RESTRICTED  WORLD TRADE  
ORGANIZATION  G/SCM/M/66 
14 April 2009 
 (09-1752) 
Committee on Subsidies  
and Countervailing Measures  
 
  
MINUTES OF THE REGULAR MEETING  
HELD ON 29 OCTOBER 2008 
 
Chairman:  Mr. Jun Kazeki (Japan
) 
 
 
1. The Committee on Subsidies and Countervailing Measures ("the Committee") held a regular 
meeting on 29 October 2008.  The agenda proposed for this regular meeting had been circulated in 
WTO/AIR/3271, dated 17 October 2008.  The delegate of Mexico  requested the Chairman to include 
under "other business" one item concerning questi ons from Mexico regarding certain subsidies 
allegedly provided by South Africa.  The Committee  adopted the agenda as contained in 
WTO/AIR/3271 with the additional item proposed by Mexico under "other business": 
A. NATIONAL LEGISLATION – REVIEW OF NOTIFICATIONS OF NEW OR AMENDED 
LEGISLATION OR REGULATIONS NOT PREVIOUSLY REVIEWED BY THE COMMITTEE .................2  
1. Albania........................................................................................................................ ...............2  
2. Egypt .......................................................................................................................... ................2  
3. El Salvador .................................................................................................................... ............3  
4. Ukraine ........................................................................................................................ ..............4  
B. NATIONAL LEGISLATION – PREVIOUSLY REVIEWED NOTIFICATIONS OF 
COUNTERVAILING DUTY LAWS/AND OR REGULATIONS ............................................................4  
1. Albania........................................................................................................................ ...............4  
2. China.......................................................................................................................... ................5  
3. Costa Rica..................................................................................................................... .............5  
4. Guatemala...................................................................................................................... ............5  
C. SEMI-ANNUAL REPORTS OF COUNTERVAILING DUTY ACTIONS ................................................5  
1. Australia ...................................................................................................................... ..............6  
2. Brazil......................................................................................................................... .................6  
3. Canada ......................................................................................................................... ..............6  
4. Chile .......................................................................................................................... .................6  
5. European Communities........................................................................................................... .6 
6. Peru ........................................................................................................................... .................6  
7. South Africa................................................................................................................... ............6  
8. Turkey......................................................................................................................... ...............6  G/SCM/M/66 
Page 2  
 
  9.
 United States.................................................................................................................. ............6  
D. NOTIFICATIONS OF PRELIMINARY AND FINAL COUNTERVAILING DUTY ACTIONS ....................7  
E. TRANSITION REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF ACCESSION OF 
THE PEOPLE 'S REPUBLIC OF CHINA TO THE WORLD TRADE ORGANIZATION .............................8  
F. EXTENSION OF THE TRANSITION PERIOD UNDER ARTICLE 27.4  OF THE SCM  
AGREEMENT ..............................................................................................................................1 7 
1. Review of Compliance with Transparency and Standstill Obligations..............................17  
2. Decisions under Paragraph 1(D) of the Ge neral Council Decision of 27 July 2007 
to Continue the Extension of the Transition Period for Calendar Year 2009...................18  
G. OTHER BUSINESS ......................................................................................................................19  
H. DATE OF NEXT REGULAR MEETING .........................................................................................19  
I. ANNUAL REPORT TO THE COUNCIL FOR TRADE IN GOODS ......................................................19  
  A. N
ATIONAL LEGISLATION – REVIEW OF NOTIFICATIONS OF NEW OR AMENDED LEGISLATION 
OR REGULATIONS NOT PREVIOUSLY REVIEWED BY THE COMMITTEE  
2. The Chairman  stated that under Item A of the age nda of the meeting the Committee would 
review notifications of countervailing duty legi slation and/or regulations in accordance with 
procedures adopted by the Committee at its specia l meeting in April 1996 (document G/SCM/W/293).  
These procedures provided inter alia  that at each regular meeting the Committee would consider 
notifications of new or amended legislations not previously reviewed by the Committee if such 
notifications had been circulated to Members in a ll three working languages at least six weeks prior to 
the scheduled date of the meeting.  In accordance w ith this provision, the Committee had before it at 
this meeting new notifications of countervailing duty legislation from Al bania, Egypt, El Salvador and 
Ukraine.  The Chairman recalled that some of th ese notifications had already been discussed at the 
meeting of the Committee on Anti-Dumping Practices held on 27 October. 
1. Albania 
3. The Chairman stated that document G/SCM/N/ 1/ALB/2/Rev.1, dated 8 May 2008, contained 
the text of a revised version of the Law numbe red 9796 and dated 23 July 2007, on Anti-Dumping and 
Countervailing Measures.  Since the delegation of Albania was not present, the Chairman moved on 
to the next agenda item. 
2. Egypt 
4. The Chairman noted that the Committee had r eceived a notification from Egypt of a Decree 
of the Minister of Trade and Industry that amended the Executive Regulation of Law No. 161/1998 concerning the Protection of the National Economy fro m Injurious Effects of Unfair Practices in 
International Trade.  This notificat ion had been circulated in document 
G/SCM/N/1/EGY/2/Rev.1/Suppl.1, dated 22 August 2008.  The Chairman also noted that the 
delegation of the United States had asked questions on this notification, which were contained in 
document G/SCM/Q1/EGY/7 and asked whether the de legation of Egypt would like to take the floor 
and respond to these questions. 
5. The delegate of Egypt
 stated that his delegation would be giving oral replies in the meeting 
and would submit written replies very shortly.  Th e delegate of Egypt started with the questions 
regarding countervailing proceedings and particularly with the one on Article 56.  Amendments to the  G/SCM/M/66 
 Page 3 
 
 
  Executive Regulation of Law No. 161/1998 which had b een introduced by the Decree No. 569 of that 
year and become effective as of 30 June 2008 prim arily concerned anti-dumping proceedings.  As of 
the date of the Committee meeting, the Ministry of Trade and Industry was reviewing the Executive 
Regulation of Law No. 161/1998 and might decide  to amend, among others, the part concerning 
subsidies and countervailing measures. 
6. With regard to question 3 concerning Article 56, the delegate of Egypt stated that the 
amended Article 56 did not provide for an automa tic system of refund of countervailing duties 
collected after the expected date of expiry of countervailing measures where these measures were 
terminated. 
7. With regard to the first question from the Unite d States concerning Article 92, the delegate of 
Egypt pointed out that if the investigating authorit y was provided with evidence that circumvention of 
an existing measure was taking place and that remedial effects of the measures were being undermined, it had to initiate an anti-circumventi on investigation.  During an anti-circumvention 
investigation, all interested parti es were to be provided with ample opportunity to provide all evidence 
and arguments which they considered relevant w ith respect to the investigation in question. 
8. With regard to the second question concerning Artic le 92, the delegate of Egypt stated that 
interested parties would be notified of the initiation of an investigation provided that they cooperated 
with the investigating authority.  They would be kept informed of the investigative process and would 
have the opportunity to present a ll evidence and arguments which they considered relevant to the 
investigating authority before a final determination was made. 
9. Regarding the question on the revoked Article 17, the delegate of Egypt pointed out that the 
investigating authority and the advisory committee we re subject to internal indicative deadlines when 
considering an application and making recommenda tions to the Minister of Trade and Industry 
regarding the possible initiation of an investigation. 
10. Concerning the question relating to the revoked Arti cle 31, the delegate of Egypt stated that 
the investigating authority was subject to an intern al indicative deadline to complete its report on the 
injurious practice.  In all investigations, the inv estigating authority had to issue a report setting forth 
the essential facts which formed the basis for its conclusion in line with the requirements set forth in 
Article 12.8 of the SCM Agreement.  Also, the investigating authority had to complete its 
investigation within the deadline set forth in Article 11.11 of the SCM Agreement. 
11. The delegate of the United States
 stated that his delegation looked forward to the written 
responses from Egypt. 
12. The Committee took note  of the statements made. 
3. El Salvador 
13. The Chairman  recalled that the Committee had received a notification from El Salvador 
concerning amendments adopted in 2007 to the Ce ntral American Regulations on Unfair Business 
Practices.  This notification appeared in document G/SCM/N/1/SLV/3, dated 8 April 2008. 
14. The Chairman recalled that the revised Centra l American Regulations on Unfair Business 
Practices had already been considered by the Commi ttee at its meeting held on 29 April 2008, when 
the Committee had before it notifications from Costa Rica, Guatemala and Nicaragua.  On that occasion, the delegate of El Salvador had already ma de a brief statement referring to the notification 
in G/SCM/N/1/SLV/3.  The Chairman also noted that  the Committee would revert to the notifications G/SCM/M/66 
Page 4  
 
