How do subsidies affect international trade?

Export Subsidies

From my point of view, the issue of unfair foreign trade practices is an extremely important topic that must be taken into account when importing or exporting to or from one customs territory to another.

Whenever we want to study a customs concept (whether we like it or not) we have to start from the legal framework, since the legislation must be a reference to understand the corresponding legal figure.

Our national legislation regulates the unfair practices to foreign trade in four different legal systems and these are: Political Constitution of the United Mexican States, Foreign Trade Law, Regulation of the Foreign Trade Law and the Federal Code of Civil Procedures, from an international point of view we can review the Agreement establishing the WTO, Agreement on the Application of Article VI of the GATT 1994, Final Act of the Uruguay Round, among others.

It is important to mention that there are acts that are not considered Unfair International Trade Practices, that is to say, they have a different legal treatment (they are crimes regulated in the Federal Tax Code), as examples we can mention smuggling, piracy, “junk” products, falsifying the origin of the goods (also called technical smuggling).

Examples of subsidies in mexico

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

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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 is today mainly regulated by the WTO Agreement on Subsidies and Countervailing Measures (ASCM).

Types of foreign trade subsidies

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

For further information, please 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.

Actionable subsidies

Subsidies are a mechanism that allows the State to intervene in economic activity since, depending on the aid it decides to grant, it can promote certain operations to the detriment of others.

By its nature, a subsidy may be repayable (which can be repaid) or non-repayable. Likewise, by its nature, it may be cash or non-cash. In addition, a distinction must be made between the purposes of a grant:

The European Union (EU) has four Structural Funds and a Cohesion Fund with which it channels its financial assistance to member states for the resolution of obstacles of an economic and social nature. These Structural Funds are, in particular:

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In the case of the Structural Funds, their priority goal is to achieve a greater balance between the levels of development of the different regions and territories that make up the EU, and their application therefore falls within the scope of regional policy.

The Cohesion Fund, on the other hand, seeks to promote economic growth in the less developed member states of the Union, ensuring that such growth is compatible with the maintenance of their macroeconomic and budgetary balances.