WORLD TRADE  
ORGANIZATION  G/SCM/Q4/JOR/5/Rev.1 
11 December 2006 
 
 (06-5913) 
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 PERU1;  JAPAN2; 
COLOMBIA3;  and CANADA4 
 
Revision  
 
 
 The following communication, dated 5 December 2006, is being circulated at the request of 
the Delegation of Jordan.  
_______________ 
  
 The Permanent Mission of the Hashemite Kingdom of Jordan presents its compliments to the 
World Trade Organization/Committee on Subsidies and Countervailing Measures, and has the honour to enclose herewith the revised replies to th e questions posed by Canada (G/SCM/Q4/JOR/2), 
Colombia (G/SCM/Q4/JOR/1/Rev.1), Japan (G/S CM/Q4/JOR/3) and Peru (G/SCM/Q4/JOR/4), on 
the issues related to the procedures for the extens ion under 27.4 of the Agreement on Subsidies and 
Countervailing Measures.  Those replies should re place Jordan's replies issued in document 
G/SCM/Q4/JOR/5 dated 17 October 2006.  
                                                     
 
1 G/SCM/Q4/JOR/4 
2 G/SCM/Q4/JOR/3 
3 G/SCM/Q4/JOR/1 
4 G/SCM/Q4/JOR/2 G/SCM/Q4/JOR/5/Rev.1 
Page 2  
 
  The following are responses to questions posed to JORDAN by PERU, JAPAN, COLOMBIA and 
CANADA based on the proposal by PANAMA in document G/SCM/W/537 dated 23 June 2006, which was co-sponsored by Jordan in document G/SCM/W/537/Add.2. 
 
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 
2 in document G/SCM/39?  
Reply
 
  The intention of Jordan is to continue benef iting from the extension until the end of 2018 and 
the conditions specified in G/SCM/39 would rema in unchanged.  Realizing that Jordan is a 
developing country with a trade de ficit equals US$4.4 b and with an export share not greater than 0.01 
per cent of world’s export trade, it is clear th at no harmful effects have been introduced on the 
international trade as a result of the subsidy prog ramme.  This clearly excludes the possibility to 
include any further programmes.   Q2. Under what laws and enabling regulations are the programmes listed in Annex A of the proposal implemented? 
 
Reply
 
 
 The implementing legislation is "Income Tax La w No. 25 for the year 2001 amending Income 
Tax Law No. 57 for the Year 1985".  
Q3. Which sectors and products benefit from the programmes? 
 
Reply
 
  
 The programme is not specified to a particular  sector or product; however exports that are not 
entitled to the exemption are mentioned therein,  - Potash Exports, 
- Phosphate exports and, 
- Exports subject to Protocol Trade.   
Q4. What amount is disbursed by the St ate to the programmes listed in Annex A? 
 
Reply
 
 
 The normal Income Tax, which will be paid in the absence of the programme, is on average 
15 per cent or less on the profits generated from all th eir operations irrespective of the nature of their 
sales.  As a matter of fact, in 2005 the total amount of exemption of US$1,061,299 constituted only 
0.02 per cent of Jordan’s national exports, and the disbursements for the year 2004 was about 
US$1,150,235.  This implies that the income tax re lief has a slight effect on Jordan’s International 
Trade due to its meagre value.    G/SCM/Q4/JOR/5/Rev.1 
 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
 
  In the light of our internal constituency di scussions and taking into account the relevant and 
legitimate financial, economic and development need s of JORDAN, the extens ion proposed should be 
regarded as an appropriate extension. 
 
 The uncertainty regarding the future of the negotiations in the Doha  Round and the significant 
transformation in the global trading scenario tri gger new challenges that will require great efforts 
from domestic producers in Jordan and will put ad ditional pressure in terms of trade and overall 
economic prospects. 
 
 JORDAN has applied and notified only 1 pr ogramme which is "the Partial or Total 
Exemption from Income Tax for Profits on Certain Export".    As a matter of fact, the Jordanian economy is still suffering from the implications of the 2nd 
Gulf War, which imposed heavy pressure on in frastructure, public services, and housing, and 
destabilized the system of resource and capital redist ribution and hastened the demise of the economic 
system upon which a welfare state had been established, as a conse quence of the prevailing political 
& economic situation in the Middle East.  The subj ect subsidy programme is necessary to be extended 
to ensure sustainability of domestic industry's perfo rmance.  With all these economic setbacks, Jordan 
remained trying to make great efforts to attain  wide-reaching economic state, however, its economic 
competences is still not proficient due to the continuous negative circumstances  in the region 
triggered also by the rising of petroleum prices all over the world.  For these reasons, an extension of 
11 years is very crucial for Jordan.  
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  subsidy programmes are integrated in the 
development strategies of the relevant Member, why a further extension beyond 2007 is 
necessary for its economic and fina ncial needs, and why the extension period has to be through 
to the end of 2018. 
 
