Mexico definitive countervailing measures on olive oil from the european communities


bring about; to give being, form, or shape to



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:  bring about; to give being, form, or shape to:  make; especially : manufacture".

233 Article 4.1(c) of the Agreement on Safeguards.

234 We recognize that the Appellate Body in US – Lamb was interpreting somewhat different language in a different agreement from that before us. Nevertheless, we consider informative the discussion of dictionary definitions in that case of the same terms as appear in the SCM Agreement.

235 See, Appellate Body report, Thailand – H-beams, para. 106, referring to the identical counterpart provision, Article 3.1, of the Anti-dumping Agreement. The Appellate Body stated that:
Article 3.1 is an overarching provision that sets forth a Member's fundamental, substantive obligation in [respect of the determination of injury]. Article 3.1 informs the more detailed obligations in succeeding paragraphs. These obligations concern the determination of the volume of dumped imports, and their effect on prices (Article 3.2), investigations of imports from more than one country (Article 3.3), the impact of dumped imports on the domestic industry (Article 3.4), causality between dumped imports and injury (Article 3.5), the assessment of the domestic production of the like product (Article 3.6), and the determination of the threat of material injury (Articles 3.7 and 3.8)...


236 In particular, Article 15.1 establishes the examinations that must be carried out as the basis for "a determination of injury", and footnote 45 indicates that "injury" consists of material injury or threat of material injury to, or material retardation of the establishment of, a "domestic industry".

237 The European Communities maintains, however, that if there is no output during the subsidy POI "no injury can be demonstrated" (see European Communities – Second oral statement, para. 57; also European Communities – Response to Panel question 135). We are not convinced. Considering Article 15.2 as context, we note that in addition to its plain language, previous panels have found that this provision contains no "specific rule as to the time periods to be covered by the injury or dumping investigations, nor any relationship between or overlap of those time periods." (Panel Report, EC – Tube or Pipe Fittings, para. 7.320; and Panel Report Egypt – Steel Rebar, para. 7.130 on the identical provision in the Anti-Dumping Agreement; see also US – Countervailing Duty Investigation on DRAMS, para. 7.245.)

238 The European Communities, in response to Panel question 13, stated that this principle should not be applied rigidly and that there were borderline situations, but that, in its view, Fortuny did not present such a situation because it had ceased production one year before its application was filed and 16 months before the investigation was initiated.

239 We recall in this context that, due to this situation, the application was presented on the basis of material retardation, but that in the light of Fortuny's long history as a producer of olive oil, Economía concluded that this would not be appropriate, and instead initiated the investigation on the basis of "injury".

240 European Communities - Response to Panel question 16: "During the First Substantive Meeting the European Communities made reference to the possibility of an ex officio initiation for situations in which there is no domestic production. The reason is that an initiation upon a written application does require the existence of an industry that, according to the EC's interpretation, also requires production. Indeed, Article 11.1 of the SCM Agreement, refers to a written application "by or on behalf of the domestic industry", and Article 11.4 lays down that an investigation based upon a request by the domestic industry shall not be initiated unless there is sufficient support of the domestic industry. On the other hand, Article 11.6 does not make a direct reference to the existence of a domestic industry. However, even in that case, during the investigation the investigating authority must adhere to the definitions of injury and domestic industry provided in Articles 15 and 16 of the SCM Agreement, which require the existence of actual production." See also, European Communities – Second oral statement, paras. 16-17.

241 Article 11.6 provides in relevant part that in respect of initiations ex officio, the authorities "shall proceed only if they have sufficient evidence of the existence of a subsidy, injury and causal link, as described in paragraph 2, to justify the initiation of an investigation."

242 European Communities - Response to Panel question 16.

243 Mexico - First written submission, para. 209; Mexico – Second written submission, para. 167; see also Japan – Third party submission, paras. 23-24.

244 European Communities – First oral statement, para. 33.

245 European Communities – Response to Panel question 14 citing New Shorter Oxford English Dictionary (Emphasis added.)

246 For example, the Dictionary of the Real Academia Español (online version) provides the following definition for "crear" (create) as: "establecer, fundar, introducir por vez primera algo; hacerlo nacer o darle vida, en sentido figurado. Crear una industria, un género literario, un sistema filosófico…" ("Establish, found, introduce something for the first time; cause to be born or give life to, in the figurative sense. Create an industry, a literary genre, a philosophical system…"). The Dictionary of the Académie Française (online version) defines "création" as, inter alia, "3. Action de fonder, d'instituer officiellement... La création d'une entreprise industrielle, ..." ("Action of founding, officially instituting...The creation of an industrial enterprise...").

