WORLD TRADE
ORGANIZATIONWT/DS132/AB/RW
22 October 2001
(01-5170)
Original:  English
MEXICO – ANTI-DUMPING INVESTIGATION OF
HIGH FRUCTOSE CORN SYRUP (HFCS) FROM THE UNITED STATES
RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE UNITED STATES
AB-2001-5
Report of the Appellate BodyWT/DS132/AB/RW
Page i
I. Introduc tion................................................................................................................. ................1
II. Arguments of the Participants  and the Third Participant............................................................3
A. Claims of Error by Mexico – Appellant......................................................................... 3
1. The Panel's Treatment of Alleged Deficiencies in the Proceedings .................3
2. Article 3 of the  Anti-Dumping Agreement :  "Threat of Material Injury".........5
3. Article 12.7 of the DSU and Article 17.6 of the  Anti-Dumping
Agreement:  "Reasoning of the Panel"..............................................................6
B. Arguments of the United States – Appellee.................................................................... 7
1. The Panel's Treatment of Alleged Deficiencies in the Proceedings .................7
2. Article 3 of the  Anti-Dumping Agreement :  "Threat of Material Injury".........8
3. Article 12.7 of the DSU and Article 17.6 of the  Anti-Dumping
Agreement :  "Reasoning of the Panel"..............................................................9
C. Arguments of the Third Participant ............................................................................. 10
1. European Communities...................................................................................10
III. Issues Raised in this Appeal ............................................................................................... ......11
IV. The Panel's Treatment of Alleged Deficiencies in the Proceed ings .........................................12
A. Mexico's Conduct Before th e Panel and the Consequences ........................................ 13
B. The Nature of  Mexico's "Objections" ......................................................................... 17
V. Article 3 of the Anti-Dumping Agreement :  "Threat of Mate rial Injury"..................................24
A. Likelihood of Incr eased Imports .................................................................................. 24
B. Likely Impact of Imports on  the Domestic  Industry..................................................... 31
VI. Article 12.7 of the DSU and Article 17.6 of the  Anti-Dumping Agreement :  "Reasoning
of the Panel".................................................................................................................. ............33
A. Article 12.7 of the DSU:  "Basic Rationale"................................................................ 33
1. The Panel's Finding Concerning Article 3.4 of the   Anti-Dumping
Agreement .......................................................................................................35
2. The Panel's Finding Concerning Article 3.1 of the  Anti-Dumping
Agreement .......................................................................................................37
B. Article 17.6(ii) of the  Anti-Dumping Agreement :  "Permissible Interpretation "........ 39
VII. Findings and Conclusions................................................................................................... ......41WT/DS132/AB/RW
Page 1
WORLD TRADE ORGANIZATION
APPELLATE BODY
Mexico – Anti-Dumping Investigation of High
Fructose Corn Syrup (HFCS) from the United
States
Recourse to Article 21.5 of the DSU by the United
States
Mexico, Appellant
United States, Appellee
European Communities, Third ParticipantAB-2001-5
Present:Feliciano, Presiding Member
Abi-Saab, Member
Ehlermann, Member
I. Introduction
1. Mexico appeals certain issues of law and legal interpretations in the Panel Report,  Mexico –
Anti-Dumping Investigation of High Fructose Corn  Syrup (HFCS) from the United States, Recourse
to Article 21.5 of the DSU  by the United States  (the "Panel Report").1  The Panel considered,
pursuant to Article 21.5 of the  Understanding on Rules and Proce dures Governing the Settlement of
Disputes  (the "DSU"), the complaint brought by the United States with respect to the consistency
with the  Agreement on Implementation of Article VI  of the General Agreement on Tariffs and Trade
1994  (the " Anti-Dumping Agreement ")  of a measure taken by Mexico to comply with the
recommendations and rulings of the Dispute Settlement Body (the "DSB") in  Mexico – Anti-
Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States  ("Mexico – High
Fructose Corn Syrup ").2
2. In  Mexico – High Fructose Corn Syrup ,  the original panel concluded that Mexico's
imposition of definitive anti-dumping duties on imports of high fructose corn syrup from the United
States was inconsistent with certain of Mexico's obligations under the  Anti-Dumping Agreement .3
The original panel report was not appealed to the Appellate Body and, on 24 February 2000, the DSB
                                                     
1WT/DS132/RW, 22 June 2001.  In this Report, we refer to the panel that considered the United States'
complaint under Article 21.5 of the DSU as the "Panel", and to its report, WT/DS132/RW, as the "Panel
Report".
2The recommendations and rulings of the DSB resulted from the adoption, by the DSB, of the panel
report in Mexico – High Fructose Corn Syrup , WT/DS132/R, adopted 24 February 2000 (the "original panel
report").  In this Report, we refer to the panel that considered the original complaint brought by the United
States as the "original panel".
3Ibid. , para. 8.2.WT/DS132/AB/RW
Page 2
adopted the original panel report, including its recommendation that Mexico bring its measure into
conformity with its obligations under the  Anti-Dumping Agreement .4
3. On 20 September 2000, with a view to complying with the findings and conclusions set forth
in the original panel report, Mexico published a final resolution (the "redetermination") which revised
the original final resolution imposing definitive an ti-dumping duties on imports of high fructose corn
syrup from the United States.5  In the redetermination, Mexico's Secretariat of Commerce and
Industrial Development ("SECOFI") "ratified its conclusion that during the period underinvestigation, there was a threat of injury to th e domestic sugar industry as a consequence of imports
of high fructose corn syrup under price discriminatory conditions originating from the United Statesof America".
6  SECOFI, thus, found "that it is appropriate to maintain the final offsetting duties
established during the [original] anti-dumping investigation".7  The factual aspects of this dispute are
set out in greater detail in the Panel Report.8
4. The United States considered that the redetermination was not consistent with Mexico's
obligations under the  Anti-Dumping Agreement  and, therefore , requested that the matter be referred
to the original panel pursuant to Article 21.5 of the DSU.9  On 23 October 2000, in accordance with
Article 21.5 of the DSU, the DSB referred the matter to the original panel.10  A member of the original
panel was unable to participate in the proceeding and the parties therefore agreed on a new panelist on13 November 2000.
11  The Panel Report was circulated to the Members of the World Trade
Organization (the "WTO") on 22 June 2001.
5. The Panel concluded,  inter alia ,  that:
                                                     
4Panel Report, para. 1.1.
5Final resolution revising, on the basis of the findings and recommendations by the Panel of the World
Trade Organization's Dispute Settlement Body, the final determination in the anti-dumping investigation of highfructose corn syrup imports, merchandise classified in tariff headings 1702.40.99 and 1702.60.01 of theSchedule of the General Import Duties Act, originating from the United States of America, irrespective of thecountry of export;  published 20 September 2000 in Mexico's Diario Oficial de la Federación ;  Exhibits
MEXICO-1 (Spanish version) and MEXICO-1(a) (English translation provided by Mexico) submitted byMexico to the Panel.  See also Panel Report, para. 1.2.
6Redetermination, para. 188.
7Ibid.
8See, in particular, paras. 1.1 – 1.8 of the Panel Report.
9WT/DS132/6, 13 October 2000.  See also Panel Report, para. 1.3.
10Panel Report, para. 1.4.
11Ibid. , para. 1.5.WT/DS132/AB/RW
Page 3
… Mexico's imposition of definitive anti-dumping duties on imports
of HFCS from the United States on the basis of the SECOFI
redetermination is inconsistent with the requirements of the
AD Agreement in that Mexico's inadequate consideration of the
impact of dumped imports on the domestic industry, and itsinadequate consideration of the potential effect of the alleged restraint
agreement in its determination of likelihood of substantially increased
importation, are not consistent with the provisions of Articles 3.1, 3.4,
3.7 and 3.7(i) of the AD Agreement.  We therefore consider that
Mexico has failed to implement the recommendation of the original
Panel and the DSU to bring its measure into conformity with its
obligations under the AD Agreement.
12
6. The Panel concluded that, to the extent that Mexico has acted inconsistently with the
provisions of the  Anti-Dumping Agreement , it has nullified or impaired benefits accruing to the
United States under that Agreement, and recommended that the DSB request Mexico to bring itsmeasure into conformity with its obligations under the  Anti-Dumping Agreement .
13
7. On 24 July 2001, Mexico notified the DSB of its intention to appeal certain issues of law
covered in the Panel Report and legal interpretations developed by the Panel, pursuant to paragraph 4
of Article 16 of the DSU, and filed a Notice of Appeal pursuant to Rule 20 of the  Working
Procedures for Appellate Review  (the " Working Procedures ").  On 3 August 2001, Mexico filed its
appellant's submission.  14  On 20 August 2001, the United States filed an appellee's submission.15  On
the same day, the European Communities filed a third participant's submission.  16
8. The oral hearing in this appeal was held on 11 September 2001.  The participants and third
participant presented oral arguments and responded to questions put to them by the Members of theDivision hearing the appeal.
II. Arguments of the Participants and the Third Participant
A. Claims of Error by Mexico – Appellant
1. The Panel's Treatment of Alleged Deficiencies in the Proceedings
9. Mexico argues that the Panel made a "fatal error" because it made no ruling regarding the fact
that Mexico and the United States did not engage in consultations before the redetermination was
                                                     
12Panel Report, para. 7.1.
13Ibid. , paras. 7.2 and 7.3.
14Pursuant to Rule 21(1) of the  Working Procedures .
15Pursuant to Rule 22 of the  Working Procedures .
16Pursuant to Rule 24 of the  Working Procedures .WT/DS132/AB/RW
Page 4
referred to the Panel and regarding Article 6.2 of the DSU.17  Had it done so, the Panel would have
been compelled to conclude that it was not properly established.  Mexico also challenges the Panel'sfailure to address Mexico's argument that the United States had acted inconsistently with Article 3.7of the DSU since, by "hastily" requesting the establ ishment of the Panel, the United States failed to
exercise its judgement as to whether action under the procedures set out in the DSU would be
"fruitful".
18  In remaining silent on these issues, the Panel acted inconsistently with the obligations set
forth in Articles 3.4, 7.2, 12.7 and 19 of the DSU.  Mexico therefore requests the Appellate Body toreverse the substantive findings made by the Panel, in particular in paragraphs 7.1 and  7.2 of thePanel Report.
10. Mexico emphasizes the importance of consultations within the GATT and WTO dispute
settlement systems.  Consultations must be held, unless there is an express provision to the contrary.This principle is confirmed and strengthened by Article 4.1 of the DSU.  The requirement thatrequests for consultations be notified to the DSB benefits all WTO Members, and not just the parties
to the dispute, because the only way for Members to know whether a dispute that is to be the subject
of consultations will affect them is if the disputing parties officially notify the DSB of their intent toengage in consultations.
11. Mexico stresses that the rules governing consultations and the establishment of panels do not
distinguish between different types of panels.  Accordingly, the generally applicable rules must alsobe observed in proceedings under Article 21.5 of the DSU.  For this reason, Mexico interprets thephrase "these dispute settlement procedures" in Article 21.5 to include the consultations proceduresprovided for in the DSU.
12. In Mexico's view, it is clear from GATT and WTO practice, and from Articles 4.7 and 6.2 of
the DSU, that a panel may be requested and established  only  after  consultations have been held and
have failed to resolve the dispute.  Mexico refers, in this regard, to  Korea – Definitive Safeguard
Measure on Imports of Certain Dairy Products  ("Korea – Dairy Safeguard
 ")19, and  European
Communities – Regime for the Importa tion, Sale and Distribution of Bananas  ("European
Communities – Bananas "),20 to support its view that the Appella te Body attaches great importance to
                                                     
