RESTRICTED  WORLD TRADE  
ORGANIZATION  G/SCM/M/75/Corr.1* 
10 March 2011 
 (11-1218) 
Committee on Subsidies 
and Countervailing Measures  
 
 
 
MINUTES OF THE REGULAR MEETING 
HELD ON 28 OCTOBER 2010 
 
Chairman:  Mr Robert Jui-song Fang (Chinese Taipei)  
 
Corrigendum  
 
  Please note that paragraphs 67 and 69 of the original document G/SCM/M/75 should be 
replaced by the following: 
  67. The delegate of El Salvador
 stated  that following the General's Council Decision of 2007 
(WT/L/691) provisions on this matter and the guideli nes of the Subsidies Committee of October and 
April of last year, his delegation had notified on 30 July 2010 the annual update of the programme for 
which El Salvador requested the continuation of th e extension for the transition period, provided in 
Article 27.4 of the SCM Agreement, for the Ex port Processing Zones and Marketing Act, commonly 
called as the Free Zone and Inward Processing Warehouse Programme.  In this notification, 
El Salvador had included the action plan for co mplying with the General Council decision.  He 
referred to the economic and trade data which they  understood continued to justify the transitional 
period for the programme under review and the contex t in which El Salvador's action plan had been 
submitted for the mid-term assessment being condu cted as provided for under the General Council 
decision.  El Salvador had found that this programme  was important to El Salvador as one of the tools 
for stimulating the establishment of, increase in, i nvestments in El Salvador and to improve the 
well-being of the El Salvadorian population.  Among the reasons for which it played an important role 
in the Salvadoran economy they had found that:  by the end of 2009, the programme was used by 
256 companies, which directly employed 65,000 pers ons who were allowed to access social security, 
education, healthcare and pensions.  The program me also allowed for the creation of 130,000 jobs 
indirectly.  The programme, thus, benefited and contributed in 8.4 per cent of the labour force in 
El Salvador. 80 per cent of the businesses that benefited from the programme were manufacturing 
companies which contributed $1.487 million, i.e. 39 per cent of the value of El Salvador's exports.  It 
also contributed 2.5 per cent of El Salvador's GDP in 2008.  Furthermore, the businesses operating 
under this programme had strengthened the producti on chains which promoted better added value 
through, e.g., a complete package which allowe d for technological advances in this sector.  
Furthermore, given the economic and financial cris is which negatively affected the national economy, 
exports and remittances from Salvadorans abroad  suffered an annual decrease of 19 per cent and 
9 per cent, respectively.  Like other Members,  credits for private investments also dropped 
substantially and exacerbated the contraction in st rategic sectors such as construction, tourism, 
manufacturing which further increased the effects of the economic recession and contributed to the 
drop of the GDP by 3.5 per cent by the end of 2009.  The delegate stated that unfortunately the crisis 
would not be over in the near future so the recove ry of El Salvadorian ec onomy was responding to the 
stimulation of markets, with which it had a strong  relationship, predominantly with the US market, 
                                                      