247 In response to a specific question from the Panel, the European Communities stated that it "does not mean to imply that no account could be taken of producers that operate on a seasonal basis or are for some other reason not producing regularly. The principle should not be applied rigidly, and no doubt in applying it problems could arise because of borderline situations." European Communities - Response to Panel question 13. However, the European Communities declines to provide any specific elaboration as to what constitutes a "borderline" situation or how such situations should or could be differentiated from the one in which Fortuny found itself.

248 We will assume, for the purposes of this section, that Fortuny was the sole domestic producer of olive oil in Mexico, in which case it would have constituted the entire domestic industry for purposes of Article 16.1 of the SCM Agreement. We examine the question of whether, in fact, Fortuny was the sole producer in section VII.J.2 infra.

249 European Communities - Response to Panel question 143.

250 Mexico - First written submission, paras. 25-28 and 213.

251 Exhibit MEX48A (showing a production season of January – June in 1999, January – April in 2000, January – June in 2001, and January – March in 2002); see also Mexico – Response to Panel question 17; Final Resolution (Exhibit EC-1), para. 9.

252 See, para. 7.184, supra.

253 European Communities – First written submission, paras. 75 et seq.

254 European Communities - Second oral statement, para 12.

255 Ibid., paras 37-45; European Communities - Second written submission, paras. 17-22.

256 Mexico – First written submission, paras. 38-44.

257 In its application Fortuny stated that "Fortuny constitutes 100 per cent of the domestic industry" Exhibit MEX-41A (proprietary version Exhibit MEX-51A) and Economía, in the Initiation Resolution (Exhibit EC-13), accepted this assertion. In particular, the Initiation Resolution contains two statements to this effect. In paragraph 22 under the heading "Standing" ("Legitimación"), the Resolution states "On the basis of written communications from the Department of Agriculture of the Government of the Free and Sovereign State of Baja California, Fortuny represents 100 per cent of the domestic industry, because it is the only company with the necessary economic and financial conditions and investments needed to establish a domestic industry in the United Mexican States in the product investigated, thus fulfilling the conditions in Article 11.4 and 16.1 of the SCM Agreement, Articles 40 and 50 of the Foreign Trade Law, and Articles 60 and 75 of the Foreign Trade Regulation." At paragraph 48, under the heading "Domestic Market", the Initiation Resolution states: "Therefore, in terms of capacity and facilities for producing the product most closely resembling or similar (virtually identical) to the one imported, Fortuny constitutes 100 per cent of the domestic industry".

258 See, e.g., Panel report in Mexico – Corn Syrup, para. 7.74.

259 European Communities - First oral statement, para. 36.

260 Mexico – Response to Panel question 103.

261 Initiation Resolution (Exhibit EC-13), paras. 4, 19.

262 Exhibit MEX – 41A (proprietary version at Exhibit MEX – 51A), para. 30.

263 Ibid.

264 Exhibit MEX – 45 (proprietary version at Exhibit MEX – 51B1).

265 Exhibit MEX- 39 .

266 Claridades Agropecuarias (Exhibit EC – 30), p.12. The Spanish version of the text refers to olives for "aderezo" which the European Communities explained to the Panel in response to Panel question 132 is "the process to transform olives harvested from the olive tree into table olives."

267 Mexico – First written submission, paras. 39-40.

268 European Communities – First oral statement, para. 40.

269 Claridades Agropecuarias, p. 14, 15, and p.19 (where, in the table comparing prices of olive oil by brand name, Ybarra is the only Mexican company listed, all others are from Spain and Italy) (Exhibit EC-30)

270 We consider that the relevant question facing Economía was not whether any individual document or statement was a sufficient basis for a conclusion that Fortuny was the sole domestic producer but, rather, whether upon examining the evidence in its totality Economía could reasonably reach that conclusion. This is consistent with the decision of the Panel in Mexico – Steel Pipes and Tubes (at para. 7.24) in respect of the obligation of an investigating authority to consider the accuracy and adequacy of information provided in an application pursuant to Article 5.3 of the Anti-Dumping Agreement (the counterpart to Article 11.3). There the panel noted: "... a piece of evidence that on its own might appear to be of little or no probative value could, when placed beside other evidence of the same nature, form part of a body of evidence that, in totality, was 'sufficient'."

271 European Communities – First written submission, paras. 188-189.

272 Mexico – First written submission, para. 157-204, citing Final Resolution (Exhibit EC-1), paras. 212 – 255.

273Mexico – Second written submission, para. 136.

274 Ibid., para. 151.

275 Ibid., para. 154.

276 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 188.

277 (footnote original) Final Resolution (Exhibit EC-1), para. 241.

