WORLD TRADE  
ORGANIZATION  G/SCM/Q4/GRD/6 
30 November 2006 
 (06-5755) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
PROCEDURES FOR EXTENSIONS UNDER  
ARTICLE 27.4 OF THE AGREEMENT ON SUBSIDIES  
AND COUNTERVAILING MEASURES 
 
Replies to Questions Posed by CANADA1; 
JAPAN2;  PERU3 and the UNITED STATES4 
 
 
 The following communication, dated 24 November 2006, is being circulated at the request of 
the Delegation of Grenada. 
 
_______________ 
 
CANADA  
 
Q1. Recalling that the objective of G/SCM/39 was to provide an extension of the transition period for the progressive elimination of export subsidy programmes of a number of Members, as called for in Article 27.4 of the SCM Agreement, we would ask the proponents of G/SCM/W/535 and G/SCM/W/537 to inform the Committee on Subsidies and Countervailing Measures of the individual efforts, if any, they  have undertaken to gradually bring these export 
subsidy programmes into conformity with their WTO obligations.    
Reply
 
  Grenada is of the view that document G/SCM/ 39 seeks to further clarify the procedures for 
extensions under Article 27.4 of the ASCM.  This  document neither reduces nor does it increase the 
balance of rights and obligations under the ASCM.   
  The first sentence of Article 27.4 mentions the phase out of export subsidies within the eight-
year period, “ preferably ” in a progressive manner.  Consequently, it is Grenada’s understanding that 
it is under no obligation to progressive ly eliminate subsidies but to adopt said approach “if possible”.  
Should a developing country deem it necessary to  apply export subsidies beyond the eight-year 
period, Article 27.4 provides a mechanism for seek ing an extension.  Document G/SCM/39 section 
1(f) also provides for the possib ility of seeking a continuation of the extension pursuant to SCM 
Article 27.4, thereby taking into account the pos sibility that a developing country might (for 
economic, financial, and developmen t needs) require additional time to  eliminate export subsidies.   
 
 Repeal of the Investment Code Incentives Act, the Qualified Enterprise Act and tax 
components in all other incentive legislation incl uding the Fiscal Incentives Act by the end of 2006. 
                                                     
 
1 G/SCM/Q4/GRD/2 
2 G/SCM/Q4/GRD/4 
3 G/SCM/Q4/GRD/5 
4 G/SCM/Q4/GRD/3/Rev.1 G/SCM/Q4/GRD/6 
Page 2  
 
    
Q2. Could the proponents of both documents also explain how further extension of this 
phase-out period would ensure that these efforts a re finally successfully undertaken in order to 
avoid a similar situation at the end of any ne w extended phase-out period for certain export 
subsidy programmes?     
  
Reply
 
  The proposal contained in G/SCM/W/535 refers only to the amendment of paragraph 1(e) of 
G/SCM/39.  The view of the proponents is to cont inue benefiting from the extension throughout 2018, 
based on their special economic, financial and de velopment needs.  Therefore, the rights and 
obligations contained in document G/SCM/39 an d Article 27.4 of the ASCM would remain 
unchanged   While Grenada is unable to predict the future, the country is of the view that the current 
review of the incentive regime will provide the framework for achieving a policy environment that 
fosters economic growth and development.      
Q3. Recalling that the previous extension of the phase-out period for certain export subsidy 
programmes was for an additional period of 6 years, could the proponents of both documents explain the rationale for a proposed extension of 11 years?   
 
Reply
 
  The choice of the suggested date of 2018 should  be read in the light of the discussions that 
had taken place before the adoption of G/SCM/39.  At  that time, the proponents of this document had 
already explained their concerns and the reasons  to eliminate their programmes over a long enough 
timeframe, possibly extending over 20 years. In the light of those discussions and taking into account the relevant and legitimate financ ial, economic and development needs of Grenada, the extension 
proposed in G/SCM/W/535 should be rega rded as an appropriate extension.  
  G/SCM/Q4/GRD/6 
 Page 3 
 
 
  JAPAN  
 
Q1. Please show the reasons why the lengthy exte nsion of 11 years is indispensable uniformly 
for all the export subsidy programmes referred to in the above documents.  
 Reply
 
  It should be noted that all of Grenada’s programmes generally share the same objectives, 
structure and design.  Similarly, the economic impe ratives that necessitate su ch intervention prevail 
almost uniformly in the economies of other proponent s of G/SCM/W/535.  Hence, the rationale of a 
uniform timeframe is supported by the similariti es that exist between programmes and the intended 
policy effects they focus on. Moreover, all proponen ts face the same structural weaknesses which 
justify the proposed extension.    It must also be acknowledged that Grenada,  like the other proponents of G/SCM/W/535, has 
suffered the adverse impacts of multiple external sh ocks.  The combined effects of multiple natural 
disasters, including Hurricane Ivan, the (negative) impact of 9/11 on key economic sectors in particular the tourism industry and to a lesser exte nt the agricultural sector, and the doubling of the 
world market price for oil have all contributed  to the deceleration of Grenada and the other 
proponents’ (of G/SCM/W/535) insertion into the gl obal economy.  Regrettably, these shocks have 
setback the realisation of policy outcomes, desired and contemplated in G/SCM/39.  
 