*In English only. G/SCM/M/75/Corr.1 
Page 2  
 
  with a backlog of a year approximately.  He st ated that the expected GDP growth for 2010 was 
1 per cent of GDP, below the average growth of El Sa lvador's main trading partners and competitors.  
The delegate explained that also the latest na tural phenomena had negatively affected the entire 
national territory and and had left damages amoun ting to $400 million which represented 9 per cent of 
El Salvador's total exports and almost 2 per cen t of its GDP for 2009.  These natural catastrophes had 
also created significant damage in public and priv ate infrastructures which were at the service of 
productive sectors.  The delegate noted that El Sa lvador's action plan contained the following four 
sections:  1) proposal from El Salvador to comply with the procedures for the continuation of the extension of the transition period:  where there's a description of the actions with respect to the 
technical efforts to develop the recommendations for compliance with the General Council decision, 
including the activities under the auspices of the "I nter-institutional Committee for the Analysis of the 
Incentives Scheme for Free Zones and Inward Processing Warehouses", and the study of the law in question, and a definition of the necessary legislativ e measures.  In this section, there was also a 
description and details about the strategic genera l lines to be applied in the technical activities 
described before, developed by the relevant authoriti es of trade policy of El Salvador;  2) A section 
containing information on legislative and admini strative changes and other necessary procedures.  
This section detailed the process foreseen under Sa lvadoran law for the elimination and/or 
modification of the legal instruments regardi ng the free zones and in ward processing warehouse 
programme for its due consideration by the Legisla tive Assembly.  3) A section describing measures 
which had been adopted or were being adopted.  This section was for the follow up that had been 
consistently and systematically given to the acti ons and processes meant to comply with the General 
Council decision with sufficient time before the en d of 2015.  In this sense, it also described the 
creation of the Inter-institutional Committee as well as its  participants and the competencies of this 
Committee.  More importantly, the Inter-institutiona l Committee had the task to review the Export 
Processing Zones and Marketing Act, and had to obser ve strictly the rights and obligations under the 
current legal framework of El Salvador;  and cons idered the best practices in other countries and 
description of compliance situations with internationa l trade law which informed the state of play of 
the work of the Inter-institutional Committee.  4) Fina lly a last section of the action plan contained the 
description of the way in which each beneficiary ha d been notified.  This included information on 
how the notification for each beneficiary was carried out, in conformity with section (e) of paragraph 
1 of the General Council decision, as well as actions that had been taken by El Salvador to strengthen 
this notification through a permanent notifica tion campaign adopted since the General Council 
decision.  In the framework of the preparatory m eetings for this review at this meeting, some 
delegations had expressed their interest in El Salvador's  notification.  Thus the delegate of El Salvador 
wanted to expand on some of the points raised by  some Members on El Salvador's programme.  In 
this regard, he wished to inform the Committee of  the recommendations that would come out of the 
Inter-institutional Committee on the analysis of the free zones and inward processing warehouses, 
referred to in sections 1 and 3 of the Action Pl an, of the actions recommended to phase out the 
program by the deadline set out in the General C ouncil Decision, and of the legislative measures 
adopted or in the process of being undertaken as a result of these recommendations.  The delegate 
stated that the Inter-institutiona l Committee was working in order to issue by 2011 a first draft of 
recommendations for the legislative measures necessar y in order to comply with the General Council 
decision to eliminate and/or modify the law unde r discussion.  These recommendations would take 
into account the guidelines drawn up by the relevant  trade policy authorities of El Salvador, which 
were focussing on a series of key processes which would fully and compleme ntarily facilitate the 
implementation of the legislative measures necessar y to guarantee compliance with El Salvador's 
international commitments.  This included stre ngthening public investment generally for the 
productive process;  incorporation of innovation and transfer of technology in Salvadoran trade 
process;  developing a marketing production strate gy and attracting investment in order to create 
quality jobs;  strengthening the inclusion of the productive sector and taking advantage of market 
access.  The delegate also noted that these recomme ndations would provide th e executive branch with 
the basis upon which to begin the process of deve loping the bills which would be submitted to the 
Congress of El Salvador for their analysis and a pproval in order to ensure compliance with the  G/SCM/M/75/Corr.1 
 Page 3 
 
 
  commitments undertaken pursuant to the Genera l Council decision.  On the basis of the 
Inter-institutional Committee's recommendations, the de legate explained that it was foreseen that the 
Ministry of Economy in 2012 would create a draft lega l text necessary in order to comply with the 
General Council decision and this would be circulated  for consultation to the rest of the relevant 
agencies and governmental bodies.  In 2013-2014 or if possible before, the delegate expressed hope 
that El Salvador would be able to submit the Presi dent's initiative through the Ministry of Economy of 
El Salvador for the due considerati on and approval of the bill by the legislative branch of El Salvador 
necessary to comply with the General Council decision. 
69. With respect to the status quo  and standstill, the delegate of El Salvador  stated that this 
Free Zone and Inward Processing Warehouse Programme did comply with the requirements set out in 
the General Council decision.  The standstill therefor e had been maintained since the granting of the 
extension up until the day of the meeting.  With respect to the second question, i.e., as regards the 
measures for eliminating subsidies, the delegate point ed out that in accordance with section 3 of its 
action plan, El Salvador had set up an Inte r-institutional Committee as one of its recommended 
activities and would come forward with recommendati ons on the draft bills and legal requirements in 
order to be in compliance with the General Council decision.  Such recommendations would also take 
into account some of the guidelines that had been give n by the authorities in charge of trade policy.  
The delegate stated that on the basis of reco mmendation made by the Inter-institutional Committee, 
El Salvador envisaged that in 2012 the draft legal bill would be elaborated in order to abide by the 
General Council decision and that this would be  discussed with other agencies and governmental 
bodies competent in this field.  Lastly, the delegate  stated that it was planned that during 2013-2014, 
and if possible before that, El Salvador would presen t the President's initiative through the Ministry of 
Economy of El Salvador for cons ideration and approval by Legislative body.  This draft with 
necessary legislative measures for compliance with the General Council decision would be submitted, 
covering the programme. 
 
__________