WORLD TRADE
ORGANIZATIONG/SCM/Q3/BLZ/8
21 June 2002
(02-3457)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement
on Subsidies and Countervailing Measures
Replies to Follow-Up Questions Posed by the UNITED STATES1, and Supplemental Replies to
Questions previously posed by CANADA2, the EUROPEAN COMMUNITIES3, JAPAN4 and
the UNITED STATES5 Regarding the Notification of BELIZE6
The following communication, dated 14 June 2002, has been received from the Permanent
Mission of Belize.
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FOLLOW-UP QUESTIONS FROM THE UNITED STATES
The following programmes are being maintained and have been notified by Belize:
Fiscal Incentives Act
Export Processing Zone ActCommercial Free Zone Act
Conditional Duty Exemptions Facili ty under the Treaty of Chaguaramas
Q1. Please provide the implementing legislation for each of the programmes for which Belize
is requesting an extension under Article 27.4 of the ASCM.
Reply
The Ministry responsible for Foreign Trade is still in the process of collecting this
documentation and will need to transform it into electr onic format.  This should be completed within a
few more days.
We will be forwarding shortly the EPZ Regulation  under the EPZ Act.
                                                     
1 G/SCM/Q3/BLZ/7
2 G/SCM/Q3/BLZ/4
3 G/SCM/Q3/BLZ/2
4 G/SCM/Q3/BLZ/3
5 G/SCM/Q3/BLZ/5
6 G/SCM/N/74/BLZ + Suppl.1 and G/SCM/N/71/BLZ + Suppl.1G/SCM/Q3/BLZ/8
Page 2
Fiscal Incentives Act
Questions posed in respect of th e local value added requirements:
Q1. Under Section 7(3) of the Act, exemption for import duty exemption is linked to the use
of domestic goods. Could Belize please provide further clarification of this provision?
Reply
Article 7(3) provides as follows:
“Except in cases of an export enterprise to non-CARICOM countries, duty exemption
shall be granted for any raw materials or articles which are available in Belize or in
any Member State provided that they are of comparable quality and price.”
The Fiscal Incentives Act, in particular Section 7(3), should be interpreted in light of Belize’s
membership in the Caribbean Common Market (CARICOM).  Note that Section 2 (Interpretation)refers to “Member States”, “national” and “rules of origin”- all in the context of the Caribbean
regional economic integration framework of the Revised Treaty Establishing the Caribbean
Community. Section 7(3) should therefore be understood in the context of the operation of the
Common External Tariff (CET) and the Community Rules of Origin (Articles 83 and 84 of the
Revised Treaty, respectively) which are fundamental instrument of CARICOM trade policy (Chapterfive).
First of all, Article 80 of the Revised Treaty commits Member States to coordinate their trade
policies with third states or group of states.  Part of this coordination relates directly to the operation
of the CET  and related Rules of Origin , and specifically in relation to trading in goods on the List of
Items Ineligible for Conditional Duty Exemption.
With respect to the CET, Articles 83 provides as follows:
“Operation of the Common External Tariff
1. Any alteration or suspension of the CET on  any item shall be decided by the COTED
2. Where:
(a) a product is not being produced in the Community;
(b) the quantity  of the product being produced  in the Community does not satisfy the
demand of the Community;  or
(c) the quality  of the product being produced  in the Community is below the Community
standard or a standard the use of which is authorized by the COTED
COTED may decide to authorize the reduction or suspension of the Common External Tariff in
respect of import of that product subject to such terms and conditions as it may decide, provided that
in no case shall the product imported from third States be accorded more favorable treatment than
similar products produced in Member States.”
Secondly, Section 7(3) must be seen also in light of the Community’s policy to encourage the
use of regional raw materials.  This is a fundamental underpinning of the common marketG/SCM/Q3/BLZ/8
Page 3
arrangement.  The Origin Rules were designed consistently with that policy, and consequently many
goods can qualify only by meeting the criteria of “ wholly produced”  or “produced from regional
materials.”
Therefore, the provision in Section 7(3) of the Act is consistent with the Treaty requirements
under Article 83, and with the Community’s overall trade policy, particularly with respect to
promoting the use of regional raw materials.