17Translation of Mexico's appellant's submission, p. 3;  original Spanish version, p. 2.
18This statement appears in the Notice of Appeal and was repeated by Mexico in its statement at the
oral hearing.  However, Mexico did not elaborate upon th is statement either in its appellant's submission or at
the oral hearing.
19Appellate Body Report, WT/DS98/AB/R, adopted 12 January 2000, paras. 120 ff.
20Appellate Body Report, WT/DS27/AB/R, adopted  25 September 1997, DSR 1997:II, 591, para. 142.WT/DS132/AB/RW
Page 5
the fulfilment of the requirements for establishment of a panel set forth in Article  6.2 of the DSU,
including that the request must indicate  whether consultations have been held.
13. Mexico recalls that, in its oral statement at the meeting with the Panel, it argued that there had
been no consultations regarding the redetermination and that the United States' request for the
establishment of a panel failed to mention whether consultations had been held, as required by
Article 6.2 of the DSU;  and that the United States had acted contrary to Article 3.7 of the DSU byfailing to exercise its judgement as to whether action under the procedures in the DSU would be"fruitful".  Furthermore, before the Panel, Mexico  agreed with the European Communities' criticism
of the lack of consultations.  Mexico maintains that, in remaining silent despite these arguments, thePanel failed to comply with its obligation, under Article 7.2 of the DSU, to address the relevant
provisions in the covered agreements cited by the parties to the dispute.  The Panel also failed tocomply with the requirement of Article 12.7 of the DSU to set out the findings of fact, applicability ofrelevant provisions, and the basic rationale behind its findings and recommendations, and thereby
effectively diminished Mexico's rights under the DS U, contrary to Articles 3.4 and 19.2 of the DSU.
2. Article 3 of the  Anti-Dumping Agreement :  "Threat of Material Injury"
14. Mexico also requests the Appellate Body to reverse the Panel's finding in paragraph  6.23 of
its Report that "SECOFI's conclusion that there was a significant likelihood of increased importationis not consistent with Article 3.7(i) of the Anti-Dumping Agreement".  Mexico believes that the  Panelwrongly interpreted Article 3.7 of the  Anti-Dumping Agreement  and failed to comply with the
standard of review prescribed by paragraphs 5 and 6 of Article 17 of that  Agreement. 
15. Mexico submits that the findings of the Panel under Article 3.7(i) of the  Anti-Dumping
Agreement  are "limited to assertions" regarding an alleged agreement between Mexican sugar millers
and soft-drink bottlers to restrain the bottlers' use of HFCS.
21  In examining the redetermination, the
Panel made "exactly the same mistake" as the original panel because both considered it necessary forSECOFI to examine the impact of an agreement whose existence had not been proven.
22  This
"agreement", therefore, did not constitute a "fact" but rather an "allegation, conjecture, or remotepossibility".  As a result, Mexico concludes, the Panel misinterpreted Article  3.7(i) of the  Anti-
Dumping Agreement .
16. Mexico submits that, in basing its evaluation on the alleged agreement, the Panel failed to
base itself on the "facts made available … to the authorities of the importing Member", as required by
                                                     
21Mexico's appellant's submission, para. 67.
22Ibid. , para. 66.WT/DS132/AB/RW
Page 6
Article 17.5 of the  Anti-Dumping Agreement .  The word "facts" must mean the same thing in
Articles 3.7, 17.5 and 17.6 of the  Anti-Dumping Agreement.  Panels are empowered to examine  only
those facts that were before an investigating authority, and not things that were merely  alleged  to
exist.  Since, in this case, the alleged restrain t agreement remained merely an "allegation, conjecture
or remote possibility", Mexico contends that the Panel acted inconsistently with the standard of
review prescribed in Articles 17.5 and 17.6 of the  Anti-Dumping Agreement  by presuming that the
alleged restraint agreement was a "fact", when SECOFI had not determined it to be so.
17. Mexico adds that the United States failed to satisfy its burden of proving the existence of the
alleged restraint agreement.  Notwithstanding such  failure, the Panel considered that SECOFI should
have evaluated the impact of this alleged agreement.  Had it properly applied Article 17.6(ii) ofthe Anti-Dumping Agreement, the Panel could not have reached the conclusion that SECOFI acted
inconsistently with Article 3.7(i) of that Agreement because it had never been found that the allegedrestraint agreement did in fact exist.  Thus, Mexico  concludes that the errors made by the Panel with
respect to the alleged restraint agreement invalidate its findings regarding Mexico's non-compliance
with Article 3.7(i) of the  Anti-Dumping Agreement .
18. Mexico further requests the Appellate Body to reverse the Panel's findings in paragraphs 6.24
to 6.37 of its Report and, in particular, the Panel's finding in paragraph 6.36 that "SECOFI'sredetermination with respect to the likely impact of dumped imports of HFCS from the United Stateson the domestic industry which underlies the determination of threat of material injury to the Mexicansugar industry is not consistent with Articles 3.1, 3.4 and 3.7 of the Anti-Dumping Agreement".Since these findings are based on the Panel's earlier conclusion regarding the likelihood of increased
imports, such findings are, in the view of Mexico, also based on an incorrect interpretation of
Article 3.7, and constitute an improper application of Articles 17.5 and 17.6 of the  Anti-Dumping
Agreement.  Accordingly, Mexico submits that these findings should also be reversed.
3. Article 12.7 of the DSU and Article 17.6 of the  Anti-Dumping Agreement:
"Reasoning of the Panel"
19. Mexico submits that the Panel's findings that Mexico violated Articles 3.1 and 3.4 of the Anti-
Dumping Agreement   should be reversed too, in view of the deficiencies in the reasoning given by the
Panel for those findings.  The Panel's examination of the impact of imports on the domestic industry is"extraordinarily confused".
23  Mexico argues that the Panel did not comply with its obligations under
Articles 3.4, 12.7 and 19 of the DSU because the Panel did not clearly identify the obligations withwhich Mexico had failed to comply.  In one paragraph in its Report, the Panel states that the
                                                     
23Mexico's appellant's submission, para. 111.WT/DS132/AB/RW
Page 7
redetermination is not consistent with Articles 3.1 and 3.4 of the  Anti-Dumping Agreement.  There is,
however, no analysis underpinning these conclusions.  It is unclear whether the Panel found thatSECOFI's findings on impact were not acceptable because they were not based on facts, because notall the Article 3.4 factors had not been examined, or because there was no  showing  of impact on the
domestic industry.  Mexico notes that while the Panel might have thought that a violation of
Article 3.7 of the  Anti-Dumping Agreement  automatically implies a violation of Articles 3.1 and 3.4
of that Agreement, the Panel did not say so.
20. Mexico further observes that, in paragraph 6.37 of its Report, the Panel acknowledged that in
the circumstances of this case it might have been possible to establish a threat of material injury, andthat Mexico "apparently" complied with the DSB's recommendations and rulings.  Mexico maintains
that, in making these statements, the Panel recogn ized that SECOFI's interpretation of the relevant
provisions was "permissible".  Therefore, Mexico states, the Panel acted contrary to its obligation
under Article 17.6(ii) of the  Anti-Dumping Agreement  by rejecting a "permissible" interpretation of
that Agreement.
B. Arguments of the United States – Appellee
1. The Panel's Treatment of Alleged Deficiencies in the Proceedings
21. The United States urges the Appellate Body to dismiss Mexico's appeal regarding the absence
of consultations.  Mexico asserts, for the first time on appeal, that the Panel lacked authority toaddress this dispute because no formal consultations had been held on the redetermination. Mexicodid not raise any such objection at the DSB meeting when the redetermination was referred to thePanel, nor did it object before the Panel itself.  Although it made passing reference to the absence ofconsultations at the meeting with the Panel, Mexico gave no indication that it was seeking a rulingfrom the Panel on whether the dispute was properly before it.  Indeed, Mexico explicitly stated that itwas  not  claiming that its rights had been infringed.  Furthermore, although the European
Communities contended that the dispute was not properly before the Panel because of the absence of
consultations, this claim was, correctly, not addressed by the Panel because it was not advanced by
either of the parties to the dispute.  Accordingly, in the view of the United States, the Panelappropriately did not address these issues in its Report, and in no way infringed or diminishedMexico's rights under the DSU in refraining from doing so.
22. The United States argues that Mexico is precluded from raising these issues for the first time
on appeal.  The United States refers, in this regard, to the Appellate Body Reports in  United States –WT/DS132/AB/RW
Page 8
Tax Treatment for "Foreign Sales Corporations"  ("United States – FSC ")24 and Thailand – Anti-
Dumping Duties on Angles, Shapes and Sections of  Iron or Non-Alloy Steel and H-Beams from
Poland  ("Thailand – H-Beams ").25  Since Mexico did not object to the lack of consultations before the
Panel, and since Mexico has not attempted to demonstr ate that it suffered any prejudice from this lack of
consultations, Mexico cannot now assert that the cl aims of the United States were not properly before
the Panel.
23. The United States submits that Mexico's appeal  should be dismissed without addressing the
merits of its arguments on consultations.  Should th e Appellate Body reach the issue, however, the
United States asks the Appellate Body to rule that formal consultations are not a prerequisite to theestablishment of a panel under Article 21.5 of the DSU.  While consultations are important, themeaning of Article 21.5, as well as its object and purpose, support the view that consultations are notrequired in proceedings under Article 21.5 of the DSU.  To read a formal consultation requirementinto Article 21.5 would undermine prompt compli ance with DSB recommendations and rulings and
extend the period during which the complaining Member suffers harm.
2. Article 3 of the  Anti-Dumping Agreement :  "Threat of Material Injury"
24. The United States submits that the Panel's finding that SECOFI’s redetermination was
inconsistent with Article 3.7(i) of the  Anti-Dumping Agreement  should be upheld.  As the Panel
found, there is no adequate factual basis for SECOFI's  findings, in its redetermination, with respect to
the likelihood of substantially increased imports.  Furthermore, in its appeal, Mexico does not address
or challenge the actual reasoning that the Panel articulated to reach this conclusion, and the
United States submits that such reasoning is not, therefore, before the Appellate Body.
25. In the view of the United States, Mexico's argument that the Panel committed the same
mistakes as the original panel by requiring SECOFI  to analyze the effects of the restraint agreement,
without at the same time requiring SECOFI to dete rmine that the restraint agreement actually existed,
should be dismissed.  Since the DSB has adopted the original panel’s findings, Mexico cannot nowargue that the original panel’s analysis was erroneous.
26. The United States maintains that Article 3.7(i) of the  Anti-Dumping Agreement   requires a
factual basis for a determination of a likelihood of substantially increased imports.  Article 3.7(i)
imposes this requirement on investigating authorities, not on panels.  In this case, SECOFI purported
to find, as a matter of fact that, even if the allege d agreement were in effect, it "would not eliminate
                                                     
24Appellate Body Report, WT/DS108/AB/R, adopted 20 March 2000.
25Appellate Body Report, WT/DS122/AB/R, adopted 5 April 2001.WT/DS132/AB/RW
Page 9
the likelihood" that HFCS users other than soft-d rink bottlers would substantially increase their
consumption of imported HFCS.26  Both the parties and the Panel understood this "likelihood" of
increased consumption of imported HFCS by "other  users" to be the factual basis for SECOFI's
finding of a likelihood of increased imports.  Sin ce SECOFI chose to take this approach, the Panel
was entitled to review it under Articles 17.5 and 17.6 of the  Anti-Dumping Agreement .
27. The United States observes that SECOFI itself elected to facilitate its analysis by assuming
that the restraint agreement existed and would be effective.  The United States did not challenge, andthe Panel did not question, SECOFI's use of this a ssumption.  Accordingly, Mexico's arguments about
"burden of proof" are misplaced and irrelevant.  On Mexico's logic, investigating authorities would be
able to "immunize" or "insulate" their findings from panel review by basing their conclusions onassumptions rather than findings of fact.
27  This cannot be a proper interpretation of Articles 17.5
and 17.6 of the  Anti-Dumping Agreement .  The United States, therefore, urges the Appellate Body to
reject Mexico’s claims that the Panel misapplied the standard of review and to affirm the finding that
Mexico acted inconsistently with Article 3.7(i).
3. Article 12.7 of the DSU and Article 17.6 of the  Anti-Dumping Agreement :
"Reasoning of the Panel"
28. The United States contends that the Panel properly found that SECOFI’s analysis of the likely
impact of HFCS imports on the Mexican sugar industry was inconsistent with Articles 3.1 and 3.4 ofthe  Anti-Dumping Agreement .  The Panel was not discussing the requirements of Articles 3.1 and 3.4
"on a blank slate", but rather against the background of the discussion of comparable claims in the
original panel report.
28  According to the United States, the Panel Report, whether read in conjunction
with the original panel report or alone, makes clear the nature of the obligations under Articles 3.1and 3.4 that Mexico failed to satisfy.
29. The United States also contends that the Panel provided "compelling" reasons for its
conclusions under Articles 3.1 and 3.4 that are not dependent on its findings with respect to
Article 3.7.
29  The Panel Report specifically identifies the nature of Mexico’s obligations under
Articles 3.1 and 3.4 – which were the same obligations articulated in detail in the original panelreport – and explains why SECOFI’s redetermination failed to satisfy those obligations.  Thus, thePanel acted consistently with Article 12.7 of the DSU.  In addition, since Mexico submitted nointerpretation of Articles 3.1 and 3.4 of the  Anti-Dumping Agreement   during the panel proceedings,
                                                     
