RESTRICTED  WORLD TRADE  
ORGANIZATION  G/SCM/M/51 
25 February 2005 
 
 (05-0791) 
Committee on Subsidies 
and Countervailing Measures  
 
 
 
MINUTES OF THE SPECIAL MEETING 
HELD ON 4 NOVEMBER 2004 
 
Chairman:  Mr. Naoshi Hirose (Japan) 
 
 1. The Committee on Subsidies and Countervailing M easures (the "Committee") held a special 
meeting on 4 November 2004. 
2. The purpose of the meeting, as set forth in  airgrams WTO/AIR/2349 and WTO/AIR/2421, 
was to review the 2003 new and full subsidy notifi cations of Canada;  Chile;  Croatia;  Czech 
Republic;  Ghana;  Hungary;  Jamaica;  Korea;  Maca o, China;  Norway;  Oman;  Turkey and Zambia.   
3. The Chairman
 recalled that the Committee adopted procedures for review of 2003 new and 
full subsidies notifications at its spring 2003 me eting (G/SCM/W/524).  Under the procedures, those 
subsidy notifications were to be reviewed in three special meetings to be held in conjunction with the 
regular meetings of the Committee in autumn 2003, and in spring and autumn 2004.  The meeting of 
4 November 2004 was the third and final of that series of meetings.  Pursuant to the above procedures, 
only notifications distributed in all three worki ng languages not less than nineteen weeks before a 
meeting may be reviewed at that meeting.  A ccordingly, the Committee had before it thirteen 
additional notifications that had been distributed before that deadline.  The review of subsidy 
notifications was to be conducted on the basis of  written questions and answ ers provided before the 
meeting.  The airgrams in question specified that  Members wishing to pose questions regarding the 
notifications listed were to do so no later than 19  July 2004 and that the responses to those questions 
were to be submitted no later than  20 September 2004.  All written qu estions and answers which were 
available in time were included in the document pa ckage.  However, not all of the questions and 
answers were available in all languages, partly du e to late submission of documentation and partly 
due to translation delays.  As indicated in the airgram, due to the volume of material involved, 
delegations were asked to bring their own copies of the notifications. 
4. Turning to the review of the notification of Canada , as contained in document 
G/SCM/N/95/CAN, the United States had submitted wr itten questions concerning that notification in 
document G/SCM/Q2/CAN/18.  Canada had responded to these questions, in document 
G/SCM/Q2/CAN/19.   
5. The delegate of the United States  indicated that he had a follow-up question with respect to 
the Technology Partnerships Ca nada Programme, a royalty-based  financing programme, and was 
interested to know what the range of rates of retu rn projected under this Programme were likely to be. 
6. The delegate of Canada  indicated that he was not in a position to provide an answer 
immediately but that he would supply a writte n response to the question in due course. 
7. The next notification on the Committee's agenda was that of Chile , as contained in document 
G/SCM/N/95/CHL.  Bolivia, the European Commu nities and the United States had posed written G/SCM/M/51 
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 questions to Chile, in documents G/SCM/Q2/CHL/15,  /17 and /18 respectively.  Chile had responded 
to the questions from Bolivia in document G/SCM/Q2 /CHL/16, and to the questions of the European 
Communities and the United States in documents G/ SCM/Q2/CHL/19 and /20 respectively.  As the 
responses to the timely EC and US questions were r eceived after the agreed deadline, the Chairperson 
invited the delegation of Chile to provide its responses orally.  The r esponses to the European 
Communities and the United States can be found in documents G/SCM/Q2/CHL/19 and /20 
respectively. 
8. The delegate of the European Communities
 indicated that he had a follow-up question 
concerning Chile's response to the United States con cerning the exact criteria for the qualification of a 
traditional and a non-traditional product. 
9. The delegate of Bolivia  thanked Chile for its written responses received in document 
G/SCM/Q2/CHL/15.  Bolivia had taken note of the replies provided by Chile to the United States which were related to the replies contained in document G/SCM/Q2/CHL/16.  He noted that looking 
at the existing trade volume between Chile and Boliv ia, those responses were of considerable interest 
to the Bolivian authorities. 
10. The delegate of the United States
 had one additional questi on concerning how Chile was 
certain that they were not over refunding the leve l of import duties in connection with the Simplified 
System of Refunds for Minor Exports. 
11. The delegate of Chile  responded first to the European Communities, and indicated that, the 
simplified system was in fact allowed by WTO, and that what Chile had notified was a simplified refund system, which had as its objective to simply ma ke it easier for exporters  to be refunded for the 
tariffs that they were paying.  The criteria used  when the programme was set up in 1985 was a study 
on exports which did not go beyond a certain amount, when there was no industry, but there were products which were starting to be exploited comme rcially.  Under the system all of these products 
were able to be included under the simplified system .  The delegate of Chiles further replied that, no 
matter how it was done, this mechan ism always provided the alternative of a refund, which in his 
view was not a subsidy, but simply the refunding of  tariff duties that were paid when an exported 