  of Costa Rica and Guatemala under Item B of the agenda.  Written questions of the United States 
regarding El Salvador's notifica tion were found in G/SCM/Q1/SLV/4. 
15. The delegate of El Salvador
 drew attention to the fact that the Central American Regulations 
on Unfair Business Practices had been reviewed in the Anti-Dumping Committee meeting held on 
Monday of the same week, where the delegation of El Salvador had given an early answer to the 
questions raised by the United States.  The delegate of El Salvador stated that he did not wish to 
repeat the statement made in the Committee on An ti-Dumping Practices and that his delegation was 
open to any question that might arise with respect to this matter in this Committee. 
16. The delegate of the United States  acknowledged that El Salva dor's legislation had been 
reviewed in the Committee on Anti-Dumping Practices and stated that his delegation would wait for 
El Salvador's written responses.   
17. The Committee took note  of the statements made. 
4. Ukraine 
18. The Chairman  noted that the Committee had received a notification from Ukraine regarding 
the Law on the Protection of National Industry Agai nst Subsidized Imports.  This notification had 
been circulated in document G/SCM/N/1/UKR/1, dated 25 June 2008.  The Chairman also noted that 
the Committee had received written questions on this legislation from China, the European Communities and the United States in , respectively, documents G/SCM/Q1/UKR/1, 
2 and 3. 
19. The Chairman stated that Ukraine had recently  submitted replies to the questions posed by 
China.  These replies were found in document G/ SCM/Q1/UKR/4, dated 28 October 2008.  However, 
Ukraine had not yet replied to the questions from the European Communities and the United States.  
The Chairman invited the delegate of Ukraine to ta ke the floor to introdu ce the legislation recently 
notified by Ukraine and to respond to the questi ons posed by the European Communities and the 
United States. 
20. The delegate of Ukraine
 stated that his capital was still working on the questions from the 
United States and European Communities and that his delegation would be ready to submit its 
responses to these questions in writing, shortly. 
21. The Committee took note  of the statements made. 
B. NATIONAL LEGISLATION – PREVIOUSLY REVIEWED NOTIFICATIONS OF COUNTERVAILING 
DUTY LAWS/AND OR REGULATIONS  
22. The Chairman  stated that the procedures contained in G/SCM/W/293 for the review of 
countervailing duty legislation provided that the Co mmittee would revert to a previously reviewed 
legislative notification if written questions were  submitted on such notification not later than 
six weeks in advance of the meeting.  The Chairman noted that pursuant to this provision, and in light 
of the written questions posed, the Committee had be fore it at this meeting notifications of 
countervailing duty legislation from Albania, China, Costa Rica, and Guatemala.   
1. Albania 
23. Because Albania was not represented in the meeting, the Chairman proceeded to the next 
agenda item.  G/SCM/M/66 
 Page 5 
 
 
  2. China 
24. The Chairman stated that the Committee had received follow-up questions from the 
United States regarding a notification of China.1  These questions appeared in G/SCM/Q1/CHN/69.  
China's replies to these questions had been circulated in document G/SCM/Q1/CHN/70.  
25. No comments were made on this notification.   
3. Costa Rica 
26. The Chairman  recalled its previous statement that at the meeting held on 29 April 2008, the 
Committee had reviewed notifications from Costa Rica2, Guatemala and Nicaragua regarding the 
Central American Regulations on Unfair Business Pr actices, as amended in May 2007.  Subsequently, 
Costa Rica had provided written replies to the questi ons of the United States, the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Matsu an d Chile.  The United States had submitted follow-
up questions, which had been circulated in G/SCM/ Q1/CRI/13.  The replies of Costa Rica to these 
questions were contained in document G/SCM/Q1/CRI/14.   
27. No comments were made on this notification. 
4. Guatemala 
28. The Chairman  noted that following the meeting held in April 2008, Guatemala had submitted 
written replies to questions posed by the United St ates, the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu and Chile on the notif ication submitted by Guatemala regarding the 
revised Central American Regulations on Unfair Bu siness Practices.  The United States had recently 
submitted a follow-up question (G/SCM/Q1/GTM/14), to  which Guatemala had replied in writing in 
document G/SCM/Q1/GTM/15.  
29. No comments were made on this notification. 
C. SEMI-ANNUAL REPORTS OF COUNTERVAILING DUTY ACTIONS  
30. The Chairman  stated that document G/SCM/N//178 dated 1 July 2008 invited Members to 
submit, not later than 31 August 2008, semi -annual reports under Article 25.11 of the SCM 
Agreement of countervailing duty ac tions taken in the period 1 Janua ry-30 June 2008.  Reports on 
countervailing duty action taken in th e first half of 2008 had been received from Australia, Brazil, 
Canada, Chile, the European Communities, Peru, Turkey, the United States and South Africa. 
31. The Chairman also noted that, as stated in paragraph 2 of document G/SCM/N/178/Add.1, 
32 Members had informed the Comm ittee that they had not taken any countervailing duty action in 
the first six months of 2008.  Based on the feedback  from the Secretariat, the Chairman stated that 
Nigeria and Colombia had to be added to this list.   Unfortunately there was a very large number of 
Members that had not submitted a semi-annual report for the period at issue.  These Members were 
listed in paragraph 3 of document G/SCM/N/178/Add.1.  The Chairman urged these Members to submit such a report as soon as possible. 
                                                     
 
1 G/ADP/N/1/CHN/2/Suppl.6. 
2 G/ADP/N/1/CRI/3. G/SCM/M/66 
Page 6  
 
  1. Australia 
32. The semi-annual report of Australia on counterv ailing duty actions taken in the first half 
of 2008 was contained in document G/SCM/N/178/AUS .  There were no comments or questions on 
this report. 
2. Brazil 
33. The semi-annual report of Brazil on countervailing du ty actions taken in the first half of 2008 
appeared in document G/SCM/N/178/BRA.  There we re no comments or questions on this report. 
3. Canada 
34. The semi-annual report of Canada  on countervailing duty actions taken in the first half 
of 2008 appeared in document G/SCM/N/178/CAN a nd Corrigendum 1.  There were no comments or 
questions on this report. 
4. Chile 
35. The semi-annual report of Chile on countervailing du ty actions taken in the first half of 2008 
was contained in document G/SCM/N/178/CHL and Corrigendum 1.  There were no comments or questions on this report. 
5. European Communities  
36. The semi-annual report of the European Comm unities on countervailing duty actions taken in 
the first half of 2008 appeared in document G/SCM/N/178/EEC.  There were no comments or questions on this report. 
6. Peru 
37. The semi-annual report of Peru on countervailing duty actions taken in the first half of 2008 
appeared in document G/SCM/N/178/PER.   There were no comments or questions on this report. 
7. South Africa 
38. The semi-annual report of South Africa on counterv ailing duty actions taken in the first half 
of 2008 was contained in document G/SCM/N/178/ZA F.  There were no comments or questions on 
this report. 
8. Turkey 
39. The semi-annual report of Turkey on counter vailing duty actions take n in the first half 
of 2008 appeared in document G/SCM/N/178/TUR.  There were no comments or questions on this 
report. 
9. United States  
40. The semi-annual report of the United States on c ountervailing duty actions taken in the first 
half of 2008 appeared in document G/SCM/N/178/US A.  There were no comments or questions on 
this report.  G/SCM/M/66 
 Page 7 
 