26United States' appellee's submission, para. 38.
27Ibid. , paras. 66 and 67.
28Ibid. , para. 70.
29Ibid. , para. 8.WT/DS132/AB/RW
Page 10
the arguments that it now makes concerning "permiss ible" interpretations under Article 17.6(ii) of that
Agreement are irrelevant.
C. Arguments of the Third Participant
1. European Communities
30. The European Communities recalls that, in th is case, no request for consultations was
provided to the DSB or circulated to Members, an d the United States' request for establishment of a
panel did not mention whether consultations were hel d.  If no consultations had been requested by the
United States, then the Panel should have ruled that the matter was not properly before it.  The Panel
erred because it neither ascertained whether consultations were held, nor ruled on the consequences ofthe lack of consultations.
31. According to the European Communities, Article 21.5 requires that the complaining party
request consultations under Article 4 of the DSU befo re requesting an Article 21.5 panel.  The phrase
"these dispute settlement procedures" in Article 21.5 refers to the panel and Appellate Bodyprocedures laid down in the DSU, including the requirement that consultations be held on a measurebefore a Member may request the establishment of a panel with respect to that measure.  TheEuropean Communities refers, in support of this interpretation, to Articles 4.7 and 6.2 of the DSU,
and to the Reports of the Appellate Body in  Brazil – Export Financing Programme for
Aircraft  ("Brazil – Aircraft
 ")30 and United States – Import Measures  on Certain Products from the
European Communities.31
32. The European Communities submits that parties to an Article 21.5 dispute cannot agree to
dispense with the requirement to hold consultations under Article 4 of the DSU.  Members cannotdeviate from the rules set forth in the DSU unless the DSU expressly authorizes them to do so.Article 4.3 and the second sentence of Article 4 .7 of the DSU confirm that consultations are a
mandatory prerequisite for requesting establishment of a panel.  In addition, it would be inconsistentwith the objectives expressed in Articles 3.7 and 4.1, as well as with the duties imposed upon parties
under Article 4.5 of the DSU, if parties could agree to dispense with consultations.  The European
Communities is of the view that any other approach would create uncertainty about proceduralguarantees for parties, and would curtail third party rights that are clearly enshrined in the DSU.
33. The European Communities submits that, since consultations are "a fundamental prerequisite
for lawful panel proceedings", Article 21.5 panels have a positive duty to ascertain, if necessary on                                                     
30Appellate Body Report,WT/DS46/AB/R, adopted 20 August 1999, para. 131.
31Appellate Body Report,WT/DS165/AB/R, adopted 10 January 2001, para. 70.WT/DS132/AB/RW
Page 11
their own motion, whether consultations under Article 4 of the DSU have been requested by the
complaining party.  Therefore, the Panel should have addressed the issue of the lack of consultations.In support of this view, the European Commun ities refers to the Appellate Body Report in
United States – Anti-Dumping Act of 1916  ("United States – 1916 Act
 "), and, in particular, to the
statement that:  "some issues of jurisdiction may be of such nature that they have to be addressed by
the Panel at any time".32
III. Issues Raised in this Appeal
34. The following issues are raised in this appeal:
(a) whether the Panel erred because it did not address, in its Report:  the lack of
consultations prior to the  DSB's referral of the redetermination to the Panel; the
alleged failure of the United States to comp ly with Article 6.2 of the DSU because its
communication seeking recourse to Article  21.5 of the DSU did not indicate whetherconsultations had been held;  and the alleged failure of the United States to exerciseits judgement, in accordance with Article 3.7 of the DSU, as to whether action underthe DSU would be "fruitful";
(b) whether the Panel erred in its review of SECOFI's determination of a threat of
material injury, and in particular whether the Panel erred:
(i) in finding, in paragraph 6.23 of the Panel Report, that SECOFI's conclusion,
in the redetermination, that there existed a significant likelihood of increased
imports of HFCS, was inconsistent with Mexico's obligations under
Article 3.7(i) of the  Anti-Dumping Agreement ; and
(ii) in finding, in paragraph 6.36 of the Panel Report, that SECOFI's conclusion,
in the redetermination, regarding the likely impact of imports of HFCS on thedomestic industry, was inconsistent with Mexico's obligations underArticles 3.1, 3.4, and 3.7 of the  Anti-Dumping Agreement ;
                                                     
32Appellate Body Report, WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, para. 54.WT/DS132/AB/RW
Page 12
(c) whether the Panel erred in the reasoning employed to reach its findings, in particular:
(i) by failing, as required under Article 12.7 of the DSU, to set out a "basic
rationale behind [its] findings" that SECOFI's analysis and conclusions, in theredetermination, regarding the likely impact of imports of HFCS on the
domestic industry, were inconsistent with Mexico's obligations under
Articles 3.1 and 3.4 of the  Anti-Dumping Agreement ; and
(ii) by failing to apply the standard of review set out in Article 17.6(ii) of the
Anti-Dumping Agreement  in stating, in paragraph 6.37 of its Report, that
SECOFI could have made a valid determination of the existence of a threat ofmaterial injury, but in nevertheless finding that Mexico had actedinconsistently with Article 3.7 of the  Anti-Dumping Agreement .
IV. The Panel's Treatment of Alleged Deficiencies in the Proceedings
35. Mexico asks us to reverse the substantive findings reached by the Panel on the grounds that
the Panel failed to address and consider the consequences of certain alleged deficiencies in the processof referring SECOFI's redetermination to the Panel.   Mexico's principal contention is that the Panel
made a "fatal error"
33 because it said  nothing  in its Report regarding:  the lack of consultations
between Mexico and the United States before the redetermination was referred to the Panel; thealleged failure of the United States to comply with Article  6.2 of the DSU because its communicationseeking recourse to Article 21.5 of the DSU did not indicate whether consultations had been held;
and the alleged failure of the United States to exercise its judgement, in accordance with Article 3.7 of
the DSU, as to whether recourse to dispute settlement would be "fruitful".  Before the Panel, Mexicoargued that there had been no consultations, and that the United States had acted contrary toArticles 3.7 and 6.2 of the DSU.  Mexico also stated that it agreed with the European Communities,which had vigorously criticized the lack of consultations.  Mexico contends that the Panel, byremaining silent on these issues despite the argume nts raised by Mexico, acted inconsistently with
Articles 7.2 and 12.7, and diminished Mexico's ri ghts under Articles 3.4 and 19 of the DSU.
36. We observe that, because Mexico has formulated its claims of error in terms of a "failure" on
the part of the Panel to speak to and resolve, in its Report, the contentions of Mexico referred to
above, it is necessary for us to examine whether the Panel was under a duty to address or rule on those
contentions.  We believe that a panel comes under a duty to address issues in at least two instances.First, as a matter of due process, and the proper ex ercise of the judicial function, panels are required to
                                                     
33Translation of Mexico's appellant's submission, p. 3;  original Spanish version, p. 2.WT/DS132/AB/RW
Page 13
address issues that are put before them by the parties to a dispute.  Second, panels have to address and
dispose of certain issues of a fundamental nature, even if the parties to the dispute remain silent onthose issues.  In this regard, we have previously observed that "[t]he vesting of jurisdiction in a panelis a fundamental prerequisite for lawful panel proceedings."
34  For this reason, panels cannot simply
ignore issues which go to the root of their jurisdiction – that is, to their authority to deal with and
dispose of matters.  Rather, panels must deal with such issues – if necessary, on their own motion  – inorder to satisfy themselves that they have authority to proceed.
37. We observe that Mexico's appeal  explicitly  asserts only that the Panel failed to fulfill its duty
in the first type of situation mentioned above.  Nevertheless, the issues that Mexico raises, inparticular regarding the relation between consultations and the authority of panels to deal with anddispose of matters, require us to consider also whether the Panel failed to exercise its duty in thesecond type of situation, namely, to consider, on its own motion, the issues now raised by Mexico onappeal.
A. Mexico's Conduct Before the Panel and the Consequences
38. In considering whether the Panel was required, by virtue of Mexico's conduct before the
Panel, to address the issues now raised by Mexico on appeal, we begin by setting out the relevantfacts.
39. The redetermination was published on 20 September 2000.
35  On 12 October 2000, the United
States submitted a communication seeking recourse to Article 21.5 of the DSU with respect to the
measure taken by Mexico to comply with the recommendations and rulings of the DSB.36  T h e
communication submitted by the United States does not refer to any consultations having been held.At the DSB meeting on 23 October 2000, which was the first occasion that the matter was raisedbefore the DSB, the matter was referred to the original panel.  Mexico did not object to this decision,but stated at that meeting that it had "decided to exercise its right not to oppose the US request at thepresent meeting."
37  Mexico added that "parties to the disp ute were working together with a view to
agreeing on the best way to proceed on the matter".38  Mexico did not mention at that DSB meeting
any of the issues which are before us now on appeal.
                                                     
34Appellate Body Report, United States – 1916 Act , supra ,  footnote 32, para. 54.
35Panel Report, para. 1.2.
36WT/DS132/6.
37WT/DSB/M/91, para. 114.
38Ibid.WT/DS132/AB/RW
Page 14
40. Mexico did not mention these procedural issues or raise any objection to the authority of the
Panel in either of its two written submissions to the Panel.  These submissions were made on14 December 2000 and on 18 January 2001.
41. Mexico referred to these issues for the first tim e in its oral statement at the meeting with the
Panel on 20 February 2001.  In that statement, Mexico said:
4. Before turning to substance, we have several  observations of
a general nature  that are worth mentioning in order for the Panel to
understand the context of this matter.
5. Firstly, it should be stressed that the United States was hasty
in resorting to the Dispute Settlement Body without exercising itsjudgement as to whether action under those procedures would be
fruitful, as required by Article 3.7 of the Dispute Settlement
Understanding, and without consulting Mexico in respect of the new
final resolution.
6. This haste resulted in the presentation of a superficial and
deficient case, as is evident as from the request for establishment of a
panel.  Thus, for example, the request did not indicate whether the
parties had engaged in consultations, as required under Article 6.2 of
the DSU.
39 (emphasis added)
42. In its first intervention following its oral statem ent, Mexico returned briefly to these issues,
and stated that:
                                                     
39Translation of Mexico's oral statement at the meet ing with the Panel (Guión de la exposición oral de
México), 20 February 2001, paras. 4-6.  The original reads:
4. Antes de abordar la sustancia del asunto, tenemos algunas
observaciones de carácter general que ameritan ser mencionadas para que elGrupo Especial comprenda el contexto en el que nos encontramos:
5. En primer lugar, vale la pena destacar que EUA recurrió al Órgano
de Solución de Diferencias de manera apresurada, sin reflexionar sobre lautilidad de actuar al amparo de los presentes procedimientos, como lo exigeel articulo 3.7 del Entendimiento sobre solución de diferencias, ni consultarcon México respecto de la nueva resolución final.
6. Esta premura los obligó a presentar un caso deficiente y superficial,
lo cual es evidente desde su solicitud de establecimiento de este GrupoEspecial.  Así por ejemplo, dicha solic itud no indica si se habían celebrado
consultas, como lo requiere el articulo 6.2 del ESD.WT/DS132/AB/RW
Page 15
… we are not complaining that there were no consultations , but
simply noting the haste with which the United States acted …40
(emphasis added)
43. The European Communities did not file a written submission as a third party in the Panel
proceedings.  However, at the 21 February 2001 third party session of the meeting with the Panel,
held a day after Mexico had presented its oral statement to the Panel, the European Communities
devoted its entire oral statement to the United States' failure to circulate a request for consultationsand its failure to mention, in the communication seek ing recourse to Article 2 1.5 of the DSU, whether
such consultations had been held.  The European Communities stated that the Panel "should considerthat the dispute is not properly before it because no consultations were requested nor held before therequest for the establishment of a panel was submitted to the DSB."
41  On the same day, in its
concluding remarks, Mexico stated that it agreed with the European Communities.42
44. The Panel did not mention any of these issues in its Report43, and Mexico did not comment on
the Panel's failure to do so during the interim review stage of the Panel proceedings.
45. In examining Mexico's conduct, we note that Mexico did not bring up the issues it now relies
upon at the DSB meeting on 23 October 2000.  Rather, Mexico in effect consented to refer the matterto the Article 21.5 Panel at the first DSB meeting where the matter was raised.  We further note thatMexico did not refer to these issues,  at all ,  in either of its written submissions to the Panel.  Nor did
Mexico ask the Panel to make any preliminary ruling on these issues.  The alleged deficiencies in theauthority of the Panel were mentioned by Mexico  only  at the meeting with the Panel on
20-21 February 2000.
46. Furthermore, at the meeting with the Panel, although Mexico referred to the issues it now
relies upon before us, Mexico described these comments simply as "observations of a general nature"
that were made "for the Panel to understand the context" of the matter.  Mexico did not expressly askthe Panel to examine whether it had the authority to address the matter before it, or to rule on the legal
                                                     
