RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/Q2/MEX/15
11 February 2000
(00-0529)
Committee on Subsidies and Countervailing Measures Original:  Spanish
SUBSIDIES
Replies to Questions posed by CHILE1, the EUROPEAN COMMUNITY2, and the
UNITED STATES3 Regarding the New and Full Notification of MEXICO4
The following communication, dated 4 February 2000, has been received from the Permanent
Mission of Mexico.
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Questions from Chile (G/SCM/Q2/MEX/12)
1. With regard to paragraph 7 of the notification, why is it not possible to determine the
quantity of goods which enter Mexican territory in a given year?
Reply
It is not possible to determine the quantity of goods which enter Mexican territory under the
PITEX programme in a given year, because the Ministry of Finance and Public Credit (responsible for
maintaining the registers) keeps in a single account all the data concerning temporary imports,
including those under the above-mentioned programme, and it is not possible to break down thecorresponding figures.
Question
2. What is meant by temporary importation?  Does it mean that goods are imported for a
period of time and re-exported subsequently?  How long do they remain in Mexico?
Reply
Under the Mexican customs law, temporary im portation means the entry of goods into the
country for a limited period of time and for a specific purpose, provided that they are returned abroad
within a specified period of time.
The periods for which such goods may remain in Mexico under the PITEX programme range
from 18 months to five years, depending on the type of goods concerned.
                                                     
1 G/SCM/Q2/MEX/12.
2 G/SCM/Q2/MEX/14.
3 G/SCM/Q2/MEX/13.
4 G/SCM/N/38/MEX.G/SCM/Q2/MEX/15
Page 2
Question
3. Has there been any evaluation of the exports covered by this programme?
Reply
No evaluation has been made.
Question
4. Is it planned to dismantle this programme by the year 2003 or earlier and/or in a
progressive  manner?
Reply
The programme will be either maintained or dism antled in the light of Mexico's requirements
and in accordance with the country's international undertakings, including in particular Article 27 ofthe Agreement on Subsidies and Countervailing Measures.
Questions from the European Community (G/SCM/Q2/MEX/14)
I. SUBSIDY PROGRAMMES NOTIFIED
Regarding PITEX (Programme of Temporary Imports to Produce Export Goods), the
Community would like clarification of the following points:
(a) Whether the benefits of PITEX include exemption from VAT;(b) whether the beneficiaries of PITEX are necessarily exporters at least 30 per cent
of whose total sales are exports or whether other criteria are applied for specific
goods (raw materials, fuel, etc.).
Reply
(a) Yes.
(b) Raw materials, parts and components, packaging, packing and containers, and fuels and other
materials used in the production of the export goods, may be imported temporarily where the
exporters have annual foreign sales amounting to more than US$500,000, or where theyexport products which account for at least 10 per cent of their total sales.
II. SUBSIDY PROGRAMMES NOT NOTIFIED
According to information obtained by the Co mmunity, Mexico has the following programmes
that should be notified under Article 25.  The Community considers that these programmes give
exporters advantages and benefits relating to specific sectors and specific export quotas.
Consequently, the Community considers that Mexico should notify the WTO of these programmes in
accordance with Article 25.G/SCM/Q2/MEX/15
Page 3
1. Maquila  Export Programme
The legal basis of this programme is the Decree on the promotion of Maquilas (in-bond
manufacturing and processing plants), published in the Official Journal of 22 December 1989, as
amended on 24 December 1993, 23 October 1996 and 11 May 1998.
The Maquila  Programme allows exporters to import goods for the processing or production of
final export goods, without paying import duties or VAT.  The enterprises that benefit in this way are
called Maquilas .
2. Drawback Programme
The legal basis of this programme is the Decree that establishes the repayment of import
duties to exporters, published in the Official Journal of 11 May 1995.
Exporters can receive the value of the import duties on all materials incorporated or used in
the process of producing export goods or on all finished products imported to be subsequentlyexported.
3. ALTEX Programme (High Exporting Companies)
The legal basis of this programme is the Decree for the promotion of exporting companies
published in the Official Journal of 3 May 1990, as amended on 17 May 1991 and 11 May 1995.
The objective of this programme is to promote Mexican exports, by granting fiscal and
administrative advantages and certain commercial benefits to exporting enterprises.
4. ECEX Programme (Foreign Trade Companies)
The legal basis of this programme is the Decree for the establishment of foreign trade
companies, published in the Official Journal of 30 May 1990, as amended on 11 May 1995 and
8 April 1997.
This programme consists of a register of trading companies that can obtain fiscal benefits and
administrative advantages.
