What is the most subsidized industry in the United States?

Elimination of agricultural export subsidies.

Recently, the U.S. Congress passed the new National Defense Authorization Act (NDAA), which includes an amendment mandating the creation of a federal plan to support and subsidize the semiconductor industry. This is intended to help fund research and development of components such as processors, memory and other next-generation chips that will be critical to future computing and communications technologies for both commercial and defense applications.

This amendment was introduced on the 21st by Doris Matsui (California) and Michael McCaul (Texas), members of both political parties. Meanwhile, on the same day, another very similar amendment, presented by another bipartisan group composed of Senators John Cornyn (Texas), Mark Warner (Virginia), Tom Cotton (Arkansas) and Chuck Schumer (New York), was approved by a large majority of 96 to 4.

This decision has been celebrated by the main representatives of the U.S. semiconductor industry, who praise the political awareness of the need for the country to remain at the forefront of research and development in this industry, which is increasingly important for the countries’ economy.

Unconditional Subsidy

Today, the WTO Dispute Settlement Body granted Mexico’s request to establish three panels to rule that the United States failed to comply with its anti-dumping and anti-subsidy obligations in investigations involving Mexican exports of cement, oil pipe and steel plate.

As will be recalled, on August 18, Mexico filed its petition for the first time, but the United States succeeded in postponing the claims by blocking the establishment of these panels with allegations that the Mexican Government considers unfounded. However, the Mexican Government immediately reacted to ensure the prompt establishment of the panels.

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Despite Mexico’s attempt to resolve this matter amicably, the United States insisted on continuing to apply these methodologies, which forced our government to assert its rights in an expeditious manner.

Subsidies or grants

A new study by the analysis center Good Jobs First has just revealed the juicy subsidies received by some of the largest companies in the United States. The report in question covers the period from 2000 to 2015, three lustrums over the course of which aid to companies worth $68 billion has been detected.

At the top of the ranking is Boeing. The largest commercial aircraft manufacturer would have benefited from subsidies valued at $13.4 billion, according to the report published by the analysis center Good Jobs First. A long way behind Boeing is the second corporation on the list: Intel, which has received subsidies worth $5.9 billion.

Alcoa, one of the largest aluminum producers, completes the podium in this ranking. In this case, the subsidies recorded in the report total $5.6 billion. Below these levels, we find the two companies that close the ‘top 5’: General Motors and Ford. The former, with 3.7 billion dollars; the latter, with 2.5 billion.

Countervailing duties

This preliminary measure is based on the investigations initiated in February 2019. On the one hand, in the matter of subsidies to verify whether Mexican steel producers are benefiting from any subsidy or subsidy (by way of financial contribution) granted by the government, putting them in a position of advantage over their U.S. competitors. On the other hand, in the matter of duties against unfair competition to determine if the steel imported from Mexico is being sold in the United States at a lower value than in the market of origin. It is important to point out that unfair competition (dumping) is when a company exports a product at a lower price than the one normally applied in its own country’s market. Therefore, there are clear differences between a subsidy and unfair competition.

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It is important to underline that, despite being a dispute between private parties, the disputes that may arise from these investigations are subject to the binding dispute settlement procedure before the WTO Dispute Settlement Body. Members, in this case Mexico, may challenge the establishment of anti-subsidy quotas or measures against unfair competition, including the imposition of provisional measures, among other aspects.