40This quotation is a translation of the italicised portion of the following statement made by Mexico:
 ... fue muy desafortunado que debido a las prisas del propio Estados Unidos
de recurrir al 21.5 sin haber realizado consultas;  y no estamos reclamando
que no haya habido consultas, simp le y sencillamente, constatando la
celeridad con la que se ha trabajado , impidieron que este tipo de
información y de aclaraciones, de caráct er técnico se pudieran hacer en su
oportunidad.
41European Communities' oral statement before the Panel, 21 February 2001, para. 11.
42Mexico's final statement at the meeting with the Panel, (Guión para las observaciones finales de
México) 21 February 2001, p. 1.
43The only reference to these issues is in the summary of the arguments made by the European
Communities;  Panel Report,  paras. 4.1-4.11.WT/DS132/AB/RW
Page 16
consequences of any deficiencies in the process by which the redetermination was referred to the
Panel.  To the contrary, Mexico explicitly said, on 20 February 2000, that it was  not  complaining
that there were no consultations, but simply "noting" the haste with which the United States acted.Mexico's statement, the following day, that it "agreed" with the presentation that had been made by
the European Communities did not, in our view, amount to a request to the Panel to examine whether
it had authority to examine the matter before it, or to rule on the legal consequences of anydeficiencies in the proceedings.  Nor did Mexico's statement suffice to offset Mexico'scharacterization of these issues as "observations of a general nature", or to negate Mexico's expressstatement that it was  not  complaining with respect to these issues.
47. In sum, the "observations" raised by Mexico were not expressed in a fashion that indicated
that Mexico was raising an objection to the authority of the Panel.  The requirements of good faith,due process and orderly procedure dictate that objections, especially those of such potentialsignificance, should be explicitly raised.  Only in  this way will the panel, the other party to the
dispute, and the third parties, understand that a specific objection has been raised, and have an
adequate opportunity to address and respond to it.  In our view, Mexico's objection was not explicitlyraised.  Thus, in making its "observations", Mexico did not meet this standard.
48. Mexico's arguments that the Panel failed to address the issues on which Mexico's appeal is
now based depend on the premise that Mexico had requested the Panel to do so.  As we have foundthat Mexico did not, in fact, make such a request – that is, it did not raise an "objection" – we need notexamine further the possible scope or source of a panel's duty to "address" objections raised byparties.
49. However, had we been satisfied that Mexico did, in fact, explicitly raise its objections before
the Panel, then the Panel may well have been required to "address" those objections, whether by virtueof Articles 7.2 and 12.7 of the DSU, or the requirements of due process.
44  In such circumstances,
however, the Panel could have satisfied that duty simply by stating in its Report that it declined toexamine or rule on Mexico's "objections"  due to the  untimely  manner in which they were raised.  We
                                                     
44We recall that, in a different context involving judicial economy, we said that:
… for purposes of transparency and fairness to the parties, a panel should, …
in all cases, address expressly [even] those claims which it declines toexamine and rule upon …  Silence does not suffice for these purposes.
Appellate Body Report,  Canada – Certain Measures Affecting the Automotive Industry 
WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, para. 117.WT/DS132/AB/RW
Page 17
note, in this regard that Mexico was aware of all the facts on which it now relies in arguing that the
Panel had no authority to deal with and dispose of the matter as soon as the United States submittedits communication seeking recourse to Article 21.5 of the DSU on 12 October 2000.  Yet Mexicomentioned these alleged deficiencies, for the first tim e, more than four months later, at the meeting
with the Panel on 20 February 2000.  Mexico did not take advantage of the opportunities it had to
raise the issues at the DSB meeting of 23 October 2000, or in either of its written submissions to thePanel.
50. In our view, assuming that Mexico had explicitly raised these issues before the Panel,  the
Panel could reasonably have concluded   that Mexico's "objections"  were not raised in a timely
manner.  When a Member wishes to raise an objection in dispute settlement proceedings, it is alwaysincumbent on that Member to do so promptly.
45  A Member that fails to raise its objections in a timely
manner, notwithstanding one or more opportunities to do so, may be deemed to have waived its rightto have a panel consider such objections.
B. The Nature of  Mexico's "Objections"
51. Turning to the next step in our analysis, we must consider whether the issues now raised by
Mexico in its appeal are of such a nature that the Panel was in any case required to address them on itsown motion.  To do so, we consider separately each of the three issues now raised by Mexico.  Weobserve, in this regard, that it is unclear whether Mexico contends that the Panel should have ruled ona  single   issue, the lack of consultations, and adduces its additional arguments regarding Articles 3.7
and 6.2 of the DSU in support of its principal position that the lack of consultations deprived the Panel
of its authority to deal with and dispose of the matter; or whether Mexico is arguing that the Panelshould have ruled on  three  distinct issues:  first, the lack of consultations;  second, the failure of the
United States' communication seeking recourse to Article 21.5 to indicate whether consultations wereheld;  and, third, the alleged failure of the United States to exercise its judgement as to whetherrecourse to dispute settlement would be "fruitful".  For the purposes of our analysis, we will assumethat Mexico contends that the Panel should have ruled on three separate issues.
                                                     
45We have already said that the principles of good faith and due process require:
… that responding Members seasonably and promptly bring claimed
procedural deficiencies to the attention of the complaining Member, and tothe DSB or the Panel, so that correctio ns, if needed, can be made to resolve
disputes … The procedural rules of WTO dispute settlement are designed topromote, not the development of litigation techniques, but simply the fair,prompt and effective resolution of trade disputes.
Appellate Body Report, United States – FSC , supra , footnote 24, para. 166.  See also  Appellate Body
Report,  Korea – Dairy Safeguard , supra , footnote 19, paras. 127-131;  and Appellate Body Report, United
States – 1916 Act , supra , footnote 32, para. 54.WT/DS132/AB/RW
Page 18
52. Mexico and the European Communities seem to argue that the Panel was required to address
the issue of consultations because consultations are an indispensable element of proceedings underArticle 21.5 of the DSU.  They interpret the phrase "these dispute settlement procedures" inArticle 21.5 of the DSU as referring to  all  procedures contained in the DSU, including the provisions
concerning consultations under Article 4 of the DSU and the provisions concerning establishment of a
panel under Article 6.
46  The United States, on the other hand, believes that the phrase refers to
something  less than  all  procedures contained in the DSU and, in particular, that the only prerequisite
set forth in Article 21.5 is that there exist a disagreement as to whether a Member has implementedthe recommendations and rulings of the DSB.
47
53. We do not consider that we need to examine th ese differences of interpretation between the
participants in order to decide the issues on appeal.  As we have said, our task is simply to determinewhether the "objections" that Mexico now raises before us are of such a nature that they could havedeprived the Panel of its authority to deal with and dispose of the matter.  If so, then the Panel was
bound to address them on its own motion.  To fulfill this task we will assume,  arguendo ,  that the
same procedures apply in Article 21.5 proceedings as in original panel proceedings.  If, even on ourassumption ,  we find that the lack of consultations was not a defect of such a nature as to deprive the
Panel of its authority to deal with and dispose of the dispute, then we need not consider theparticipants' arguments on the interpretation of Article 21.5 of the DSU.
54. We note that Mexico emphasizes the importance of consultations within the GATT and WTO
dispute settlement systems.  We agree with Mexico on the importance of consultations.  Throughconsultations, parties exchange information, assess the strengths and weaknesses of their respective
cases, narrow the scope of the differences between them and, in many cases, reach a mutually agreed
solution in accordance with the explicit preference expressed in Article 3.7 of the DSU.  Moreover,even where no such agreed solution is reached, consultations provide the parties an opportunity todefine and delimit the scope of the dispute between th em.  Clearly, consultations afford many benefits
to complaining and responding parties, as well as to third parties and to the dispute settlement systemas a whole.
                                                     
46Mexico's appellant's submission, para. 12;  European Communities' third participant's submission,
para. 16.
47United States' appellant's submission, para. 26.WT/DS132/AB/RW
Page 19
55. The practice of GATT contracting parties in regularly holding consultations is testimony to
the important role of consultations in dispute settlement.  Article 4.1 of the DSU recognizes thispractice and further provides that:
Members affirm their resolve to  strengthen and improve  the
effectiveness  of the consultation procedures employed by Members.
(emphasis added)
56. A number of panel and Appellate Body reports have recognized the value of consultations
within the dispute settlement process.
48  The United States too, in this appeal, recognizes the
importance of consultations.49  Nevertheless, we are not persuaded that the undoubted practical
importance of consultations to the WTO dispute settlement system is dispositive of the issue before uson appeal.  To resolve that issue, we turn now to the relevant texts of the WTO agreements.
57. Article 4 of the DSU sets forth a number of other provisions with respect to consultations.
We recall that, in our Report in  Brazil – Aircraft , we observed that:
Articles 4 and 6 of the DSU, as well as paragraphs 1 to 4 of Article 4
of the SCM Agreement , set forth a process by which a complaining
party must request consultations, and consultations must be held,
before a matter may be referred to the DSB for the establishment of apanel.
50
                                                     
48The important role of consultations in both the GATT and the WTO dispute settlement systems has
repeatedly been acknowledged, both expressly and implicitly, by panels and by the Appellate Body.  See, forexample:  Panel Report,  Uruguayan Recourse to Article XXIII ,  adopted 16 November 1962, BISD 11S/95,
para. 10;  Panel Report,  United States – Imposition of Anti-Dumpin g Duties on Imports of Fresh and Chilled
Atlantic Salmon from Norway , adopted 27  April  1994, BISD 41S/Vol.I/229, para. 333;  Panel Report, Brazil –
Measures Affecting Desiccated Coconut , WT/DS22/R, adopted 20 March 1997, as upheld by the Appellate
Body Report, WT/DS22/AB/R, DSR 1997:1, 189, para. 287;  Panel Report,  European Communities – Bananas,
WT/DS27/R/ECU, adopted 25 September 1997, as modified by the Appellate Body Report, WT/DS27/AB/R,
DSR 1997:III, 1085, paras. 7.17–7.20;  Panel Report,  Korea – Taxes on Alcoholic Beverages  ("Korea – Alcoholic
Beverages
 "), WT/DS75/R, WT/DS84/R, adopted 17 February 1999, as modified by the Appellate Body Report,
WT/DS75/AB/R, WT/DS84/AB/R, para. 10.19;  Appellate Body Report,   Brazil – Aircraft , supra , footnote 30,
para. 132;  Panel Report,  Brazil – Aircraft,  WT/DS46/R, adopted 20 August 1999, as modified by the Appellate
Body Report, WT/DS46/AB/R, para. 7.10;  Panel Report,  United States – Safeguard Measures on Imports of
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia  ("United States – Lamb Safeguard "),
WT/DS177/R, WT/DS178/R, adopted 16 May 2001, as modified by the Appellate Body Report,
WT/DS177/AB/R, WT/DS178/AB/R, para 5.40.  See also the discussion of the role of consultations in disputesunder the  Agreement on Textiles and Clothing  in Appellate Body Report,  United States – Restrictions on Imports
of Cotton and Man-made Fibre Underwear ,  WT/DS24/AB/R, adopted 25 February 1997, DSR 1997:I, 11, at 23-
24.
49United States' appellant's submission, para. 32.
50Appellate Body Report, supra , footnote 30, para. 131.WT/DS132/AB/RW
Page 20
58. The general process that we described in that case also applies in disputes brought under other
covered agreements.51  Thus, as a general matter, consultations are a prerequisite to panel
proceedings.  However, this general proposition is subject to certain limitations.  For example,Article 4.3 of the DSU provides:
If a request for consultations is made pursuant to a covered agreement,
the Member to which the request is made shall, unless otherwise
mutually agreed, reply to the request within 10 days after the date of its
receipt and shall enter into consultations in good faith within a period of
no more than 30 days after the date of receipt of the request, with a view
to reaching a mutually satisfactory solution.  If the Member does not
respond within 10 days after the date of receipt of the request, or does
not enter into consultations within a period of no more than 30 days, or
a period otherwise mutually agreed, after the date of receipt of the
request, then the Member that requested the holding of consultations
may proceed directly to request the establishment of a panel.  (emphasis
added)
59. Article 4.3 of the DSU relates the responding party's conduct towards consultations to the
complaining party's right to request the establishment of a panel.  When the responding party does not
respond to a request for consultations, or declines to enter into consultations, the complaining partymay dispense with consultations and proceed to request the establishment of a panel.  In such a case,the responding party, by its own conduct, relinquishes the potential benefits that could be derivedfrom those consultations.
60. We also note that Article 4.7 of the DSU provides:
                                                     
51Pursuant to Article 17.1 of the  Anti-Dumping Agreement, the provisions of the DSU apply to
consultations and dispute settlement under that Agreement "[e]xcept as otherwise provided herein".  We notethat, in our Report in  Guatemala – Anti-Dumping Investigation Regarding Portland Cement from Mexico ,  we
observed that "the rules and procedures of the DSU apply together with  the special or additional provisions of
[the  Anti-Dumping Agreement ]", and that:
… it is only where the provisions of the DSU and the special or additional
rules and procedures of a covered agreement cannot  b e  r e a d  a s
complementing  each other that the special or additional provisions are to
prevail .  A special or additional provision should only be found to prevail
over a provision of the DSU in a si tuation where adherence to the one
provision will lead to a violation of the other provision, that is, in the case of
a conflict  between them.
Appellate Body Report, WT/DS60/AB/R, adopted 25 November 1998, para. 65.
Neither of the parties to this dispute has argued that  there is any conflict between the provisions of the
DSU relating to consultations and dispute settlement and the "special and additional rules and procedures"contained in the  Anti-Dumping Agreement .WT/DS132/AB/RW
Page 21
If the consultations fail to settle a dispute within 60 days after the date
of receipt of the request for consultations, the complaining party may
request the establishment of a panel.  The complaining party may
request a panel during the 60-day period  if the consulting parties jointly
consider that consultations have failed to settle the dispute.  (emphasis
added)
61. Article 4.7 also relates the conduct of the responding party concerning consultations to the
complaining party's right to request the establishmen t of a panel.  This provision states that the
responding party may agree with the complaining part y to forgo the potential benefits that continued
pursuit of consultations might bring.  Thus, Article 4.7 contemplates that a panel may be validlyestablished notwithstanding the shortened period for consultations, as long as the parties agree.Article 4.7 does not, however, specify any particular  form that the agreement between the parties must
take.
62. In addition, as we discuss in more detail below
52, pursuant to Article 6.2 of the DSU, one of
the requirements for requests for establishment of a panel is that such requests must "indicate whether
consultations were held".  The phrase " whether  consultations were held" shows that this requirement
in Article 6.2 may be satisfied by an express statement that  no consultations were held .  In other
words, Article 6.2 also envisages the possibility that a panel may be validly established without beingpreceded by consultations.
63. Thus, the DSU explicitly recognizes circumstances where the absence of consultations would
not  deprive the panel of its authority to consider the matter referred to it by the DSB.  In our view, it
follows that where the responding party does not obj ect, explicitly and in a timely manner, to the
failure of the complaining party to request or engage in consultations, the responding party may be
deemed to have consented to the lack of consultations and, thereby, to have relinquished whatever
right to consult it may have had.
64. As a result, we find that the lack of prior consultations is not a defect that, by its very nature,
deprives a panel of its authority to deal with and dispose of a matter, and that, accordingly, such adefect is not one which a panel must examine even if both parties to the dispute remain silent thereon.We recall that, in this case, Mexico neither pursued the potential benefits of consultations nor objectedthat the United States had deprived it of such benefits.
65. For these reasons, we conclude that  even if   the general obligations in the DSU regarding
prior consultations were applicable in proceedings under Article 21.5 of the DSU – a matter which we
do not decide – non-compliance with those obligations would not have the effect of depriving a panel
                                                     
