WORLD TRADE ORGANIZATION
Committee on Subsidies
and Countervailing Measures
13 November 2001
PROPOSED PROCEDURES FOR EXTENSIONS UNDER ARTICLE 27.4 FOR CERTAIN DEVELOPING COUNTRY MEMBERS
Communication from the Chairman of the General Council
Should Ministers so direct
Members, the Committee on Subsidies and Countervailing Measures ("SCM
Committee") shall follow the procedures set forth below in respect of
extensions of the transition period under Article 27.4 of the Agreement
on Subsidies and Countervailing Measures ("SCM Agreement") for certain
developing country Members. The programmes to which these procedures
shall apply are those meeting the criteria set forth in 2.
1. Mechanism for extension
(a) A Member that maintains programmes meeting the criteria set
forth in 2 and that wishes to make use of these procedures, shall
initiate Article 27.4 consultations with the Committee in respect of an
extension for its eligible subsidy programmes as referred to in 2, on
the basis of documentation to be submitted to the Committee not later
than 31 December 2001. This documentation shall consist of (i) an
identification by the Member of those programmes for which it is seeking
an extension under SCM Article 27.4 pursuant to these procedures; and
(ii) a statement that the extension is necessary in the light of the
Member's economic, financial and development needs.
(b) Not later than 28 February 2002, the Member seeking an
extension shall submit to the SCM Committee an initial notification as
referred to in 3(a) providing detailed information about the programmes
for which extension is being sought.
(c) Following receipt of the notifications referred to in 1(b),
the SCM Committee shall consider those notifications, with an
opportunity for Members to seek clarification of the notified
information and/or additional detail with a view to understanding the
nature and operation of the notified programmes, and their scope,
coverage and intensity of benefits, as referred to in 3(b). The purpose
of this consideration by the SCM Committee shall be to verify that the
programmes are of the type eligible under these procedures as referred
to in 2, and that the transparency requirement referred to in 3(a) and
3(b) is fulfilled. Not later than 15 December 2002, Members of the SCM
Committee shall grant extensions for calendar year 2003 for those
programmes notified pursuant to these procedures, provided that the
notified programmes meet the eligibility criteria in 2 and that the
transparency requirement is fulfilled. The notified information on the
basis of which the extensions are granted, including information
provided in response to requests from Members as referred to above,
shall form the frame of reference for the annual reviews of the
extensions as referred to in 1(d) and 1(e).
(d) As provided for in SCM Article 27.4, the extensions granted
by the SCM Committee pursuant to these procedures shall be subject to
annual review in the form of consultations between the Committee and the
Members receiving the extensions. These annual reviews shall be
conducted on the basis of updating notifications from the Members in
question, as referred to in 3(a) and 3(b). The purpose of the annual
reviews shall be to ensure that the transparency and standstill
requirements as set forth in 3 and 4 are being fulfilled.
(e) Through the end of calendar year 2007, subject to annual
reviews during that period to verify that the transparency and
standstill requirements set forth in 3 and 4 are being fulfilled,
Members of the Committee shall agree to continue the extensions granted
pursuant to 1(c).
(f) During the last year of the period referred to in 1(e), a Member
that has received an extension under these procedures shall have the
possibility to seek a continuation of the extension pursuant to SCM
Article 27.4, for the programmes in question. The Committee shall
consider any such requests at that year's annual review, on the basis of
the provisions of SCM Article 27.4, i.e., outside the framework of these
(g) If a continuation of the extension pursuant to 1(f) is either
not requested or not granted, the Member in question shall have the
final two years referred to in the last sentence of SCM Article 27.4.
