WORLD TRADE  
ORGANIZATION   
G/SCM/Q2/MEX/25 
4 April 2012 
 (12-1763) 
Committee on Subsidies and  
Countervailing Measures Original: Spanish 
 
 
 
SUBSIDIES 
 
Replies to the Questions Posed by JAPAN1 Regarding the 
New and Full Subsidy Notification of MEXICO2 
   The following communication, dated 30 March 2012, is being circulated at the request of the 
delegation of Mexico. 
 
_______________ 
 
 
Programme for the Development of High-Technology Industries (PRODIAT) 
 
Question 1 
 
 According to Mexico's 2011 New and Full Notifi cation, it "covers earlier fiscal years for 
which no notifications were submitted", and th e period covered by the notification for 
PRODIAT is from 1 January 2011 to 31 December 2011.  On the other hand, according to the 
website ( http://www.economia.gob.mx/ ) which was referred to by the delegate of Mexico at the 
SCM committee meeting on 26 October, the programme started in 2009. 
 
 Could Mexico clarify: 
 
 (a) whether the programme started in 2009, and if so, the reason for notifying 
specifically on the period of the year 2011? 
 
 Reply 
 
 The Programme for the Development of High-Technology Industries (PRODIAT) did 
indeed start in 2009.  However, as the programme  was considered to be in a pilot study phase 
in 2009 and 2010 and no resources were granted to  it in the first year, Mexico decided to 
notify it only as of 2011.  For transparency purposes, further details are provided in the note annexed hereto. 
 
 (b) if there is any difference among the programmes of 2011, 2010 and 2009? 
 
 Reply 
 
 See the note annexed hereto, as referred to in the reply above. 
 
                                                      
1 G/SCM/Q2/MEX/24 
2 G/SCM/N/220/MEX G/SCM/Q2/MEX/25 
Page 2  
 
   (c) if there is any project which was granted support before 2011?  (Paragraph 6 
("To whom and how assistance is provided") suggests that support can be granted to the same project for two or  three years, but not more than three 
years.) 
  Reply 
 
 2010 was the first year in which resources were granted to PRODIAT projects.  Support amounting to 3.9 million pesos was provide d for only three projects, which sought to 
resolve market failures in the metalworking, electronics and aeronautical sectors.  These 
projects were approved by the Governing Board in 2010. 
 
REFERENCE COMPANY AMOUNT OF 
SUPPORT 
(PESOS) 
007/1079 United States - Mexico Foundation for Science (FUMEC) A.C. 1,517,500 
001/0868 United States - Mexico Foundation for Science (FUMEC) A.C. 600,000 
005/1067 Mexican Federation of Aerospace Industries (FEMIA) A.C. 1,750,000 
  3,867,500 
 
 It should be noted that a project may receive PRODIAT support for a maximum of three years and that requests for support must be submitted by fiscal year and in accordance with the budgetary provisions in force. 
 Question 2 
 
 Could Mexico clarify the eligibility criteria for receiving the support, in particular the 
criteria to be regarded as a 'strategic project' a nd to determine the duration of support for each 
project? 
 
Reply 
 
• The target population entities listed in section 5 of the Rules for the Operation of PRODIAT 
are eligible to receive PRODIAT support, on a non-discriminatory basi s, in accordance with 
the current rules for the fiscal year 2012, published on 23 December 2011 in the Official Journal, providing they meet the following requirements: 
 
I. They must be up to date with their ta x obligations, pursuant to Article 32-D of the 
Federal Tax Code, and submit a tax compliance certificate in accordance with the relevant provisions of the current annua l set of amendments to the Tax Law 
(Resolución Miscelánea Fiscal ); 
 
II. They must not be receiving support u nder other federal programmes, which would 
imply the substitution or duplication of support; 
 
III. Beneficiaries under this programme or other funds or programmes in prior fiscal 
years must be up-to-date with their obliga tions.  This will be verified by the 
Directorate-General of Heavy Industry and High Technology (DGIPAT);  and 
 
IV. Target population entities belonging to Groups III and IV must be linked to Group I 
entities through agreements or other relevant legal instruments.  G/SCM/Q2/MEX/25 
 Page 3 
 
 
   
• The selection criteria used by the Governing Board to evaluate and, where appropriate, 
approve the projects submitted are as follows: 
 
I. Alignment with PRODIAT objectives; 
 
II. Number and type of market failures addressed by the project; 
 
III. Effectiveness and efficiency of the res ponse to the market failure, taking into account 
the requested resources.  In 2012, DGIPA T will define an indicator to measure 
market failures;  and 
 
IV. Effects on quantitative indicators. 
 
• Projects will be selected by applying an al gorithm that weighs their responses to various 
market failures.  This algorithm is set out in  Annex F to the Rules for the Operation of 
PRODIAT, published on 23 December 2011 in the Official Journal. 
 
• A strategic project is considered to be one that addresses more than one market failure and 
that has a significant impact on more than one lin k of the value chain and/or on more than one 
of the sectors referred to in Rule 5 of the Rules for the Operation of PRODIAT, published on 
23 December 2011 in the Official Journal. 
 