52Infra , paras. 66-70.WT/DS132/AB/RW
Page 22
of its authority to deal with and dispose of the matter.  It follows that, in this case, the  Panel was not
required to consider, on its own motion, whether the lack of consultations deprived it of its authorityto assess the consistency of the redetermination with the  Anti-Dumping Agreement . 
66. We turn to consider whether the issue raised by Mexico with respect to Article 6.2 of the
DSU relates to a defect that would deprive a panel of its authority to deal with and dispose of the
matter before it and, therefore, constitutes an issue that the Panel should have addressed on its ownmotion.  In Mexico's view, Article 6.2 of the DSU requires that a communication seeking recourse to
Article 21.5 of the DSU "shall indicate whether consultations were held".  Since the communicationcirculated by the United States in this case contained no such indication, Mexico argues that theUnited States failed to comply with Article 6.2 of the DSU.
67. For purposes of our analysis of this issue we again assume,  arguendo ,  that the same
procedures apply in Article 21.5 proceedings as in original panel proceedings.  If, on this  assumption,we find that the failure of the United States' communication to indicate whether consultations were
held would not deprive a panel of its authority to deal with and dispose of the matter before it, then we
need not inquire further into the procedures   that are actually required in proceedings under
Article 21.5 of the DSU.
68. Article 6.2 of the DSU, which governs requests for the establishment of a panel, provides:
The request for the establishment of a panel shall be made in writing.
It shall indicate whether consultations were held , identify the specific
measures at issue and provide a brief summary of the legal basis of the
complaint sufficient to present the problem clearly.  In case the
applicant requests the establishment of a panel with other thanstandard terms of reference, the written request shall include the
proposed text of special terms of reference. (emphasis added)
69. We recall that, in previous appeals, we have observed that Article 6.2 imposes four
requirements on Members requesting establishment of a panel, one of which obliges Membersrequesting the establishment of a panel to "indicate", in that request, "whether consultations wereheld
".53  The issue which we examine here is not whether Members come under such an obligation,
for it is clear that they do.  Rather, we must consider the nature of that obligation, and theconsequences that ensue when a requesting Member does not "indicate whether consultations were
held" in its request for establishment of a panel and a responding Member does not object to that
omission.  We stress that, in so doing, we neither examine nor interpret the other three requirementsfor requests for establishment of a panel set forth in Article 6.2 of the DSU.
                                                     
53Appellate Body Report,   Korea – Dairy Safeguard, supra , footnote 19, para. 120.WT/DS132/AB/RW
Page 23
70. In assessing the importance of the obligation "to indicate whether consultations were held",
we observe that the requirement will be satisfied by the inclusion, in the request for establishment of apanel, of a statement as to whether consultations occurred  or not .  The purpose of the requirement
seems to be primarily informational – to inform the DSB  and Members as to whether consultations
took place.  We also recall that the DSU expressl y contemplates that, in certain circumstances, a panel
can deal with and dispose of the matter referred to it even if no consultations took place.  Similarly,the authority of the panel cannot be invalidated by the absence, in the request for establishment of thepanel, of an indication "whether consultations were held".  Indeed, it would be curious if therequirement in Article 6.2 to inform the DSB whether consultations were held was accorded moreimportance in the dispute settlement process than the requirement actually to hold those consultations.
71. Thirdly, Mexico also challenges the silence of the Panel regarding the alleged failure of the
United States to satisfy its obligation under the first sentence of Article 3.7 of the DSU to exercise itsjudgement as to whether dispute settlement proceedings would be "fruitful".  Although Mexico has
not elaborated its interpretation of the scope of this obligation we, nevertheless, consider whether a
failure to comply with the first sentence of Article 3.7 of the DSU would deprive a panel of itsauthority to deal with and dispose of a matter.
72. The first sentence of Article 3.7 of the DSU provides:
Before bringing a case, a Member shall exercise its judgement as to
whether action under these procedures would be fruitful.
73. In our view, this sentence reflects a basic principle that Members should have recourse to
WTO dispute settlement in good faith, and not frivolously set in motion the procedures contemplatedin the DSU.  We recall that, when we examined the language of Article 3.7 of the DSU in our Reportin  European Communities – Bananas ,  we stated that:
… a Member has broad discretion in deciding whether to bring a case
against another Member under the DSU.  The language of ArticleXXIII:1 of the GATT 1994 and of Article 3.7 of the DSU suggests,
furthermore, that a Member is expected to be  largely self-regulating 
in deciding whether any such action would be "fruitful".
54  (emphasis
added)
74. Given the "largely self-regulating" nature of the requirement in the first sentence of
Article 3.7, panels and the Appellate Body must pr esume, whenever a Member submits a request for
establishment of a panel, that such Member does so in good faith, having duly exercised its judgementas to whether recourse to that panel would be "fruitful".  Article 3.7 neither requires nor authorizes a                                                     
54Appellate Body Report,  supra , footnote 20, para. 135.WT/DS132/AB/RW
Page 24
panel to look behind that Member's decision and to question its exercise of judgement.  Therefore, the
Panel was not obliged to consider this issue on its own motion.
75. We have already found that, before the Panel, Mexico did not explicitly raise its "objections"
relating to the lack of consultations, the failure of the communication seeking recourse to Article 21.5
of the DSU to indicate whether consultations were held, and the alleged failure of the United States to
comply with the requirement in the first sentence of Article 3.7 of the DSU.  Having considered thenature of these "objections", we also find that the Panel did not err in refraining from addressing themon its own motion.  We, therefore, dismiss Mexico's appeal on these issues.
V. Article 3 of the Anti-Dumping Agreement :  "Threat of Material Injury"
76. In this appeal, Mexico also asks us to reve rse the Panel's findings regarding, first, the
likelihood of increased HFCS imports and, second, the likely impact of these imports on the Mexican
sugar industry.  We will deal with each issue separately.
A. Likelihood of Increased Imports
77. Regarding SECOFI's conclusion that there existed a significant likelihood of increased
imports, the Panel found:
SECOFI's determination that industries other than soft-drink bottlers
would undertake a massive shift from sugar use to HFCS use,
resulting in total consumption of HFCS beyond the capacity of the
domestic industry to supply, and a consequent significant increase indumped imports, is not, in our view, one that could be reached by an
unbiased and objective investigating authority in light of the evidence
relied upon and the explanations given in the redetermination.  While
in its redetermination, SECOFI did set out additional information
concerning the points identified by the Panel as problematic in itsoriginal report, SECOFI failed to provide a reasoned explanation of
how that information supports the conclusion that there was a
significant likelihood of increased imports.  We therefore determine
that SECOFI's conclusion that there was a significant likelihood of
increased importation is not consistent with Article 3.7(i) of theAD Agreement.
55
78. We start by making certain preliminary observations on the scope of these Article 21.5
proceedings.  Mexico argues that the original pa nel erred in its treatment of the alleged restraint
agreement and that the Panel "made  exactly the same mistake as the original Panel ".56  (emphasis
added)  The only difference, Mexico asserts, is that "in this case, the Panel focused on whether or not                                                     
55Panel Report, para. 6.23.
56Mexico's appellant's submission, para. 66.WT/DS132/AB/RW
Page 25
SECOFI had complied with [the findings and recommendations of the original panel as adopted by
the DSB], and compliance with Article 3.7(i) of the Anti-Dumping Agreement became secondary".57
There appear to us to be two elements to Mexico's assertion.  First, Mexico seems to seek to have usrevisit the original panel report.  Second, Mexico is claiming that the Panel should have analysed the
consistency of the new measure with Mexico's obligations under the  Anti-Dumping Agreement  rather
than simply verifying whether Mexico had followed the original panel's recommendations as adoptedby the DSB.
79. With respect to the first element, we note th at the original panel report, regarding the  initial
measure (SECOFI's original determination), has been  adopted and that these Article 21.5 proceedings
concern a  subsequent  measure (SECOFI's redetermination).  We also note that Mexico did not
appeal the original panel’s report, and that Articles 3.2 and 3.3 of the DSU reflect the importance tothe multilateral trading system of security, predictability and the prompt settlement of disputes.  Wesee no basis for us to examine the original pane l's treatment of the alleged restraint agreement.
80. With respect to the second element, we note th at Mexico argues that the Panel confined itself
inappropriately to an examination of whether the new measure complied with the rulings and
recommendations of the DSB relating to the original measure.  However, we note that at the outset ofits reasoning the Panel considered that it was "fa ced principally with determining whether  SECOFI's
conclusion in the redetermination … is consistent with Articles 3.1, 3.4 and 3.7(i) of the  Anti-
Dumping Agreement ".
58  In our view, making this determination is exactly what the Panel went on to
do, as is clear from the rest of its analysis.  Similarly, our review of the Panel Report will focus on thePanel's reasons for finding that the redeterminat ion was not consistent with Mexico's obligations
under the Anti-Dumping Agreement .
81. Returning to the substance of Mexico's appeal, we observe that Mexico asks us to reverse the
finding of the Panel regarding the likelihood of increased imports on the grounds that the Panelwrongly interpreted Article 3.7 of the  Anti-Dumping Agreement   and incorrectly applied the standard
of review prescribed by Articles 17.5 and 17.6 of  that Agreement.  In its appellant's submission,
Mexico focuses its arguments on errors that it consid ers the Panel made in its treatment of an alleged
restraint agreement between Mexican sugar millers and Mexican soft-drink producers.  Article 3.7provides, among other things,  that "a determination of a threat of material injury shall be based on factsand not merely on allegation, conjecture or remote possibility".   Mexico maintains that, since SECOFI
never determined that this alleged agreement existed as a matter of "fact", it was only "allegation,
conjecture or remote possibility".  Thus, Mexico asserts that the Panel erred in relying on "allegation,                                                     
57Mexico's appellant's submission, para. 66.
58Panel Report, para. 6.5.WT/DS132/AB/RW
Page 26
conjecture or remote possibility" to find that the redetermination was inconsistent with Article 3.7(i)
of the  Anti-Dumping Agreement.  Mexico also argues that the Panel erred in examining the alleged
restraint agreement since Article 17.5 of the  Anti-Dumping Agreement   authorizes panels to examine
only the " facts  made available" (emphasis added) to national investigating authorities.
82. Article 3.7 of the  Anti-Dumping Agreement  provides, in relevant part:
A determination of a threat of material injury shall be based on facts and
not merely on allegation, conjecture or remote possibility.  The change
in circumstances which would create  a situation in which the dumping
would cause injury must be clearly foreseen and imminent.10  In making
a determination  regarding the existence of a threat of material injury,
the authorities should consider,  inter alia , such factors as:
(i) a significant rate of increase of dumped imports into the
domestic market indicating the likelihood of substantially
increased importation;  (emphasis added)
______________
10One example, though not an exclusive one, is that there is convincing reason
to believe that there will be, in the near future, substantially increased
importation of the product at dumped prices.
83. In previous anti-dumping cases, we have emphasized the importance of distinguishing
between the different roles of panels and investigating authorities.59  We note, in this regard, that
Article 3.7 of the  Anti-Dumping Agreement  sets forth a number of requirements that must be
respected in order to reach a valid determination of a threat of material injury.  The third sentence of
Article 3.7 explicitly recognizes that it is the  investigating authorities  who make a determination of
threat of material injury, and that such determination – by the investigating authorities -  "must bebased on facts and not merely on allegation, conjecture or remote possibility".  Consequently,Article 3.7 is not addressed to panels, but to the national investigating authorities which determine theexistence of a threat of material injury.
84. The  Anti-Dumping Agreement  imposes a specific standard of review on  panels .  With
respect to facts, Articles 17.5 and 17.6(i) of the  Anti-Dumping Agreement , together with Article 11 of
the DSU
60, set out the standard to be applied by panels when assessing whether a Member's
investigating authorities  have "established" and "evaluated" the facts consistently with that Member's
                                                     
