WORLD TRADE  
ORGANIZATION  G/SCM/N/186/SLV 
G/SCM/N/192/SLV 4 June 2009 
 
 
(09-2691) 
Committee on Subsidies and Countervailing Measures Original:   Spanish 
 
 
 
SUBSIDIES 
 
New and Full Notification Pursuant to Article XVI:1 of the GATT 1994 and
 
Article 25 of the Agreement on S ubsidies and Countervailing Measures  
 
Continuation of Extension under SCM Article 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  
 
EL SALVADOR 
   The following communication, dated 29 May 2009, is being circulated at the request of the delegation of El Salvador
. 
 
_______________ 
 
 
I. FREE ZONE AND INWARD-PROCESSING WAREHOUSE PROGRAMME 
 Pursuant to paragraph 10.6 of the Decision on Implementation-Related Issues and Concerns 
set forth in document WT/MIN(01)/17, the request fo r an extension of the transition period under the 
procedures laid down in document G/SCM/39 a nd the WTO General Council Decision in document 
WT/L/691, and the SCM Committee Decisions contained in documents G/SCM/65, G/SCM/65/Add.1, G/SCM/65/Add.2, G/SCM/65/A dd.3, G/SCM/65/Add.4, G/SCM/65/Add.5 and 
G/SCM/65/Add.6 concerning the free zone and inward-processing warehouse programme, 
El Salvador is pleased to submit this notifica tion relating to the programme, in accordance with 
paragraph 2(a) of document WT/L/691.
1 
  El Salvador hereby wishes to confirm that , pursuant to paragraph 3(a) of document 
WT/L/691, the Free Zone and Inward-Processing Warehouse Programme satisfies the standstill 
requirements established therein. 
 
1. Title of the subsidy progra mme, if relevant, or brief descr iption or identification of the 
subsidy  
  Incentives for firms operating in free trad e zones or in inward-processing warehouses. 
 
                                                     
 
1 El Salvador's notifications pursuant to Article 27.4 of the Agreement on Subsidies and Countervailing 
Measures were circulated as documents G/SCM/N/38/SLV/Suppl.1, G/SCM/N/48/SLV/Suppl.1, G/SCM/N/60/SLV/Suppl.1 and G/SCM/N/71/SLV/Supp l.1;  G/SCM/N/95/SLV and G/SCM/N/99/SLV;  
G/SCM/N/114/SLV and G/SCM/N/11 4/SLV/Corr.1;  G/SCM/N/123/ SLV and G/SCM/N/128/SLV;  
G/SCM/N/146/SLV;  G/SCM/N/ 155/SLV and G/SCM/N/160/SLV ;  and G/SCM/N/177/SLV. G/SCM/N/186/SLV 
G/SCM/N/192/SLV Page 2 
 
 
  2. Period covered by the notification
 
  2008. 
 
3. Policy objective and/or purpose of the subsidy
 
  No changes have been made to the programme since the last updating notification.  4. Background and authority for the subsidy (inc luding identification of the legislation under 
 which it is granted)  
 A. BACKGROUND 
 For the reasons explained in previous notifica tions, El Salvador needs to improve the welfare 
of its people.  The benefits deriving from the pr ogramme, by creating opportunities to maintain and 
raise employment levels and, by extension, to improve the welfare of the Salvadoran people, are 
therefore essential for the country's economic and social development.   In this context, under the development progra mme in question, the number of people directly 
employed by enterprises benefiting under the Export Processing Zones and Marketing Act amounted to 70,434 by the end of 2008.  As a result, nu merous households now enjoy a secure source of 
income, employment opportunities, access to social secu rity, education, health, a pension plan, etc.  
Furthermore, these activities led to the creation of  140,868 indirect jobs, thus making a total of 
211,302 new jobs overall, accounting for 9.1 per cent of the Salvadoran labour force.  It should be 
noted that approximately 80 per cent of the jobs cr eated through this programme are held by women, 
a large percentage of whom are heads of household.  This has given them the opportunity to improve 
the economic welfare of their families and afforded them greater access to health care, education and 
social security. 
 Exports from the in-bond assembly ( maquila ) industry amounted to US$1,928 million, 
constituting El Salvador's principa l export product to third markets.  Higher export volumes in the 
first half of the year influenced the final result. 
 A total of 270 enterprises have benefited unde r the Law, of which 62 per cent are foreign 
companies and the rest domestic companies. 
 Against the backdrop of the economic and financ ial crisis currently affecting all markets, 
updates of previous years' results reveal that there has been a significant dec line with regard to the 
objectives of the development policies contained in this programme, such as, inter alia , the creation 
and maintenance of employment, as a result of re duced exports following the contraction in demand 
experienced by enterprises in El Salvador.  Figur es released by the WTO in March 2009 indicate that 
world trade volume is set to shrink by approximately nine per cent.  According to ECLAC, the fall in exports caused by the crisis will affect Latin Amer ican economies and, in the case of the Salvadoran 
economy, will even affect other expanding sectors and segments, such as remittances, tourism and 
foreign direct investment, which are the channels th rough which the international crisis spreads to the 
domestic economy. Zero or negative growth is thus forecasted with some clarity and certainty for 
El Salvador in 2009.  In the light of the presen t global economic crisis and our firm commitment to 
maintaining and fulfilling the objectives which we  have set ourselves under the various Millennium 
Development Goals adopted under the auspices of  the United Nations, we consider that the 
programme in question remains a key factor for our country's economic sustainability and development. 
  G/SCM/N/186/SLV 
 G/SCM/N/192/SLV 
 Page 3 
 