2. Eligible programmes
Programmes eligible for extension pursuant to these procedures, and for
which Members shall therefore grant extensions for calendar year 2003 as
referred to in 1(c), are export subsidy programmes (i) in the form of
full or partial exemptions from import duties and internal taxes, (ii)
which were in existence not later than 1 September 2001, and (iii) which
are provided by developing country Members (iv) whose share of world
merchandise export trade was not greater than 0.10 per cent1
, (v) whose total Gross National Income ("GNI") for the year 2000 as
published by the World Bank was at or below US $ 20 billion2,
(vi) and who are otherwise eligible to request an extension pursuant to
Article 27.43, and (vii) in
respect of which these procedures are followed.
The initial notification referred to in 1(b), and the
updating notifications referred to in 1(d), shall follow the agreed
format for subsidy notifications under SCM Article 25 (found in G/SCM/6).
(b) During the SCM Committee's consideration/review of the
notifications referred to in 1(c) and 1(d), notifying Members can be
requested by other Members to provide additional detail and
clarification, with a view to confirming that the programmes meet the
criteria set forth in 2, and to establishing transparency in respect of
the scope, coverage and intensity of benefits (the "favourability") of
the programmes in question4. Any
information provided in response to such requests shall be considered
part of the notified information.
The programmes for which an extension is granted shall not be
modified during the period of extension referred to in 1(e) so as to
make them more favourable than they were as at 1 September 2001. The
continuation of an expiring programme without modification shall not be
deemed to violate standstill.
(b) The scope, coverage and intensity of benefits (the "favourability")
of the programmes as at 1 September 2001 shall be specified in the
initial notification referred to in 1(b), and standstill as referred to
in 4(a) shall be verified on the basis of the notified information
referred to in 1(d) and 3(b).
5. Product graduation on the basis of export competitiveness
Notwithstanding these procedures, Articles 27.5 and 27.6 shall apply in
respect of export subsidies for which extensions are granted pursuant to
6. Members listed in Annex VII(b)
A Member listed in Annex VII(b) whose GNP per capita has
reached the level provided for in that Annex and whose programme(s) meet
the criteria in 2 shall be eligible to make use of these procedures.
(b) A Member listed in Annex VII(b) whose GNP per capita has not
reached the level provided for in that Annex and whose programme(s) meet
the criteria in 2 may reserve its right to make use of these procedures,
as referred to in 6(c), by submitting the documentation referred to in
1(a) not later than 31 December 2001.
(c) If the per capita GNP of a Member referred to in 6(b) reaches
the level provided for in that Annex during the period referred to in
1(e), that Member shall be able to make use of these procedures as from
the date at which its per capita GNP reaches that level and for the
remainder of the period referred to in 1(e), as well as for any
additional periods as referred to in 1(f) and 1(g), subject to the
remaining provisions of these procedures.
(d) For a Member referred to in 6(b), the effective date for the
standstill requirement referred to in 4(a) shall be the year in which
that Member's GNP per capita reaches the level provided for in Annex
7. Final provisions
The decision by Ministers, these procedures, and the SCM
Article 27.4 extensions granted thereunder, are without prejudice to any
requests for extensions under Article 27.4 that are not made pursuant to
(b) The decision by Ministers, these procedures, and the SCM
Article 27.4 extensions granted thereunder, shall not affect any other
existing rights and obligations under SCM Article 27.4 or under other
provisions of the SCM Agreement.
(c) The criteria set forth in these procedures are solely and
strictly for the purpose of determining whether Members are eligible to
invoke these procedures. Members of the Committee agree that these
criteria have no precedential value or relevance, direct or indirect,
for any other purpose.
1 According to the calculations
performed by the WTO Secretariat as reflected in Appendix 3 to the
Report of the Chairman (G/SCM/38).
2 The SCM Committee shall consider
other appropriate data sources in respect of Members for whom the World
Bank does not publish total GNI data.
3 The fact that a Member is listed
in Annex VII(b) shall not be deemed to make that Member otherwise
ineligible to request an extension pursuant to Article 27.4.
4 The scope, coverage and
intensity of the programmes in question will be determined on the basis
of the legal instruments underlying the programmes.