WT/DS577/RW  
20 February  2024 
(24-1541) Page: 1/31 
  Original:  English   
 
  
UNITED  STATES  – ANTI -DUMPING AND COUNTERVAILING  
DUTIES ON RIPE OLIVES FROM SPAIN  
RECOURSE TO ARTICLE  21.5 OF THE DSU BY THE EUROPEAN  UNION  
REPORT OF THE PANEL  
 
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  TABLE OF CONTENTS  
 
1   INTRODUCTION  ................................ ................................ ................................ ..........  8 
1.1   Complaint by the European  Union  ................................ ................................ ................  8 
1.2   Panel establishment and composition  ................................ ................................ ...........  8 
1.3   Panel proceedings  ................................ ................................ ................................ ...... 9 
2   FACTUAL ASPECTS  ................................ ................................ ................................ ..... 10 
3   PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS  ................................  10 
4   ARGUMENTS OF THE PARTIES  ................................ ................................ ...................  11 
5   ARGUMENTS OF THE THIRD PARTIES  ................................ ................................ ........  11 
6   INTERIM REVIEW  ................................ ................................ ................................ ...... 11 
7   FINDINGS  ................................ ................................ ................................ .................  11 
7.1   General principles regarding treaty interpretation, the applicable standard of review, and 
burden of proof  ................................ ................................ ................................ ...............  11 
7.1.1   Treaty interpretation  ................................ ................................ ..............................  11 
7.1.2   Standard of review  ................................ ................................ ................................ . 11 
7.1.3   Burden of proof  ................................ ................................ ................................ ..... 12 
7.2   The European  Union's  claims in relation to Section  771B of the Tariff Act of 1930 and its 
application in the ripe olives from Spain countervailing duty investigation  ................................  12 
7.2.1   Introduction  ................................ ................................ ................................ ..........  12 
7.2.2   The Panel's task in this compliance proceeding and the nature of the actions taken  
by the United  States to achieve compliance with DSB recommendations and rulings  ..................  14 
7.2.3   Analysis of the United  States' implementation measure in relation to findings in  
the original proceeding  ................................ ................................ ................................ ..... 16 
7.2.3.1    Findings in the original proceeding in relation to Section  771B of the Tariff Act of  
1930 and its application in the ripe olives countervailing duty investigation  ..............................  16 
7.2.3.2    The USDOC's revised analysis  and application of S ection  771B in the ripe olives 
Section  129 proceeding  ................................ ................................ ................................ .... 19 
7.2.3.3    Whether the United  States' im plementation measures address the "as such"  
inconsistency of Section  771B ................................ ................................ ............................  21 
7.2.3.3.1    The USDOC's reconsideration of the meaning of "raw agricultural product" and  
"prior stage product" in Section  771B ................................ ................................ .................  22 
7.2.3.3.2    The USDOC's "additional considerations"  ................................ .............................  23 
7.2.3.3.2.1    The USDOC's assessment that it has discretion to take into account  
considerations in addition to the specifically enume rated factors in Section  771B ......................  23 
7.2.3.3.2.2    The USDOC's evaluation of "deemed" and its assessment that it has discretion  
to attribute less than the full amount of subsidies under Section  771B ................................ ..... 25 
7.2.3.3.3    Overall assessment  ................................ ................................ ...........................  27 
7.2.3.4    Whether the application of Section  771B i n the Section  129 proceeding also violates 
Article  VI:3 of the GATT 1994 and Article  10 of the SCM  Agreement  ................................ ........  29 
8   CONCLUSIONS AND RECOMMENDATIONS  ................................ ................................ . 30 
 
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  LIST OF ANNEXES  
ANNEX  A 
PANEL DOCUMENTS  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  4 
Annex  A-2 Additional Working Procedures of the Panel concerning Business Confidential 
Information  11 
Annex  A-3 Additional Working Procedures for the Panel: Open Meeting  13 
Annex  A-4 Interim Review  14 
ANNEX B  
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of the European  Union  21 
Annex  B-2 Integrated executive summary of the arguments of the United  States  28 
ANNEX C  
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex  C-1 Integrated executive summary of the arguments of Brazil  42 
Annex  C-2 Integrated executive summary of the arguments of Canada  43 
Annex  C-3 Integrated executive summary of the arguments of Japan  47 
Annex  C-4 Integrated executive summary of the arguments of the Russian Federation  52 
 