Q2. Please explain, one by one for each of th e export subsidy programmes referred to in the 
above documents, how each of those export subs idy programs are integrated in the development 
strategies of the relevant Me mber, why a further extension beyond 2007 is necessary for its 
economic and financial needs, and why the extens ion period has to be through to the end of 
2018.  
Reply
 
  The choice of the suggested date of 2018 should be understood in light of the discussions that 
had taken place in 2000/2001 and led to the adoption of G/SCM/39 (the decision that allowed for the 
extension).  At that time, the proponents of G/SC M/39 had expressed concern that a short extension 
would not allow time for the necessary structural transformation.  Specifically, it was suggested that a timeframe of sufficient duration, and adequate to  allow for sectoral and macro-economic adjustment 
was required.  In this context, the proponent s offered that 20 years would be adequate.  
 
 A further extension of eleven (11) years will allow companies currently operating under the 
Fiscal Incentives Act No. 41 of 1974 to be protected  until expiration of the incentives granted.  The 
last of which is 2015. G/SCM/Q4/GRD/6 
Page 4  
 
  PERU
 
 
Q1. Do the co-sponsors of proposal G/SCM/W/535 intend to extend only the programmes 
which have been notified to date under Ar ticle 27.4 of the Agreement on Subsidies and 
Countervailing Measures and which are included in Annex A of their proposal or do they 
intend to include any other export subsidy progr amme which fulfils the criteria set forth under 
Article 2 in document G/SCM/39? 
 
Reply  
 
 Only the programmes which have been include d in Annex A will be extended.  A further 
extension of eleven (11) years will allow compan ies currently operating under the Fiscal Incentives 
Act No. 41 of 1974 to be protected until the expiration of the incentives granted.     
Q2. Under what laws and enabling regulations are the programmes listed in Annex A of the 
proposal implemented? 
 
Reply
 
 
• The Fiscal Incentives Act No. 41 of 1974 
•  the Qualified Act No.18 of 1978  
• SRO No. 37 of 1999  
 Q3. Which sectors and products benefit from the programmes? 
 
Reply
 
  Fiscal Incentives Act No, 41 of 1974- Manufacturing   
 Under the Qualifying Enterprises Act No.18 of 1978 no sector or product is currently 
benefiting.  
Q4. What amount is disbursed by the St ate to the programmes listed in Annex A? 
 
Reply
 
  The State of Grenada does not make any disbursements to the programmes.  Support to the programmes provided by way of revenue forgone.   G/SCM/Q4/GRD/6 
 Page 5 
 
 
  UNITED STATES  
 
q1. Please describe what efforts Grenada has made to phase out the programme within the 
extension period that has already been gr anted, as provided under the “Procedures for 
Extension Under Article 27.4 for Cert ain Developing Country Members”.5  Please further 
describe how Grenada will continue to ensure that  the programme will be phased out, if an 
additional extension were granted.   
 
Reply  
 
 Grenada’s Economic Reform Programme 2006 - 2008 introduced a new investment incentive 
policy to further the socio-economic development of th e country to attract and facilitate investment.   
  The objectives of the new policy are:  
1. To increase predictability 
2. Stability and transparency of the legal regime for investment 
3. Promote the development of internationa l best practices regarding investment 
4. Provide a framework for fiscal incentives  
 
In this regard the programme ou tlined a series of measures to be implemented during 2006 to achieve 
policy objectives.  The rationale for these measures and the proposed chang es to the incentive policy 
is given below.  Proposed Policy Changes:  
1. Cessation of the granting of tax holiday s from 1 January 2006 (however, approved 
programmes are expected to expire in 2015; 
 2. Establishment of a  single investment act to encourage private domestic and foreign 
investment which will repeal the Invest ment Code Incentives Act, the Qualified 
Enterprise Act and tax components in all othe r incentive legislation including the Hotel 
Aids Act and the Fiscal Incentives Act by 2007; 
 3. Commencement of the provision of income tax incentives in the form of accelerated 
depreciation, investment allowances and the ‘carry forward of losses’ as of 2007, and 
 
4. In keeping with international norm and best  practices, the Income Tax Act and Customs 
Act will be amended.   
 
Q2. Please describe changes to the programme since 2001.  Also, please provide any updated 
or revised implementing legislation, and an y relevant amendments, unde r this programme and 
any accompanying regulations and decrees.   
 
Reply
 
  N/A  Q3. How many beneficiaries of this pr ogramme were there in 2001?  How many 
beneficiaries are there currently under the prog ramme?  What types of industries currently 
benefit under the programme? 
                                                     
 
5 G/SCM/39 G/SCM/Q4/GRD/6 
Page 6  
 
  Reply
 
  While data on the number of beneficiaries is  currently unavailable, programmes are supported 
by the following legislation:  
a. Fiscal Incentives Act No. 41 of 1974- 4 
b. Qualifying Enterprises Act No. 18 of 1978- 0 
c. Companies within the manufacturing industry are currently benefiting under the 
Fiscal Incentives Act No. 41 0f 1974. 
 Q4. Did Grenada undertake any commitments to provide export subsidies to new beneficiaries beyond the year 2009?  If so, please indicate the number of such beneficiaries by 
the year in which those commitments extend. 
 
Reply
 
 
 Yes  
Q5. If available, please provide the amount of the subsidy provided under the programme 
for each year from 2001 through 2005.   
 Reply
 
  N/A   
Q6. Please explain whether exports by qualif ying companies to CARICOM members are 
eligible for the benefits provided under this progra mme.  If not, please explain what benefits, if 
any, such exports to CARICOM countries are elig ible for, and the reason for differentiating 
among exports to CARICOM members and other exports.   
 
Reply
 
 
 Exports by qualifying companies to CARICOM members are eligible for benefits under the 
programme.    
Q7. Please explain whether there are any requirements that the receipt of benefits is 
contingent upon the use of domestic over imported goods.   
 
Reply
 
  There are no requirements that the receipt of benefits is contingent upon the use of domestic over imported goods.  
__________