decree Law No. 19/89 was 
promulgated.  It was amended by Decree Law No. 27/89 and became the Law of 31 March 1990 once 
approved by the National Congress, ultimately becoming the present Law No. 60/90.  The general purposes of Law No. 60/90 included "export promo tion and import substitution", but in fact it 
established no specific mechanism that  involved discrimination or barrier s to imports.  Later, in 1991, 
the "New Tax Regime" Law, No. 125, was promul gated which nullified all the earlier provisions 
imposing levies on goods exports.  This measure voide d one of the objectives set in Law No. 60/90, 
which was why Paraguay took the view that the conditi ons set in Article 3 of the Subsidies Agreement 
were not met.  The delega te of Paraguay also underlin ed that this legislation had been examined in the 
two reviews of Paraguay's trade policy, in 1997 an d 2005, and no objections were raised by other 
Members. 
25. In response to Question 2, the delegate of Paraguay stated that under Law No. 125/91, as 
amended by Law No. 2.421/2004, the Executive was aut horized to require that one or more taxes be 
fixed and levied at certain stages, or at a particul ar stage, of the economic cycle when, for practical 
reasons relating to marketing, tax collection needed to be simplified.  As regards the importation of 
motorcycles, there had been no variations since 20 07.  The principal destination was Brazil, followed 
by Uruguay; almost all of the production was consumed in the domestic market.  Apart from 
motorcycles, Paraguay had no automotive production.   The legislation was undergoing revision to 
bring it up to date.  The delegate of Paraguay also  stated that both laws had been examined in the 
trade policy reviews of Paraguay and prompted no ob jections on the part of other Members.  They 
were, as of the date of the Committee meeting,  being examined with a view to amendment. 
26. The delegate of the United States
 expressed appreciation for the explanations provided by 
Paraguay and stated that his delegation would read th e translation and would at a later stage raise any 
further questions that it might have. 
27. The Committee took note  of the statements made. 
C. QUESTIONS POSED BY MEXICO TO SOUTH AFRICA UNDER ARTICLE 25.8  OF THE SCM 
AGREEMENT REGARDING SOUTH AFRICA 'S MOTOR VEHICLE DEVELOPMENT SCHEME  
28. The Chairman stated that, at the Committee' s regular meeting held on 29 October 2008, the 
delegate of Mexico had raised questions on South Africa's Moto r Vehicle Development Scheme.  
Mexico had subsequently subm itted these questions in writing as circulated in document 
G/SCM/Q2/ZAF/10.  No replies had been received from South Africa to questions posed by Mexico. 
29. The delegate of South Africa  informed the Committee that her delegation had met with the 
Mexican delegation bilaterally to discuss this issue a nd answered the latter's questions.  She stated that 
the Mexican delegation said they were satisfied with  these answers.  The delegate of South Africa G/SCM/M/68 
Page 6  
 
  stated that her delegation would provide replies to  any further questions that Mexico would have on 
this matter. 
30. The delegate of Mexico
 stated that the delegation of South Africa had provided answers to 
Mexico's questions and that such replies were be ing reviewed by their capital.  The delegate of 
Mexico expressed his hope that South Africa's repl ies would be considered satisfactory and remove 
Mexico's concerns. 
31. The delegate of the United States  referred to the statement of  the delegate of South Africa 
regarding the bilateral meeting be tween South Africa and Mexico and asked whether the delegation of 
South Africa would consider making its answers available in writing which, according to the delegation of the United States, would be th e proper method under Article 25.8 of the SCM 
Agreement. 
32. The delegate of South Africa
 stated that her delegation intended to do that. 
33. The Committee took note  of the statements made. 
D. PROCEDURES FOR REVIEW OF 2009  NEW AND FULL SUBSIDY NOTIFICATIONS  
34. The Chairman  stated that on 13 January 2009, the Secretariat had circulated a document 
inviting Members to submit their new and full notif ications due in 2009 by 30 June 2009.  This 
invitation was contained in document G/SCM/N/186.  The invitation drew attention to the agreed 
format for subsidy notifications, which c ould be found in document G/SCM/6/Rev.1. 
35. The Chairman stated that in connection with  the 2005 new and full subsidy notifications, the 
Committee had adopted special procedures for the review of these notifications, which were in 
document G/SCM/117 of 26 April 2005.  The key elem ents of these procedures were the following: 
• First, the procedures provided for special meeti ngs to carry out the review of the subsidy 
notifications, to be held in conjunction w ith the regular meetings of the Committee; 
• Second, the procedures provided that only notifications circulated in all three working 
languages not less than seventeen weeks before a meeting could be reviewed at that meeting; 
• Third, the procedures provided th at the review of subsidy notif ications was to be based on 
written questions and written answers to be provi ded before the meeting.  Specifically, written 
questions had to be submitted not less than thir teen weeks before the date of the meeting and 
written responses had to be submitted not less than four weeks before the date of the meeting. 
36. The Chairman also stated that in its special  meeting held on 26 April 2007, the Committee 
had decided to apply these procedures also to th e review of Members' 2007 new and full subsidy 
notifications (G/SCM/M/60, paragr aphs. 45 and 46).  The Chairman expressed the view that these 
procedures could also apply to the review of th e 2009 new and full notifications that were due by 
30 June 2009.  He therefore asked whether th e Committee was in a position to agree that the 
procedures in document G/SCM/117 for the review of  the 2005 notifications would also apply to the 
review of the 2009 new and full subsidy notifications.  It was so agreed . 
37. The Chairman  reminded Members that, as indicat ed in document G/SCM/N/186 dated 
13 January 2009, the 2009 new and full subsidy notifications were due on 30 June 2009.  The 
Committee would start reviewing these notifications in  its special meeting that would be held in 
conjunction with the regular meeting in November 2009.  In accordance with the agreed procedures,  G/SCM/M/68 
 Page 7 
 
 
  the Committee would review at that meeting notificati ons that would have been circulated in all three 
working languages not later than 17 week s before the date of the meeting. 
38. The Chairman stated that the next special meeting of the Committee to review subsidy 
notifications would take place in the week of 2 November 2009. 
39. The Chairman  adjourned the special meeting of the SCM Committee. 
__________