59Appellate Body Report,  United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products
from Japan  ("United States – Hot-Rolled Steel "), WT/DS184/AB/R, adopted 23 August 2001, para. 55.
60Article 11 of the DSU provides in relevant part that "a panel should make an objective assessment of
the matter before it, including an objective assessment of the facts of the case and the applicability of andconformity with the relevant covered agreements".WT/DS132/AB/RW
Page 27
obligations under the covered agreements.61  These provisions do not authorize panels to engage in a
new and independent fact-finding ex ercise.  Rather, in assessing the measure,  panels must consider,
in the light of the claims and arguments of the parties, whether,  inter alia,  the "establishment" of the
facts by the investigating authorities was "proper", in accordance with the obligations imposed on
such investigating authorities under the  Anti-Dumping Agreement .62
85. In our view, the "establishment" of facts by investigating authorities includes both affirmative
findings of events that took place during the period of investigation as well as assumptions relating tosuch events made by those authorities in the course of their analyses.  In determining the existence ofa  threat  of material injury, the investigating authorities will necessarily have to make assumptions
relating to "the "occurrence of future events" since such  future   events  "can never be definitively
proven by facts".
63  Notwithstanding this intrinsic uncertainty , a "proper establishment" of facts in a
determination of threat of material injury must be based on events that, although they have not yet
occurred, must be "clearly foreseen and imminent", in accordance with Article 3.7 of the  Anti-
Dumping Agreement .64
86. Bearing in mind the role assigned to panels under Articles 17.5 and 17.6 of the  Anti-Dumping
Agreement  and Article 11 of the DSU, we turn to examine how the Panel dealt with the treatment of
the alleged restraint agreement by SECOFI in its redetermination.
87. We recall that the United States asserted, before the original panel that, during the anti-
dumping investigation, United States' exporters had learned of the existence of an agreement betweenMexican sugar millers and Mexican soft-drink bottlers.  Under that alleged agreement, Mexican soft-drink bottlers had undertaken to limit their consumption of HFCS while Mexican sugar millers had, in
                                                     
61Appellate Body Report, United States – Hot-Rolled Steel, supra , footnote 59, paras. 50-62.
62Ibid., para. 56.
63Appellate Body Report,  United States – Lamb Safeguard , WT/DS177/AB/R, WT/DS178/AB/R,
adopted 16 May 2001, para 136.
64As we noted in United States – Hot-Rolled Steel :
Article 17.6(i) … defines when  investigating authorities   can be considered
to have acted inconsistently with the  Anti-Dumping Agreement   in the course
of their "establishment" and "evaluation" of the relevant facts.  In otherwords, Article 17.6(i) sets forth the appropriate standard to be applied by
 panels  in examining the WTO-consistency of the investigating authorities'  
establishment and evaluation of the facts under other provisions of the  Anti-
Dumping Agreement .  (original emphasis)
Appellate Body Report, supra , footnote 59, para. 56.WT/DS132/AB/RW
Page 28
turn, agreed to reduce the prices at which sugar was supplied to these bottlers.65  In its original
determination, SECOFI did not determine whether th e alleged restraint agreement actually existed,
but nevertheless concluded that, " in any event , the alleged agreement 'does not eliminate the
possibility that bottlers as well as other sectors that use HFCS in multiple applications [will continue
to import] it under conditions of price discrimination to replace sugar.'" 66  (emphasis added)
88. We note that, in order to arrive at this conclusion, SECOFI must have considered the potential
consequences of the alleged restraint agreement and found that they were not sufficient to eliminatethe threat of material injury to the sugar indu stry.  The original panel found that SECOFI had
inadequately evaluated the impact of dumped imports on the domestic industry and the potentialeffects of the alleged restraint agreement and that, by doing so, had acted inconsistently withArticles 3.1, 3.2, 3.4, 3.7 and 3.7(i) of the  Anti-Dumping Agreement .  As we have already observed,
this original panel report was not appealed and was subsequently adopted by the DSB.
89. By way of implementation, SECOFI then carried out a new investigation, the results of which
are set forth in the redetermination.  In the analysis leading to its new conclusion that there existed a
"well-founded likelihood that a signficant increase in  [imports of HFCS from the United States]
would occur in the immediate future"
67, SECOFI explained:
The Secretariat determined that  even if there was an agreement to
restrict the use of high fructose corn syrup in September 1997,
between the sugar mills and the soft drink bottlers , it would not
eliminate the threat of injury to the domestic sugar industry.68
…
                                                     
65On 23 September 1997, Secretary Blanco Mendoza of SECOFI appeared before the Mexican Senate
and stated that he had "been informed" of the existence of the alleged restraint agreement, and declared that he
took "great satisfaction" in this "private arrangement".  However, the text of the alleged agreement was never
produced to the original panel and, in response to a written inquiry from SECOFI during the course of the anti-dumping investigation, the Mexican Sugar Chamber (which had filed the application for the anti-dumpinginvestigation and was said to be one of the parties to the alleged agreement) denied the existence of such an
agreement. (Original Panel Report, para. 5.529, footno te 425 to para. 5.532 and footnote 433 to para. 5.544
)
66Original Panel Report, para. 7.173, quoting from para. 547 of SECOFI's original determination.
67Redetermination, para. 61.
68Ibid. , para. 56.WT/DS132/AB/RW
Page 29
For purposes of determining the likelihood of an increase in imports
of high fructose corn syrup originating from the United States of
America,  assuming without admitting that the alleged agreement
existed (and in addition that it was strictly honoured by the parties ),
the Secretariat based on projections of total sugar consumption for1997 and 1998, estimated the consumption by industrial sector users
other than soft drink bottlers.
69
…
This allowed the Secretariat to conclude that,  even if the assumed
agreement existed and was complied with , the demand for imports of
high fructose corn syrup based on price levels prevailing in the
domestic market would provide an incentive for an increase in itsconsumption by the consuming industries other than soft drink
bottlers.  Such an increase would be at such a magnitude as to [be]
consider[ed] a significant increase in imports over the levels noted
during the period under investigation ...
70  (emphasis added)
90. In stating that "even if the assumed agreement existed and was complied with" the likelihood
of the threat of injury to the domestic sugar industry would not be eliminated, SECOFI –  arguendo  –
treated the existence of the agreement and its effectiveness  as if they were facts  and concluded that,
even if those assumptions were correct, the threat of material injury to the sugar industry remained.
We note that SECOFI could have made affirmative factual findings concerning the alleged agreement.However, the above reasoning clearly indicates that SECOFI  chose  to assume the existence and
effectiveness of the alleged restraint agreement for purposes of its analysis of the likelihood ofincreased imports.  We further note that none of the parties to this dispute challenged, before the
Panel, SECOFI's decision to make such assumptions.  In these circumstances, it was logical for the
Panel to examine SECOFI's conclusions using the same premises.  Indeed, we consider that it wouldhave been improper for the Panel to have sought, on its own initiative, to go behind the assumptionsmade by SECOFI.
71
91. In challenging the Panel's finding regarding SECOFI's determination of a significant
likelihood of increased imports, Mexico confines its arguments to the Panel's treatment of the allegedrestraint agreement.  Notably, Mexico's appellant's submission does not allege any legal error in the
                                                     
69Redetermination, para. 58.
70Ibid. , para. 60.
71We note, in this context, that Articles 17.5 and 17.6(i) contemplate precisely that panels will examine
antidumping measures on the same  factual basis as that before the investigating authorities.  In Thailand – H-
Beams , we found that "Articles 17.5 and 17.6 clarify the powers of review of a panel established under the  Anti-
Dumping Agreement.  These provisions place limiting obligations on a panel, with respect to the review of the
establishment and evaluation of facts by the investigating authority".  (Appellate Body Report, supra ,
footnote 25, para 114)WT/DS132/AB/RW
Page 30
Panel's analysis leading to its conclusions with respect to SECOFI's projections of increased demand
for HFCS from users  other  than soft-drink bottlers.
92. Notwithstanding the narrow scope of Mexico’s ar guments on this issue, we believe that it is
useful to observe that the Panel (like the original panel) considered that the relevant question was  not
whether the alleged agreement existed, but "whether SECOFI's analysis provide[d] a reasoned
explanation for its conclusion that, assuming [a restraint] agreement existed, there was nonetheless alikelihood of substantially increased importation".
72  In answering this question, the Panel found that
SECOFI's projection of increased HFCS imports depended on the finding that  users other than soft-
drink bottlers  (i.e., those that purportedly were  not  parties to the alleged restraint agreement)  could
and would  replace sugar with HFCS, resulting in an in crease in consumption of HFCS by those users
of more than 400 per cent in 1997.73  This projection was based on SECOFI's view of the ability and
willingness of that segment of the domesti c industry to substitute HFCS for sugar.74  The Panel
observed that SECOFI's projection relied on the supposition that, due to price differentials between
domestic sugar and imported HFCS, substitution of HFCS for sugar would take place.75  The Panel
considered that this supposition was not supported by the evidence in the record concerning the use ofHFCS and sugar in 1996.
76  The Panel also observed that SECOFI had not addressed the "critical
question"77 of the degree to which companies, which had not used HFCS during the period of
investigation (1996), could, as a technical matter (taking into account production processes andequipment), use HFCS in place of sugar in 1997 and 1998.  It was these defects underlying SECOFI’sprojection of increased imports, and  not  any assumption used by the Panel relating to the existence
of the alleged restraint agreement, that led the Panel to conclude that  SECOFI's determination of the
likelihood of increased imports was inconsistent with Article 3.7 (i) of the  Anti-Dumping Agreement .
93. In conclusion, we find that the Panel did not err in using the same assumption with respect to
the alleged restraint agreement that SECOFI used in  the redetermination for purposes of the analysis
leading to its conclusion that there existed a likelihood of substantially increased imports. We,therefore, uphold the Panel's finding, in paragra ph 6.23 of its Report, that "SECOFI's conclusion that
there was a significant likelihood of increased importation is not consistent with Article 3.7(i) of theAD Agreement."
                                                     
72Panel Report, para. 6.14, referring in footnote to para. 7.175 of the Original Panel Report.
73Ibid. , para. 6.16.
74Ibid.
75Ibid.
76Ibid. , para. 6.17.
77Ibid. , para. 6.18.WT/DS132/AB/RW
Page 31
B. Likely Impact of Imports on the Domestic Industry
94. Following its examination of SECOFI's analysis of the likely impact of imports on the
domestic industry, the Panel concluded:
… that SECOFI's redetermination with respect to the likely impact of
dumped imports of HFCS from the United States on the domestic
industry which underlies the determination of threat of material injury
to the Mexican sugar industry is not consistent with Articles 3.1, 3.4,
and 3.7 of the AD Agreement.78
95. Mexico requests that this finding be reversed on appeal. In Mexico's view, it is clear, in
particular from paragraphs 6.34 and 6.35 of the Panel Report, that the Panel's findings regarding thelikely impact of imports on the domestic industry depend on its findings on the likelihood of increasedimports.  Since, as Mexico argued above, the Pane l erred in rejecting SECOFI's conclusion regarding
the likelihood of an increase in imports, Mexico s ubmits that it follows that the Panel's finding
regarding the likely impact of dumped imports on the domestic industry is similarly flawed and mustbe reversed.  This is the sole substantive argument raised in Mexico’s appellant’s submission relating
to the Panel's finding concerning the impact of imports on the domestic industry.
96. In the previous section, we upheld the Panel' s finding that SECOFI did not determine the
existence of a significant likelihood of increased imports in accordance with Article 3.7(i) of the  Anti-
Dumping Agreement.  We agree with Mexico that the Panel's finding on SECOFI's determination of
the impact of imports on the domestic industry depends on the Panel's finding on the likelihood ofincreased imports.  We note, however, that despite this logical inter-dependence, the Panel alsoconsidered SECOFI’s evaluation of a number of economic factors leading to its determination ofthreat of material injury, and we consider it useful to examine its reasoning in this regard.
97. In reviewing the information included in SE COFI’s redetermination, the Panel found that
SECOFI's own analysis indicated that, despite in creased levels of imports, and despite increased
margins of underselling by HFCS relative to sugar, “the domestic sugar industry's performanceimproved in 1996 over 1995, with increased operating margins, net margins, and return oninvestment, as well as increased production and capacity utilisation".
79  The Panel thus concluded that,
in the light of the evidence and explanations provided in the redetermination, there was insufficient
                                                     