Reply
 
 
 JORDAN has applied and notified only 1 pr ogramme which is "the Partial or Total 
Exemption from Income Tax for Profits on Cert ain Export".  The information regarding the 
programme notified by JORDAN is available in e ach of the annual notifications that JORDAN has 
submitted to the Committee on Subsidies and Countervailing Measures in compliance with the transparency and standstill obligations. 
 
 The main challenges currently  facing Jordan is to reinforce the capabilities of domestic 
industries to adjust to the economic developments  in Jordan and the region, as well as to create 
investment incentives, open more markets and promot e job creation.  All these anticipations could not 
be materialized unless through empowering the expo rting capabilities and this exporting programme 
is one of the major driving forces of economic grow th and is a vehicle to reaching new adventures and 
opportunities, and opening up new markets.  Moreove r, this programme has several positive effects on 
the Jordanian SMEs, which are pers istently enquiring about the possibility of extending it as long as 
possible in order to enhance its capabilities in  the light of the mentioned circumstances. 
 G/SCM/Q4/JOR/5/Rev.1 
Page 4  
 
   Thus, Jordan requires an extension up to the year 2018, as it has been among the 
government's priorities to secure economic openn ess and effective integration with the global 
economy.  One of its strategies to implement these intentions is to support the SMEs (92 per cent of 
Jordan industry sector), and this programme is part of  its strategy.  A further extension up to the year 
2018 will enhance the positive effects of the s ubject subsidy programme and will reinforce the 
capabilities of the domestic industries to adjust to th e general economic situati on and to cope with the 
progressive trade liberalization resulted from Jordan ’s accession to the WTO, as  Jordan's economy 
still unable to sustain a higher growth rate, the govern ment  however, is anticipating a potential on this 
export programme that has been implemente d along with its prudent economic policies. 
 
 
  G/SCM/Q4/JOR/5/Rev.1 
 Page 5 
 
 
  COLOMBIA  
 
Q1. In document G/SCM/W/537/Add.2, Jorda n co-sponsors the proposal by Panama 
contained in document G/SCM/W/537.  The latter document states that "[t]he extension 
procedures under Article 27.4 would hence be applicable to all members and existing 
programmes in line with paragraph 2 of G/SCM/39".  One of the conditions in paragraph 2 is 
that those Members "whose share of world mercha ndise export trade was not greater than 0.10 
per cent" shall benefit from such an extension.  Do Jordan's exports currently account for less 
than 0.10 per cent of world merchandise export trade? 
 Reply
 
  As a matter of fact, Jordan is still a developing country with a share not greater than 0.10 per 
cent of world’s export trade, and this fact implie s that the income tax relief has a slight effect on 
Jordan’s international trade due to its meager va lue, seeing that the Jordanian economy is one of the 
smallest in West Asia, and its gross domestic  product was estimated US$11.51 billion (official 
exchange rate) in the year 2005.   
Q2.  Jordan provides no justification in docu ment G/SCM/W/537/Add.2 for being granted an 
extension of the phase-out period for export subs idies.  Does Jordan share the justification put 
forward by the group of small, vulnerable econo mies, on the grounds that Jordan suffers from 
the combined effect of diseconomies of scale caused by the small size of its economy and 
administration and by its physical isolation?  
 
Reply
 
 
 Ninety eight per cent of the Jordanian exporting industrial companies that are mostly of small 
and medium size suffer from the lack of market access  caused by their small size and limited capacity, 
that obstruct them from reaching economies of scale, leaving their costs higher, and depriving them 
from having opportunities to compete in world markets.  The dramatic increase in the prices of energy 
resources resulted in a high cost of outputs, which is  being reflected in a slower activity of the small 
and medium enterprises that are already facing mounting competitive pressures as a result of trade 
liberalization.  Furthermore, Jordan's natural resource s are so limited; a fact that made its growth rate 
at a slow-moving path, added to these drawbacks was the continuous negative circumstances in the 
region, all of which has made the pace of exporting potential not as anticipated. 
 