278 European Communities – First written submission, paras. 168-171.

279 European Communities - First written submission, para. 172.

280 Ibid., para. 105.

281 Exhibit MEX-9

282 Exhibit MEX-10. See also, Preliminary Resolution (Exhibit EC-22), paras. 193-194.

283 Exhibit MEX-11.

284 Exhibit MEX-12.

285 Exhibit MEX-13

286 Exhibit MEX-40.

287 Exhibits MEX-14, 15.

288 Exhibit MEX-16, 17.

289 Exhibit MEX-16.

290 Exhibit MEX-17.

291 Exhibit MEX-18.

292 Exhibit MEX-19.

293 Exhibit MEX-22.

294 Exhibit MEX-23.

295 Exhibit MEX-26.

296 Exhibits MEX-24, MEX-25

297 Exhibits MEX-27, 28, 29, and 30.

298 Exhibit MEX-31.

299 Exhibit MEX-32.

300 Exhibit MEX-33.

301 Exhibits MEX-49A, 49B, and 49C

302 Ibid.

303 Exhibit MEX-49G.

304 Exhibit MEX-49D.

305 Exhibit MEX-49E.

306 Exhibit MEX-49F.

307 Exhibits MEX-20, 21. See also Preliminary Resolution (Exhibit EC-22), paras. 193-195; Final Resolution (Exhibit EC-1), paras. 231-232.

308 Exhibit MEX-49H

309 Mexico – First written submission, para. 180; Mexico – Response to Panel question 73.

310 Exhibit MEX-36 and Exhibit EC-28. Neither study was actually provided by the European Communities in its submissions to Economía during the investigation. Mexico notes that the IOOC data presented by ASOLIVA and ASSITOL did not list Mexico as a producer of olive oil. See Exhibits MEX-34 and MEX-35.

311 Final Resolution (Exhibit EC-1), para. 254.

312 European Communities – First written submission, para. 194-200 citing, Panel Report, Korea – Resins, para. 222.

313 European Communities – First written submission, paras. 201-207; European Communities – First oral statement, para. 112.

314 European Communities – First written submission, paras. 204-207; European Communities – First oral statement, para. 112; European Communities – Response to Panel question 82; European Communities – Second written submission, paras. 55, 59.

315 European Communities – Second written submission, para. 59.

316 European Communities – First written submission, para. 211.

317 Ibid., para. 211-213.

318 European Communities – Second oral statement, para. 63.

319 European Communities – Second written submission, para. 53.

320 European Communities – First oral statement, paras. 115 – 117; European Communities – Second written submission, para. 53.

321 European Communities – First oral statement, para. 117 citing Appellate Body Report, US – Hot Rolled Steel, para. 193.

322 Ibid., citing Appellate Body Report, Mexico – Rice, para. 180; Panel Report, Mexico – Steel Pipes and Tubes, para. 7.252.

323 Mexico – First written submission, para. 219-223 citing Preliminary Resolution (Exhibit EC-22), para. 219 and Final Resolution (Exhibit EC-1), para. 279.

324 Mexico – First written submission, paras. 236-237.

325 Mexico – First written submission, paras. 248-277.

326 Ibid., at para. 260.

327 Ibid., at para. 261.

328 Ibid., para. 253.

329 Mexico – First oral statement (executive summary), para. 37.

330 European Communities – Request for establishment of a panel (WT/DS341/2).

331 Appellate Body Report, Thailand – H-Beams, para. 106.

332 Appellate Body Report, US – Hot-Rolled Steel, para. 192.

333 Ibid.

334 Appellate Body Report, US – Hot-Rolled Steel, para 193.

335 Ibid.

336 Ibid.

337 Panel Report, Mexico – Steel Pipes and Tubes, para. 7.214.

338 Panel Report, Mexico – Anti-Dumping Measures on Rice, para. 7.77.

339 Ibid., para. 7.79 upheld by Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 180.

340 Panel Report, Mexico – Steel Pipes and Tubes, para. 7.249.

341 Appellate Body Report, Thailand – H-Beams, paras. 121-128; Panel Report, EC – Bed Linen, paras. 6.154-6.159. See also Panel Report, Mexico – Corn Syrup, para. 7.128; Panel Report, Egypt – Steel Rebar, para. 7.36.

342 Panel Report, Mexico – Corn Syrup, para. 7.128.

343 Panel Report, EC – Bed Linen (Article 21.5 – India), paras. 6.163, 6.213.

344 Appellate Body Report, US – Hot-Rolled Steel, para. 193.

345 Mexico – First written submission, para. 271.

346 Final Resolution (Exhibit EC-1), paras. 305-306; 313 – 315.

347 Ibid., paras. 307-310.

348 Ibid., para. 324.

349 Ibid.

350 Ibid., paras. 335, 368-414.

351 Ibid., para. 333.

352 Ibid., paras. 339 -340.

353 We note that it is not clear from the Final Resolution whether the periods referred to in the discussion of financial indicators are calendar years or the April-December periods of the referenced years.