 
  41. Before proceeding to the next agenda item, th e Chairman drew the Committee's attention to 
the decision taken by the Committee on Anti-Dumpi ng Practices to adopt a revised standard format3 
for semi-annual reports under the Anti-Dumping Agreemen t.  In light of this decision, the question 
naturally arose whether it was desirable for this Comm ittee to decide that this revised standard format, 
with the appropriate changes, also apply to th e submission of semi-annual reports under the SCM 
Agreement. 
42. The Chairman also referred to the fact that at the regular meeting held on 26 April 2007, the 
Committee had agreed that, in light of the d ecision adopted by the Committee on Anti-Dumping 
Practices regarding the minimum information to be  provided in reports under Article 16.4 of the Anti-
Dumping Agreement (document G/ADP/2/Rev.1, 30 October 2006), it might be appropriate to adopt 
a similar decision in respect of reports to be s ubmitted under Article 25.11 of the SCM Agreement.  
That decision had been taken two years ago and th e Committee had noted this matter at the previous 
meeting in April 2007.  There were therefore two issues before the Committee in this regard:  One 
was the improvement of the format for the semi-ann ual reports of countervailing duty actions in line 
with the decision in the Committee on Anti-Dumping Practices regarding the semi-annual format for 
anti-dumping actions.  The second issue concerned the improvement of the notification of preliminary 
and final countervailing actions, by taking a simila r decision regarding the minimum information to 
be provided.  The Chairman suggested that the Committee agree to hold informal consultations on 
these two issues.  
43. The delegate of the European Communities  recalled that Members had already achieved a 
very beneficial improvement on the formatting in the Committee on Anti-Dumping Practices which 
would enhance transparency for the future and s uggested that the SCM Committee should also work 
on possible improvements of notification requireme nts under Article 25.11 of the SCM Agreement.  
However, the Committee should look into this ma tter with a fresh mind, without any preconceived 
ideas. 
44. The delegate of Canada  expressed support for this initiative to improve transparency and 
openness in the context of semi-a nnual reports and notifications. 
45. The delegate of the United States  also supported the Chairman's proposal to begin informal 
consultations on the two issues that the latter had outlined. 
46. The delegate of New Zealand  joined the other Members in supporting the Chairman's 
proposal which would increase the transparency of the notifications and reports provided to this 
Committee. 
47. The Chairman  concluded that the Committee had deci ded to start informal consultations 
regarding the two issues that he had described in relation to Article 25.11:  first, the semi annual 
report, and second, the minimum informati on to be provided in the report.   
D. NOTIFICATIONS OF PRELIMINARY AND FINAL COUNTERVAILING DUTY ACTIONS  
48. The Chairman noted that since the regular me eting held on 29 April 2008, the Committee had 
received notifications under Article 25.11 of the SCM Agreement of preliminary and final 
countervailing duty actions from Canada, Chile, the European Communities, Japan and the 
United States.  These notifications were listed in  documents G/SCM/N/175-176, 179, 180 and 181.  
No comments were made regarding any of these notifications.  This concluded the Committee's 
discussions under item D. 
                                                      
3 G/ADP/1/Rev.1. G/SCM/M/66 
Page 8  
 
  E. T
RANSITION REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF ACCESSION OF THE 
PEOPLE 'S REPUBLIC OF CHINA TO THE WORLD TRADE ORGANIZATION  
49. The Chairman recalled that paragraph 18 of the Protocol of Accession of the People's Republic 
of China to the World Trade Organization provided that all subsidiary bodies, including this Committee, "which have a mandate covering Ch ina's commitments under the WTO Agreement or 
[the] Protocol shall, within one year after accession, review, as appropriate to their mandate, the 
implementation by China of the WTO Agreement and of  the related provisions of [the] Protocol".   
50. China was to provide relevant information in advance of the review, including information 
specified in Annex 1A to the Pr otocol.  China could also raise issues relating to any reservations 
under Section 17 or to any other specific commitments made by other Members in the Protocol, in 
subsidiary bodies which had a rele vant mandate.  This Committee was required to report the results of 
the review promptly to the Council for Trade in Good s.  The review was to take place after accession 
in each year for eight years, with a final review in year 10 or at an earlier date decided by the General Council. 
51. The Chairman noted that there were no procedures set out for the conduct of the transitional 
review in the Protocol, except that China was to provide relevant informa tion in advance of the 
review.  In this regard, Annex 1A specified that  China was requested to provide information on the 
following to this Committee in ac cordance with Article 18.1 of its Accession Protocol:  "Pricing 
Policies":  (a) "application of existing or any other pr ice controls and the reason for their use";  and (b) 
"pricing mechanisms of China's state trading enterp rises for exported products".  The notification of 
China provided for in Annex 1A has been circulated in document G/SCM/N/182, dated 
20 October 2008.  The European Communities and the United States had submitted questions in the 
context of this transitional review, which had been circulated in documents G/SCM/Q2/CHN/40 
and 41.   
52. 
The delegate of the European Communities  saw the transitional review as a useful 
supplement to bilateral discussions with China on its subsidies policy, including China's observance 
of WTO obligations and its commitments under the Protocol of Accession.  China became a Member 
of the WTO in 2001 and its first subsidy notifica tion in 2006 represented an important step towards 
observing the fundamental principle of transparency as required under the SCM Agreement .  As had 
been reiterated on several occasions, China had s till not completed its firs t subsidy notification 
submitted in 2006, although it had been called upon by  several WTO Members to do so.  This in and 
of itself raised the question whether China was willi ng to fully abide by its WTO obligations.  This 
was further emphasized by the fact that China had not yet submitted the new and full subsidy 
notification which had been due by 30 June 2007.  
53. The delegate of the European Communities not ed that subsidies pr ovided by sub-national 
governments was an area specifically highlighted by  Members in paragraph 173 of the Working Party 
Report on China's accession to the WTO .  As a result it might be expected that discussions on subsidy 
issues would focus more on substance rather than  on China's implementation of specific commitments 
that it had made in its Protocol of Accession.  
54. As a consequence of these shortcomings, th e European Commission continued to uncover 
subsidy schemes which had not been notified.  According to information the European Commission 
had, China subsidized the development of name br ands for export at both the federal and the sub-
federal level of government.  These subsidies ap peared to be contingent upon export and were 
therefore inconsistent with Article 3 of the  SCM  Agreement  as prohibited subsidies. 
55. By continuously failing to update its insufficient subsidy notification or to submit a new and 
full subsidy notification in due time, WTO Members we re left with only one of two options:  to accept  G/SCM/M/66 
 Page 9 
 
 
  China's disregard for the legitimate interests of WTO Members and WTO obligations regarding 
transparency and notification requirements;  or, to  initiate formal dispute settlement proceedings - a 
path that the European Communities, and - one w ould assume - China, would prefer to avoid.  
56. In light of this the delegate of the Europ ean Communities encouraged China to commit to a 
specific timeline for the submission of information on its sub-federal programm es and of its next new 
and full subsidy notification.  
57. Furthermore, the delegate of the European Co mmunities requested China to provide it with 
comprehensive information on the subsidy schemes that had been specifically addressed at this 
meeting regarding the development of name brands  for export and regarding subsidies in its semi 
conductor industries, and to immediately notify those schemes or to terminate them. 
58. The delegate of the United States  said that this was the seven th annual transitional review 
mechanism for China.  The United States believed th at the transitional review mechanism continued 
to be a useful mechanism.  The transitional revi ew mechanism helped to provide needed additional 
transparency for China's trade regime so that Members could better understand and assess the 
progress that China had made in implementing and complying with its WTO obligations.  One of 
those obligations was to provide a complete subsidy notification. 
59. After nearly five years as a WTO Member, China had submitted its first s ubsidy notification.  
While this was a positive step, the notification was la rgely incomplete as it failed to include a single 
sub-central government measure.  In explaining th e incompleteness of its notification, China had 
stated that it was "internally discussing how to gath er information in an efficient and an effective 
manner".  While for some WTO Members the absence of sub-central government measures may not 
be important, that was not true in the case of China.  
60. The United States had highlighted in prior subm issions to this Committee that provincial and 
local authorities in China played a very important  role in implementing industrial policy, including 
subsidy policy.  Therefore, the notification of sub-central government measures by China was imperative.  For example, it had recently been repo rted that one of China's provincial governments 
was providing assistance to four textile compan ies so they could avoid bankruptcy.  This 
demonstrated the important role of local governments, as well as China's commitment to maintain production in an industrial sector in which it was already a dominant supplier worldwide
. 
61. The delegate of the United States continued th at a second obligation China assumed when it 
joined the WTO was to immediately eliminate all export subsidies.  The United States and other WTO 
Members had raised numerous questions over the years with respect to what appeared to be 
unreported subsidy programmes at va rious levels of government that were all contingent upon export 
performance.  The United States had also raised these  same concerns bilaterally, based on evidence of 
legal measures that clearly appeared to provide prohi bited export subsidies.  Notably, all of these 
programmes were implemented well after China beca me a WTO Member.  China had not taken steps 
to address the concerns of the United States or similar concerns expressed by other WTO Members.  
Most disturbingly, publicly available legal measur es at the central and local governments clearly 
indicated that some of these pr ogrammes appeared to have been formulated and adopted under the 
direction of the central government.  Given that th e end of the period of the trade review mechanism 
was drawing nearer, it was particularly troubling to see China taking what seemed to be new steps backwards rather than forwards, by implementin g what appeared to be new prohibited subsidy 
programmes, at nearly all levels of government, pr omoted and sanctioned by the Central Government.  
Continuation down such a path was not tenable.  China needed to meet its obligations to provide a full 
subsidy notification covering all le vels of government, and to termin ate without delay any prohibited 
subsidies in place. G/SCM/M/66 
Page 10  
 