78Panel Report, para. 6.36.
79Ibid., para. 6.31.WT/DS132/AB/RW
Page 32
justification for SECOFI's conclusion that imports of HFCS had had "adverse effects" on the domestic
industry during the period of investigation (1996).80
98. With respect to SECOFI's projections concerning the likely condition of the Mexican sugar
industry in 1997, the Panel found that these depended on "a projected decline in industry revenues in
1997 based on declining prices for sugar caused by increased dumped imports of HFCS".81  As we
have seen, however, the Panel also found that "SECOFI's conclusions regarding the projected increasein imports [of HFCS] are not supported by the evidence"
82 and that this "undermines the projected
decline in [domestic industry] revenues for 1997 which is at the core of SECOFI's redetermination".83
99. The Panel further found that "SECOFI has failed to provide a reasoned explanation for why
the performance of the industry will suddenly decline significantly in 1997"84, in particular given that
"SECOFI's projections of price levels and profitability for 1997 are contrary to the trends observedduring the period of investigation".
85  In sum, the Panel provided a number of reasons in support of its
finding that there was insufficient evidence and expl anations to justify  SECOFI's conclusion that the
projected substantial increase in dumped HFCS imports (which, as we have seen, the Panel did not
accept) would cause material injury to the domestic sugar industry in 1997.
100. As the Panel observed, several of the relevant economic factors analysed in the
redetermination indicate a positive performance by the sugar industry during the period ofinvestigation.  We note that Article 3.7 of the  Anti-Dumping Agreement  provides that a
determination of a threat of material injury must be based on a change in circumstances that must be"clearly foreseen and imminent".  Bearing in mind this high standard set by Article 3.7, and havingreviewed the reasoning of the Panel, we see no reason to question the Panel's finding, in
paragraph 6.36, that "SECOFI’s redetermination with respect to the likely impact of dumped imports
of HFCS from the United States on the domestic industry … is not consistent with Articles 3.1, 3.4and 3.7 of the  Anti-Dumping Agreement ".
101. We, therefore, dismiss this part of Mexico's appeal relating to the Panel's review of
SECOFI’s analysis of the impact of imports on th e domestic industry.  We note, however, that Mexico
also requests us to reverse the Panel's finding that  SECOFI's analysis of the impact of imports on the
                                                     
80Panel Report, para. 6.31 .
81Ibid. , para. 6.34.
82Ibid.
83Ibid.
84Ibid. , para. 6.35.
85Ibid.WT/DS132/AB/RW
Page 33
domestic industry was inconsistent with Articles 3.1 and 3.4 of the  Anti-Dumping Agreement  on
other grounds, to which we now turn.
VI. Article 12.7 of the DSU and Article 17.6 of the  Anti-Dumping Agreement :  "Reasoning of
the Panel"
102. In its appeal, Mexico also challenges certain aspects of the reasoning used by the Panel in
finding that SECOFI's analysis of the likely impact of the dumped imports was inconsistent withMexico's obligations under the  Anti-Dumping Agreement .  Mexico argues, first, that the Panel failed
to set out a "basic rationale", as required by Article 12.7 of the DSU, for its findings that Mexico
acted inconsistently with its obligations under Articles 3.1 and 3.4 of the  Anti-Dumping Agreement .
Second, Mexico argues that the Panel erred in its application of Article 17.6(ii) of the  Anti-Dumping
Agreement .
A. Article 12.7 of the DSU:  "Basic Rationale"
103. In the penultimate paragraph of the section of its Report examining SECOFI's analysis of the
likely impact of dumped imports of HFCS on the do mestic industry, the Panel reached the following
conclusion:
We conclude that SECOFI's redetermination with respect to the likely
impact of dumped imports of HFCS from the United States on the
domestic industry which underlies the determination of threat of
material injury to the Mexican sugar industry is not consistent with
Articles 3.1, 3.4, and 3.7 of the AD Agreement.
86
104. On appeal, Mexico points out that this is the only paragraph in the relevant part of the Panel
Report where the Panel states that the redetermination is inconsistent with Articles 3.1 and 3.4 of theAnti-Dumping Agreement.  Mexico asserts that this section of the Panel Report lacks  any  analysis
revealing how the Panel reached such conclusions, and does not identify the specific obligations thatMexico was found to have violated.  Mexico notes that while the Panel may have taken the view thata violation of Article 3.7 of the  Anti-Dumping Agreement   automatically implies a violation of
Articles 3.1 and 3.4 of that Agreement, the Panel Report actually contains no such explanation.
Mexico argues, therefore, that the Panel failed to set out a "basic rationale" as required under
Article 12.7 of the DSU.
105. Article 12.7 of the DSU provides, in relevant part, that:
                                                     
86Panel Report, para. 6.36.  This conclusion is also reflected in paragraph 7.1 of the Panel Report.WT/DS132/AB/RW
Page 34
Where the parties to the dispute have failed to develop a mutually
satisfactory solution, the panel shall s ubmit its findings in the form of a
written report to the DSB.  In such cases, the report of a panel shall set
out the findings of fact, the applicabili ty of relevant provisions and the
basic rationale behind any findi ngs and recommendations that it
makes. … (emphasis added)
106. In considering the scope of the duties imposed on panels under Article 12.7, we turn first to
the dictionary meaning of "basic", which includes both "fundamental; essential" and "constituting aminimum … at the lowest acceptable level".
87  "Rationale" means both "a reasoned exposition of
principles; an explanation or statement of reasons" and "the fundamental or underlying reason for orbasis of a thing; a justification".
88  The "basic rationale" which a panel must provide is directly linked,
by the wording of Article 12.7, to the "findings and recommendations" made by a panel.  We,therefore, consider that Article 12.7 establishes a minimum standard for the reasoning that panelsmust provide in support of their findings and recommendations.  Panels must set forth explanationsand reasons sufficient to disclose the essential, or fundamental, justification for those findings and
recommendations.
107. In our view, the duty of panels under Article 12.7 of the DSU to provide a "basic rationale"
reflects and conforms with the principles of fundamental fairness and due process that underlie andinform the provisions of the DSU.
89  In particular, in cases where a Member has been found to have
acted inconsistently with its obligations under the covered agreements, that Member is entitled toknow the reasons for such finding as a matter of due  process.  In addition, the requirement to set out a
"basic rationale" in the panel report assists such Member to understand the nature of its obligationsand to make informed decisions about:  (i) what must be done in order to implement the eventual
rulings and recommendations made by the DSB;  and (ii) whether and what to appeal.  Article 12.7
also furthers the objectives, expressed in Article 3.2 of the DSU, of promoting security andpredictability in the multilateral trading system and of clarifying the existing provisions of the coveredagreements, because the requirement to provide "basic" reasons contributes to other WTO Members'understanding of the nature and scope of the rights and obligations in the covered agreements.
108. We do not believe that it is either possible or desirable to determine, in the abstract, the
minimum standard of reasoning that will const itute a "basic rationale" for the findings and
                                                     
87The New Shorter Oxford English Dictionary , Lesley Brown (ed.) (Clarendon Press, 1993), Vol. I,
p. 188.
88Ibid. , Vol. II, p. 2482.
89We have also examined these principles in other contexts.  See, for example, Appellate Body Report,
United States – Hot-Rolled Steel , supra , footnote 59, paras. 101 and 193;  Appellate Body Report,  United
States – Import Prohibition of Certain Shrimp and Shrimp Products , WT/DS58/AB/R, adopted 6 November
1998, para. 158;  and Appellate Body Report, United States – FSC , supra , footnote 24, para. 166.WT/DS132/AB/RW
Page 35
recommendations made by a panel.90  Whether a panel has articulated adequately the "basic rationale"
for its findings and recommendations must be determined on a case-by-case basis, taking into accountthe facts of the case, the specific legal provisions at issue, and the particular findings andrecommendations made by a panel.  Panels must identify the relevant facts and the applicable legal
norms.  In applying those legal norms to the relevant  facts, the reasoning of the panel must reveal how
and why the law applies to the facts.  In this way, pa nels will, in their reports, disclose the essential or
fundamental justification for their findings and recommendations.
91
109. This does not, however, necessarily imply that Article 12.7 requires panels to expound at
length on the reasons for their findings and recommendations.  We can, for example, envisage cases inwhich a panel's "basic rationale" might be found in reasoning that is set out in other documents, suchas in previous panel or Appellate Body reports – provided that such reasoning is quoted or, at a
minimum, incorporated by reference.  Indeed, a panel acting pursuant to Article 21.5 of the DSUwould be expected to refer to the initial panel re port, particularly in cases where the implementing
measure is closely related to the original measure, and where the claims made in the proceeding under
Article 21.5 closely resemble the claims made in the initial panel proceedings.
110. Turning to examine whether the Panel in this case satisfied its duty to set forth a "basic
rationale" for its findings under Articles 3.1 and 3.4 of the  Anti-Dumping Agreement , we note that the
relevant section of the Panel Report, entitled "Analysis of Likely Impact of Imports on the DomesticIndustry", is contained in paragraphs 6.24 to 6.37 of the Panel Report.  At the end of this section, the
Panel found that Mexico had acted inconsistently with its obligations under Articles 3.1, 3.4 and 3.7.of the Anti-Dumping Agreement.
1. The Panel's Finding Concerning Article 3.4 of the   Anti-Dumping Agreement
111. We first consider Mexico's argument, on appeal, that the Panel failed to set out a "basic
rationale", as required by Article 12.7 of the DSU, for its finding that Mexico had acted inconsistentlywith its obligations under Article 3.4 of the  Anti-Dumping Agreement.
112. In reviewing SECOFI's analysis of the likely impact of imports on the domestic industry, the
Panel began by recalling the original panel's view that, in a case involving a determination of a threatof material injury, investigating authorities must "consider, among other relevant factors, all the
                                                     
90Appellate Body Report,  Korea – Alcoholic Beverages,  WT/DS75/AB/R, WT/DS83/AB/R, adopted
17 February 1999, para. 168.
91Appellate Body Report,  Chile – Taxes on Alcoholic Beverages ,  WT/DS87/AB/R, WT/DS110/AB/R,
adopted 12 January 2000, para. 78.WT/DS132/AB/RW
Page 36
factors set out in Article 3.4".92  The Panel then recalled the conclusion of the original panel that
SECOFI's initial determination "reflected 'no meaningful analysis of a number of the Article 3.4factors'".
93  It appears to us that, without expressly saying so, the Panel considered, in assessing the
consistency of an injury determination with Artic le 3.4, that it was necessary to examine, first,
whether all listed and other relevant factors were evaluated, and second, whether the evaluation of
each factor by the investigating authorities was adequate.
113. The Panel then restated the applicable standard of review, found in Article 17.6(i) of the Anti-
Dumping Agreement , and observed that the determination of threat of material injury must "as well"
satisfy the elements of Article 3.7 of the  Anti-Dumping Agreement .94  Having identified the relevant
legal standards – Articles 3.4, 3.7 and 17.6(i) – the Panel turned to apply them to the redetermination.
114. In reviewing the evidence that was before SECOFI, the Panel's analysis relating to the claim
under Article 3.4 of the  Anti-Dumping Agreement   is intertwined with its analysis relating to the
claim under Article 3.7 of that Agreement.  For this reason, it is not always easy to ascertain whether
the Panel's review of specific facts was undertaken pursuant to Article 3.4, to Article 3.7, or to both
provisions.  While the Panel did not itself discuss the relationship between those two provisions, it didreproduce three lengthy passages from the original report that reflect the original panel's view of theclose relationship between the obligations under Articles 3.4 and 3.7 of the  Anti-Dumping Agreement
in cases involving a determination of a threat of material injury.
95
115. The United States acknowledged that SECOFI's  redetermination contained "information" on
factors relevant under Article 3.496 and the Panel stated that, "[i]n the redetermination, SECOFI did
provide information on the elements that were not addressed in the original determination".97  Thus, it
seems that the Panel found that the redetermination did address all the relevant factors under
Article 3.4 of the  Anti-Dumping Agreement .
116. The Panel then considered the adequacy of SECOFI's analysis of a number of economic
factors.  Although it did not refer explicitly to Article 3.4, the economic factors analysed by the Panel
                                                     
92Panel Report, para. 6.24.
93Ibid.
94Ibid. , para. 6.27.
95Panel Report, paras. 6.24 and 6.28, referring to th e Original Panel Report, paras. 7.132, 7.140
and 7.141.  We note, also, that the preceding paragraphs of the original panel report set out in detail that panel'sview of the relationship between the obligations set forth in Articles 3.4 and 3.7 of the  Anti-Dumping
Agreement . (Original Panel Report, paras. 6.118-6.131)
96Panel Report, para. 6.25.
97Ibid. , para. 6.29.WT/DS132/AB/RW
Page 37
are among those listed in Article 3.4, including profits, production, capacity utilisation and prices.98
As we discussed in the previous section of this  Report, the Panel found that SECOFI's analysis of
these factors was not supported by the evidence that was before SECOFI.99
117. It appears to us that, while this part of the Panel Report might not reflect an exemplary degree
of clarity in all respects, it can fairly be read as setting out the Panel's "basic" explanations and
reasons for considering that SECOFI's evaluation of certain Article 3.4 factors was not adequate.Thus, we find that the Panel satisfied its duty, under Article 12.7 of the DSU, to provide a "basicrationale" for its finding that Mexico acted inconsistently with its obligations under Article 3.4 of theAnti-Dumping Agreement .
118. For these reasons, we dismiss Mexico's appeal concerning the Panel's alleged failure to
provide a "basic rationale" for its finding concerning Article  3.4 of the  Anti-Dumping Agreement .
We also recall that, in the previous section of this Report, we dismissed Mexico's appeal regarding thesubstance of that finding.
100  We, therefore, uphold the Panel's finding, in paragraph 6.36 of its Report,
that Mexico acted inconsistently with its obligations under Article 3.4 of the  Anti-Dumping
Agreement .
2. The Panel's Finding Concerning Article 3.1 of the  Anti-Dumping Agreement
119. As regards the Panel's finding that Mexico acted inconsistently with Article 3.1 of the  Anti-
Dumping Agreement ,  we recall that the Panel found, in paragraph 6.36 of its Report, that the
redetermination "is not consistent with Articles 3.1, 3.4, and 3.7 of the AD Agreement".
120. Turning again to the section of the Panel Report  reviewing  SECOFI's analysis of the likely
impact of imports on the domestic industry, we note that it does not contain any quotation ordiscussion of the text of Article 3.1, or explanat ion of how Mexico failed  to comply with the
obligations set out in that provision.  Nevertheless, in examining whether the Panel provided a "basicrationale" for its finding with respect to Article 3.1, we believe that we must take account of thecircumstances particular to this case.
121. The Panel was charged, under Article 21.5 of the DSU, with assessing the claims made by the
United States with respect to the consistency of the redetermination with Mexico's obligations underthe  Anti-Dumping Agreement.  In proceeding under Article 21.5 of the DSU, the Panel conducted its
                                                     