In Belize’s particular circumstances, both indi vidually and as part of CARICOM, the issue of
domestic goods within the meaning of “local content requirement” has not risen in recent times.  In
the early years following the attainment of political independence, Belize like most small developing
countries, was subscribing to the model of growth based on the protection of infant industries.However, from a practical standpoint this could only apply to the agro-processing and manufacture of
wooden products.  In the case of the former, no issue has arisen so far with respect to the Act, and
benefits under it.  In the case of wooden products, the policy was to promote the use of local wood in
the manufacture of products for export.  This however was premised on an assumption that Belize had
a large supply of wood.  Subsequent evaluation of the national forest resources proved that
assumption to be invalid.  Hence, the wooden furnit ure industry has remained largely oriented to the
domestic market, with very limited exportation.  These two cases aside, the issue of use of domestic
goods does not arise in practice to any significant extent.
Q2. Under the provision, are enterprises inelig ible for import duty exemption on imported
goods where goods of comparable quality and price are available domestically?
Reply
Under the provision, no duty exemption shall be gr anted to an export enterprise exporting to a
non- CARICOM country, so long as the materials needed are available in Belize or any other Member
State and meet the comparable criteria for quality and price.  Duty exemption is possible where the
goods are not available in Belize or the rest of CARICOM, or available but do not meet the criteria for
quality and price.  The latter is the norm, based on Belize’s current industrial structure, making it most
likely that exemptions are granted.
Q3. Is the duration of the benefits under this programme contingent upon local value added
requirements?
Reply
No.  The basic objective is to attract investme nts that lead to creation of employment and
incomes, with out any specific reference to exportation.  The benefits are available to manufactures
and service providers alike.  In the few instances where exportation occurs, this is found to be
beneficial to Belize and therefore acceptable.  In such cases domestic raw materials are invariable
used because the enterprise was contemplated upon such domestic supplies, for which sustainable use
is also required.
Q4. Please provide implementing legislation, and relevant amendments to this programme.
Reply
This is being compiled in electronic format.G/SCM/Q3/BLZ/8
Page 4
Commercial Free Zone Act
Q5. Please provide, in detail the extent to which “lower rates on income taxes” are provided
under this programme.
Reply
Under the Income and Business Tax Act, companies are liable to pay a tax of twenty-five
percentum  (25%) on their taxable income.  However, the CFZ Act provides for lower  rates to be
assessed (i.e. 2 per cent, 4 per cent, 6 per cent and 8 per cent) as laid out in Section 16, which also
makes provision for tax credits based on the number of workers employed by the CFZ Developer or
CFZ Company.  The full details of the extent to which these lower rates are being applied have not yetbeen complied, but it is expected that our Income Tax Department will have this data with in a
reasonable timeframe.
RESPONSES TO QUESTIONS PREVIOUSLY POSED BY CANADA, THE EUROPEAN
COMMUNITIES, JAPAN AND THE UNITED STATES
1. Duty foregone with respect to the Commercial Free Zone Programme
(Q.2 from Canada
7)
Reply
Foregone duty for the 2001- 02 (April to March) is approximately BZ$18.0 million.  It has
been estimated roughly that this figure has grown by approximately 10 per cent per annum over the
preceding two years from the 1999 level.
It must be pointed out that goods destined for the CFZ are in fact goods in transit and are not
for sale in the domestic market and are sold to consumers in southern Mexico.  In the absence of that
market, the CFZ activities would not be taking plac e.  Instead there would be a transshipment trade
only.  Under the legal status of the CFZA, the issue of duty exemption does not arise.
The benefits from the CFZ exist in the employment generated (approximately 1,200 jobs at
present).  The government has also considered it justifiable to apply a “social fee” of 1.5 per cent on
the c.i.f. value of all goods entering the CFZ (except for Gasoline and Diesel, which attract 10 per
cent).  This generated some BZ$6.2 million in 2001-02.
2. Duty foregone with respect to the Export Processing Zone Programme
(Q.2 from Canada7)
Reply
The import duty foregone for fiscal year 2001-02 was approximately BZ$12.0 million.  The
figures for the preceding two years were slightly lower.  Most of the recent activities of new
companies entering the EPZ Programme are service providers, whose activities are not understood to
come under the scope of the SCM Agreement.
                                                     
7 G/SCM/Q3/BLZ/4G/SCM/Q3/BLZ/8
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3. Average duties payable but waived for imports under the programmes
(Q.3 from the European Communities8, Q.1 from Japan9, Q.2 from the United States10)
Reply
Import duties range between 5 per cent and 20 per cent.  Sales Tax is standard 8 per cent.
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8 G/SCM/Q3/BLZ/2
9 G/SCM/Q3/BLZ/3
10 G/SCM/Q3/BLZ/5