product used imported inputs.  The delegate of Chil e further stated that th e figures which existed in 
1995 were amended in US$ amounts and today reached US$18 million. 
12. In response to the question from the United States,  the delegate of Chile explained that the 
way in which Chile had avoided the incorporation of a subsidy to this simplified system was to 
introduce a requirement of 50 per cent of imported input s. By so doing, Chile would be ensuring that 
the 3 per cent which exporters would be receiving ha d no subsidy element to it. Since half of the 
products exported were made of im ported elements and the tariff was 6 per cent, then this refund was 
justified on the up to 3 per cent amount.  The delegate  of Chile further stated that he would like to 
highlight that, as he had already stated in giving his response, the Chilean authorities had seen that 
this in fact was not very welcome by exporters, and that in fact they were not using this system, but 
rather the normal system for the refund of the tariff. 
13. The delegate of the European Communities
 requested additional clarification with regard to 
his initial follow-up question concerning the di fference between a traditional product and a non-
traditional product under the simplified refund scheme. 
14. The delegate of Chile  responded that terms "traditional" or  non-traditional" referred to a status 
of imports of the inputs that were used and th at his authorities did not go beyond establishing which 
products would need support at a given time.  G/SCM/M/51 
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 15. The following notification on the Committee's agenda was that of Croatia , as contained in 
document G/SCM/N/95/HRV.  The Chairman noted  that this was a double-symbolled document 
which had also been reviewed at the Committee's regular spring 2004 meeting.   No further written 
questions had been received in respect of the notification since then. 
16. The next notification on the Committee's agenda was that of the Czech Republic , as contained 
in document G/SCM/N/95/CZE.  The United States posed timely written questions on the notification 
in document G/SCM/Q2/CZE/16.  Responses had been ci rculated at the request of the Delegation of 
the European Commission, in document G/SCM/Q2/CZE/17-G/SCM/Q2/EEC/44, dated 18 October 2004.  A lthough these replies had been received afte r the agreed deadline, and therefore 
should have been provided orally at the mee ting as well, the delegate of the United States
 had no 
problem in accepting the written responses.  No furt her questions or comments were raised during the 
Committee meeting. 
17. The Committee then examined th e "nil" notification of Ghana , which could be consulted in 
document G/SCM/N/95/GHA.  No written questions ha d been received, and no comments were raised 
during the Committee meeting. 
18. The following notification on the Comm ittee's agenda was that of Hungary , as contained in 
document G/SCM/N/95/HUN.  The United States had s ubmitted written questions in respect of this 
notification in document G/SCM/Q2/HUN/9.  Respon ses had been circulated at the request of the 
delegation of the European Commission in document G/SCM/Q2/HUN/10-G/SCM/Q2/EEC/45.  No further questions or comments were raised during the Committee meeting. 
19. The next notification on the agenda was that of Jamaica
, which could be found in document 
G/SCM/N/95/JAM.  The Chairperson noted that this was a double-symbolled document which had 
also been reviewed at the Committee's regular sp ring meeting.  No further questions or comments 
were raised during the Committee meeting. 
20. The Committee then examined the notification of Korea , as contained in document 
G/SCM/N/95/KOR.  The European Communities had posed  timely written questions in respect of this 
notification in document G/SCM/Q2/KOR/23, and the United States had also submitted written 
questions one day after the agreed deadline in document G/SCM/Q2/KOR/24.  Korea had provided 
written responses to these questions in document G/SCM/Q2/KOR/25, though as these replies had 
been received after the agreed dead line, the Chairman invited the delegation of Korea to provide oral 
responses at the meeting. 
21. The delegate of the United States  had a minor technical question on the programme entitled 
"Tax Waivers on Fishing Equipment".  In their resp onse, Korea had stated that value-added tax was 
not imposed on agricultural or fisheries products and, as a result, in order to achieve equity in taxation, the government did not impose value-a dded tax for intermediate goods such as fishing 
equipment.  The United States requested a furthe r explanation with respect to this point, and 
specifically the concept of equity and taxation. 
22. The delegate of the European Communities
 also had a follow-up question to a reply to a 
question posed by the United States concerning the financing of the raw materials programme, and requested clarification on what type of raw material was covered by the programme. 
23. In response to the question from the United States, the delegate of Korea
 explained that in the 
Korean tax system value-added tax is imposed  on goods and services, but not on agricultural and 
fisheries products. Korea stated that there were sev eral reasons for this. He explained that, normally, 
VAT is transferred from producers to the final consumers by way of setting a price, but in agricultural 
and fisheries, because of the inappropriate market  conditions, it was difficult for producers to do this. G/SCM/M/51 
Page 4  
 