98Panel Report, paras. 6.30-6.34.
99The Panel found deficiencies, for example, in the conclusions that SECOFI drew in its analysis of the
domestic industry's projected revenues, production levels and capacity utilisation, and in SECOFI's analysis ofprojected domestic prices. (Panel Report, paras. 6.31-6.35)
100Supra, para. 101.WT/DS132/AB/RW
Page 38
work against the background of the original proceedings, and with full cognizance of the reasons
provided by the original panel.  The original dete rmination and original panel proceedings, as well as
the redetermination and the panel proceedings under Article 21.5, form part of a continuum of events.We consider that the Panel Report cannot be read in isolation from those events.
122. In addition, in this case, the redetermination was not a stand-alone measure, but rather one
that, in the words of Mexico, "complements and amends" the original determination.
101  T h e
United States' claims under Articles 3.1, 3.4 and 3.7 closely resembled the claims that it had made
under Articles 3.1, 3.4 and 3.7 with respect to SECOFI's original determination.
123. We recall that, in its Report, the Panel provided reasons in support of its findings that the
redetermination was inconsistent with Mexico's obligations under Articles 3.4 and 3.7 of the  Anti-
Dumping Agreement .  There is, as we have ourselves observed, a close relationship between the
various paragraphs of Article 3 of the  Anti-Dumping Agreement .102  In its assessment of SECOFI's
original determination, the original panel explained, at length, its views as to the relationship between
Articles 3.1, 3.4 and 3.7.103  Based on its view of the relationship between these three provisions, the
original panel found a violation of Article 3.1 as a consequence of having found violations ofArticles 3.4 and 3.7.
104
124. Having regard to these circumstances, we are of the view that the Panel Report, read together
with the original panel report, leaves no doubt a bout the reasons for the Panel's additional finding
under Article 3.1 of the  Anti-Dumping Agreement .  We, therefore, find that the Panel did not fail to
provide a "basic rationale" for that finding.
125. For these reasons, we dismiss Mexico's appeal concerning the Panel's alleged failure to
provide a "basic rationale" for its finding with respect to Article 3.1 of the  Anti-Dumping Agreement .
We recall that, in the previous section of this Report, we dismissed Mexico's appeal regarding thesubstance of that finding.
105  We, therefore, uphold the Panel's finding, in paragraph 6.36 of its Report,
that Mexico acted inconsistently with its obligations under Article 3.1 of the  Anti-Dumping
Agreement .
                                                     
101Panel Report, para. 3.78.
102See, in particular, Appellate Body Report, Thailand – H-Beams, supra , footnote 25, paras. 106-108;
and Appellate Body Report,  United States – Hot-Rolled Steel , supra , footnote 59, paras. 192-197.
103Original Panel Report, paras. 7.118-7.131.
104We also note that, in their responses to questioni ng at the oral hearing before us, both Mexico and
the United States accepted that a measure that was inconsistent with Article 3.4 of the  Anti-Dumping
Agreement would also be inconsistent with Article 3.1 of that Agreement.
105Supra,  para. 101.WT/DS132/AB/RW
Page 39
126. We wish to add that for purposes of transparency and fairness to the parties, even a panel
proceeding under Article 21.5 of the DSU should strive to present the essential justification for itsfindings and recommendations in its own report.  In this case, in particular, we consider that thePanel's finding under Article 3.1 of the  Anti-Dumping Agreement   would have been better supported
by a direct quotation from or, at least, an explicit reference to, the relevant reasoning set out in the
original panel report.
B. Article 17.6(ii) of the  Anti-Dumping Agreement :  "Permissible Interpretation "
127. In paragraph 6.37 of its Report, the Panel stated:
We do not mean to suggest that it would not be possible to make a
finding of threat of material injury in the circumstances of this case.
Such a conclusion would be beyond the scope of our standard of
review, as it would involve us in analysing the facts de novo .
However, we do conclude that an unbiased and objective investigating
authority could not reach the conclusion that the domestic sugar
industry in Mexico was threatened with material injury on the basis ofthe evidence and explanations provided by SECOFI in the notice of
redetermination. … (underlining added)
128. Mexico argues that this paragraph demonstrates that the Panel in effect recognized that
SECOFI's interpretation of the relevant provisions of the  Anti-Dumping Agreement   was or could be
"permissible".
106  Since Article 17.6(ii) of the  Anti-Dumping Agreement   requires panels not to
disturb "permissible" interpretations by national investigating authorities – even if the panels preferalternative "permissible" interpretations – Mexico concludes that the Panel erred in nevertheless
finding the redetermination to be inconsistent with Mexico's obligations under the  Anti-Dumping
Agreement .
129. We recall that Article 17.6 of the  Anti-Dumping Agreement, which sets out the standard of
review for panels examining claims under that Ag reement, contains two separate sub-paragraphs,
which read:
In examining the matter referred to in paragraph 5:
(i) in its assessment of the facts of the matter, the panel shall
determine whether the authorities' establishment of the facts was
proper and whether their evaluation of those facts was unbiased and
objective.  If the establishment of the facts was proper and theevaluation was unbiased and objective, even though the panel might
have reached a different conclusion, the evaluation shall not be
overturned;
                                                     
106Mexico's appellant's submission , para. 127.WT/DS132/AB/RW
Page 40
(ii) the panel shall interpret the relevant provisions of the
Agreement in accordance with customary rules of interpretation of
public international law.  Where the panel finds that a relevant
provision of the Agreement admits of more than one permissible
interpretation, the panel shall find the authorities' measure to be inconformity with the Agreement if it rests upon one of those
permissible interpretations.
130. We recently examined this standard of review in  United States – Hot-Rolled Steel.  In our
Report in that case, we observed that, pursuant to Article 17.6(i), "the task of panels is simply toreview the investigating authorities' 'establishment' and 'evaluation' of the facts".
107  Under
Article 17.6(ii), panels must "determine whether a measure rests upon an interpretation of the relevantprovisions of the  Anti-Dumping Agreement   which is  permissible under the rules of treaty
interpretation   in Articles 31 and 32 of the  Vienna Convention ."
108  The requirements of the standard
of review provided for in Article 17.6(i) and 17.6(ii) are cumulative.  In other words, a panel mustfind a determination made by the investigating authorit ies to be consistent with relevant provisions of
the  Anti-Dumping Agreement   if it finds that those investigating authorities have properly established
the facts and evaluated those facts in an unbiased and objective manner,  and  that the determination
rests upon a "permissible" interpretation of the relevant provisions.
131. Before considering whether the Panel properly applied the standard of review set forth in
Article 17.6(ii) of the  Anti-Dumping Agreement ,  we first examine Mexico's characterization of
paragraph  6.37 of the Panel Report and, in particular, its contention that the Panel found that
SECOFI's interpretation of the relevant provisions of the  Anti-Dumping Agreement   could be
"permissible".  In the first sentence of paragraph 6.37, the Panel cautioned that it did "not mean tosuggest that it would not be possible to make a finding of threat of material injury in thecircumstances of this case."  In our view, the Panel was not suggesting, in this sentence, thatSECOFI's interpretation of the applicable legal provisions was "permissible".  Rather, the Panel wassimply declining to exclude the possibility that,  had certain factual circumstances been sufficiently
substantiated and properly evaluated by SECOFI in its redetermination ,  SECOFI could  have made a
determination of threat of material injury that would have been consistent with Mexico's obligationsunder the  Anti-Dumping Agreement .  However, in the same paragraph, the Panel considered that, on
the basis of the evidence and explanations actually provided, it was not possible to make such a
finding of threat of material injury:
                                                     
107Appellate Body Report, supra , footnote 59, para. 55.
108Ibid. , para. 60.WT/DS132/AB/RW
Page 41
… we  do conclude  that an unbiased and objective investigating
authority  could  not  reach the conclusion that the domestic sugar
industry in Mexico was threatened with material injury on the basis of
the evidence and explanations provided by SECOFI in the notice of
redetermination. (emphasis added)
132. We are satisfied that, in paragraph 6.37, the Panel was acting according to the standard of
review set forth in Article 17.6(i) of the  Anti-Dumping Agreement .  The Panel reviewed what
SECOFI had done and found that SECOFI's  establishment and evaluation of the facts  did not
support its determination of a threat of material injury.109  This finding was sufficient for the Panel to
find the redetermination to be inconsistent with Articles 3.1, 3.4 and 3.7 of the  Anti-Dumping
Agreement .
133. We are further satisfied that the Panel was  not,  in this paragraph, dealing with any issue of
legal interpretation of the relevant provisions of the  Anti-Dumping Agreement .110  The Panel did not
consider whether SECOFI's determination of the existence of a threat of material injury rested on a"permissible" legal interpretation of Articles 3.1, 3.4 and 3.7 of the  Anti-Dumping Agreement
because the Panel found that SECOFI's establishment and evaluation of  the facts  did not support
that determination.  Thus, the Panel did not need to apply the standard of review in Article 17.6(ii).
134. For these reasons, we are unable to accept Mexico's assertion that the reasoning used in
paragraph 6.37 indicates that the Panel found that  SECOFI's legal interpretation of the relevant
provision of the  Anti-Dumping Agreement   could be "permissible".  As Mexico's appeal concerning
the standard of review in Article 17.6(ii) of the  Anti-Dumping Agreement  depends on this premise,
we dismiss this part of Mexico's appeal.
VII. Findings and Conclusions
135. For the reasons set out in this Report, the Appellate Body:
(a) finds that the Panel did not err in refraining from addressing in its Report:  the lack of
consultations between the United States and Mexico prior to the DSB's referral of theredetermination to the Panel;  the alleged failure of the United States to comply withArticle 6.2 of the DSU because its communication seeking recourse to Article 21.5 ofthe DSU did not indicate whether consultations had been held;  and the alleged failure
                                                     
109We recall that the findings of the Panel were based on its review of the  factual  basis for SECOFI's
projected increases in demand for HFCS from users other than soft-drink bottlers, and on the resulting projected
increase in HFCS imports and projected impact on the Mexican sugar industry.
110The Panel itself noted that neither Mexico nor the United States "made any arguments concerning
the interpretation of the applicable provisions of the AD Agreement." (Panel Report, footnote 66 to para. 6.5)WT/DS132/AB/RW
Page 42
of the United States to exercise its judgement, in accordance with Article 3.7 of the
DSU, as to whether action under the DSU would be "fruitful";
(b) upholds the Panel's finding, in paragraph 6.23 of the Panel Report, that SECOFI's
conclusion, in the redetermination, that there existed a significant likelihood of
increased imports was inconsistent with Mexico's obligations under Article 3.7(i) of
the  Anti-Dumping Agreement ;
(c) upholds the Panel's finding, in paragraph 6.36 of the Panel Report, that SECOFI's
conclusion, in the redetermination, with respect to the likely impact of dumpedimports of HFCS from the United States on the domestic industry, was inconsistentwith Mexico's obligations under Articles 3.1, 3.4, and 3.7 of the  Anti-Dumping
Agreement ;
(d) finds that the Panel satisfied its duty, under Article 12.7 of the DSU, to set out a
"basic rationale behind [its] findings" with respect to Articles 3.1 and 3.4  of the  Anti-
Dumping Agreement ;  and
(e) finds that the Panel did not act inconsistently with the standard of review set out in
Article 17.6(ii) of the  Anti-Dumping Agreement .
136. The Appellate Body  recommends   that the DSB request that Mexico bring its anti-dumping
measure found in this Report, and in the Panel Report as upheld by this Report, to be inconsistent withthe  Anti-Dumping Agreement ,  into conformity with its obligations under that Agreement.WT/DS132/AB/RW
Page 43
Signed in the original at Geneva this 5th day of October 2001 by:
_________________________
Florentino P. Feliciano
Presiding Member
_________________________ _________________________
Georges Abi-Saab Claus-Dieter Ehlermann
Member Member