• PRODIAT will grant support for the development and execution of projects conforming to the 
following provisions: 
 
I. The amount of support per project shall not exceed 50 per cent of the total project 
cost, except in the case of the projects re ferred to in the following paragraph; 
 
II. For strategic projects, the Governing Board may authorize support of up to 
70 per cent of the total project cost, at the express request of the beneficiary and on the recommendation of DGIPAT;  and 
 
III. Specific expenditure items and maximum amounts per item shall be those indicated 
below: 
 
Thematic heading 1 
 
Technical assistance, training and other rela ted services to reduce the risks and sunk costs 
associated with training and consultancy services specializing in the industrial application of 
innovative products and processes. 
 
Specific items Maximum amount 
of support 
(pesos) Restrictions 
1. Specialized training and skills development courses 
for human capital on the in dustrial application of 
innovative products and processes 108,000.00 Per course and per person;  
the level of specialization 
will be taken into account G/SCM/Q2/MEX/25 
Page 4  
 
  Specific items Maximum amount 
of support 
(pesos) Restrictions 
2. Specialized consulting on the industrial application of 
innovative products and processes 2,158,000.00 Per project;  the objective 
of the consultancy service 
and its complexity will be 
taken into consideration 
3. Payment/acquisition of royalties/licences for 
technology, initial payment only 539,000.00 Per project 
4. Costs associated with intellectual property protection 162,000.00 Per project 
5. Costs associated  with the transfer  of technology 1,077,000.00 Per project 
6. Product and/or organizational innovation 1,077,000.00 Per project 
 
Thematic heading 2 
 
Technical assistance to enhance the efficiency of decisions relating to the purchase of highly 
specialized machinery, inputs and services. 
 
Specific items Maximum amount 
of support 
(pesos) Restrictions 
1. Specialized consulting on available technologies and 
their implementation 2,158,000.00 Per project;  the objective 
of the consultancy service 
and its complexity will be 
taken into consideration 
2. Diagnostic and prospective studies 1,079,000.00 Per study 
3. Studies to identify high-demand inputs  2,158,000.00 Per study 
4. Studies to identify tech nological and manufacturing 
capacities 2,158,000.00 Per study 
5. Consultancy services to enhance efficiency of 
purchasing decisions  3,237,000.00 Per study 
6. Market surveys 3,232,000.00 Per survey 
 
Thematic heading 3 
 
Access to specialized information on the current state of the markets and on technological, 
production and demand trends , and resources for obtaining such information. 
 
Specific items Maximum amount 
of support 
(pesos) Restrictions 
1. Development of Internet portals containing 
information on the current state of the markets, 
technological, production and demand trends, 
industrial capacity, research  centres, and educational 
institutions. 1,079,000.00 Per portal 
2. Diagnostic and prospective studies 1,079,000.00 Per study  G/SCM/Q2/MEX/25 
 Page 5 
 
 
  Specific items Maximum amount 
of support 
(pesos) Restrictions 
3. Studies to identify high-demand inputs 2,158,000.00 Per study 
4. Market surveys 3,237,000.00 Per survey 
5. Other headings included by analogy 519,000.00 Per item 
 
• Total support granted to a beneficiary may not exceed 4.5 million pesos. 
 
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 G/SCM/Q2/MEX/25 
Page 6  
 
  ANNEX TO MEXICO'S REPLIES TO THE QUESTIONS 
POSED BY JAPAN (G/SCM/Q2/MEX/24) 
 
Programme for the Development of High-Technology Industries (PRODIAT) 
 
 
 The Programme for the Development of High-Technology Industries (PRODIAT) was launched in 2009 to provide support for projects that resolve market failures hindering the 
productivity and competitiveness of Mexican industry.  In light of the nature and working methods of 
the Federal Government, PRODIAT does, however, encompass a number of measures which, while 
relating to market failures, also come under the Fe deral Government's counter-cyclical activities, in 
particular the Type B programme "For employment preservation" and Type C programme "For vehicle renewal".  PRODIAT also includes a guarantee scheme aimed at mitigating the effects of information asymmetry problems, which have an adverse effect on the supply of and demand for 
automotive industry goods. 
 
