The claim of the European Communities under Article 13.1 of the SCM Agreement has two parts. First, the European Communities alleges that Economía did not send the invitation to consultations prior to initiation as required by Article 13.1 of the SCM Agreement. This part of the European Communities' claim presents issues of both law and fact. As a matter of law, we must decide what action constitutes "initiation" within the meaning of the SCM Agreement. As a matter of fact, we must then decide on the date Economía initiated the countervailing duty investigation into olive oil from the European Communities.
Second, the European Communities' claim raises questions about the nature of the obligations in Article 13.1. Specifically, the issues are: (1) whether Article 13.1 contains an obligation to hold consultations prior to initiation, and, (2) whether this provision requires that a sufficient amount of time be allowed, between the invitation for consultations and the initiation, for consultations to be held.
Did Economía Send the Invitation to Consultations After Initiation
The parties disagree on the actual date of initiation of the olive oil investigation, and thus on whether the invitation to consultations was issued by Mexico prior to that date as required by Article 13.1.55 The European Communities contends that the investigation was initiated on 2 July 2003, the date on which the Minister signed the Initiation Resolution, and that Mexico only issued the invitation to consultations thereafter, on 4 July 2003, thereby breaching Article 13.1 of the SCM Agreement.56 Mexico counters that the investigation was initiated on 16 July 2003, the day the Initiation Resolution was published in the Official Journal of Mexico.57 This disagreement raises two questions. First, what does the term "initiation" mean for the purposes of the SCM Agreement? Second, applying the definition of "initiation" in the SCM Agreement, what is the date on which Economía initiated the countervailing duty investigation into olive oil from the European Communities? Once both questions are resolved, we can examine whether Economía's 4 July 2003 invitation to consultations occurred prior to or after initiation.
The term "initiated" is defined in footnote 37 to Article 10 of the SCM Agreement, which reads:
The term 'initiated' as used hereinafter means procedural action by which a Member formally commences an investigation as provided in Article 11.
According to the European Communities, the signature by the Minister of the Initiation Resolution was the "procedural action" that "formally" commenced the investigation, as referred to in this definition, because signature of a resolution is a formal act, and the focus of the particular resolution in question was the commencement of the investigation, the publication of which followed automatically after the Minister had signed.58 Mexico counters that the SCM Agreement leaves to individual Members how, procedurally, to initiate an investigation. Mexico states that under Mexican law, it is publication in the Official Journal that constitutes initiation, as it is this publication that gives legal effect to initiation resolutions. In particular, Mexico argues, a resolution signed by a Minister, but never published in the Official Journal, would be entirely without legal effect in Mexico. Thus, while signature by the Minister is necessary, a resolution only enters legally into force, and the deadlines in the investigation only start running, when the resolution is published. For this reason, according to Mexico, the date of initiation is the date of publication in the Official Journal.59
We begin by examining the definition of "initiated" in footnote 37 of the SCM Agreement. It is important to note that the definition describes a "procedural action by which a Member formally commences an investigation" [emphasis added], without specifying any particular action, or any particular procedure, that a Member must undertake in this regard. The European Communities admits that "the particular steps to be taken [in regard to initiation] are largely left to Members", and that while "[i]t can be inferred from Footnote 37 that the process will involve one element of formality ... precisely what this should consist of is not specified".60
The heart of this dispute is not over what constitutes a "procedural action" as many steps within an investigation may qualify as such, but rather which procedural action "formally commences" an investigation. The Shorter Oxford English Dictionary defines "formally" as "In prescribed or customary form; with the formalities required to make an action valid or definite."61 The Shorter Oxford English Dictionary also defines "commence" as "make a start or beginning; come into operation."62 As footnote 37 states, we are concerned with "a Member's" initiation of an investigation. Because the SCM Agreement does not contain any specific standards for determining the validity of an action meant to start a countervailing duty investigation, the date of "formal commencement" must be in reference to the internal regime of the importing Member.
Other articles of the SCM Agreement that refer to initiation provide context for interpreting the term "initiated" in footnote 37. For example, Article 11 of the SCM Agreement contains a number of substantive requirements that must be satisfied before an importing Member may initiate a countervailing duty investigation. Article 11 demonstrates that when the drafters intended to prescribe that Members satisfy particular standards, they were perfectly able to do so.63 Additionally, Article 22.2 requires investigating authorities to give public notice of the initiation. Article 22.2 (ii) requires that the investigating authority include in the published notice the "date of initiation". In our view, this confirms a reading of footnote 37 that leaves it up to the investigating authority to determine on what date it "formally commenced" an investigation and to then make the public aware of that date through the notice.64
Finally, in terms of the object and purpose of the SCM Agreement, we note that the deadline for completing an investigation in Article 11.11; the requirement to release the application to interested exporters in Article 12.1.3; and the timeframes for imposing provisional measures in Article 17.3 all flow from the date of initiation. We view a reading whereby the date of initiation is based on the internal law of the importing Member as ensuring predictability for the interested parties in the investigation under the domestic system of each Member. If WTO dispute settlement proceedings taking place considerably after the termination of an investigation could revisit these procedural steps in the absence of any specific requirements in the SCM Agreement, this predictability would be substantially reduced.
Based on the foregoing analysis, we find that what constitutes "initiation" within the meaning of the SCM Agreement will vary based on the procedural actions defined in each Member's individual regime. Therefore, to determine the date on which Economía initiated the investigation and whether Mexico sent the invitation to consultations prior to initiation, as required by Article 13.1 of the SCM Agreement, we must examine what constitutes the procedural act by which an investigation is formally commenced in the Mexican system.
The Date on Which Economía Initiated the Olive Oil Investigation
As noted above, we see the issue of what date Economía initiated the olive oil investigation as one of municipal law, which is a matter of fact. Mexico provided information indicating that, by virtue of the interaction between Article 85 of the Mexican Foreign Trade Law and Article 7 of the Mexican Federal Tax Code, the Initiation Resolution "will enter into effect on the day following its publication".65 This same language is repeated at the end of the Initiation Resolution itself.66 Furthermore, as noted above, Mexico indicated that the time limits imposed upon the interested parties and on Economía in respect of the investigation ran from the date of publication, and this also is reflected in the Resolution.67
We therefore find, as a matter of fact, that under Mexican law, the procedural act by which an investigation is formally commenced in the Mexican system is the publication of the Initiation Resolution, which takes legal effect the following day.
The Initiation Resolution was published on 16 July 2003. Therefore, on the basis of the evidence provided by Mexico on its domestic law, we find, as a matter of fact, that the date of initiation of the olive oil investigation, in the sense of the SCM Agreement, was 17 July 2003, the day after the Initiation Resolution was published, and not 2 July, the date of the Minister's signature, as argued by the European Communities. Given this finding, there is no basis for the European Communities' allegation that the invitation to consultations was only issued after initiation, contrary to Mexico's obligations under Article 13.1 of the SCM Agreement.