. /.RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/W/431/Rev.1
20 March 2001
(01-1358)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
IMPLEMENTATION-RELATED ISSUES REFERRED TO THE COMMITTEE
IN THE GENERAL COUNCIL'S DECISION OF 15 DECEMBER 2000
Discussion Paper Submitted by Cuba, Dominican Republic, Honduras, India,
Indonesia, Malaysia, Pakistan, Tanzania, Uganda and Zimbabwe
Revision
The following communication, dated 9 March 2001, has been received jointly from the
Permanent Missions of Cuba, the Dominican Republic, Honduras, India, Indonesia, Malaysia,Pakistan, Tanzania, Uganda and Zimbabwe.
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Technical Paper on the Proposal regarding Article 27.6 of the SCM Agreement and the
possibility to establish export competitiveness on  the basis of  a period longer than two years
1. We are grateful to the Chairman of the WTO Committee on Subsidies and Countervailing
Measures for inviting concrete written submissions on the issues regarding Article 27.6 of the SCM
Agreement.  We look forward to the following proposal to be given immediate and favorable
consideration by the Committee in order to address the genuine concerns of the developing countriesto strengthen their industrial sectors.
2. Article 27.6 of the SCM Agreement provides for that “Export Competitiveness in a product
exists if a developing country Member’s exports of that product have reached a share of at least
3.25 per cent in world trade of that product for two consecutive calendar years”.  Such a “competitive
need test” shall be based on either the notification by the developing country member having reachedexport competitiveness, or a computation undertaken by the WTO Secretariat at the request of any
Member.  For this purpose, a product is defined as a section heading of the HS (i.e. four-figure
number).
3. Nevertheless, the period of two years established in paragraph 6 of Article 27 of the SCM
Agreement, is not sufficient to determine the export competitiveness of a developing country,specially in view of the volatility of the internationa l market (i.e. international financial crisis, raise of
the prices of petroleum, etc.) and the vulnerability of  the developing countries to external  influences,
such as natural disasters.  It is necessary to extend this period to 5 years, which would  be a reasonable
time frame to guarantee that a developing country has reach a situation of export competitiveness in a
given product.
4. Besides,  there is no explicit provision in the Agreement for automatic inclusion if later on the
export share of a country falls below the 3.25 per cent level, such as the situation in which the East
Asian countries that have experienced due to the financial crisis. There should be an automaticG/SCM/W/431/Rev.1
Page 2
inclusion provision so as to enable developing countries to reintroduce export subsidy once the share
of their export of a product decreases to a level below 3.25 per cent in world trade of that product.
5. Finally, the Committee shall propose to the General Council to reach an Understanding based
on paragraph 2 of Article IX of the Marrakesh Agreement establishing the World Trade Organization,
in order to take into account the above concerns.
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