 Therefore, VAT was not imposed on agricultural and fisheries products.  He further explained that, 
since Korea does not impose VAT on agricultural and fisheries goods, it does not also impose VAT 
on tools and equipments that are used to produ ce agricultural and fisheries goods either. This was 
meant to ensure that no VAT was eventually imposed  on the final agricultural and fisheries products.  
The delegate of Korea explained that the words "e quity and taxation", in Korea's answer, meant this 
aspect of Korea's policy, although he admitted that there are some misleading points in the selection 
of those words. 
24. With regard to the question from the European Communities, the delegate of Korea indicated 
that he did not have an exact list of the raw mate rials and that the programme had been implemented 
for a temporary period only.  He would, however, undertake to contact his capital to ascertain if there 
was such a list of raw materials covered by the programme.   
25. The delegate of the United States
 indicated that he was still not quite sure of the precise 
mechanics and the policy reason for the exemptions. He  further indicated that the Korean delegate's 
reference to imperfect market was probably the r eason for his failure to understand the programme.  
He asked whether Korea could further elaborate on that phrase. He also wondered whether Korea was 
referring to the prices for the products in question or the regulated prices, and whether that was the 
reason for the exemption of the VAT. 
26. The delegate of Korea  explained that the term "imperfect market condition" did not mean that 
there was any price control by the government in Ko rea's agricultural market.  He stated that it was 
normal in every other country that the price of agri cultural products be very much affected by outer 
conditions, not by producers or a price policy.  He  further stated that, in industrial goods, producers 
can set their price according to the market conditi ons, but in agriculture and fisheries, prices are 
affected by weather and other outer conditions. That is what he meant by impe rfect market condition.  
He explained that he not mean that Korea controlle d agricultural prices, and that Korea did not have a 
price control system in agriculture. 
27. The following notification on the Committee's ag enda was the "nil" notification of Macao, 
China , to be found in document G/SCM/N/95/MAC/Suppl.1.  No written questions had been received 
and no further questions or comments were  raised during the Committee meeting. 
28. The next notification to be examined  by the Committee was that of Norway , as contained in 
document G/SCM/N/95/NOR/Add.1.  The Chairman not ed that this was an addendum to Norway's 
original notification circulated on 17 July 2003.   No written questions had been received and no 
further questions or comments were raised during the Committee meeting. 
29. The Committee then examined th e "nil" notification of Oman , to be found in document 
G/SCM/N/95/OMN.  No written questions had been r eceived in respect of this notification and no 
further questions or comments were raised during the Committee meeting. 
30. The following notification on the Committee's ag enda was the "nil" notification of Turkey , as 
contained in document G/SCM/N/95/TUR.  No writ ten questions had been received and no further 
questions or comments were raised during the Committee meeting. 
31. The final notification on the Committee's age nda was the "nil" notification of Zambia , to be 
found in document G/SCM/N/95/ZMB.  The Chairman noted that this was a double-symbolled document which had also been reviewed at the Co mmittee's regular spring 2004 meeting.  No further 
written questions had been received and no additiona l questions or comments were raised during the 
Committee meeting.  G/SCM/M/51 
 Page 5 
 
 
 32. The Chairman  wished to remind delegations that if th ey desired written answers to their oral 
follow-up questions, they should submit these qu estions to the notifying Member and to the 
Secretariat within a period of two weeks, i.e. by 18 November 2004.  The written responses to these 
additional questions s hould be submitted no late r than 13 January 2005. 
33. The Committee took note  of the statements made and concluded its review of the 2003 new 
and full subsidy notifications listed in airgrams WTO/AIR/2349 and WTO/AIR/2421. 
34. The Chairman  recalled that this special meeting was the third and final scheduled meeting to 
review 2003 new and full subsidy notifications.  He commended the 42 Members (counting the EEC 
as one Member) that had satisfied this transparency  obligation.  He urged all Members who had not 
made a 2003 subsidy notification to make every effo rt to meet this obligation as soon as possible. 
35. The Chairman recalled that the Committee was entering a new cycle of new and full subsidy 
notifications in 2005.  He referred Members to the understanding concerning the timing and emphasis 
for submission of subsidy notifications that w as reached at the Committee's special meeting in 
May 2001 (document G/SCM/M/30).  This was continued in 2003 (document G/SCM/M/46), and 
included the need to review the situation after a tr ial period of two years (i.e. in 2005).  The Chairman 
recalled that in 2001 and 2003, his perception of Memb ers' views was that th ey believed that their 
resources could be best utilized by giving maximu m priority to submitting new and full notifications 
every two years, and by de-emphasizing the review of the annual updating notifications. 
36. The Chairman asked Members to consider next  year whether to continue these arrangements 
concerning the timing and emphasis for the submissi on of subsidy notifications for a further trial 
period, and noted that review pro cedures would need to be adopted for the new cycle.  He reiterated 
that the deadline for the next round of new and fu ll subsidy notifications was 30 June 2005, and he 
urged all Members to meet their obligations by s ubmitting a new and full subsidy notification by that 
date. 
37. The meeting was adjourned . 
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