 
  B. LEGISLATION  
 No changes have been made to the programme since the last updating notification. 
 5. Form of the subsidy (i.e., grant, loan, tax concession, etc.
) 
 
 No changes have been made to the programme since the last updating notification. 
 6. To whom and how the subsidy is provided (whe ther to producers, to exporters, or others;  
through what mechanism;  whether a fixed or fluctuating amount per unit;  if the latter, how 
determined ) 
  No changes have been made to the programme since the last updating notification.    7. Subsidy per unit, or in cases where this is not possible, the total amount or the annual amount 
budgeted for that subsidy (indicating, if possible,  the average subsidy per unit in the previous 
year).  Where provision of per-unit subsid y information (for the year covered by the 
notification, for the previous year, or both) is not possible, a full explanation . 
  Given the nature and scope of the programme , no statistical data reflecting the amount of 
incentives per unit are available. 
 
8. Duration of the subsidy and/or any other tim e-limits attached to it, including date of 
inception/commencement  
  This will be in line with the international oblig ations undertaken by El Salvador, in particular 
under the SCM Agreement. 
 9. Statistical data permitting an assessment of th e trade effects of the subsidy.  The specific 
nature and scope of such statistics is left to the judgement of the notifying Member.  To the 
extent possible, relevant and/or determinable, however, it is desirable that such information 
include statistics on the production, consumpti on, imports and exports of the subsidized 
product(s) or sector(s ). 
  (See Annex) 
 10. Information concerning the steps taken pursuant to paragraphs 1(e) and 1(f) of the Procedures 
for Continuation of Extensions Pursuant to  Article 27.4 of the SCM Agreement of the 
Transition Period under Article 27.2(b) of the SCM Agreement for Certain Developing 
Country Members contained in the General Council Decision in document WT/L/691 
(the " Procedures ") 
  On the basis of technical analyses of th e subsidies within the framework of the 
SCM Agreement and the Free Zone and Inward-P rocessing Warehouse Programme, El Salvador has 
been holding internal consultations with a view to preparing recommendations intended to promote 
measures consistent with its obligations.  El Salv ador enlisted the support of specialized advisory 
services to carry out these analyses.  
 Furthermore, a broad information campaign, including the publication of 
Government-sponsored notices in the media, has been conducted to ensure that the beneficiaries of the 
programme in question are familiar with th e terms and conditions of the Procedures. 
 G/SCM/N/186/SLV 
G/SCM/N/192/SLV Page 4 
 
 
   Finally, El Salvador has begun to compile the information which it will be required to submit 
in a timely manner for the annual review and corresponding assessment by the Committee on 
Subsidies and Countervailing Measures provided for in paragraph 1(f) of the Procedures. To this end, 
the internal coordination required to draw up the action plan to be presented in due course is now 
under way. 
  
   G/SCM/N/186/SLV
 G/SCM/N/192/SLV
 Page 5 
ANNEX 
COMPARATIVE TABLE  
(in US$ million) 
 
 
 Source :  International Monetary Fund, Central Reserve Bank, Ministry of the Economy. 
 
__________   2000 2001 2002 2003 2004 2005 2006 2007 2008 
(a) World exports  7,782,600.0 7,510,600.0 7,837,800.0 8,937,700.0 11,196,100.0 12,640,600.0 14,716,900.0 17,019,465.0 19,693,890.0
(b) Salvadoran exports  2,950.5 2,864.0 2,995.0 3,128.0 3,305.0 3,418.0 3,707.0 3,979.9 4,549.2 
(c) (b)/(a)  0.0379% 0.0381% 0.0382% 0.0350% 0.0295% 0.0270% 0.0251% 0.0234% 0.0231% 
(d) Salvadoran net maquila  
exports  456 489 474 494 465 616 620 564 647 
(e) (d)/(a)  0.0059% 0.0065% 0.0060% 0.0055% 0.0042% 0.0049% 0.0042% 0.0033% 0.0033%