 These programmes shared a common purpose - to resolve market failures with a view to 
helping the most vulnerable companies to withsta nd the global economic crisis, to which Mexico was 
not immune.   At the beginning of 2009, PRODIAT was fo cused on Type A support;  however, in response 
to the economic crisis, the Federal Government deci ded to implement a counter-cyclical policy with a 
view to bolstering production and preventing the lo ss of human capital, thus counteracting possible 
external demand shocks.  This led to the implem entation of two new programmes - Types B and C. 
  The first support programme, Type A, is aime d at projects that focus on resolving market 
failures such as externalities, s unk costs, information disclosure and lack of coordination. 
  Type B "For employment preservation" a nd Type C "For vehicle renewal" support 
programmes were implemented to offset possibl e external demand shocks caused by the world 
economic crisis, as well as to stimulate economic  demand and address the volatility of demand for 
high-technology products, which is greater than that  of overall domestic demand;  variations in such 
demand may be seven or eight times greater than in demand in the economy as a whole. 
  The Federal Government decided that Type  B and C support would be implemented through 
the Ministry of the Economy's PRODIAT programme for the following reasons:  (i) in high-technology industries, human capital is more sp ecialized than in other industries, which means 
that dismissals result in the considerable loss of su ch capital;  (ii) fluctuations in demand are greater;  
and (iii) the training of human capital is associat ed with sunk costs and inappropriateness (market 
failures).   As of 2010, no further applications were accep ted for Type B support and only the standing 
obligation to deliver approved support to benefici ary companies which met the requirements of the 
2009 Rules for the Operation of PRODIAT and subm itted the required documentation continued to be 
met.   In 2010, it was noted that access to credit inst ruments had a significant impact on the demand 
for automotive goods and that the proportion of ve hicles acquired on credit had recently decreased.  
This was attributed to the existence of informa tion asymmetries, one of the market failures PRODIAT 
seeks to mitigate.  G/SCM/Q2/MEX/25 
 Page 7 
 
 
   It was therefore considered appropriate to develop a scheme to support the funding and 
generation of information on credit risks, which wo uld help solve the problem of inadequate funding 
for the acquisition of new vehicles, thereby su pporting the revival of the automotive sector. 
  In light of the above, the "Agreement amendi ng certain provisions of the Agreement notifying 
the Rules for the Operation of the Programme for the Development of High-Technology Industries 
(PRODIAT)" was published on 2 August 2010.  Its aim was to support schemes seeking to mitigate the effects of the information asymmetry problems adversely affecting the supply of or demand for 
automotive goods (another aspect of market failure faced, in this case, by the automotive industry), 
thereby boosting sales, production, employment, value added, productivity and competitiveness in this 
sector. 
  To this end, a cooperation agreement was signed with the national finance company, Nacional 
Financiera  (Nafin), to implement a 100-million-peso gua rantee scheme to help revive the automotive 
market by mitigating the information asymmetry problems. 
 
 The outcomes of this measure were the following:  
(a) The Ministry of the Economy's contribution of 100 million pesos enabled  intermediaries to increase their portfolio by five per cent or 3,067.8 million pesos.  
 The observed value of the increase, however, was 10,277.1 million pesos. 
 
(b) 69,746 credits were granted to natura l persons, as opposed to an initial estimate 
 of 21,152. 
 
(c) Repayment periods do not usually exc eed 40 months;  however, this programme 
 offered periods of up to 60 months.  More than 50 per cent of the total funds lent by 
 participating intermediaries was for a period exceeding 40 months. 
 
(d) Funding was provided to segments of the population not normally considered eligible 
 for credit, such as worker s in the informal sector. 
 
 Furthermore, on 2 September 2010, th e Federal Government published the 
"Decree establishing the actions to be taken by th e Federal Public Administration to expedite the 
transition to digital terrestrial television", Article 8 of which states that the Ministry of the Economy shall:  
(a) Issue or amend the relevant provisions in order to ensure that the population has 
 access to the benefits of digital terrestrial television. 
 
(b) Ensure that monopolistic practices, excl usive arrangements and restrictions do not 
 exist and are not encouraged in respect of the importation, production, manufacture,  distribution, sale and general marketing of di gital receivers or decoders, so as to avoid 
 diminishing, harming or impeding the competition and free market participation 
 process. 
  In light of the above, the Fe deration's expenditure budget for the 2011 fiscal year authorized 
the allocation of resources to PRODIAT for the di gital terrestrial television transition programme.  
However, Transitional Article 13 of the above Decree stated the following: 
 
"The amount authorized in this Decree fo r the Programme for the Development of 
High-Technology Industries (PRODIAT) shall not be released until the Mexican Supreme 
Court of Justice has issued a final decision on constitutional dispute cases Nos. 73/2010 and G/SCM/Q2/MEX/25 
Page 8  
 
  74/2010, initiated in 2010, in respect of the transition from analogue television to digital 
television." 
 
 This transitional provision was introduced fo llowing the Mexican Supreme Court of Justice's 
October 2010 decision to suspend the Decree a nnounced by President Felipe Calderón Hinojosa, 
under which the transition to digital televi sion had been brought forward to 2015. 
  In November 2011, the Mexican Supreme Court of Justice ruled in favour of the Decree.  
PRODIAT has not, however, received the resources in question, as they were placed in reserve by the 
Ministry of Finance and Public Credit (SHCP)  on 1 November 2011 and, as at 31 December 2011, 
no notification had been received of the Me xican Supreme Court of Justice's ruling. 
  In light of this constitutional dispute, the Rules for the Operation of PRODIAT for the fiscal year 2012 do not provide for measures in this area, nor have resources been allocated for the transition 
to digital terrestrial television in the Federation's expenditure budget for 2012. 
 
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