WT/DS341/R
Page 1
Organization
WT/DS341/R
4 September 2008
(08-4082)
Original: English
MEXICO – DEFINITIVE COUNTERVAILING
MEASURES ON OLIVE OIL FROM THE
EUROPEAN COMMUNITIES
Report of the Panel
WT/DS341/R
Page 1
TABLE OF CONTENTS
Page
I.introduction
A.complaint of the european communities
B.establishment and composition of the panel
II.FACTUAL ASPECTS
III.parties' requests for findings and recommendations
A.the european communities
B.mexico
IV.ARGUMENTS OF THE PARTIES
V.ARGUMENTS OF THE THIRD PARTIES
VI.INTERIM REVIEW
A.technical corrections and adjustments
B.requests from the european communities
VII.findings
A.general issues
1.Standard of Review
2.Burden of Proof
3.Treaty Interpretation
B.article 13.1 of the scm agreement
1.Arguments of the Parties
2.Reasoning of the Panel
(a)Did Economía Send the Invitation to Consultations After Initiation
(i)"Initiation" Within the Meaning of the SCM Agreement
(ii)The Date on Which Economía Initiated the Olive Oil Investigation
(b)The nature of the obligations in Article 13.1
C.article 13(b)(i) of the agreement on agriculture
1.Arguments of the Parties
2.Reasoning of the Panel
(a)Applicability of the Provision
(b)Article 13(b)(i) of the Agreement on Agriculture
(i)Domestic Support Measures which Fully Conform with Article 6 of the Agreement on Agriculture
(ii)Exempt from Imposition of Countervailing Duties Unless a Determination of Injury or Threat Thereof is Made
(iii)Due Restraint Shall be Shown in Initiating Any Countervailing Duty Investigation
D.article 12.4.1 of the scm agreement
1.Arguments of the Parties
2.Reasoning of the Panel
E.article 12.8 of the scm agreement
1.Arguments of the Parties
2.Reasoning of the Panel
F.article 11.11 of the scm agreement
1.Arguments of the Parties
2.Reasoning of the Panel
G.articles 1 and 14 of the scm agreement
1.Arguments of the parties
2.Reasoning of the Panel
(a)"Pass-through" of Subsidy Benefits
(i)"Pass-through" Analysis in WTO Law
(ii)Claim of the European Communities pursuant to Article 1.1 of the SCM Agreement
(iii)Claim of the European Communities pursuant to Article 14 of the SCM Agreement
(b)Article 14 – Other Calculation Issues
H.definition of "domestic industry"
1.Arguments of the Parties
2.Reasoning of the Panel
(a)Introduction
(b)Definition of "domestic industry"
(c)Was Fortuny a "Producer" Within the Meaning of Article 16.1 of the SCM Agreement
I.article 11.4 of the scm agreement
1.Arguments of the Parties
2.Reasoning of the Panel
J.article i6.1 of the scm agreement and article vi:6(a) of the gatt 1994
1.Arguments of the Parties
2.Reasoning of the Panel
K.articles 15.1 and 15.4 of the scm agreement and article vi:6(a) of the gatt 1994
1.Arguments of the Parties
2.Reasoning of the Panel
(a)Article 15 of the SCM Agreement
(b)Facts Regarding Economía's Injury Investigation and Determination
(c)Application of Articles 15.1 and 15.4 to the Facts of this Case
(i)The April – December Periods of Analysis for Injury
(ii)Other claims and arguments
L.article 15.5 of the scm agreement
1.Arguments of the Parties
2.Reasoning of the Panel
VIII.conclusions and recommendations
LIST OF ANNEXES
ANNEX A
First Written Submissions by the Parties
Contents / PageAnnex A-1Executive Summary of the First Written Submission of the European Communities / A-2
Annex A-2Executive Summary of the First Written Submission of Mexico / A-13
Annex B
Third Party Submissions
Contents / PageAnnex B-1Executive Summary of the Third Party Submission of Canada / B-2
Annex B-2Executive Summary of the Third Party Submission of China / B-6
Annex B-3Executive Summary of the Third Party Submission of Japan / B-8
Annex B-4Executive Summary of the Third Party Submission of Norway / B-13
Annex B-5Executive Summary of the Third Party Submission of the UnitedStates / B-18
Annex B-6Third Party Oral Statement of Canada / B-24
Annex B-7Third Party Oral Statement of the United States / B-25
Annex C
Second Submissions by the Parties