  62. A third obligation China undertook when it became a WTO Member was that it "would not 
influence, directly or indirectly, commercial decisi ons on the part of state-owned or state-invested 
enterprises", as set forth in paragraph 46 of th e Working Party Report accompanying China's WTO 
Protocol of Accession.  The delegate of the United States noted that China was currently 
consolidating state ownership of large or strate gically important state-owned enterprises ("SOEs") 
under the State Assets Supervision and Administra tion Commission ("SASAC").  The approximately 
150 SOE holding companies owned by SASAC controlled thousands of companies across a wide range of industries and accounted for most of the pr ofits in the SOE sector.  A recent paper issued by 
The General Office of the State Council (GBF [2006] No. 97) stated that the dominant position of public ownership would be maintained, and estab lished a mechanism by which profits from SOEs 
would fund the re-organization of state-owned enterp rises, consistent with national industrial policies 
and planning.  Given the government's heavy relia nce on industrial policies and the government's 
explicit goal of maintaining a leading role for SOEs  in China, the United St ates asked China how it 
intended to proceed with its plans for SOEs and, at  the same time, meet its WTO obligation to operate 
its SOEs solely on a commercial basi s without government interference. 
63. The delegate of the United States noted that th e last section of the United States' submission 
included several questions regarding domestic suppo rt for China's agricultural sector.  Many of those 
questions were asked in the committee meeting of the Committee on Agriculture.  At that meeting 
China asserted that many of those questions were more appropriate for this Committee.  The United States was now repeating those questions w ith the expectation that China would provide a 
clear and complete response.  
64. The delegate of Japan
 noted that while Japan had not submitted written questions in the 
context of this year's transitional review, Japan shared some of the concerns expressed by other 
Members in their written submissions.  The fact that some of the questions in those written 
submissions had also been posed in 2007 showed that  the responses from China were not sufficient to 
address Members' concerns.  In this regard, as a general matter, Japan hoped that China would 
respond to questions clearly and in an adequate and timely manner.  
65. Japan had an especially strong interest in de velopments in China's banking and financial 
sectors, and shared the concerns of the United States in this regard.  Japan co nsidered that if Chinese 
state-owned commercial banks provided loans to un creditworthy enterprises, or supplied lending on 
terms and conditions inc onsistent with market considerati ons, such loans and lending constituted 
subsidies within the meaning of the SCM Agreement .  China had explained that as a result of the 
reform of the banking and financial sector, Ch inese state-owned commercial banks now provided 
loans on a commercial basis.  However, the details w ith respect to this reform were not clear.  For 
example, as pointed out by the United States at paragraphs 10-12 of documen t G/SGM/Q2/CHN/33, it 
was unclear how Chinese state-owned commerci al banks could take lending decisions on a 
commercial basis given that those banks were also required to act consisten tly with China's national 
industrial policy.  Japan requested China to provide a clear explanation on this point.  
66. The delegate of Canada  thanked the United States and th e European Communities for their 
communications and looked forward to reviewing China's answers.  Cana da agreed that the 
notification process was important for transparency  purposes and had been a key element of the work 
of this Committee.  In the context of previous tran sitional reviews, Canada had raised concerns with 
respect to China's industrial policies and subsidy programmes, in particular in the iron and steel 
sectors.  Those concerns remained.  Canada therefor e shared the interest of some other Members in 
having more information regarding programmes identified in the written submissions from the 
European Communities and the United States, includi ng programmes that supported name brands in 
international markets, issues relating to SOE operati ons in China, VAT rebates and VAT exemptions.    G/SCM/M/66 
 Page 11 
 
 
  67. The delegate of Mexico  echoed the concerns of previous delegations, noting that not much 
was known about the subsidy programmes at vari ous levels of the Chinese Government.  The 
implementation of programmes which appeared to be prohibited subsidies under Article 3 of the SCM 
Agreement was also a concern.  Mexico would be paying  close attention to the answers provided by 
China to these concerns. 
68. The delegate of China  took note of the statements made by the previous speakers.  Before 
responding to the written questions from the United States and European Communities, the delegate 
of China wanted to make some general comments.  
69. The delegate of China firmly rejected any im plication that China had failed to fulfil its 
transparency commitments in the area of subsidies.  China had always made it clear that preparation 
of subsidy notifications would in volve tremendous difficulties – this had been made clear to the 
Working Party when paragraph 173 of the Working Pa rty Report was drafted, which was why, in that 
same paragraph, China had committed to "progressively  work towards a full notification of subsidies, 
as contemplated by Article 25 of the SCM Agreement .  The Working Party took note of this 
commitment".  The delegate from China repeat ed the phrase, "China would progressively work 
towards a full notification of subsidies, as contempl ated by Article 25 of the SCM Agreement".  This 
was what China had committed to do and this was ex actly what China had been doing ever since its 
accession and it is what China would continue to do.  It was never an easy task to finalize the first 
new and full notification of China's subsidy measure s and programmes at the central government level 
in April 2006, only a few years after China's accession.  The notification had contained comprehensive information covering the period 2001 to 2004.  China would never agree that 
finalising this notification in 2006 amounted to a fa ilure to honour its accession commitment.  On the 
contrary, China believed its efforts were a reflecti on of its commitment to the fundamental principle 
of transparency.  This was especially true given its serious capacity constraints as a newly acceded developing country Member.  There had been de lays in the subsidy notifications from some 
developed Members, in sharp contrast to the efforts made by China.  
70. China's efforts would continue, even though it w as not in a position at this moment to submit 
a second or updated New and Full notification.  Th e main reason for the delay was the major reform 
of China's internal tax policies, which resulted in  adjustments to the policies and measures contained 
in China's first notification.  It would not be sen sible to waste precious resources and limited capacity 
to notify things that were undergoing chang es.  China intended to present to Members a 
comparatively complete picture of the changes.   China was continuing to work on an updated 
notification, and to the extent possible would endeavour to cover the period from 2005 to 2008 in this 
second updated notification.  
71. As to the question whether the second notifica tion would cover the s ub-national level, the 
delegate of China stated he had no answer at this st age.  But, China had a feeling that the effects of 
subsidies provided at the sub-national level mi ght be magnified.  In preparing China's written 
responses to the written questions from the United Stat es regarding its first notification, as contained 
in document G/SCM/Q2/CHN/28, China endeavoured to  verify those sub-national measures identified 
by the United States.  But, many of those measures  were outdated, had already been eliminated, or 
had not been understood correctly.  
72. The delegate of China asked whether the Unite d States and the European Communities could 
reassure WTO Members that they had notified all subs idy measures at the sub-national level that they 
were obliged to notify to this Committee.  In the case of the European Communities, de minimis aid 
was governed by Articles 87 and 88 of the European  Communities' Treaty.  Regulation No 69/2001 of 
12 January 2001 deemed that state aid measures granted to any single enterprise not exceeding 
EUR 100,000 over any period of three years would not meet the criteria under Article 87(1) of the European Communities' Treaty, and would therefor e not fall under the notification requirement of G/SCM/M/66 
Page 12  
 
