WORLD TRADE  
ORGANIZATION   
G/SCM/Q2/MEX/22 
15 November 2011 
 (11-5879) 
Committee on Subsidies and 
Countervailing Measures Original:   Spanish 
 
 
 
SUBSIDIES 
 
Replies to Questions Posed by the UNITED STATES1 Regarding the 
New and Full Subsidy Notification of MEXICO2 
  
 The following communication, dated 3 November 2011, is being circulated at the request of 
the delegation of Mexico. 
 
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Question 
 1. We welcome the submission of Mexico's subs idy notification.  We note that Mexico had 
not previously provided a subsidy notification fo r several years.  Has Mexico taken any steps to 
ensure that its future subsidy notification s are submitted on a more timely basis? 
 
 Publicly available information indicates that Mexico administers several support 
programmes that may meet the notification requirements set forth under Article 25 of the SCM Agreement.  Please explain why the programm es below should not be notified or provide 
the information required under Article 25 of the SCM Agreement. 
 
Reply 
  As part of Mexico's efforts to ensure the comprehensive and timely notification of subsidy 
programmes that are subject to the notification obligation under Article 25.1 of the Agreement on 
Subsidies and Countervailing Measures (SCM), the first National Workshop on Subsidies and 
Countervailing Measures was held in Mexico City  from 10 to 12 October.  This workshop was 
requested as part of the technical assistance provided by the World Trade Organization.  It should be 
noted that the question of notification obligations  under the SCM Agreement was included on this 
workshop's agenda.  The workshop was extremely re levant, and it is hoped that this event, in 
conjunction with inter-institutional consultations, w ill contribute significantly to the improvement of 
Mexico's notification process.  
                                                      
1 G/SCM/Q2/MEX/19 
2 G/SCM/N/220/MEX. G/SCM/Q2/MEX/22 
Page 2  
 
  2. State Subsidy Programmes 
 
Question 
  Page 80, paragraph 250 of the Secretaria t's Report for Mexico's 2008 Trade Policy 
Review (TPR), WT/TPR/S/195/Rev.1 (2 May 2008) , states that "In addition to the promotion 
programmes  implemented at the Federal level, the states also have mechanisms to promote 
economic activities.  In general terms, the support  consists of financial assistance channelled to 
specific economic agents, mainly micro, small and medium-sized enterprises through trust 
funds.  In some cases, the assistance may also  include tax concessions.  In October 2007, the 
CIPI's [Interministerial Industrial Policy Comm ission] inventory contained information on 
around 531 programmes in 31 states." 
 
Reply 
 
 In document G/SCM/N/220/MEX, Mexico has no tified all the subsidy programmes that have 
been identified as programmes subject to notification under the SCM Agreement.  
3. Tax incentives for the cinematographic industry 
 
Question 
  Page 81, paragraph 256 of the Secretariat's Report for Mexico's 2008 TPR, 
WT/TPR/S/195/Rev.1 (2 May 2008), provides a ta ble of subsidy programmes administered by 
several Ministries, including the Tax incentives for the cinematographic industry programme.  
Also, according to publicly available sources,  "the government will reimburse producers 
7.5 per cent of their expenses if they spend more than $5.5 million durin g filming or $1.6 million 
in post-production." 
 
Reply 
  Given that the SCM Agreement is one of the Multilateral Agreements on Trade in Goods 
listed in Annex 1A of the Marrakesh Agreement Es tablishing the World Trade Organization and that 
Article XV of the General Agreement on Trade in  Services (GATS) establishes the commitment to 
enter into negotiations with a view to developing the necessary s ubsidy disciplines (negotiations 
which are held within the framewo rk of the Working Party on GATS Rules), Mexico considers the 
above question to fall outside th e scope of the SCM Agreement. 
 
Nevertheless, and with a view  to promoting Members' co-responsibility in respect of 
transparency, Mexico reiterates its  willingness to discuss the details of this programme in the group 
most appropriate for this purpose, namely the Wo rking Party on GATS Rules, and, more specifically, 
in the subsidy negotiations, where it has already submitted information on this programme as part of 
the Working Party's information exch ange process.  In this regard, we believe that by raising their 
questions in the body most befitting the nature of the measure concerned, Me mbers will be able to 
build on the work on transparency carried out w ithin the framework of the Working Party on 
GATS Rules and provide more comprehensive information on their subsidy programmes. 
  G/SCM/Q2/MEX/22 
 Page 3 
 
 
  4. PROSEC Sectoral Import Duty Reductions 
 
Question 
  Page 80, paragraph 252 of the Secretariat's Report for Mexico's 2008 TPR, 
WT/TPR/S/195/Rev.1 (2 May 2008), states "Companies with PROSECs that manufacture 
particular goods may import various inputs to be used to produce those goods at a reduced 
tariff, irrespective of whether the goods are to be  exported or are for the domestic market." 
 