Contents / PageAnnex C-1Executive Summary of the Second Written Submission of the European Communities / C-2
Annex C-2Executive Summary of the Second Written Submission of Mexico / C-10
Annex D
Oral Statements, First and Second Panel meetings
Contents / PageAnnex D-1Executive Summary of the Oral Statement of the European Communities – First Meeting / D-2
Annex D-2Executive Summary of the Oral Statement of Mexico – First Meeting / D-8
Annex D-3Executive Summary of the Oral Statement of the European Communities – Second Meeting / D-14
Annex D-4Executive Summary of the Closing Statement of the European Communities – Second Meeting / D-20
Annex D-5Oral Statement of Mexico – Second Meeting / D-22
Annex E
Request for the Establishment of a Panel
Contents / PageAnnex E-1Request for the Establishment of a Panel by the EuropeanCommunities / E-2
TABLE OF CASES CITED IN THIS REPORT
Short Title / Full Case Title and CitationArgentina – Ceramic Tiles / Panel Report, Argentina – Definitive Anti-Dumping Measures on Imports of Ceramic Floor Tiles from Italy, WT/DS189/R, adopted 5November 2001, DSR2001:XII, 6241
Argentina – Footwear (EC) / Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/AB/R, adopted 12January 2000, DSR2000:I, 515
Argentina – Poultry Anti-Dumping Duties / Panel Report, Argentina – Definitive Anti-Dumping Duties on Poultry from Brazil, WT/DS241/R, adopted 19May 2003, DSR2003:V, 1727
Brazil – Desiccated Coconut / Appellate Body Report, Brazil – Measures Affecting Desiccated Coconut, WT/DS22/AB/R, adopted 20March 1997, DSR1997:I, 167
Brazil – Desiccated Coconut / Panel Report, Brazil – Measures Affecting Desiccated Coconut, WT/DS22/R, adopted 20March 1997, upheld by Appellate Body Report, WT/DS22/AB/R, DSR1997:I, 189
Canada – Aircraft / Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R, adopted 20August 1999, DSR1999:III, 1377
Canada – Aircraft / Panel Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/R, adopted 20August 1999, upheld by Appellate Body Report, WT/DS70/AB/R, DSR1999:IV, 1443
Canada – Dairy
(Article 21.5 – New Zealand and US II) / Appellate Body Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products – Second Recourse to Article 21.5 of the DSU by New Zealand and the United States, WT/DS103/AB/RW2, WT/DS113/AB/RW2, adopted 17January 2003, DSR2003:I, 213
EC – Bed Linen / Panel Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/R, adopted 12March 2001, as modified by Appellate Body Report, WT/DS141/AB/R, DSR2001:VI, 2077
EC – Bed Linen
(Article 21.5 – India) / Panel Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSUby India, WT/DS141/RW, adopted 24April 2003, as modified by Appellate Body Report, WT/DS141/AB/RW, DSR2003:IV, 1269
EC – Countervailing Measures on DRAM Chips / Panel Report, European Communities – Countervailing Measures on Dynamic Random Access Memory Chips from Korea, WT/DS299/R, adopted 3August 2005, DSR 2005:XVIII, 8671
EC – Hormones / Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13February 1998, DSR1998:I, 135
EC – Trademarks and Geographical Indications (US) / Panel Report, European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Complaint by the United States, WT/DS174/R, adopted 20April 2005, DSR 2005:VIII-IX, 3499
EC – Tube or Pipe Fittings / Appellate Body Report, European Communities – Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/AB/R, adopted 18August 2003, DSR2003:VI, 2613
EC – Tube or Pipe Fittings / Panel Report, European Communities – Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/R, adopted 18August 2003, as modified by Appellate Body Report, WT/DS219/AB/R, DSR2003:VII, 2701
Egypt – Steel Rebar / Panel Report, Egypt – Definitive Anti-Dumping Measures on Steel Rebar from Turkey, WT/DS211/R, adopted 1October 2002, DSR2002:VII, 2667
Guatemala – Cement II / Panel Report, Guatemala – Definitive Anti-Dumping Measures on Grey Portland Cement from Mexico, WT/DS156/R, adopted 17November 2000, DSR2000:XI, 5295
India – Patents (US) / Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16January 1998, DSR1998:I, 9