  Article 88(3) of the European Communities' Treaty .  As such the European Communities would not 
notify to this Committee subsidies granted to any single enterprise under EUR 100,000 over any period of three years.  The delegate from China invited the Committee to co mpare that to China's 
measures stated by the European Communities in its written questions.  Even if the measures 
identified by the European Communitie s in its questions to China were  all verified, an enterprise in 
China that complied with the criteria would be awarded RMB 30,000 annually, or RMB 90,000 over 
three years – how did that compare to the de minimis  level of EUR 100,000 in the case of the 
European Communities, a developed Member.  With the exchange rate standing at 1 Euro to 10 RMB 
were China's subsidies at the sub national level really a big problem? 
73. Turning to the specific questions, the delegate of China noted that he had been informed by 
his authorities that the Circular on Carrying out Evaluation of Products to be recognised as China 
World Top Brand of 24 March 2005  was no longer being implemented.   Regarding the questions from 
the European Communities on the semi-conductor indus tries, details of China's measures regarding 
this particular industry were already contained in  the first New and Full notification, specifically 
item 57 in document G/SCM/N/123/CHN.  Noting the specific comment on page 3 of the written 
questions from the European Communities stating that  " ... China applies a 3 per cent value-added tax 
rate on China-made chips", the Chinese delegate veri fied that no such policy was in place in China. 
74. The United States had asked whether there was any mechanism in place in China for 
reviewing new Central Government subsidy programm es.  The delegate of China confirmed that the 
Central Government followed consultation proced ures when formulating policies and developing 
measures in order to ensure WTO consistency.  As  to the efforts regarding subsidy programmes of 
local government, a comprehensive programme on  legislation review was launched nationwide 
around the time of China's accession to the WTO.  As pa rt of that process a special circular was issued 
by the State Council in September 2001 requesting al l local governments to review local regulations, 
rules and administrative measures in line with the principles of uniform application, non-discrimination and transparency.  To ensure cons istency within the legal framework and uniform 
implementation of trade policies across the country, the Regulations on Submission of Regulations 
and Rules for Record was promulgated at the end 2001.  This included the requirement that all rules 
and regulations be submitted to the Legislative Affairs Office of the State Council for review within 
30 days of promulgation.  This afforded the opportu nity to identify and remedy any inconsistencies 
between the local rules and regulations with the laws  and regulations of the Central Government.  In 
addition, anyone could write to the Legislative Affair s Office of the State Council to initiate a review 
process whenever they identified an in consistency in the legislation.  
75. Regarding the question on the relationship between industrial po licies and subsidy 
programmes, the delegate of China clarified that they were not necessarily inter-linked.  Industrial 
policies were usually general, reflective of a general policy direction and implemented through 
specific administrative measures.  Subsidy progra mmes were found in admini strative measures which 
might or might not be related to industrial policies.   It was on these specific administrative measures 
providing for subsidies that China had made its subsidy notification.  Generally speaking the 
financing of the subsidy programmes would remain at the level of government initiating the subsidy. 
76. Turning to the questions on state-owned enterprises, China thought using the word 
"consolidation", as the United States had done in its  written questions, could be misleading.  More 
appropriate phrases to describe the process might be "streamlining" or "rationalisation".  China 
clarified that this process was not a subsidy programme .  It was a process that reflected the efforts of 
the Chinese Government to further reform its  state owned enterprises along the market economy 
principles, which included ensuring that decisions of those enterprises were based solely on commercial considerations, and that the role of the State as an investor and shareholder was separated 
from that of the managerial board of those ente rprises as the decision maker.  The State Assets 
Supervision and Administration Commission, or SASAC took on the role of the investor or  G/SCM/M/66 
 Page 13 
 
 
  shareholder on behalf of the State and aimed to pr eserve and increase the value of the state-owned 
assets.  It did not seem necessary to go into deta iled analysis of the directives stated by the 
United States as in light of the mandate of the Committee concerning the transitional review those 
directives were not directly relevant.  However, the delegate of China wished to highlight some points 
of those directives in order to reflect the polic y direction of the Chinese government regarding its 
reform of state-owned enterprises, as he had just st ated.  For example,  state-owned enterprises, other 
than those of national security interest, would be pr omoting a diversified investor structure;  state-
owned enterprises were encouraged to go public and be listed on stock market;  and investors, 
including foreign investors, were welcome to take up shares in those enterprises.  
77. The delegate of China noted that due to the late arrival of written questions, the relevant 
authority had not been in a position to respond to th e questions on land administration.  He also added 
that China did not see the relevance of the questions to the mandate of this Committee, particularly 
those concerning the National Land Superintendency.  Th e delegate of China wished to reiterate that a 
basic principle adhered to by China in its economi c reforms was to allow the market to play its 
fundamental role in the allocation of resources, no ting that in China land for industrial purposes could 
now only be provided through public bidding procedures.  
78. The delegate of China noted that the economi c reforms in China had led to fewer price 
controls on goods and services.  These days onl y a very small number of goods and services 
continued to be subject to state pricing, or go vernment guidance on pricing due to their importance 
and sensitivity.  Information provided to this Comm ittee in accordance with Annex 1A reflected this 
situation.  In the meantime the reform process was on-going – for example, pri ce controls on coal and 
grain had been eliminated in the last few years.  While the reform of fuel pricing in China would not 
be completed overnight, the policy direction was clear.  
79. On questions regarding the agricultural sector and China's new Enterprise Income Tax Law, 
the delegate of China responded that  chapter one of the legislation answered the question posed by the 
United States regarding the definition of "enterpri se".  Given misunderstandings  that might be derived 
from translation the delegate from China suggested th at the United States consult the official English 
version of this particular law for the details.  As to the questions concerning the projections of values 
of income tax exemptions, China was not in a posit ion to do such projections.  The amount of tax 
forgone as a result of the implementation of prefer ential tax policies was not available as China did 
not have a statistics system for tax expenditure.  Therefore, at this point, such projections were 
impossible.  Other available details on exemptions would be included in future notifications.  Noting 
that the final Article of the legislation was Article  60, the delegate from China wondered if there had 
been a mistake in the question from the United States  given reference to a non existent Article 86.   
80. The delegate of China referred to a previous ly raised question on which he had provided a 
response, on the VAT exemptions for agricultura l products produced by Chinese farmers.  He 
reiterated that China did not believe there to be any discrimination in appl ying such exemptions.  
China had explained repeatedly its views on this issue, including in written responses during its trade 
policy review.  This exemption of VAT in China app lied to the products directly produced by Chinese 
farmers and the corresponding stage of tax levying in  a foreign country was when a foreign farmer 
sold his/her products.  He asked whether the Unite d States or the European Communities could clarify 
whether any tax was levied on farmers in the Unite d States or in EU Member States when a farmer 
sold his/her products.  It seemed not only were fa rmers exempt from taxes in  those countries, they 
were also heavily subsidized.  
81. Finally, with respect to China's export VAT re bate, the delegate of China stated that the 
rebates were implemented according to legislated re bate rates, none of which were in excess of the 
original rates levied.  As such China did not  believe there was any inconsistency with the 
requirements of the SCM Agreement.   G/SCM/M/66 
Page 14  
 
