. /.   WORLD TRADE  
ORGANIZATION  G/SCM/Q2/PRY/7 
22 April 2009 
 (09-1911) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Follow-Up Questions from the UNITED STATES Regarding  
the New and Full Notification of PARAGUAY1 
 
  The following communication, dated 16 April 2009,  is being circulated at the request of the 
Delegation of the United States.  
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  We would like to thank Paraguay for its res ponse to the United States' question regarding 
their new and full subsidies notification.  The following are some additional questions based on 
Paraguay's response.   
 
Law 60/90
 
  In response to the United States' questions, Pa raguay stated that Law 60/90 does not meet the 
standards for notification set out in the Subsid ies Agreement.  However, publicly available 
information indicates that Law 60/90 meets the defi nition of a subsidy as provided under Article 1 of 
the Subsidies Agreement.  Specifically, Law 60/90 provi des a financial contribution in the form of tax 
and duty exemptions, which confer a benefit upon the recipients.  Further, when approving investment 
projects under this programme, reco mmendations are geared toward  several objectives, including 
"export promotion and import substitution".  To the extent that the above-mentioned benefits are 
contingent upon export or upon the use of domest ic over imported goods, this programme would 
appear to be deemed specific under Artic le 2.3 of the Subsidies Agreement.   
  Please explain further why Law 60/90 does not qu alify as being subject to the notification 
requirements pursuant to Article 25 of the Subsidies Agreement.  In addition, please explain how this 
programme is consistent with Article 3 of the Subs idies Agreement, given that one of the objectives, 
and presumably, one of the eligibility requirement s, appears to be based on "export promotion and 
import substitution".    Decree No. 21.944 (the Auto Regime)
 
 
 In response to the United States' questions, Pa raguay stated that its Auto Regime does not 
meet the standard for notification set out in the Subsidies Agreement.  However, publicly available 
information indicates that Decree  No. 21.944 meets the definition of a subsidy as provided under 
Article 1 of the Subsidies Agreement.  Specifically , this programme provides a financial contribution 
in the form of tax and duty exemptions, which confer a benefit upon the recipients.  Further, this programme clearly appears to be specific to the automotive sector.  The Decree also appears to 
                                                     
 
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  condition eligibility for benefits on the basis of  "export promotion and/or import substitution".  
Decree No. 21.944 also specifies that benefici ary enterprises must "gradually and increasingly 
incorporate locally produced components".  To th e extent that the above -mentioned benefits are 
contingent upon exports or upon the use of dome stic over imported goods, this programme would 
appear to be a prohibited subsidy as provided un der Article 3 of the Subsidies Agreement.   
 
 Please explain further why Paraguay's Auto Regime does not qualify as being subject to the notification requirements pursuant to Article 25 of the Subsidies Agreement.  In addition, please 
explain how Decree No. 21.944 is consistent with Ar ticle 3 of the Subsidies Agreement, given that 
one of the requirements to receive benefits under th is programme appears to be export promotion or 
import substitution.   
  
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