India – Quantitative Restrictions / Appellate BodyReport, India – Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products, WT/DS90/AB/R, adopted 22September 1999, DSR1999:IV, 1763
India – Quantitative Restrictions / Panel Report, India – Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products, WT/DS90/R, adopted 22September 1999, upheld by Appellate Body Report, WT/DS90/AB/R, DSR1999:V, 1799
Japan – Apples / Appellate Body Report, Japan - Measures Affecting the Importation of Apples, WT/DS245/AB/R, adopted 10December 2003, DSR2003:IX, 4391
Japan – DRAMs (Korea) / Panel Report, Japan – Countervailing Duties on Dynamic Random Access Memories from Korea, WT/DS336/R, adopted 17 December 2007, as modified by Appellate Body Report, WT/DS336/AB/R
Korea – Dairy / Appellate Body Report, Korea – Definitive Safeguard Measure on Imports
of Certain Dairy Products, WT/DS98/AB/R, adopted 12January 2000, DSR2000:I,3
Korea – Resins / GATT Panel Report, Panel on Korea – Anti-Dumping Duties on Imports of Polyacetal Resins from the United States, ADP/92 and Corr.1, adopted 27April1993, BISD40S/205
Mexico – Anti-Dumping Measures on Rice / Appellate BodyReport, Mexico – Definitive Anti-Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted 20December 2005, DSR 2005:XXII, 10853
Mexico – Anti-Dumping Measures on Rice / Panel Report, Mexico – Definitive Anti-Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/R, adopted 20December 2005,
as modified by Appellate Body Report, WT/DS295/AB/R, DSR 2005:XXIII, 11007
Mexico – Corn Syrup / Panel Report, Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States, WT/DS132/R, adopted 24February 2000, and Corr.1, DSR2000:III, 1345
Mexico – Corn Syrup
(Article 21.5 – US) / Appellate Body Report, Mexico – Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States – Recourse to Article 21.5 of the DSUby the United States, WT/DS132/AB/RW, adopted 21November 2001, DSR2001:XIII, 6675
Mexico – Steel Pipes and Tubes / Panel Report, Mexico – Anti-Dumping Duties on Steel Pipes and Tubes from Guatemala, WT/DS331/R, adopted 24 July 2007
Thailand – H-Beams / Appellate BodyReport, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R, adopted 5April 2001, DSR2001:VII, 2701
Thailand – H-Beams / Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections
of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/R, adopted 5April 2001, as modified by Appellate Body Report, WT/DS122/AB/R, DSR2001:VII, 2741
US – 1916 Act (EC) / Panel Report, United States – Anti-Dumping Act of 1916, Complaint by the European Communities, WT/DS136/R and Corr.1, adopted 26September 2000, upheld by Appellate Body Report, WT/DS136/AB/R, WT/DS162/AB/R, DSR2000:X, 4593
US – Canadian Pork / GATT Panel Report, United States – Countervailing Duties on Fresh, Chilled and Frozen Pork from Canada, DS7/R, adopted 11July1991, BISD38S/30
US – Cotton Yarn / Appellate Body Report, United States – Transitional Safeguard Measure on Combed Cotton Yarn from Pakistan, WT/DS192/AB/R, adopted 5November2001, DSR2001:XII, 6027
US – Countervailing Duty Investigation on DRAMS / Appellate Body Report, United States – Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors (DRAMS) from Korea, WT/DS296/AB/R, adopted 20July 2005, DSR 2005:XVI, 8131
US – Countervailing Duty Investigation on DRAMS / Panel Report, United States – Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors (DRAMS) from Korea, WT/DS296/R, adopted 20July 2005, as modified by Appellate Body Report, WT/DS296/AB/R, DSR 2005:XVII, 8243
US – Countervailing Measures on Certain EC Products / Appellate Body Report, United States – Countervailing Measures Concerning Certain Products from the European Communities, WT/DS212/AB/R, adopted 8January 2003, DSR2003:I, 5
US – Gambling / Appellate Body Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20April 2005, DSR 2005:XII, 5663, and Corr.1
US – Gasoline / Appellate BodyReport, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20May 1996, DSR1996:I, 3