  82. The delegate of the European Communities  thanked China for its replies and its 
explanations, particularly on semi conductor industries and noted he would follow up on the information provided.  China had interpreted paragraph 173 of the Working Party Report as 
allowing it to delay submission of its notification to this Committee.  The European Communities strongly disagreed with this interpretation.  Transparency was a fundamental principle of the 
WTO and the delayed submission of a subsidy no tification would severely undermine the 
usefulness of such a notification to Members.  To  be useful subsidy notifications needed to be 
timely.    
83.
 As to China's name brand programmes, the European Communities agreed with the view 
that notifications  needed to be made irrespective of the amount notified.  Th e delegate of the 
European Communities noted that China had also asked a question regarding the 
European Communities notification.  The Eur opean Communities was prep ared to answer any 
question put to it on its notifications and would be prepared to terminate any prohibited subsidies 
found in Europe. 
84. The delegate of the United States  agreed firmly with the European Communities on the 
meaning of paragraph 173 in China's Working Party Report.  It was very disturbing to hear China 
suggest that, in effect, it had no obligation under Article 25 of the SCM Agreement to make 
subsidy notifications, but rather c ould meet its obligations by merely continually working toward 
a full notification.  The delegate of the United St ates noted that he had been very involved in 
China's accession  negotiations and recalled that Members of the Working Party had asked and 
expected China to provide a full notification of its subsidies at the time of its accession.  China 
provided a notification in Annex V of the Work ing Party Report, but as many Working Party 
members noted at the time it was incomplete.  Working Party Members had asked China to work 
progressively to complete that notification.  That did not amount to an alteration of China's 
obligation under Article 25 of the SCM Agreement regarding future notifications.  Seven years 
into China's WTO membership, the expectation was that China should now have notified all of 
its subsidies, including subsidies at the sub-national  government level.  While China had stated 
that it was a developing country Member and therefore needed more time to put together its notification, China's Protocol of Accession did not label China as a developing country Member, 
nor did it provide for developing country treatment for China under the 
SCM Agreement.  China 
was not given the right to invoke any of the developing country provisions in the SCM 
Agreement  in its Protocol of Accession.  
85. The delegate  of the United States noted concerns  with China's suggestion that because 
some programmes at the sub-national government leve l were dated or eliminated they were not a 
big problem.  The United States considered programmes implemented at the sub-national 
government level to be an enormous problem – it had identified, so far, more than sixty  separate 
legal measures that appeared to provide export subsidies.   
86. Following initial questions in 2006 on the export brand programme, the United States 
interpreted this programme  as providing export subsidies at the central government level.  The 
legal measure, at the level of the central govern ment, set out the parameters of the programme 
and provided guidance to sub-central governments to implement programmes along the lines of 
the central government legal measure.  The concer n was that the central government in China did 
not appear to be aware of its WTO obligations as  these legal measures clearly appeared to be 
prohibited export subsidies.  The issue of prim ary concern was not necessarily whether China 
was able to track down all of the provincial mea sures in question, but rather that the central 
government had formulated and implemented progra mmes that appeared to be prohibited.  These 
programmes were implemented in 2005 and 2006,  long after China became a WTO Member.  
The United States considered that the mechanisms  China had in place with respect to insuring 
WTO consistency, both at the central government level and the local government levels were  G/SCM/M/66 
 Page 15 
 
 
  ineffective.  The reviewers, MOFCOM, of the measures in China did not appear to understand 
the full nature of China's obligations under the SCM Agreement .   
87. The delegate  of the United States noted that China had asked whether the United States 
had notified all of its sub-central government m easures.  While not all sub-central government 
measures may have been notified, the United Stat es stated that it had notified over 350 state 
programmes, which was 350 more sub-central government programmes than China had notified.  
88. The United States welcomed the statement from the Chinese delegate that SASAC's role 
was limited to that of an investor interested in  maximizing state-owned asset values.  But, the 
directive cited by the United States in its writte n questions included repeated references to the 
fact that SASAC's efforts at streamlining owners hip and in regulating investment activity in the 
SOEs was to be done in accordance with state in dustrial development policies.  The directives 
also made clear that SASAC would determine both the core and non-core business of those large SOEs and would 
assign  a priority to the allocation of inve stment to core businesses.  How did 
SASAC intend to maximise asset values consistent w ith market principles if at the same time it 
was going to allocate or regulate investment behaviour in accordance with state industrial 
development policies?  How could SASAC maximise asset values if the directive prioritised the 
allocation of investment into core business as dictated by SASAC, rather than core business 
determined by enterprises?  The delegate of th e United States noted that SASAC had explicitly 
stated that it would maintain control over those SOEs so that no strategic investor, whether 
foreign or domestic, would have effective control over the SOEs under SASAC purview.  
89. Finally, regarding land, it probably went w ithout saying that land was perhaps China's 
most scarce and valuable resource relative to labo ur.  Given the scarcity of land and given its 
clear implications  for both market entry and competition c oncerns, it would not be too much to 
ask why the Government had undertaken effort s to recentralize land administration at the 
provincial level.  There were concerns about what  that implied for transpa rency in land allocation 
in China. 
90. The delegate of China  took note of the comments and wished to respond to the points raised.  
On paragraph 173 of the Working Party Report, what  he said should not be understood to mean that it 
was China's intention to delay its notification.  Ra ther, China was applying maximum effort to do as it 
had committed to do, and was working towards providi ng a full notification.  Secondly, regarding the 
point concerning the brands, China took note that  some Members felt MOFCOM, as the reviewer, did 
not appreciate fully China's WTO obligations.  But, there appeared to be a misunderstanding on this 
particular point.  China had previously explained MOFCOM's policy in this regard, probably during 
the previous transitional review meeting or in wr itten responses in its trade policy review – the focus 
of the policy was to promote the brands to particip ate in trade fairs and trade promotion activities.  
The delegate from China noted he was not an expert in company law,  but wondered whether SASAC, 
as a shareholder and investor in a company, was prevented from expressing views on the 
company in which it had invested.  He also noted that it appeared that major countries were 
nationalising company assets due to the ongoing financial crisis that had originated in the United States.  In saying this the delegate from China did not mean to trigger a debate, but wanted to reiterate that in light of the mandate of the Committee, the discussion under this agenda item should focus on the WTO consistency of concrete and specific measures, rather than general issues such as the land administration system, SOE reform or financial assets 
nationalisation. 
91.
 The delegate of the United States  noted his appreciation for China's response to his 
intervention.  With respect to the famous e xport brand programme, it was very clear from the 
legal measures that in order to qualify for th e programme a firm had to export products.  The 
policy behind the programme was to encourage th e exportation of Chinese branded products, and G/SCM/M/66 
Page 16  
 
  it was thus a very clear case of export contingency.   The Chinese delegate had stated trade fairs 
and trade promotions, but this was of little interest  at this point.  The United States was interested 
in cash grants that were given to companies that had been recognized as the owners of famous export brands - cash grants that could have significant value.   
92.
 On the issue of SOEs, from a separation standpoint and from a governance standpoint 
privatization of the SOEs would be the first best  option, but if privati zation was not an option 
there was not a concern with SASAC operating as an investor per se .  Of course SASAC had a 
right as the owner to participate as an investor .  The concern was more with the fact that the 
investment regulation and SASAC's ownership of those enterprises would be conducted in accordance with state industrial development policies.   Because of the link to industrial policies it 
was not clear to what extent those SOEs would operate as extensions of the government rather 
than true commercial actors. 
93.
 The delegate of the European Communities  thanked China for its follow up responses.  
The European Communities appreciated that Chin a had the same understanding of paragraph 173 
of the Working Party Protocol as it had, and acknowledged China's effort to undertake to submit 
timely and complete subsidy notifications.  He asked whether China could be more specific with 
regard to when it would make a complete subsidy notification.  
94. On the brand names, China seemed to have understood it as more or less a trade 
promotion export problem .  According to the information of  the European Communities this was 
clearly an export subsidy programme rather than an issue of export promotion.    
95. The delegate of China  responded that on the brands issue, as had just been explained, the 
provision of assistance as contained in the MOFCOM policy was for the purposes of trade 
promotion.  The delegate was not convinced that such trade promotion activity was a problem.  
Regarding the subsidy notification, China was in th e process of preparing a second notification.  
96. Finally, while  on this particular occasion the delega te of China did not wish to enter into 
a debate on China's developing country status, he said that it was an undeniable fact that China 
was still a developing country and that China ha d all the rights that a developing country was 
entitled to in the WTO.  He had been pe rsonally involved in China's accession process. 
97. The delegate of the United States  stated that China's Protocol of Accession was very clear 
on this point.  In its Protocol of Accession China agreed not to invoke any of the development country 
treatment  provisions that are normally available under the SCM Agreement.    
98. Another delegate of China  referred his colleague from the United States to paragraph 171 
of the Working Party Report.  The final two sent ences read: "In line with this approach the 
delegate of China stated his intention to rese rve the right to benefit from the provisions of 
Articles 27.10, 27.11, 27.12 and 27.15 of the SCM  Agreement while confirming that China 
would not seek to invoke Articles 27.8, 27.9 a nd 27.13 of the SCM Agreement.  The Working 
Party took note of these commitments".  It was clear from those sentences what China had 
committed to and that it did have developing country status. 
99. The delegate of the United States  wished to provide a clarification.  The provisions of the 
SCM Agreement  that were "reserved" were provisions that dealt with anti-dumping and 
countervailing duty investigations for which the i nvestigating authority retained the authority to 
determine whether or not an investigated importin g Member was or was not, in the view of the 
investigating authority , a developing country.  Those were not provisions that China could 
invoke.  Those provisions referred to the investig ating authority.  With regard to the provisions  G/SCM/M/66 
 Page 17 
 