Reply 
  As previously stated in other WTO bodies,  Mexico does not consider the mechanism 
implemented by the Decree establishing Various S ectoral Promotion Programmes, published in the 
Official Journal on 2 August 2002 and amended as notified in that same publication, to constitute a 
subsidy under the SCM Agreement.  First, the m echanism involves a reduction in the tariff levels 
applied on a most-favoured-nation (MFN) basis, re gardless of whether the imported products are 
incorporated into goods destined for export or for the domestic market, and second, the programme 
does not impose any performance requirements.  
 
5. NAFIN 
 
Question 
 
 Page 83, paragraph 259 of the Secretariat's Report for Mexico's 2008 TPR, 
WT/TPR/S/195/Rev.1 (2 May 2008), provides a table of credit and financial services of the NAFIN.  The Foreign trade service is described as  "Foreign currency financing for companies 
with the aim of supporting their foreign trade transactions."  
Reply 
  Mexico wishes to specify that the financ ing programmes implemented by the Mexican 
Development Bank through the National Finance Co mpany (NAFIN) and the National Foreign Trade 
Bank (BANCOMEXT) (both national credit companies)  do not constitute subsidies under Article 1 of 
the SCM Agreement as they do not grant "benefits".   The financing provided by these institutions is 
granted at market rates, and the conditions are ther efore no more favourable than those applied in the 
market itself.  6. IMMEX Programme 
 
Question 
  Page 66, Paragraphs 175 - 193 of the Sec retariat's Report for Mexico's 2008 TPR, 
WT/TPR/S/195/Rev.1 (2 May 2008), describes the var ious export promotion incentives that are 
available to exporting enterprises under th e IMMEX programme, including deferment and 
reduction of tariffs and VAT payments. 
 
 In so much as the incentives provided under this programme are contingent 
upon export performance, it appears that  the programme could be considered a 
prohibited export subsidy, under Article 3.1 of the SCM Agreement.  Please 
explain how this programme conforms with Mexico's obligations under the 
Subsidies Agreement. 
 G/SCM/Q2/MEX/22 
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  7. ALTEX Programme 
 
Question 
  Page 69, paragraph 195 of the Secretariat's Report for Mexico's 2008 TPR, 
WT/TPR/S/195/Rev.1 (2 May 2008), states that "Non-petroleum exporters of goods exporting 
directly for an amount of US$2 million or the equi valent of 40 per cent of their annual sales are 
eligible for the Programme;  producers with i ndirect exports corresponding to 50 per cent of 
their annual sales and foreign tradin g companies are also eligible." 
 
 In so much as the incentives provided under this programme are contingent 
upon export performance, it appears that  the programme could be considered a 
prohibited export subsidy, under Article 3.1 of the SCM Agreement.  Please explain how this programme conforms with Mexico's obligations under the 
Subsidies Agreement. 
 
8. ECEX Programme  
Question 
  Page 69, paragraph 197 of the Secretariat's Report for Mexico's 2008 TPR, 
WT/TPR/S/195/Rev.1 (2 May 2008), states that this programme "is intended for two types of 
enterprise:  "export consolidators", which mu st have minimum capital of Mex$2 million and 
export the products of at least five producers;  and "export promoting" companies, which must 
have minimum capital of Mex$200,000 and export goods of at least three producers."  
 In so much as the incentives provided under this programme are contingent 
upon export performance, it appears that  the programme could be considered a 
prohibited export subsidy, under Article 3.1 of the SCM Agreement.  Please 
explain how this programme conforms with Mexico's obligations under the 
Subsidies Agreement. 
 
Reply 
  Given that the ALTEX and ECEX progra mmes both provided the same administrative 
facilities to private individuals, and that the Decr ee for the Promotion of the Manufacturing Industry, 
Maquiladora and Export Services (IMMEX) governs these concepts, the Federal Government 
considered it appropriate to consolidate both schemes into this Decree.  The ALTEX and 
ECEX programmes were therefore repealed throug h an amendment to the IMMEX Decree, published 
in the Official Journal of 24 December 2010.  The aim was to generate savings for the 
Federal Government by administrating a single schem e, and to provide legal certainty, transparency 
and continuity to the operations of co mpanies operating under similar schemes. 
  Mexico does not consider the ALTEX and ECEX  programmes, or the scheme provided for in 
the IMMEX Decree, to constitute a subsidy under th e SCM Agreement, as no financial contribution is 
made by the Government and no income or price support mechanism is established.  The 
IMMEX programme is an instrument through wh ich the Federal Government provides companies 
with administrative facilities, thereby enabling them  not only to adopt new ways of operating and 
doing business, but to reduce logistics and admini strative costs and update, streamline and reduce 
procedures.  It also enables the Federal Govern ment to enhance the effi ciency of its control 
mechanisms. 
  G/SCM/Q2/MEX/22 
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   Informative note on the Programme of Temporary Imports to Produce Export 
Goods (PITEX):  With regard to the PITEX programme notified in G/SCM/N/48/MEX and 
G/SCM/N/60/MEX, and exclusively for informati on purposes, Mexico would like to make the 
following comments regarding the developm ent and conclusion of this programme: 
 