Reply
Maquila, Drawback, ALTEX and ECEX.The above-mentioned programmes were not notified because none of them constitutes a
subsidy contrary to Mexican law under the Agreement on Subsidies and Countervailing Measures.
In the case of the Maquila  programme, footnote 1 to the Agreement, for example, establishes
clearly that: "the exemption of an exported product from duties or taxes borne by the like product
when destined for domestic consumption, or the remission of such duties or taxes in amounts not in
excess of those which have accrued, shall not be deemed to be a subsidy".
In the case of the drawback programme, apart from the above-mentioned footnote, section I
of Annex III and paragraph (i) of Annex I clearly establish that drawbacks may constitute an export
subsidy only where they are in excess of the import charges levied initially.  Moreover, footnote 5
makes it clear that measures referred to Annex I as not constituting export subsidies shall not be
prohibited under Article 3 or any other provision of the Agreement.G/SCM/Q2/MEX/15
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Both the high exporting companies scheme (ALTEX) and the foreign trade companies
scheme (ECEX) involve administrative facilities not covered by the definition of subsidy in Article 1
of the Agreement.
The purpose of ALTEX is to expedite the fiscal and customs formalities of firms which
export goods on a routine basis and can therefore be served more flexibly than first-time or sporadic
exporters.
The purpose of ECEX is to promote the establishment of marketing companies in order to
consolidate exportable supply, particularly in the case of small and medium-sized companies, through
administrative facilities enabling such compan ies to have access to the ALTEX and PITEX
mechanisms.
Questions from the United States (G/SCM/Q2/MEX/13)
The following are questions regarding the notification of Mexico made pursuant to
Article XVI of the GATT 1994 and Article 25 of  the Agreement on Subsidies and Countervailing
Measures, in document G/SCM/N/38/MEX.
1. On 14 November 1998, SECOFI published a decree to establish various programmes for
sectoral promotion, beginning with the electric and electronics industry.  The sectoralpromotion programme will reduce duties for manufacturers of certain goods, but does not make
the tariff reductions available to all importers.  Is this a new programme, or does it represent a
change in an existing programme?  Based on our understanding, this programme appears to be
specific within the meaning of Article 2.1(a) of the Agreement.  Is our understanding correct?
Reply
The programmes published in the Official Journal of 14 November 1998 are not in operation.
In accordance with the transitional article of the decree in question, those programmes will come into
effect by 1 November 2000.
Accordingly, it is considered that neither the Committee nor Mexico should divert their
attention from other more pressing issues in orde r to speculate on the conformity or otherwise of
certain programmes that are not in effect.
Question
2. Based upon the information available to us, the following programmes appear to meet
the notification requirements of Article 25 of the SCM Agreement.  Please explain why these
programmes were not included in your subsidy notification.
• Technology Transfer Unit (UTT) (adminis tered by the Ministry of Trade and
Industrial Development (SECOFI)) – provides certain industries with processed
and customized solutions needed to solve technological and production
problems.
• IMIS Research and Development – the Instituto Mexicano de Investigaciones
Siderurgicas (IMIS), a government-owned research and development
organization, performs independent and joint venture research with the ironand steel industry.G/SCM/Q2/MEX/15
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• Fund for the Promotion of Exports of Mexican Manufactured Products
(FOMEX) – FOMEX is a trust of the Mexican Treasury Department, with the
National Bank of Foreign Trade acting as trustee for the programme.  The
National Bank of Foreign Trade, through financial institutions, makes FOMEX
loans available at preferential rates to Mexican manufacturers and exporters fortwo purposes:  pre-export financing and export financing.
Reply
There was no reason to notify the programmes referred to, inter alia  for the following
reasons:
- The Technology Transfer Unit, A.C (UTT.AC) is a civil association not controlled by
the Mexican Government.  UTT.AC is a non-profit association, supported by the
United Nations Conference on Trade and Development (UNCTAD), and the services
it offers are consultancy, specialized technical information, industrial property and
quality assurance services, among others.
- The Instituto Mexicano de Investigaciones Siderúrgicas (IMIS) was dissolved by a
decree published in the Official Journal on 4 November 1991.
- The Fund for the Promotion of Exports of Mexican Manufactured Products
(FOMEX) was dissolved by a decree published in the Official Journal on
30 December 1989.
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