RESTRICTED  WORLD TRADE  
ORGANIZATION  G/SCM/M/62 
14 March 2008 
 (08-1160) 
Committee on Subsidies  
and Countervailing Measures  
 
 
MINUTES OF THE SPECIAL MEETING  
HELD ON 25 OCTOBER 2007 
 
Chairman:  Mr. Pablo Klein (Mexico )  
 
 
1. The Committee on Subsidies and Countervailing Measures ("the Committee") held a special 
meeting on 25 October 2007.  As set forth in WTO/AIR/3093 of 15 October 2007, the purpose of this meeting was, on the one hand, to c ontinue the review of 2005 new and fully subsidy notifications and, 
on the other, to begin the review of 2007 new and full subsidy notifications.  
 
A. 
CONTINUATION OF REVIEW OF 2005  NEW AND FULL SUBSIDY NOTIFICATIONS  
2. As agreed at the special meeting held on 26 April 20071, the Committee reverted to the 2005 
new and full subsidy notifications of China, Korea, Qatar and Turkey.   
1. China 
3. The Chairman  recalled that the Committee ha d discussed China's notification 
(G/SCM/N/123/CHN) at special meetings held in Oc tober 2006 and April 2007.  Prior to the meeting 
held in October 2006, the European Communitie s, Japan, Canada, the United States, Turkey, 
Australia and Mexico had submitted written questions on this notifica tion.  China had provided oral 
responses to some of these questions at the mee ting held in October 2006 and had very recently 
submitted written answers.2   
4. The delegate of China  stressed the efforts made by China to provide written responses to the 
questions posed on its subsidy notification.  If the Members in question had further comments or questions they could do so at this meeting but his delegation might not be in a position to respond 
orally.   
5. The delegate of the United States
 thanked China for its answers3 to the questions of the 
United States.4  His delegation had two comments and three follow-up questions on these answers.  
The first comment pertained to China's State Policy Banks.  While China maintained that each of its 
State Policy Banks operated indepe ndently and on market-oriented pr inciples, this statement seemed 
to be contradicted most recently by press reports that the National Development and Reform Commission and the China Development Bank ha d signed a memorandum of understanding under 
which the China Development Bank would provide $10.8 billion to China's high-tech industry.  This 
indicated that there was a fair degree of government  involvement with respect to China's State Policy 
Banks.  The second comment was with respect to Ch ina's state-owned commercial banks.  In this 
regard, China's contention that these banks had long been operating on the basis of commercial 
                                                     
 
1 G/SCM/M/60. 
2 G/SCM/Q2/CHN/25-31. 
3 G/SCM/Q2/CHN/28. 
4 G/SCM/Q2/CHN/19. G/SCM/M/62 
Page 2  
 
  considerations seemed to be contradicted by other so urces, such as China's five year plans, Article 34 
of the Commercial Bank Law and the annual reports of China's Central Bank for 2004 and 2005.   
6. The delegate of the United States then posed thr ee follow-up questions.  First, with respect to 
programmes 76, 77 and 78 of China's notification, it appeared that under each of these programmes 
the seller of particular products could retain a por tion of the VAT paid by the producer.  He asked 
whether China could provide a detailed explan ation of how these programmes operated, perhaps 
through the use of a simple example.  Second, w ith respect to the five provincial programmes which 
the United States had brought to China's attention and which were mentione d on page 25 of China's 
answers, the United States considered that these pr ogrammes very clearly appeared to be prohibited 
export subsidies.  In this regard, he asked what steps China was taking to comply with its commitment 
to eliminate all of its export subsidies upon access ion and with its general obligation as a WTO 
Member not to provide prohibited subsidies under Article 3 of the SCM Agreement .  Since much of 
the source documentation that the United States had relied upon to develop information with respect 
to these programmes was easily obtainable on the internet, it was not clear why there was a problem in further developing information with respect to these programmes.  Finally, for the two programmes 
referred to in questions 44 and 46 of the United Stat es, he asked China to explain on what basis China 
maintained that these programmes did not constitute specific subsidies. 
7. The delegate of the European Communities
 stated that while the European Communities 
appreciated the efforts made by  China in providing responses5 to its questions6, China had submitted 
its responses very late and after the expiry of th e timeframe to which China had committed itself at 
the last special meeting.  Moreover, not in one si ngle reply had China provided the statistical data 
requested by the European Communities, on the grounds  that such statistics were not available.  
However, since Article 25.3 of the SCM Agreement clearly required Members to submit such 
statistical data, the alleged lack of availability of the data could not be accepted as a valid excuse.  The 
European Communities also considered  that certain answers provided by China were either partial or 
flawed and in contradiction with Article 25.10 of the SCM Agreement .  China had submitted its first 
notification after its accession in 2001 only in Apr il 2006 and had failed to include in this notification 
information on measures applied by sub-national le vels of government.  The European Communities 
considered that, as a major trading partner of th e European Communities, China should abide by its 
WTO obligations by observing the fundamental princi ples of transparency and accountability.  In this 
regard, he noted that China had not yet submitted  a 2007 subsidy notification, due by 30 June 2007, 
and he requested China to do as soon as possible.   
8. The delegate of Canada  thanked China for its responses7 to Canada's questions.8  His 
delegation's comments basically related to the lack of information provided by China with respect to 
some of Canada's questions.  Thus, China's statem ent that it did not maintain subsidies that were 
specific to the iron and steel industry appeared to contradict the essence of China's 2005 iron and steel 
policy, which specifically provided for various  forms of government assi stance to the Chinese 
industry.  Similarly, China had failed to provid e any explanation how the subsidy programmes for 
foreign investment enterprise with export orientation,  referred to in Canada's questions 1 and 2, and 
the subsidies for the purchase of domestically produced  equipment, referred to in questions 5 and 6, 
complied with China's obligations under Article 3 of the SCM Agreement.  China had stated that these 
subsidy programmes would be adjusted with th e implementation on 1 January 2008 of the new 
Income Tax Law of the People's Republic of China for Enterprises, but China had not provided any 
further details as to the meaning of this adjustment  and had left it completely unclear when and how 
the subsidy programmes would be modified or indeed abolished.  Canada was also concerned with the 
                                                      