Q3. Given that Jordan did not provide any economic justification for the extension of the 
phase-out period for export subsidies, please expl ain why it requires an extension up to the year 
2018 to comply with the obligation to eliminate the above subsidies and why it cannot comply with this obligation within the period of extension already granted.  
 
Reply
 
 
 Jordan requires an extension up to the y ear 2018, as it has been among the government's 
priorities to secure economic openness and effective integration with the global economy.  One of its 
strategies to implement these intentions is to suppor t the SMEs (92 per cent of Jordan industry sector), 
and this programme is a part  of its strategy.  A further extension up to the year 2018 will enhance the 
positive effects of the subject subsidy programme and will reinforce the capabilities of the domestic 
industries to adjust to the general economic s ituation and to cope with the progressive trade 
liberalization achieved due to Jordan’s accession to  the WTO, as Jordan's economy still unable to 
sustain a higher growth rate, the government  how ever, is anticipating a potential on this export 
programme that has been implemented al ong with its prudent economic policies. 
 G/SCM/Q4/JOR/5/Rev.1 
Page 6  
 
   In the light of the prevailing political situati on in the Middle East, and its significant effects 
on the economic conditions of the region, expectations  of decreased trade defi cit  in the coming years 
will be disappointing, and in order to enhance the positive effects of this programme, the continuation 
of the subject subsidy programme to the year 2018 is necessary to ensure the sustainability of the 
domestic industry's performance a nd to improve its export potentia l and further develop exporting 
capabilities. 
 
Q4. What measures has Jordan adopted to fulf il the obligation to phase out the export 
subsidy programmes, in line with the latest extension it was granted?   
Reply
 
  Jordan is at all times committed that its programme must be compatible with the WTO 
obligations, exporters are informed that the extensi on decision is decided on a yearly basis, and that 
Jordan will phase out this programme at the end of  the extension period to be considered by the 
Committee.  
 
Q5. In the case of each of the programmes, please provide the most up-to-date information 
available regarding the number of beneficiary en terprises classified according to industrial 
sector.  
Reply
 
  The number of beneficiary enterprises Based on Article 3(c) of the Income Tax Law No. 57 is all exports enterprises in Jordan except Potash exports, Phosphate exports, and Exports subject to 
Protocol Trade.  
 
Q6. Please explain why, under the above programmes, which have been in place for over ten 
years, it is still not possible to dismantle the pr ohibited subsidies. Purpose of further extension 
of the subsidy programme until the year 2018. 
 
Reply
 
 
 Currently, it is still not possible to disman tle the prohibited subsidy programme as the 
Jordanian economy is still suffering from the implicati ons of the 2nd Gulf War, which imposed heavy 
pressure on infrastructure, public services, and housing, thus destabilizing the system of resource and capital redistribution and hastened the demise of the economic system upon which a welfare state had 
been established.  Ninety-eight per cent of the Jordanian exporting industrial companies that are 
mostly of small and medium size suffer from the lack of market access caused by their small size and 
limited capacity, that obstruct them from reaching ec onomies of scale, leaving their costs higher, and 
depriving them from having opportunities to compete in  world markets.  The dramatic increase in the 
prices of energy resources resulted in a high cost of outputs, which is being reflected in a slower activity of the small and medium enterprises that  are already facing mounting competitive pressures 
as a result of trade liberalization.  Furthermore, Jo rdan's natural resources are so limited; a fact that 
made its growth rate at a slow-moving path, adde d to these drawbacks was the continuous negative 
circumstances in the region, all of which has made  the pace of exporting potential not as anticipated. 
  Thus the continuation of the subject subsidy programme to the year 2018 is necessary to 
ensure the sustainability of the domestic industry' s performance and to improve its export potential 
and further develop exporting capabilities.   G/SCM/Q4/JOR/5/Rev.1 
 Page 7 
 