 
  that China itself could invoke, those were the ones that China had agreed in paragraph 171 not to 
invoke. 
100. The delegate of China  responded that China of course understood what those provisions 
meant, but the question to the United States was whether the United States was the only Member within the WTO who was entitled to judge the st atus of another Member?  Was that a political 
signal being sent to China, and also to other Me mbers, that China would not be entitled to any 
further S&D treatment for fishery negotiations, for fishing subsidies negotiations or whatsoever?  The United States should be cautious – that posit ion would be problematic for China, for the 
United States and for this organisation.   
101. The delegate of the United States  responded that China and the United States were going to 
have to agree to disagree and he just referred Me mbers to the terms of china's Protocol of Accession 
to reach their own conclusions.   
102. The Chairman  thanked Members for their comments and questions.  He stated that China's 
Protocol of Accession to the WTO did not contain sp ecific guidelines on the report to be submitted by 
the Committee on the transitional review.  Following the transitional review conducted at the meeting 
in October 2007 the Chairperson, acting on his own responsibility, prepared a brief, factual report, 
with references to the documents concerned, and attached the portion of the minutes of the meeting 
relating to the transitional review.  He proposed  that the Committee agre e to follow the same 
procedure.  It was so decided . 
F. EXTENSION OF THE TRANSITION PERIOD UNDER ARTICLE 27.4  OF THE SCM  AGREEMENT  
103. The Chairman  stated that, as indicated in the ag enda item on this matter, the Committee 
would first review whether Members that had been granted an extension of the transition period for 
calendar year 2008 under the procedures contained in the General Council Decision of 27 July 2007 
(WT/L/691) had complied with the transparency and standstill requirements provided for in those 
procedures.  Thereafter, the Committee would adopt  decisions to extend the transition period for 
calendar year 2009 in accordance with the procedures contained in WT/L/691. 
104. In connection with these two items, the Chairman  drew Members' attention to a Secretariat 
paper that had been circulated as Job (08)/104, dated 17 October 2008, which listed the programmes 
in respect of which the Committee had agreed in 2007 to continue the extension of the transition 
period until 31 December 2008 and the updating notifications relating to those programmes that had 
been submitted by the Members in question.   
1. Review of Compliance with Transparency and Standstill Obligations 
105. The Chairman stated that the procedures se t forth in the General Council Decision in 
WT/L/691 provided for annual review by this Committ ee of compliance with certain transparency and 
standstill requirements in paragraphs 2 and 3 of that Decision.  This annual review was to be based on 
annual updating notifications submitted by the Memb ers in question.  At the Committee's regular 
meeting held in October 2007, the Chairman ha d requested Members concerned to submit their 
notifications by 30 June 2008. 
106. The notifications received had been circulated in the G/SCM/N/177/xx document series.  The 
document that had been circulated by the Secret ariat on 17 October 2008 contained a table that listed 
the notifications received.  The Chairman informed the Members that at the beginning of the week of 
the meeting, the Committee had received an updati ng notification for calendar year 2007 from Papua 
New Guinea. G/SCM/M/66 
Page 18  
 
  107. The Chairman also noted that the Committee had not received written questions on any of 
these notifications.  Instead of examining these no tifications one by one, the Chairman invited 
Members wishing to make comments on any of these notifications to do so. 
108. No comments were made. 
109. The Chairman stated that this concluded the Committee's annual review under the procedures 
in WT/L/691 of the transparency and stands till requirements contained in those procedures. 
2. Decisions under Paragraph 1(D) of the General Council Decision of 27 July 2007 to 
Continue the Extension of the Transition Period for Calendar Year 2009 
110. The Chairman
 noted that the General Council Decision of 27 July 2007 provided that "during 
the period 2008-2012 the Members of the Committee sh all agree to continue the extensions pursuant 
to these procedures" subject to verification that th ere had been compliance with the transparency and 
standstill requirements.   
111. The Chairman stated that, in order to fac ilitate the decision-making process under this item, 
the Secretariat had prepared a model text for the d ecisions to be adopted by the Committee under this 
provision.  This model text was contained in the Secretariat paper circulated on 17 October 2008.  
Additional copies were available in the meeting room.   
112. The Chairman proposed that the Committee agr ee to continue to extend the transition period 
for calendar year 2009 in respect of the programmes th at then benefited from such an extension.  He 
also proposed that, based on the text of the mode l decision, the Secretariat prepare and circulate 
individual decisions pertaining to each of the progra mmes for which such requests had been received.  
There were no comments from the Members.  It was so agreed .4 
113. The Chairman  reminded all Members that the continuation of the extension of the transition 
period that had just been decided was subject to the conditions defined in the General Council 
Decision of 27 July 2007.  He stressed in this co nnection that there would be an important change 
regarding the scope of the notifications that Memb ers were required to make in 2009.  The Chairman 
stated that paragraphs 1 (e) and 1 (f) of the Decision provided inter alia  that Members would take the 
necessary internal steps w ith a view to eliminating export subsid ies before the end of the final two-
year phase-out period.  Paragraph 2(a) of the General Council Decision provided that "[b]eginning 
with the updating notifications covering calendar year 2008, notifying Members also shall provide 
information regarding the actions they have take n pursuant to 1(e) and 1(f)".  Thus, the updating 
notification required in 2009 would ha ve to contain information relating to the "internal steps" taken 
by Members to eliminate their export subsidies.  The Chairman then went through the internal steps 
highlighted in the General Council Decision:  internal  steps had to include consultations with relevant 
government bodies and organizations and any necessar y technical and/or legal assessments.  In 
addition, from 1 January 2008 and in no case later than 31 December 2009, the Member had to notify each beneficiary under the programme indicating th at no export subsidies within the meaning of 
SCM Article 3.1(a) would be granted or maintained  beyond the end of calendar year 2015.  This 
meant that internal steps were important in terms of informing the beneficiaries regarding the future 
elimination of export subsidies.  The Chairman point ed out that this was an important part of the 
General Council Decision and the 2009 notifications w ould have to include th e relevant information 
in this regard. 
                                                     
 
4 The decisions adopted by the Committee have been circulated in documents G/SCM/52/Add.6-
G/SCM/68/Add.6, G/SCM/72/Add.6-G/SCM/79/Add.6, G/SCM/83/Add.6-G/SCM/90/Add.6, and 
G/SCM/92/Add.6.  A list of the decisions adopted by the Committee is contained in the Annex to these Minutes.  G/SCM/M/66 
 Page 19 
 