354 Final Resolution (Exhibit EC-1), paras. 345 – 360.

355 Ibid., para. 354.

356 Ibid., para 352

357 Ibid., paras. 341-342.

358 Mexico – First written submission, para. 271-273; Mexico – Response to Panel question 84.

359 Preliminary Resolution (Exhibit EC-22), para. 343.

360 Final Resolution (Exhibit EC-1), para. 438.

361 Ibid., para. 3.

362 European Communities – First oral statement, para. 115.

363 Panel Report, Mexico – Anti-Dumping Measures on Rice, para. 7.79 upheld by Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 180.

364 Panel Report, Mexico – Steel Pipes and Tubes, para. 7.249.

365 See, e.g., Final Resolution (Exhibit - EC 1), para. 9.

366 Exhibit – MEX 49D.

367 Exhibit – EC 30.

368 Exhibit – MEX 48A (showing a production season of January – June in 1999, January – April in 2000, January – June in 2001, and January – March in 2002); see also Mexico – Response to Panel question 17; Final Resolution (Exhibit EC-1), para. 9.

369 Panel Report, Mexico – Steel Pipes and Tubes, para. 7.252.

370 Mexico – Response to Panel question 78 (footnote 8); Final Resolution (Exhibit EC-1), paras. 307-310.

371 Mexico – Response to Panel question 85.

372 Mexico – First written submission, paras. 272-273.

373 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 183.

374 We note that in some instances "seasonal" periods of investigation may indeed have utility.

375 Although we do not reach the substance of that the European Communities other claims under Article 15.1 and 15.4, we note that if Economía had included in its analysis the January-March 2002 period, it would not have even been open to such criticisms.

376 European Communities - First written submission, para. 215; European Communities - Second oral statement, para. 40: European Communities - Comments on Mexico's Response to Panel question 149.

377 European Communities - First written submission, para. 216.

378 Ibid., para. 217.

379 European Communities - First written submission, para. 221; European Communities - Response to Panel question 90.

380 Mexico – First written submission, paras. 282-283.

381 Mexico – First written submission, paras. 284-295; Mexico – First oral statement, paras. 39-43; Mexico - response to Panel question 96; Mexico – Second written submission, paras. 92-96; Mexico - Response to Panel questions 148 and 149.

382 Appellate Body Report, EC – Tube or Pipe Fittings, para. 175.

383 Appellate Body Report, US – Hot-Rolled Steel, para. 223.

384 (footnote original) The panel in US – Norwegian Salmon AD, para. 550 stated: "there is no express requirement that investigating authorities examine in each case on their own initiative the effects of all other possible factors other than imports under investigation." That panel was examining Article 3.4 of the Tokyo Round Anti-Dumping Code, which contained different language than Article 3.5 of the WTO AD Agreement.

385 Panel Report, Thailand – H-Beams, para. 7.273.

386 Appellate Body Report, US – Hot-Rolled Steel, para. 226; followed by Panel Report, EC – Countervailing Measures on DRAM Chips, paras. 7.404-7.405.

387 Appellate Body Report, US – Hot-Rolled Steel, paras. 223 et seq; See also Panel Report, US – Softwood Lumber VI, para. 7.129.

388 Appellate Body Report, US – Hot-Rolled Steel, para. 228.

389 Appellate Body Report, EC – Tube or Pipe Fittings, para. 188.

390 Ibid., para. 189.

391 Ibid., para. 192.

392 Ibid., fn. 232 citing Panel Report, EC – Tube or Pipe Fittings, para. 7.369.

393 Ibid., paras. 193-194.

394 European Communities - First written submission, para. 221; European Communities – Response to Panel question 90.

395 European Communities – First written submission, paras. 215-227; European Communities - Second oral statement, para. 67.

396 Final Resolution (Exhibit EC-1), para. 415.

397 Mexico – Response to Panel question 149.

398 Preliminary Resolution (Exhibit EC-22), para. 327; Final Resolution (Exhibit EC-1), para. 437.

399 Preliminary Resolution (Exhibit EC-22),para. 325; Final Resolution (Exhibit EC-1), para. 437.

400 Final Resolution (Exhibit EC-1) para. 67.

401 Final Resolution (Exhibit EC-1), para. 324.

402 Preliminary Resolution (Exhibit EC-22), paras. 338-342; Final Resolution (Exhibit EC-1), paras. 370-385.

403 Final Resolution (Exhibit EC-1), paras. 200-202.

404 Ibid., para. 360.

405 Ibid., para. 414.

406 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 186 - 187.

407 Ibid., para. 188.



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