5 G/SCM/Q2/CHN/25. 
6 G/SCM/Q2/CHN/16.  
7 G/SCM/Q2/CHN/27.  
8 G/SCM/Q2/CHN/18.   G/SCM/M/62 
 Page 3 
 
 
  fact that China had not provided statistical data  requested on the amount of tax or VAT forgone under 
the various subsidy programmes.  Article 25.3 of the SCM Agreement  specified that such data should 
be provided by Members. If China was not capable of providing this form of data at this time, China 
should at the very least indicate what steps it was taking to address this matter and when Members could expect to be provided with such data.  In conclusion, Canada was of the opinion that 
notifications under Article 25 of the SCM Agreement  were a fundamental transparency exercise 
inherent to the SCM Agreement  and Canada expected China, like any other WTO Member, to live up 
to its obligations in this regard. 
9. The delegate of Mexico
 thanked China for its responses9 to Mexico's questions.10  While 
China's answers clarified some aspects, China had not provided the statistical data requested by 
Mexico on the number of enterprises that were be neficiaries under the subsidy programmes and on the 
issue of whether these beneficiaries were predominantly  state-owned enterprises.  He recalled, in this 
regard, that the SCM Agreement  and China's Protocol of Accession required China to present 
information that was sufficiently specific with re spect to subsidy programmes and their effects on 
trade.  He asked whether China had considered how  it could improve its statistical capacity to present 
this information in future and whether China coul d indicate when it expected to be in a position to 
provide information on subsidies granted at sub-national levels of government.  
10. The delegate of Japan  expressed his delegation's appreciation for the efforts made by China to 
submit written responses11 to Japan's questions.12  Japan expected China to administer its subsidy 
programmes in a manner that was consistent with Ch ina's WTO obligations.  In this respect, Japan 
was concerned about the lack of transparency rega rding the details of the implementation of the new 
Income Tax Law that would enter into force on 1 January 2008.  He therefore requested China to 
provide information on any regulations, circulars a nd administrative rules implementing the new law, 
the applicable transition period and the timeframe for the abolishment of the existing regime.  In 
response to Japan's Question 2, China had mentione d the possibility that certain measures or policies 
could be extended under new legislation and that  information on any such extended measures or 
policies would be included in future notifications.  In  this respect, he stres sed the need for any such 
extended measures or policies to be applied consistently with the WTO Agreement.   
11. The delegate of Turkey  thanked China for its responses13 to Turkey's questions.14  However, 
since the answers were incomplete, his delegation w as interested in the steps China would take to 
provide complete responses, especially with respect to statistical data.   
12. The delegate of Australia  thanked China for its responses15 to Australia's questions.16  
Australia was still studying these answers.   
13. The delegate of China  enquired whether the information u sed by the United States as the basis 
for its comments and questions was reliable.  In th is connection, he requested the United States to 
indicate precisely the specific paragraphs of China's five  year plan and of the annual reports of China's 
Central Bank which the United States had menti oned in its comments on the operation of China's 
state-owned commercial banks.  He also asked whet her the United States could identify the press 
reports and other sources of information relating to the five provincial measures.  In response to the 
comment of the European Communities regarding th e delay in the submission of China's responses, 
                                                      