US – Hot-Rolled Steel / Appellate Body Report, United States – Anti-Dumping Measures on Certain
Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted 23August 2001, DSR2001:X, 4697
US – Lamb / Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, adopted 16May 2001, DSR2001:IX, 4051
US – Lead and Bismuth II / Appellate Body Report, United States – Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom, WT/DS138/AB/R, adopted 7June 2000, DSR2000:V, 2595
US – Lead and Bismuth II / Panel Report, United States – Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom, WT/DS138/R and Corr.2, adopted 7June 2000, upheld by Appellate Body Report, WT/DS138/AB/R, DSR2000:VI, 2623
US – Norwegian SalmonAD / GATT Panel Report, Imposition of Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway,ADP/87, adopted 27April1994, BISD41S/229
US – Oil Country Tubular Goods Sunset Reviews
(Article 21.5 – Argentina) / Panel Report, United States – Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina – Recourse to Article 21.5 of the DSU by Argentina, WT/DS268/RW, adopted 11 May 2007, as modified by Appellate Body Report, WT/DS268/AB/RW
US – Shrimp / Appellate BodyReport, United States – Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6November 1998, DSR1998:VII, 2755
US – Softwood Lumber III / Panel Report, United States – Preliminary Determinations with Respect to Certain Softwood Lumber from Canada, WT/DS236/R, adopted 1November 2002, DSR2002:IX, 3597
US – Softwood Lumber IV / Appellate Body Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/AB/R, adopted 17February 2004, DSR2004:II, 571
US – Softwood Lumber IV / Panel Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/R and Corr.1, adopted 17February 2004, as modified by Appellate Body Report, WT/DS257/AB/R, DSR2004:II, 641
US – Softwood Lumber VI / Panel Report, United States – Investigation of the International Trade Commission in Softwood Lumber from Canada, WT/DS277/R, adopted 26April 2004, DSR2004:VI, 2485
US – Softwood Lumber VI (Article 21.5 – Canada) / Appellate Body Report, United States – Investigation of the International Trade Commission in Softwood Lumber from Canada – Recourse to Article 21.5 of the DSU by Canada, WT/DS277/AB/RW, adopted 9May 2006, and Corr.1
US – Steel Safeguards / Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Certain Steel Products, WT/DS248/AB/R, WT/DS249/AB/R, WT/DS251/AB/R, WT/DS252/AB/R, WT/DS253/AB/R, WT/DS254/AB/R, WT/DS258/AB/R, WT/DS259/AB/R, adopted 10December 2003, DSR2003:VII, 3117
US – Upland Cotton / Panel Report, United States – Subsidies on Upland Cotton, WT/DS267/R, and Add.1-Add.3, and Corr.1, adopted 21March 2005, as modified by Appellate Body Report, WT/DS267/AB/R, DSR 2005:II-VI, 299
US – Wheat Gluten / Appellate Body Report, United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the European Communities, WT/DS166/AB/R, adopted 19January 2001, DSR2001:II, 717
US – Wool Shirts and Blouses / Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23May 1997, and Corr.1, DSR1997:I, 323
WT/DS341/R
Page 1
I.introduction
A.complaint of the european communities
1.1On 31 March 2006, the European Communities ("the EC") requested consultations with Mexico pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU"), ArticleXXIII of the General Agreement on Tariffs and Trade 1994 ("GATT 1994"), Article 30 of the Agreement on Subsidies and Countervailing Measures ("SCM Agreement") and Article 19 of the Agreement on Agriculture. The consultations concerned the definitive countervailing measures imposed by Mexico on imports of olive oil from the European Communities by the "Final Resolution in the investigation of price subsidization of imports of olive oil" published in the Official Journal of the United Mexican States ("Official Journal") on 1August2005.[1] The European Communities and Mexico held consultations on 5 May 2006. These consultations failed to resolve the dispute.