 
  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
 
 
 JORDAN is of the view that document G/SC M/39 contains only fast track procedure to 
approve extensions under Article  27.4 of the ASCM.  This document neither reduces nor does it 
increase the rights and obligations under the AS CM, therefore neither document G/SCM/39 nor 
Article 27.4 of the ASCM provide for a progressi ve elimination of expor t subsidy programme.  
Moreover, Article 27.4 mentions a "progressive" elimin ation in the first sentence which refers to the 
phase out of the export subsidies within the eight –year period mentioned in article 27.2(b), a condition that is completely different  to the subsidy programme at issue.  Additionally, it is clear from 
the language in Article 27.4 that such "pr ogressive elimination" is not mandatory.  
  However, JORDAN is at all times committed that  its programme must be compatible with the 
WTO obligations, exporters are informed that the ex tension decision is decided on a yearly basis, and 
that Jordan will phase out this programme at the end of the extension period to be considered by the 
Committee.    As a matter of fact, the current extensions have been granted to Jordan in accordance to 
Article 27.4 and under the procedures and conditions  set forth in document G/SCM/39 thus Jordan 
considers that its export subsidy programme is fully in compliance with its WTO obligations. 
  
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
 
  In document G/SCM/W/537/Add.2, Jordan co-s ponsors the proposal by Panama contained in 
document G/SCM/W/537, in which it referred to  th e amendment of paragraph 1 (c) of G/SCM/39.  
The continuation of the extension throughout th e year 2018 is essential to Jordan based on its 
economic, financial and developmen t needs.  Therefore, the rights and obligations contained in 
document G/SCM/39 and Article 27.4 of the ASCM would remain unchanged. 
  Consequently, JORDAN would take pertinent decision, based on its specific financial, 
economic and development needs and in accordance with the procedures and timelines established in 
the provisions mentioned above.  As a WTO Member, JORDAN has designed its development 
strategies to address these needs with a view to util ize trade promotion as a tool to support the SMEs 
and achieve a fruitful integration into the world eco nomy.  Currently Jordan’s main challenges is to 
reinforce the capabilities of domestic industries to adju st to the economic developments in Jordan and 
the region, as well as to create investment incentives and open more markets and promote job 
creation.  All these anticipations could not be ma terialized unless through empowering the exporting 
capabilities and this exporting programme is one of the major driving forces of economic growth and 
is a vehicle to reaching new adventures and opportu nities, and opening up new markets.  Moreover, 
this programme has several positive effects on the Jo rdanian SMEs, which are persistently enquiring G/SCM/Q4/JOR/5/Rev.1 
Page 8  
 
  about the possibility of extending it as long as possibl e in order to enhance its capabilities in light of 
the mentioned circumstances.    
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
 
  A period of 11 years will induce investment pr ospects and endorse the local industries that 
were shadowed by the continuous aggression in th e Middle East region and the resultant tremendous 
recession.  Additionally, 11 years will be a sufficien t period of time for the SMEs to cope with the 
progressive trade liberalization resulted from Jordan ’s accession to the WTO thus ensuring a stable 
performance for the industrial sector in light of Jordan's economic and development needs. 
 
 At the same time, the Jordanian economy is still suffering from the implications of the 2nd 
Gulf War, which imposed heavy pressure on infr astructure, public services, and housing, thus 
destabilizing the system of resource and capital redistribution and hastened the demise of the 
economic system upon which a welfare state had been  established.  In the light of the prevailing 
political situation in the Middle East, and its signi ficant effects on economic conditions of the region, 
the subject subsidy programme is  necessary to be extended to en sure sustainability of domestic 
industry's performance. 
  Ninety eight per cent of the Jordanian exporting industrial companies that are mostly of small and medium size suffer from the lack of market access  caused by their small size and limited capacity, 
that obstruct them from reaching economies of scale, leaving their costs higher, and depriving them 
from having opportunities to compete in world markets.  The dramatic increase in the prices of energy 
resources resulted in a high cost of outputs, which is  being reflected in a slower activity of the small 
and medium enterprises that are already facing mounting competitive pressures as a result of trade 
liberalization and which are persistently enquiring  about the possibility of extending it as long as 
possible in order to enhance its capabilities in light  of the mentioned circumstances.  Furthermore, 
Jordan's natural resources are so limited; a fact that  made its growth rate at a slow-moving path, added 
to these drawbacks was the continuous negative circ umstances in the region, all of which has made 
the pace of exporting potential not as anticipated.   Finally, in light of the prevailing political situation in the Middle East, and its significant effects on the economic conditions of the region, E xpectations of decreased trade deficit  in the 
coming years will be disappointing, and in order to  enhance the positive effects of this programme, 
the continuation of the subject subsidy programme  to the year 2018 is necessary to ensure the 
sustainability of the domestic industry's performance  and to improve its export potential and further 
develop exporting capabilities.  
__________