9 G/SCM/Q2/CHN/31.  
10 G/SCM/Q2/CHN/22.  
11 G/SCM/Q2/CHN/26. 
12 G/SCM/Q2/CHN/17. 
13 G/SCM/Q2/CHN/29. 
14 G/SCM/Q2/CHN/20. 
15 G/SCM/Q2/CHN/30. 
16 G/SCM/Q2/CHN/21.  G/SCM/M/62 
Page 4  
 
  he stated that this was due to resource limitations and to the fact that China's experts working on this 
matter had recently been involved in various proceed ings under the DSB.  Regarding the request of 
Japan for information on the detaile d implementation of the new Income  Tax Law, he stated that the 
implementing rules for this law were still being di scussed at this time, but he assured Members that 
these rules would be WTO-consistent.  Finally, with respect to Canada's comments, he stated that 
some of the issues raised by Canada would be addressed by the new Income Tax Law.   
14. The Committee took note
 of the statements.  
2. Korea 
15. The Chairman  recalled that the Committee had discussed Korea's notification 
(G/SCM/N/123) in October 2006 and in April 2007.  Prior to the meeting in April 2007, the 
Committee received written responses of Korea17 to questions posed by Turkey and the United States.  
In light of the follow-up questions raised at that meeting by the United States18, the Committee had 
agreed to revert to Korea's notification at its next special meeting.   
16. The delegate of Korea  stated that since the United States had not submitted its questions in 
writing he did not have an official response a nd could only provide a preliminary reply. The 
Framework Act on Marine Fishery Development de fined important principles and provided broad 
direction on maritime policies to the Korean Government but it did not require or mandate the Government to take any special measures.  Therefor e, neither the provisions cited by the United States 
nor any other provisions of the Act directed the Government to provide any kind of subsidies.  None of the maritime policy programmes adopted by th e Government of Korea pursuant to this Act 
provided any type of subsidies within the meaning of Article 1.1 of SCM Agreement .  As a 
consequence, there was no particular programme to notify.   
17. The delegate of the United States
 thanked Korea for its answers.  His delegation did not have 
any follow-up questions at this point but might have additional questions at some future point. 
18. The Committee took note  of the statements.   
3. Qatar 
19. The Chairman recalled that the Committee ha d discussed the 2005 new and full notification 
of Qatar (G/SCM/N/123) at its special meetings held in October 2006 and April 2007.  Qatar had 
provided written answers19 to questions posed by the United Stat es.  Subsequently, the United States 
had posed follow up questions20, to which Qatar had very recently responded in writing.21  
20. The delegate of Qatar  thanked the delegate of the United States for his interest in Qatar's 
commitment under the SCM Agreement .  His authorities were currently reviewing all information on 
Qatar's trade policy published on the Government webs ite to ensure that it reflected exactly Qatar's 
WTO commitments. 
21. The delegate of the United States  thanked Qatar for its answers.  His delegation was reflecting 
on the answers recently provided by Qatar and had no further questi ons at this time.  
22. The Committee took note  of the statements.   
                                                      
17 G/SCM/Q2/KOR/27 and 29.  
18 G/SCM/M/60, para.23.  
19 G/SCM/Q2/QAT/2. 
20 G/SCM/Q2/QAT/3/Rev.1. 
21 G/SCM/Q2/QAT/4.  G/SCM/M/62 
 Page 5 
 
 
  4. Turkey  
23. The Chairman  recalled that the Committee had discussed the 2005 new and full notification 
of Turkey (G/SCM/N123/TUR and Add.1) at the special meetings held in October 2006 and April 2007.  At the last special meeting, Turkey had responded orally to questions posed by the United States.  More recently, Turkey had submitted written responses
22 to these questions.23   
24. The delegate of the United States  thanked Turkey for its answers and stated that his 
delegation had no further questions. 
25. The Committee took note  of the statements.  
B. REVIEW OF 2007  NEW AND FULL SUBSIDY NOTIFICATIONS  
26. The Chairman  recalled that on 1 February 2007 the Secretariat had circulated a document 
(G/SCM/N/155) inviting Members to submit th eir 2007 new and full subsidy notifications by 
30 June 2007.  At the special meeting of 26 April 2007, the Committee had agr eed that the procedures 
applied by the Committee to the review of the 2005 no tifications would also apply to the review of 
2007 notifications.24  These procedures provided that only notifications circulated in all three WTO 
languages not less than 17 weeks prior to a meeting coul d be reviewed at that meeting.  Pursuant to 
the procedures adopted in April 2007, the Committ ee had before it the 2007 new and full subsidy 
notifications of the following Members:  Armenia (G/SCM/N/155/ARM);  Honduras 
(G/SCM/N/155/HND);  Macao, China (G/SCM/N/155/MAC);  and Nigeria (G/SCM/N/155/NGA).   
27. The Chairman  stated that no written questions had been received on any of these 2007 new 
and full subsidy notifications. 
28. No comments were made or questions posed on these notifications.  
29. The Chairman  stated that the Committee would continue  the review of the 2007 new and full 
subsidy notifications at the next special meeti ng, which would take place in April 2008.  In 
accordance with the procedures adopted in Apr il 2007, the Committee would review those 
notifications that have been circulated not less th an 17 weeks before the date of the meeting in the 
three working languages of the WTO.  
30. The meeting was adjourned.  
__________ 
 
                                                      
22 G/SCM/Q2/TUR/18.  
23 G/SCM/Q2/TUR/17.  
24 G/SCM/M/60, paras. 45-46.