WORLD TRADE  
ORGANIZATION  G/SCM/Q2/PRY/6 
29 October 2008 
 
 (08-5250) 
Committee on Subsidies and 
Countervailing Measures Original:   Spanish 
 
 
 
SUBSIDIES 
 
Replies to the Questions from the UNITED STATES1 Regarding  
the New and Full Notification of PARAGUAY2 
 
  The following communication, dated 28 October 2008,  is being circulated at the request of 
the delegation of Paraguay.  
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Law 60/90 
 
 Paraguay's Law 60/90 establishes the general framework for investment incentives in 
Paraguay.  We understand that one of the objectives in granting incentives is "export promotion 
and import substitution". 
 
Question 1 
 
 Please explain why Law 60/90 was not no tified pursuant to Article 25 of the 
SCM Agreement. 
 
Reply
 
  Law 60/90 was not notified as a subsidy on account of the fact that we do not consider it as 
such, given that the conditions set forth in the following do not apply: 
 
• Articles 1, 2 and 3 of the Agreement on Subsidies and Countervailing Measures; 
• Annex I of the Agreement on Subs idies and Countervailing Measures; 
• Article XVI of the General Ag reement on Tariffs and Trade. 
  Furthermore, this Law was examined in the framework of the two Trade Policy Reviews of 
Paraguay in 1997 and 2007 and no objecti ons were raised by other Members. 
 
                                                     
 
1 G/SCM/Q2/PRY/5. 
2 G/SCM/N/155/PRY. G/SCM/Q2/PRY/6 
Page 2  
 
  Question 2 
 
 Please explain why this programme is not inconsistent with Article 3 of the 
SCM Agreement, if one of its objectives is export promotion and import substitution. 
 
Decree No. 21.944 (the Auto Regime) 
 
 We understand that included among the eligibility criteria to qualify for benefits under 
Paraguay's Decree No. 21.944 (the Auto Regime) is "export promotion and/or import substitution". 
 
Reply
 
  See the Reply to Question 1.  Question 3   Please explain why the Auto Regime was not notified pursuant to Article 25 of the SCM Agreement.  
 
Reply
 
 
 The Auto Regime was not notified as a subsidy on account of the fact that we do not consider it as such, given that the conditions set forth in the following do not apply:  
• Articles 1, 2 and 3 of the Agreement on Subsidies and Countervailing Measures; 
• Annex I of the Agreement on Subs idies and Countervailing Measures; 
• Article XVI of the General Ag reement on Tariffs and Trade. 
 
 It should be noted that the process of exporting motorcycles with a certificate of origin to 
MERCOSUR began in 2007, in compliance with the rule of origin setting the regional content 
requirement for Paraguayan motorcycles at 40 per cent.   Thus, 90 motorcycles with a value of US$62, 845 were exported in 2007 and 130 motorcycles 
with a value of US$109,980 were exported in 2008.  The main destination is Brazil, followed by 
Uruguay.   Moreover, motorcycle imports have been stable since 2007.   Virtually all production is therefor e consumed in the domestic market. 
 
 Furthermore, this legislation was examined in  the framework of the Trade Policy Review of 
Paraguay in 2005 and no objections were raised by other Members. 
  G/SCM/Q2/PRY/6 
 Page 3 
 
 
  Question 4 
  Please explain why this programme is not inconsistent with Article 3 of the SCM Agreement, if one of its objectives is ex port promotion and/or import substitution. 
 Reply
 
  See the Reply to Question 3.  
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