RESTRICTED
World Trade
G/SCM/N/3/COLL/7611/Add.11
3 August 1995
Organization
(95-2298)
Original: Spanish
Committee on Subsidies and Countervailing Measures
SUBSIDIES
NOTIFICATIONS PURSUANT TO ARTICLE XVI.1 OF THE GATT 1994
AND ARTICLE 25 OF THE AGREEMENT ON SUBSIDIES AND
COUNTERVAILING MEASURES
COLOMBIA
The following updating notification, dated 30 June 1995, has been received from the Permanent Mission of Colombia.
In view of the decision taken by the CONTRACTING PARTIES of the GATT 1947 on Avoidance of Procedural and Institutional Duplication (L/7582, dated 13 December 1994) this notification is deemed to be also a notification under Article XVI:1 of the GATT 1947.
_______________
NOTIFICATION PURSUANT TO ARTICLE 25.1 OF THE
AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES
AND ARTICLE XVI OF THE GATT 1994
This notification is made in compliance with the provisions of the Agreement on Subsidies and Countervailing Measures and Article XVI of the GATT and in accordance with the format established in document G/SCM/W/7.
I. Tax Reimbursement Certificate (CERT)
1. Description of the programme
The Tax Reimbursement Certificate (CERT) is a measure designed to support and encourage exports by refunding a percentage of their f.o.b. value.
The level or percentage is fixed by the Government, according to the product and market conditions.
2. Notification period: first notification to the WTO, June 1995
3. Objective and purpose of the subsidy
The objective is to stimulate and encourage secondary and non-traditional exports.
4. Basis and legislation
- Act 48 of 1983
- Decree 446 of 1992
- Decree 1608 of 1992
- Decree 1650 of 1992
- Decree 708 of 1995
5. Form of subsidy
CERT was introduced in 1967 as an export promotion mechanism in the form of a tax credit equivalent to a percentage of the f.o.b. value of the exports and representing all or part of the indirect taxes, charges and other levies prepaid by the exporter.
6. To whom and how the subsidy is paid
CERT is a freely negotiable bearer certificate. The exporter obtains it from the Banco de la Republica (Central Bank) through a financial intermediary. The certificates are valid for two years from the date of issue. This incentive is available to natural and legal persons who can show that the goods in question have been exported.
7. Fiscal cost of the subsidy
In 1994, CERT amounted to US$ 79.6 million, of which 17.5 million represents the value of the subsidy. For 1995 it is calculated that CERT will rise to US$ 94 million, of which US$ 18.6 million represents the subsidy.
8. Initiation and duration of the programme
The programme was introduced in 1967 for an indefinite period. However, this indefinite period is subject to the commitments stemming from the WTO Agreements.
9. Statistics on the impact of the programme
Year |
Total exports (f.o.b. value in US$ millions) |
Exports with CERT (f.o.b. value in US$ millions) |
Value of subsidy (f.o.b. value in US$ millions) |
1992 |
6,897.8 |
2,069.3 |
14.5 |
1993 |
7,112.9 |
2,133.9 |
14.9 |
1994 |
8,360.8 |
2,500.0 |
17.5 |
II. Special Machinery Import-Export System
1. Description of the programme
This mechanism permits the duty-free importation of machinery and parts for use in the manufacture of goods intended, wholly or partly, for export.
2. Notification period
First notification to the WTO, June 1995.
3. Objective of the programme
The objective of this programme is to serve as a mechanism for promoting Colombian exports, strengthening the export diversification process and contributing to technological renewal.
4. Basis and legislation
Article 173c of Decree Law 444 of 1967
Article 11 of Decree 631 of 1985
Article 10 of Resolution 2386 of the Colombian Foreign Trade Institute (INCOMEX), 1992.
5. Form of subsidy
Exemption from customs duty and other import taxes and charges.
6. To whom and how the subsidy is paid
Any natural or legal person engaged in manufacturing, exporting or marketing is eligible for this exemption. Anyone who so requests is assigned an overall import quota to import capital goods or spare parts into the country for a certain period. To exercise this right he must provide a general guarantee in support of an undertaking to export the amounts specified at the time of authorization.
7. Subsidy per unit
There is no statistical information available for calculating the subsidy per unit but the total amount of taxes not paid was US$ 25 million in 1994. Considering that exports, excluding coffee and oil, were worth US$ 4800 million, the subsidy amounted to 0.5 per cent of the value exported.
8. Initiation and duration of the programme
The programme was introduced in 1958 and reorganized in 1967 for an indefinite period. Nevertheless, this indefinite period is subject to the commitments stemming from the WTO Agreements.
9. Statistics on the impact of the programme
Year |
Non-traditional exports (f.o.b. value in US$ millions) excluding coffee, oil and coal |
Capital goods imports (f.o.b. value in US$ millions) |
Imports benefiting from the programme (f.o.b. value in US$ millions) |
Value of incentive (in US$ millions) |
1992 |
4,042.2 |
3,178.4 |
120.8 |
18.1 |
1993 |
4,358.1 |
3,490.1 |
132.8 |
19.8 |
1994 |
4,901.3 |
4,352.1 |
167.0 |
25.0 |
III. Free Zones
This measure concerning the operation of the free zones is notified on the understanding that for all the countries who are members of the WTO it is a question of an instrument covered by Article 3 of the Agreement on Subsidies and Countervailing Measures.
1. Description of the programme
The free zones are specified geographical areas within the national territory in which customs, exchange controls, foreign trade, taxation and capital investment are subject to a special legal regime.
Foreign goods entering free zones are exempt from import formalities and duties. Goods originating in the national customs territory (NCT) which enter a free zone are considered to have been exported and goods produced in the free zone which enter the NCT are considered to have been imported, which entails duties on the external value added.
2. Notification period
First notification to the WTO, June 1995.
3. Objective of the programme
The objective is to serve as a focus of regional development, to promote foreign trade, to generate employment and foreign exchange and to encourage and develop the manufacture of goods and the provision of services for foreign markets and, secondarily, the domestic market.
4. Basis and legislation
- Act 7 of 1991
- Decree 2350 of 1991
- Decree 2131 of 1991
- Decree 1552 of 1992
- Decree 971 of 1993
5. Form of the subsidy
Exemption from income and related taxes and from remittance tax.
6. To whom and how the subsidy is paid
The exemption is granted to any Colombian legal person (with domestic or foreign capital) and subsidiaries of foreign enterprises established in Colombia for the purpose of developing activities within the boundaries of the free zone.
7. Amount of the subsidy
As follows from the table reproduced under heading 9, this incentive does not have any fiscal impact since there are no exports to third countries.
8. Duration of the subsidy
Although the free zones were created in 1958, exemption from income tax has been granted only since the entry into force of Act 7 of 1991. Between 1991 and 1994 a process of privatization of the management of the existing free zones and creation of new free zones was completed.
9. Statistics on the impact of the programme
As may be seen from the following figures, this incentive has no impact on international trade.
Free zone |
Number of users |
1994 production in US$ millions |
1994 exports to third countries |
Cúcuta |
10 |
120 |
0 |
Santa Marta |
5 |
48 |
0 |
Cartagena |
3 |
203 |
0 |
Buenaventura |
0 |
0 |
0 |
Rionegro |
6 |
513 |
0 |
Bogotá |
0 |
0 |
0 |