RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q3/COL/8
12 March 2002
(02-1253)
Committee on Subsidies and
Countervailing MeasuresOriginal:  Spanish
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement
on Subsidies and Countervailing Measures
Replies to the Questions Posed by Australia1, Switzerland 2,
the European Communities3and Canada4
The following communication, dated 8 March 2002, has been received from the Permanent
Mission of Colombia.
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REPLIES TO THE QUESTIONS POSED BY AUSTRALIA (G/SCM/Q3/COL/1)
1. Phase-out plan
The phase-out plan would be similar to that set forth in document G/SCM/W/471/Rev.1,
specifically under paragraph 1(e) and (f).  This means that a period equal to that agreed for
programmes in the form of exemption from internal taxes and import duties would be requested forthe Compensation Mechanism, and it would obviously be granted within the limits specified in
Article 27.4 of the Agreement on Subsidies and Countervailing Measures.
An in-depth study is currently being carried out at the inter-institutional level in order to
determine the conditions under which this Compensation Mechanism would be granted in future,inter alia  as regards destinations and/or products.
4. Eligible products
The Transport Compensation Mechanism has benefited products in various industrial and
agricultural sectors (e.g. leather, wood, plastics and agro-industry).
5. Viability of continued application of the Transport Compensation Mechanism having regard
to economic, financial and development needs
The Transport Compensation Mechanisms allows Colombian exporters to penetrate distant
markets for which there is no direct, regular or suitable forwarding service.  This may be regarded as a
                                                     
1 G/SCM/Q3/COL/1.
2 G/SCM/Q3/COL/2.
3 G/SCM/Q3/COL/3.
4 G/SCM/Q3/COL/5.G/SCM/Q3/COL/8
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market defect justifying State support.  Without such support, these markets would be lost to the
Colombian export supply, which would have a negative impact in terms of the country's economic,
financial and development needs.
REPLIES TO THE QUESTIONS POSED BY SWITZERLAND (G/SCM/Q3/COL/2)
2. Viability of continued application of the Transport Compensation Mechanism having regard
to economic, financial and development needs;  origin of beneficiaries;  operation;  and coverage
Concerning economic, financial and development needs, see reply to Question 5 posed by
Australia.
The Transport Compensation Mechanism does not discriminate between domestic and foreign
investors.
As regards the operation of this programme, it should be noted that direct payments are made
under the Transport Compensation Mechanism to ente rprises incorporated in Colombia, subject to
evidence that the enterprise in question has incurred expenditure in respect of transport to a
destination for which there is no direct forwarding service.  Once approval for the transport has been
obtained, 26 per cent of the amount spent is reimbursed over the first three years and 13 per cent over
the last two years of the programme.  After five years, the exporter is no longer eligible under the
programme in respect of the same good delivered to the same destination, as this is considered alength of time sufficient to penetrate and consolidate presence in the market.
The main destinations profiting from this programme are Antigua, the Netherlands Antilles,
Barbados, Cameroon, China, Côte d'Ivoire, the Fiji Islands, Hong Kong, the Philippines, Saudi Arabia
and the United Arab Emirates.
REPLIES TO THE QUESTIONS POSED BY THE EUROPEAN COMMUNITIES
(G/SCM/Q3/COL/3)
1. Entry into operation of the programmes
The Transport Compensation Mechanism came into operation in 1983.
6. Beneficiaries as at 1 September 2001
As at 1 September 2001, a total of 71 enterprises were benefiting under the programme.
REPLIES TO THE QUESTIONS POSED BY CANADA (G/SCM/Q3/COL/5)
1. How long have these programmes existed?
See reply to Question 1 posed by the European Communities.
2. What are the levels of benefit, i.e. is there a full exemption from taxes or do companies
pay a percentage of regular rates?
See reply to Question 3 posed by Switzerland.
3. For how long can a company enjoy these benefits?  If there is an expiry can a company
re-apply for exemptions?G/SCM/Q3/COL/8
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See reply to Question 3 posed by Switzerland.
4. Are there estimates of government revenue foregone?
Estimates of government revenue foregone were given in the notifications on subsidies made
by Colombia in December 2001 (document G/SCM/N/71/COL).
5. Are there any direct payouts to companie s, e.g. percentage of payroll taxes refunded?
See reply to Question 3 posed by Switzerland.
6. Who can take advantage of these programmes, e.g. industry sectors, agriculture, certain
regions?
Non-traditional industrial and agricultural exports (other than coffee, petroleum and emeralds)
are eligible under the Transport Compensation Mechanism.
7. Are there requirements to qualify for tax exemption benefits, e.g. minimum investment,
number of local employees, etc.?
There is no requirement regarding minimum investment or the number of jobs created, or any
other type of requirement.
8. Please identify total exports that benefit from these programmes and the percentage of
national exports (annually since UR) under each programme.
The Compensation Mechanism covers 0.08 per cent of Colombia's total exports.
9. How many recipient companies/industrial parks, etc. (annually since UR) exist under
each programme?
See reply to Question 6 posed by the European Communities.
10. Can a company benefit from more than on e of the three programmes at one time?
SIEX and Free-Zone beneficiaries are eligible under this Mechanism.
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