What is export subsidy?

Examples of subsidies in Mexico

According to the Central American Regulations on Unfair Trade Practices, the filing of the Form should not be understood as the initiation of an investigation into an unfair trade practice.

For further information, you may consult the legal texts of the WTO or the respective Central American regulations (Central American Regulations on Unfair Trade Practices or Central American Regulations on Safeguard Measures) or contact the Investigating Authority in cases of unfair trade practices, at telephone (502) 24120337 or PBX (502) 2412 0200 extensions 4200 or 4202; as well as the Investigating Authority’s e-mail address.

Types of subsidies

(i) where the practice of a government involves a direct transfer of funds (e.g., grants, loans and equity infusions) or possible direct transfers of funds or liabilities (e.g., loan guarantees);

(1) In accordance with the provisions of Article XVI of GATT 1994 (Note to Article XVI), and the provisions of Annexes I to III of this Agreement, the exemption of an exported product from duties or taxes borne by the like product when destined for domestic consumption and the remission of such duties or taxes in amounts not in excess of the total amounts due or paid shall not be deemed to be a subsidy.

1.2 A subsidy, as defined in paragraph 1, shall only be subject to the provisions of Part II or to the provisions of Part III or V where it is specific under the provisions of Article 2.

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2.1 In determining whether a subsidy as defined in paragraph 1 of Article 1 is specific to an enterprise or industry or group of enterprises or industries (referred to in this Agreement as “certain enterprises”) within the jurisdiction of the granting authority, the following principles shall apply:

What are prohibited subsidies?

Usually when talking about ‘subsidies’ in the context of international trade, this concept is treated with a negative connotation and even understood in the abstract as an unfair trade practice. However, a ‘subsidy’ per se does not necessarily contain a negative element.

International regulation of subsidies has existed since the 1947 General Agreement on Tariffs and Trade (GATT), evolved with the Subsidies Code of the Tokyo round of trade negotiations under the 1947 GATT, and today is mainly regulated by the WTO Agreement on Subsidies and Countervailing Measures (ASCM).

What are export subsidies?

An export subsidy is a government policy to encourage the export of goods and discourage the sale of goods in the domestic market through direct payments, low-cost loans, tax relief for exporters, or government-funded international advertising. An export subsidy reduces the price paid by foreign importers, which means that domestic consumers pay more than foreign consumers. The World Trade Organization (WTO) prohibits most subsidies directly related to the volume of exports, except for LDCs.[1] A country’s government provides incentives to exporters to encourage the export of goods.

At the 10th WTO Ministerial Conference, held in Nairobi, Kenya, December 15-19, 2015, WTO member states agreed to eliminate export subsidies on agricultural products. Least developed nations had until the end of 2018 to eliminate agricultural export subsidies (until January 1, 2017 for cotton exports), while developed countries agreed to eliminate most of those subsidies immediately.[2][3][4]

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What is export subsidy?
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