 On 21 November 1996, Mexico notified the Programme of Temporary Imports to Produce 
Export Goods (PITEX) as a subsidy, pursuant to  Article XVI:1 of the GATT 1994 and Article 25 of 
the WTO Agreement on Subsidies and Counterva iling Measures (ASCM).  This notification was 
submitted to the WTO Committee on Subsidies a nd Countervailing Measures (CSCM) in document 
G/SCM/N/3/MX. 
 
 The PITEX programme was notified because, at  the time, it had a subsidy component, which 
consisted of an exemption from import tariffs on ma chinery and equipment used in the production of 
goods destined for export.  This subsidy compone nt was to be eliminated during an eight-year 
transition period, pursuant to the special and differe ntial treatment provisions for developing countries 
established in Article 27.2(b) of the ASCM. 
  On 15 November 2000, Mexico notified the CSCM (in document G/SCM/N/48/MX) of the 
Decree reforming the PITEX programme, which had been published in the Official Journal on 
13 November 1998.  This Decree announced that in order to bring the provisions of the PITEX programme into line with Mexico's inte rnational commitments under the WTO and the 
North American Free Trade Agreement, the exem ption from tariffs on machinery and equipment 
imported temporarily would be eliminated from the programme as of 2001;  the General Import Tax 
would then be paid as if importation were definitive.  
This reform was implemented on 20 November 2000, pursuant to the Decree published in the 
Official Journal on 30 October 2000. 
  The subsidy component of the PITEX programme  was therefore eliminated two years before 
the end of the transition period provided for under Ar ticle 27.2(b) of the ASCM, which had been due 
to end on 31 December 2002.  
 Over time, the development of the PITEX pr ogramme led to its benefits converging with 
those of the Maquila programme, as both granted administrative facilities.  In view of this 
convergence, on 1 November 2006, the PITEX a nd Maquila programmes were replaced by a 
new scheme called the Manufacturing Indu stry, Maquiladora and Export Services 
(IMMEX) programme. 
 
 The IMMEX programme consolidated th e PITEX and Maquila programmes into a 
single instrument that would provide certainty, tran sparency and continuity in respect of company 
operations and enable companies not only to adopt  new ways of operating and doing business, but to 
reduce logistics and administrative costs and update, streamline and reduce procedures.  It would also 
enhance the Federal Government's control capacity in a climate conducive to attracting and retaining 
investment in the country. 
 G/SCM/Q2/MEX/22 
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  9. BANCOMEXT and ProMexico 
 
Question 
  Page 70, paragraph 200 of the Secretariat's Report for Mexico's 2008 TPR, 
WT/TPR/S/195/Rev.1 (2 May 2008), states that "The main instruments used by the Bank to 
provide financial support are:  loans to export ing companies to finance their working capital, 
export sales and export-related investment  projects;  lines of credit for importers of 
Mexican goods and services;  insurance, collate ral and pre- and post-export guarantees for 
commercial financing;  as well as other financia l services to facilitate export transactions such 
as letters of credit and trust fund services." 
 
 In so much as the incentives provided under this programme are contingent 
upon export performance, it appears that  the programme could be considered a 
prohibited export subsidy, under Article 3.1 of the SCM Agreement.  Please explain how this programme conforms with Mexico's obligations under the 
Subsidies Agreement. 
 
10. National Finance Company 
 
Question 
 
 Page 72, paragraph 209 of the Secretariat's Report for Mexico's 2008 TPR, 
WT/TPR/S/195/Rev.1 (2 May 2008), states that this development bank "provides support for 
exports through several foreign trade financing programmes." 
 
 In so much as the incentives provided under this programme are contingent 
upon export performance, it appears that  the programme could be considered a 
prohibited export subsidy, under Article 3.1 of the SCM Agreement.  Please 
explain how this programme conforms with Mexico's obligations under the 
Subsidies Agreement. 
 
Reply 
 
See reply to question 5. 
 
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