 
  114. The delegate of Barbados  stated that his delegation had taken note of the Chairman's remarks, 
and that it was aware of the General Council Decision and would ensure that all steps were taken to 
honour what had been agreed to the previous year. 
115. The Chairman proposed that the Committee ag ree to request the Members concerned to 
provide their updating notifications covering calenda r year 2008 not later than 30 June 2009.  It was 
so agreed . 
G. OTHER BUSINESS  
116. The Chairman recalled that at the beginning of  the meeting Mexico had made a proposal to 
include an item regarding the measure of South Afri ca and that the Committee had agreed to add this 
item to the agenda. 
117. The delegate of Mexico  drew attention to a programme initiated by South Africa.  On 
12 August 2003, South Africa had notified that it would not maintain any subsidy under the SCM 
Article 27.4.  However, there was the motor indust ry development programme created by the Customs 
and Excise Act of South Africa.  This programme  constituted an incentive scheme for the automotive 
industry.  Among others, this pr ogramme provided reductions of import duties for the beneficiary 
companies.  The delegate of Mexico stated that recently the Government of South Africa had been 
making changes to this programme.  These cha nges contemplated a new way to promote the 
automotive industry and help develop it.  For these reasons, Mexico had subm itted questions to South 
Africa in order to obtain more details regarding th is programme.  He expressed the hope that these 
questions would be taken up in the next meeting of the Committee.  Without entering into details, the 
delegate of Mexico asked when this programme would be terminated and the successor programme 
would come into effect, and what the transition period would be for the new programme to become 
effective.  Specifically, the delegate of Mexico asked whether the new programme that South Africa 
would introduce would terminate the granting of e xport duties or inputs.  The delegate of Mexico 
stated that his delegation was aware of special  treatment for catalytic converters in the new 
programme and asked what this special treatment entailed and whether South Africa was 
contemplating a special programme. 
118. The delegate of South Africa  stated that as soon as his delegation received the questions it 
would provide a written response. 
119. The Committee took note  of the statements made. 
120. The Chairman  referred back to the agenda item rega rding Albania, i.e. item 1(A)(i) and 
2 (B)(i).  In the absence of the delegation of Alba nia, the Chairman proposed to defer these two items 
to the next meeting.  It was so agreed . 
H. DATE OF NEXT REGULAR MEETING  
121. The Chairman  recalled that the Committee had agreed at its meeting of 21 February 1995 that 
regular meetings normally would be held in the last week of April and in the last week of October.  
The Committee on Anti-Dumping Practices and the Safe guards Committee had the same schedule.  In 
order to accommodate all three bodies' meetings, the Ch airman proposed that the next meeting of this 
Committee take place in the week of  4 May 2009.  It was so agreed . 
I. ANNUAL REPORT TO THE COUNCIL FOR TRADE IN GOODS  
122. The Chairman stated that pursuant to Article  32.7 of the SCM Agreement, the Committee was 
required to review annually the implementation a nd operation of the Agreement, taking into account G/SCM/M/66 
Page 20  
 
  the objectives thereof, and to inform annually the Co uncil for Trade in Goods of developments during 
the period covered by the review.   
123. A first draft of the annual report for 2008 prepar ed by the Secretariat had been faxed to all 
delegations earlier the week of the Committee's meeti ng.  The Chairman proposed to go into informal 
mode in order to take Members' corrections or indications of errors and to make the necessary 
changes. 
124. Following the discussions in the informal mode , the Chairman stated that a number of 
comments had been received and that the Secretar iat would incorporate the changes suggested by 
Members in the final version of the report to be transmitted to the Council for Trade in Goods.  In 
order to avoid having to reconvene  this meeting, the Chairman asked whether Members would agree 
to adopt the report ad referendum .  The Chairman stated that the Secretariat would fax the revised 
report to Members and that, after a brief comment  period, the report would be forwarded to the 
Council for Trade in Goods.  The Committee so decided
.5 
                                                      
5 The annual report of the Committee was ci rculated in G/L/869 (11 November 2008).  G/SCM/M/66 
 Page 21 
 
 
  ANNEX 
 
CONTINUATION FOR CALENDAR YEAR 2009 OF EXTENSION UNDER SCM 
ARTICLE 27.4 OF THE TRANSITION PERIOD FOR THE ELIMINATION  
OF EXPORT SUBSIDIES PURSUANT TO THE GENERAL COUNCIL  
DECISION OF 27 JULY 2007 (WT/L/691) 
 
Decisions Adopted by the Committee on Subsidies and Countervailing Measures  
on 29 October 2008  
 
 
Member Programme Document 
Fiscal Incentives Act Cap 172 G/SCM/50/Add.6 Antigua & 
Barbuda Free Trade and Processing Zone Act No. 12 of 1994 G/SCM/51/Add.6 
Fiscal Incentive Programme  G/SCM/52/Add.6 
Export Allowance G/SCM/53/Add.6 
Research and Development Allowance G/SCM/54/Add.6 
International Business Incentives  G/SCM/55/Add.6 Barbados 
Societies With Restricted Liability G/SCM/56/Add.6 
Fiscal Incentives Act  G/SCM/57/Add.6 
Export Processing Zone Act G/SCM/58/Add.6 
Commercial Free Zone Act G/SCM/59/Add.6 Belize 
Conditional Duty Exemptions Facility under the Treaty of 
Chaguaramas G/SCM/60/Add.6 
Free Zone Regime G/SCM/61/Add.6 
Costa Rica 
Inward Processing Regime G/SCM/62/Add.6 
Dominica Fiscal Incentives Programme  G/SCM/63/Add.6 
Dominican 
Republic  Law No. 8-90 to "Promote the Establishment of New Free 
Zones and Expand Existing Ones" G/SCM/64/Add.6 
El Salvador  Export Processing Zones and Marketing Act, as amended G/SCM/65/Add.6 
Short-Term Export Profit Deduction  G/SCM/66/Add.6 
Export Processing Factories/Export Processing Zones Scheme G/SCM/67/Add.6 Fiji 
The Income Tax Act (Film Making and Audio Visual 
Incentive Amendment Decree 2000) G/SCM/68/Add.6 G/SCM/M/66 
Page 22  
 
  Member Programme Document 
Fiscal Incentive Act No. 41 of 1974 G/SCM/69/Add.6 
Statutory Rules and Orders No. 37 of 1999 G/SCM/70/Add.6 Grenada 
Qualified Enterprises Act No. 18 of 1978 G/SCM/71/Add.6 
Exemption from Company Tax, Customs Duties and Other 
Import Taxes for Companies under Special Customs Regimes G/SCM/72/Add.6 
Exemption from Company Tax, Customs Duties and Other 
Import Taxes for the Production Process Relating to Activities 
of Managers and Users of Free Zones  G/SCM/73/Add.6 
Guatemala  
Exemption from Company Tax, Customs Duties and Other 
Import Taxes for the Production Process of Commercial and 
Industrial Enterprises Operating in the Industrial and Free Trade Zone  G/SCM/74/Add.6 
Export Industry Encouragement Act G/SCM/75/Add.6 
Jamaica Export Free Zone Act  G/SCM/76/Add.6 
Foreign Sales Corporation Act  G/SCM/77/Add.6 Jamaica 
Industrial Incentives (Factory Construction) Act G/SCM/78/Add.6 
Jordan Partial or Total Exemption from Income Tax of Profits 
Generated from Exports under Law No. 57 of 1985, as 
amended G/SCM/79/Add.6 
Mauritius Freeport Scheme – Customs Duty and Excise Duty Concession 
on Machinery and Equipment Imported into Freeport  
Freeport Scheme – Corporate Tax Exemption  G/SCM/83/Add.6 
Official Industry Register  G/SCM/84/Add.6 
Panama 
Export Processing Zones  G/SCM/85/Add.6 
Papua New 
Guinea Section 45 of the Income Tax  G/SCM/86/Add.6 
Fiscal Incentives Act, No. 15 of 1974  G/SCM/87/Add.6 
Free Zone Act, No. 10 of 1999  G/SCM/88/Add.6 Saint Lucia 
Micro and Small Scale Business Enterprises Act, No. 19 of 
1998 G/SCM/89/Add.6 
Saint Kitts and 
Nevis Fiscal Incentives Act, No. 17 of 1974  G/SCM/90/Add.6 
St. Vincent 
and the 
Grenadines Fiscal Incentives Act No .5 of 1982 G/SCM/91/Add.6 
Uruguay Automotive Industry Export Promotion Regime  G/SCM/92/Add.6 
__________