. /.   WORLD TRADE  
ORGANIZATION  G/SCM/Q2/ARG/25 
26 April 2007 
 (07-1737) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Questions from the UNITED STATES  
Regarding the New and Full Notification of ARGENTINA1 
 
  The following communication, dated 25 April 2007,  is being circulated at the request of the 
delegation of the United States.  
_______________ 
 
 
Free Zones 
Argentina’s notification states, "the objective of the free zones shall be to stimulate trade and 
industrial export activity, helping to extend to inv estment and employment the increase in efficiency 
and reduction in costs associated with the activiti es developing within such zones".  Please describe 
the eligibility criteria for receiving the benefits unde r this program and explain whether eligibility is 
contingent upon export performance, as provided unde r Article 3.1(a) of the WTO Agreement on 
Subsidies and Countervailing Measures (Subsidies Agreement).   
Capital goods, information techno logy and telecommunications regime 
Please explain in further detail the eligibilit y requirements under this  program and how the 
value of the benefit is determined.  Specifically , please explain whether the benefits under this 
program are contingent upon the use of dom estic over imported goo ds, as provided under 
Article 3.1(b) of the Subsidies Agreement.   
General Questions 
Publicly available information indicates that  Argentina may maintain additional subsidy 
programs that meet the requirements for notifica tion under Article 25.  Some of these programs 
appear to be prohibited.  Please explain why the subsidy programs below have not been notified.  If 
they do qualify as subsidy programs that should be notified, please provide the information required 
under Article 25.3 of the Subsidies Agreement and ot her information specifically requested.  If they 
do not qualify as subsidy programs that should be no tified, please provide an explanation why.   
Investment Promotion Law - Promotion of investme nts in capital goods and infrastructure works 
According to publicly available information, the government provides incentives in order to 
promote investments in capital goods and infrastru cture works, through Ar gentina’s Investment 
Promotion Law.  Benefits include (a) advance re fund of VAT on goods or works for infrastructure 
                                                     
 
1 G/SCM/N/123/ARG. G/SCM/Q2/ARG/25 
Page 2  
 
  included in the proposed investment project;  or (b) accelerated depreciation thereof for purposes of 
Argentina’s anticipated profits tax (IG).  It is  our understanding that these benefits are mutually 
exclusive, except in the case of investment projects in which production is exclusively for the export 
market.  Could Argentina explain how this pr ogram is consistent with the provisions under 
Article 3.1(a) of the Subsidies Agreement? 
Imports of goods forming part of large-scale investment projects 
According to publicly available information, Argentina provides duty exemptions on the 
importation of capital goods from outside MERCOSUR des tined for large investment projects.  It is 
our understanding that in order to qualify for duty ex emptions under this program, recipients must 
purchase goods of domestic origin amounting to at l east 30 percent of the investment project.  Could 
Argentina explain how this program is consistent with the provisi ons under Article 3.1(b) of the 
Subsidies Agreement? 
Import Regime for Used Production Lines 
According to publicly available information, Argentina provides certain tax incentives (e.g., 
exemption from the payment of import duties and statis tical tax) to domestic or foreign firms located 
in the country producing tangible goods, and financial entities or companies that deal in leasing 
contracts.  It is out understanding that in order to receive benefits under this program companies must 
purchase new goods of domestic origin amounting to 30 percent of the investment.  Could Argentina 
explain how this program is cons istent with the provisions under Article 3.1(b) of the Subsidies 
Agreement? 
Duty Drawback for Turnkey Export Contracts 
According to publicly available information, exports of complete industrial plants or 
engineering works are eligible to receive duty draw back treatment.  It is our understanding that the 
benefit is subject to two conditions:  first, the export should be made under a "turnkey export 
contract";  and secondly, the domestic component ( physical goods and services) may not be less than 
60 per cent of the contractual f.o.b. value.  Could Argentina explain how this  program is consistent 
with the provisions under Article 3. 1(b) of the Subsidies Agreement? 
Financing of VAT on the investment 
According to publicly available information, Argentina provides financing for the full amount 
of VAT paid on new capital goods to firms with e xport potential.  Please explain how the government 
provides funding to companies under this program?  For example, does a company receive a loan 
from the government in the amount of VAT to be paid on new capital equipment or is funding 
provided through the administration of the VAT?  If fundi ng is provided in the form of a loan, please 
describe the terms of such loans.  Please also ex plain how this program is consistent with the 
provisions under Article 3.1(a) of the Subsidies Agreement. 
Incentives Regime for the Auto Parts Industry 
According to publicly available information, in  order to promote the recovery of the auto 
parts industry, in 2005 Argentina established an Ince ntives Regime.  It is our understanding that this 
regime provides benefits in the form of a cash re fund on the value of purchases of local auto parts, 
i.e., those with a non-local content of not more th an 30 percent.  Could Argentina explain how this 
program is consistent with the provisions under Article 3.1(b) of the Subsidies Agreement? 
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