1.2On 7 December 2006, the European Communities requested the establishment of a panel pursuant to Articles4.7 and 6.2 of the DSU, ArticleXXIII of the GATT 1994, Articles 4 and 30 of the SCM Agreement, and Article 19 of the Agreement on Agriculture.[2]
B.establishment and composition of the panel
1.3At its meeting on 23 January 2007, the Dispute Settlement Body ("DSB") established the Panel pursuant to the request of the European Communities in document WT/DS341/2, in accordance with Article 6 of the DSU. At that meeting, the parties to the dispute also agreed that the Panel should have standard terms of reference. The terms of reference are, therefore, the following:
To examine, in the light of the relevant provisions of the covered agreements cited by the European Communities in document WT/DS341/2, the matter referred to the DSB by the European Communities in that document, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.
1.4On 13 February2007, the European Communities requested the Director-General to determine the composition of the Panel, pursuant to paragraph 7 of Article 8 of the DSU. On 21February 2007, the Director-General composed the Panel as follows:
Chair:MsDebra Steger
Members:Mr. Jan Heukelman
Ms Gloria Peña
1.5Canada, China, Japan, Norway, and the United States have reserved their rights to participate in the Panel proceedings as third parties.[3]
1.6The Panel met with the parties on 26-27 June 2007 and 3-4 October 2007, and with the third parties on 26 June 2007.
II.FACTUAL ASPECTS
2.1This dispute concerns the imposition by Mexico of countervailing duties on imports of olive oil from the European Communities.
2.2On 12 March 2003, the Mexican company Fortuny de México, SA de CV ("Fortuny"),filed an application for the imposition of countervailing dutieson olive oil originating in the European Communities (mainly from Spain and Italy). Fortuny's application alleged that during the period April-December 2002, subsidized imports of virgin and refined olive oil from the European Communities materially retarded the establishment of a domestic industry producing identical or similar products.[4]
2.3On 2 July 2003, the Minister of Economy signed a resolution accepting the application and initiating the investigation.
2.4On 4 July 2003,Mexico invited the European Communities to consultations pursuant to Article 13.1 of the SCM Agreement.[5] On 11July 2003, the European Communities sent a letter accepting the invitation.[6] The consultations took place in Mexico City on 17 July 2003.[7]
2.5The Initiation Resolution was published in the Official Journalon 16 July 2003.[8] The investigation covered virgin olive oil, including the categories of extra virgin, fine virgin and ordinary virgin; refined, including first-class refined and second-class refined; and blended oil, including first-class blends and second-class blends. These goods were classified in tariff sub-headings 1509.10.01, 1509.10.99, 1509.90.01, 1509.90.02 and 1509.90.99 of the Mexican Tariff Schedule.[9]
2.6The investigation covered the period April-December 2002[10] ("Period of Investigation" or "POI"). The examination of "trends" in the context of the injury analysis covered the periods 1 April-31 December of 2000, 2001 and 2002 [11]("Injury Investigation Period" or "Injury POI").
2.7During the course of the investigation, there were numerous communications and exchanges, including questionnaires, comments and submissions between the Mexican investigating authority, the Ministry of Economy ("Economía") and the parties to the investigation: Fortuny, the European Commission, the governments of the exporting EC Member States, importers, and exporters. Mexico and the European Communities also held consultations on 17 November 2003 and 2December2004.[12]
2.8On 10 June 2004, Economía published the Preliminary Resolution in the Official Journal. The Resolution continued the investigation and imposed provisional countervailing duties on aper kilogram basis. To determine the specific amount payable on each shipment, the maximum duty payable in respect ofthe individual exporter, calculated on an ad valorem basis, was added to the customs value of the shipment, up to a maximum per kilogram reference price.[13]