./.WORLD TRADE
ORGANIZATIONG/SCM/104
13 February 2003
(03-0919)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
COUNTERVAILING DUTY INVESTIGATION BY PERU ON OLIVE OIL
FROM THE EUROPEAN COMMUNITY
Request for consultations by the European Community
under Article 13.2 of the Agreement
The following communication, dated 11 February 2003, has been received from the
Permanent Delegation of the European Commission.
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The European Community (EC) requests consultations with the Republic of Peru on the
countervailing duty investigation concerning imports of olive oil from the European Community.
These consultations are requested in accordance with Article 13.2 of the WTO Agreement on
Subsidies and Countervailing Measures (“the SCM Agreement”).
These consultations concern the initiation, on 29 August 2002, of the above mentioned CVD
investigation by the INDECOPI - Instituto Nacional de Defesa de la Competencia y de la Protección
de la Propriedad Intelectual and the imposition, on 21 November 2002, of provisional countervailing
duties.
The purpose of the consultations is to enable the EC to clarify a number of issues arising from
the decisions taken by INDECOPI.
The issues which the EC will raise during the consultations are as follows:
(a) Initiation of the investigation on alleged subsidised imports of olive oil from the EC
The EC is convinced that this investigation shou ld not have been initiated because it does not
meet the requirements provided by Article 11 of the SCM Agreement.
1. According to Article 11.2(iii) of the SCM Agreement, petitioners have to provide “evidence
with regard to the existence, amount and nature of  the subsidy in question”.  In addition, petitioners
are required to explain why these programmes have provided a countervailable benefit to theproducers concerned. In that respect, the petition should include all the information, which is
reasonably available to the applicant.  In the present case the petitioners have failed to provide
sufficient evidence to demonstrate that the alleged subsidy confers a benefit to the product concerned.
In particular, the petitioners failed to provide evidence on the benefit conferred to olive oil through the
aid attributed to olive growers.
2. In this regard, it is also considered that the INDECOPI did not sufficiently “review the
accuracy or adequacy of the evidence provided in the application” to determine whether there was
sufficient evidence to justify the initiation of an investigation, as required by Article 11.3.G/SCM/104
Page 2
(b) Imposition of provisional countervailing duties on alleged subsidised imports of olive oil
from the EC
The EC has serious concerns about the Peruvian decision to impose provisional
countervailing measures.  The EC is convinced that this decision raises serious doubts on the WTO
compatibility of this investigation, as foreseen in Article 10 of the WTO SCM Agreement.
1. Article 17.1(a) of the WTO SCM Agreement provides that provisional measures may be
applied only if interested Members and interested parties have been given adequate opportunity to
submit information and make comments.  In the present investigation interested parties were not given
such an opportunity.  Notably, the Peruvian authorities imposed provisional measures before
receiving the EC’s reply to their questionnaire, in spite of the fact that the questionnaire was
submitted by the EC before the expiry of the deadline for replying.
Moreover, Article 13.2 and footnote 44 of the SCM Agreement provide that “throughout the
period of investigation, Members the products of which are the subject of the investigation shall be
afforded reasonable opportunity to continue consultations” and no affirmative determination should
be made without reasonable opportunity for consul tation being given. In fact, INDECOPI, by not even
waiting for the EC questionnaire reply, made an  affirmative preliminary determination “without
reasonable opportunity for consultations having been given”, since such a reply must be the basis for
such consultations.  In these circumstances, the EC and the Member States did not have the
opportunity to clarify the factual situation with a vi ew to arriving at a mutually agreed solution, as
foreseen in the above-mentioned Article.  Therefore, INDECOPI appears to have based its findingsand the decision to impose provisional measures solely on the information presented by the Peruvian
domestic industry.
2. Under the provisions of Articles 1.1 (b) of the SCM Agreement a “subsidy shall be deemed to
exist if a benefit is thereby conferred”.  In Addition, Article 14 provides that the amount of a subsidyshould be calculated in terms of the benefit to the recipient and the method used in the particular case
shall be transparent and adequately explained.  In this regard, the Peruvian investigation authority
seems to have based its findings only on provisions of Regulation No 136/66/ EEC, of
22 September 1966, on the establishment of a common organisation of the market in oils and fats.
However, the alleged subsidy is an assistance that growers of olives in EC Member States can apply
for.  The level of this assistance varies according to Member State and to harvest.  In these
circumstances, the investigating authorities have to analyse the existence of an alleged downstreambenefit to olive oil producers, and the effect on import prices, so as to demonstrate that olive oil
imports are, through the effect of a financial contribution to the production of olives, causing injury to
the domestic industry.
The EC looks forward to agreeing a suitable date for these consultations.  It is provisionally
suggested that the consultations take place in Geneva as soon as possible.
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