RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q3/KNA/6
23 May 2002
(02-2848)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement
on Subsidies and Countervailing Measures
Replies to Questions Posed by AUSTRALIA1, JAPAN2, CANADA3 and the UNITED STATES4
Regarding the Notification of ST. KITTS AND NEVIS5
The following communication, dated 25 April 2002, has been received from the Ministry of
International Trade, Labour, Social Security , CARICOM Affairs, Telecommunications and
Technology in St. Kitts and Nevis.
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QUESTIONS FROM AUSTRALIA
Q1. What types of activities are undertaken by the different categories or groups of
enterprises?  What determines how enterprises are categorized?
Reply
The Fiscal Incentives Programme is applicable to all types of manufacturing or processing
activity but does not apply to agriculture and tourism.  The different categories or groups of
enterprises are determined by the percentage of local value added.
Q2. Is the tax holiday dependent on the use of domestic goods?
Reply
The fiscal incentive programme does not provide exemptions, which require that enterprises
use domestic goods over imports.
Q3. Document G/SCM/N/74/KNA refers to “export sales to a territory listed in Schedule 2”.
Are there target markets for granting export allowances?
                                                     
1 G/SCM/Q3/KNA/1
2 G/SCM/Q3/KNA/3
3 G/SCM/Q3/KNA/4
4 G/SCM/Q3/KNA/5
5 G/SCM/N/74/KNA and G/SCM/N/71/KNAG/SCM/Q3/KNA/6
Page 2
Reply
The Fiscal Incentive Programme sets out the countries for which export allowances are not
allowed.
Q4. Australia notes that the incentives are subj ect to export performance.  Could St. Kitts &
Nevis elaborate on how this export performance is measured?
Reply
For the purposes of the fiscal incentive programme export performance is assessed using
information relating to sales to markets outside of St. Kitts and Nevis.
QUESTIONS FROM JAPAN
Fiscal Act No. 17 of 1974
Q1. This Act seems to include a requirement for local value.  Could St. Kitts and Nevis
please explain its conformity with Article 3.1(b) of the ASCM?
Reply
The Fiscal Incentives Act does not include provisions that require enterprises to use domestic
goods over imports.  The conditions in the Fiscal Incentives programme for 'local value added' do not
constitute a requirement to use domestic over imported goods.  As stated in the Act, the 'local value
added' is the amount by which the sales of an approved product exceeds:
(i) The aggregate amount of the value of imported raw materials;(ii) Wages and/or salaries paid to persons non-national of a CARICOM member state;(iii) Interest, management charges and other income payments to non-residents in a
CARICOM member state;  and
(iv) Depreciation on the imports of plant, machinery and equipment.
Q2. While this Act seems to have already been effective in 1998, St. Kitts and Nevis notified
in G/SCM/N/38/KNA on 17 July 1998 that there were no measures which require notificationunder Article 25.  Could St. Kitts and Nevis please explain this contradiction.
Reply
In the earlier notification, it was not perceived that the Fiscal Incentives Act should have been
notified as it was part of the WTO approved regional integrated movement CARICOM.G/SCM/Q3/KNA/6
Page 3
QUESTIONS FROM CANADA
How many recipient companies/industrial park s, etc. operate under the Fiscal Incentives
Act No. 17 programme?
Reply
At present there are eighteen (18) companies operating under the Fiscal Incentives Act.
QUESTIONS FROM THE UNITED STATES
Fiscal Incentives Act No. 17 of 1974
Q1. Because the tax holiday is granted for up to 15 years, please explain how St. Kitts and
Nevis would modify this programme so that subsidies do not extend beyond any extension
period provided.
Reply
The Fiscal Incentives Act is presently under review as part of the regional process towards a
CARICOM single Market and Economy.
Q2. In light of the local value-added requirements for some of the benefits provided under
this programme, please comment on whether this  programme constitutes a prohibited subsidy
under Article 3.1(b) of the Agreement on Subsidies and Countervailing Measures.
Reply
The Fiscal Incentives Act does not include provisions that require enterprises to use domestic
goods over imports.  The conditions in the Fiscal Incentives programme for 'local value added' do not
constitute a requirement to use domestic over imported goods.  As stated in the Act, the 'local value
added' is the amount by which the sales of an approved product exceeds:
(i) The aggregate amount of the value of imported raw materials;
(ii) Wages and/or salaries paid to persons non-national of a CARICOM member state;(iii) Interest, management charges and other income payments to non-residents in a
CARICOM member state;  and
(iv) Depreciation on the imports of plant, machinery and equipment.
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