./.WORLD TRADE
ORGANIZATIONG/SCM/108
10 September 2003
(03-4721)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
COUNTERVAILING DUTY INVESTIGATION BY ARGENTINA
ON IMPORTS OF OLIVE OIL FROM
THE EUROPEAN COMMUNITY
Request for consultations by the European Community
under Article 13.2 of the Agreement
The following communication, dated 9 September 2003, has been received from the
Permanent Delegation of the European Commission.
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The European Communities (“EC”) request consultations with Mexico on the countervailing
duty investigation concerning imports of olive oil from the EC.  These consultations are requested inaccordance with Article 13.2 of the WTO Agreement on Subsidies and Countervailing Measures.
Their purpose is to enable the EC to clarify a number of issues arising from the decision to
initiate and to point out certain deficiencies in the procedure.
The issues which the EC will raise during the consultations, relate inter alia to:
1. The EC would like to clarify the scope of the investigation.  The Resolution initiating the
investigation, published in the Official Journal on 16 July 2003, refers to virgin, extra virgin and
refined olive oil  as investigated products but subsequent reference to customs headings in the notice of
initiation does not support this classification.
2. The EC would like to be informed whether the Mexican olive oil industry has had the
capacity to produce during and before the investigation period all types of the investigated products or
not.
3. The EC maintains that Article 13(b)(i) of the Agreement on Agriculture, the peace clause ,
does not contemplate the imposition of countervailing measures based on “material retardation” and,
hence, the initiation of an investigation on those grounds.  The Agreement on Agriculture exemptsdomestic support measures to agricultural products from the imposition of countervailing duties
unless they cause material injury or threat of injury.  Material retardation is excluded from this list.
4. The EC maintains that the initiation did not meet the requirement of “due restraint” of
Article 13(b)(i) of the Agreement on Agriculture.
By initiating on material retardation, while knowing that countervailing measures cannot be
taken on this basis, Mexico did not show “due restraint” in initiating.  The minimum requirement of
due restraint is that one does not try harder to initiate an investigation than ordinary procedurerequires.  In the regard, the EC would like to discuss with Mexico the very short amount of timeG/SCM/108
Page 2
(8 days) allowed for pre-initiation consultations under Article 13.1 of the SCM Agreement, given that
the aim of these consultations is “clarifying the situation” and “arriving at a mutually agreed
solution”.
5. The EC maintains that the causal link between the alleged injury and the allegedly subsidized
imports is weak.  There is evidence that suggests that the impossibility of marketing the olive oil
produced by Fortuny S.A. is due to a large extent to the break-up of Formex Ybarra S.A., that left the
company without a recognized brand in the Mexican market.
6. The EC would also like to discuss th e choice of the investigation period.
The European Communities looks forward to agreeing a suitable date for the consultations
with the Mexican authorities.
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