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  CASES CITED IN THIS REPORT  
Short Title  Full Case Title and Citation  
Chile – Price Band System 
(Article  21.5 – Argentina)  Panel Report, Chile – Price Band System and Safeguard Measures Relating to 
Certain Agricultural Products – Recourse to Article  21.5 of the DSU by Argentina , 
WT/DS207/RW  and Corr.1, adopted 22  May 2007, upheld by Appellate Body 
Report WT/DS207/AB/RW, DSR 2007:II, p.  613 
China – Autos (US)  Panel Report, China – Anti-Dumping and Countervailing Duties on Certain 
Automobiles from the United  States , WT/DS440/R  and Add.1, adopted 
18 June 2014, DSR 2014:VII, p.  2655 
China – Broiler Products  Panel Report, China – Anti-Dumping and Countervailing Duty Measures on Broiler 
Products from the United  States , WT/DS427/R  and Add.1, adopted 
25 September  2013, DSR 2013:IV, p.  1041 
China – GOES  Panel Report, China – Countervailing and Anti -Dumping Duties on Grain Oriented 
Flat-Rolled Electrical  Steel from the United  States , WT/DS414/R  and Add.1, 
adopted 16  November  2012, upheld by Appellate Body Report WT/DS414/AB/R, 
DSR 2012:XII, p.  6369 
EC – Bed Linen 
(Article  21.5 – India)  Appellate Body Report, European  Communities – Anti-Dumping Duties on Imports 
of Cotton -Type Bed Linen from India – Recourse to Article  21.5 of the DSU  by 
India, WT/DS141/AB/RW , adopted 24  April 2003, DSR 2003:III, p.  965 
EC – Hormones  Appellate Body Report, European  Communities – Measures Concerning Meat and 
Meat Products (Hormones) , WT/DS26/AB/R , WT/DS48/AB/R , adopted 
13 February  1998, DSR  1998:I, p.  135 
Japan – Alcoholic 
Beverages II  Appellate Body Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/AB/R , 
WT/DS10/AB/R , WT/DS11/AB/R , adopted 1  November  1996, DSR  1996:I, p.  97 
Mexico – Corn Syrup 
(Article  21.5 – US) Appellate Body 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 , WT/DS132/AB/RW , adopted  21 November  2001, DSR  2001:XIII, 
p. 6675 
US – Carbon Steel (India) 
(Article  21.5 – India)  Panel Report, United  States  – Countervailing Measures on Certain Hot -Rolled 
Carbon Steel Flat Products from India – Recourse to Article  21.5 of the DSU by 
India, WT/DS436/RW  and Add.1, 15  November  2019, mutually agreed solution 
reported  
US – Coated Paper 
(Indonesia)  Panel Report, United  States  – Anti-Dumping and Countervailing Measures on 
Certain Coated Paper fro m Indonesia , WT/DS491/R  and Add.1, adopted 
22 January  2018, DSR  2018:I, p.  273 
US – Countervailing Duty 
Investigation on DRAMS  Appellate Body Report, United  States  – Countervailing Duty Investigation on 
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea , 
WT/DS296/AB/R , adopted 20  July 2005, DSR  2005:XVI,  p. 8131 
US – Countervailing 
Measures on Certain EC 
Products ( Article  21.5 – 
EC) Panel Report, United  States  – Countervailing Measures Concerning Certain 
Products from the European Communities – Recourse to Article  21.5 of the DSU 
by the European  Communit ies, WT/DS212/RW , adopted 27  September  2005, 
DSR 2005:XVIII, p.  8950 
US – Gambling 
(Article  21.5 – Antigua and 
Barbuda)  Panel Report, United  States  – Measures Affecting the Cross -Border Supply of 
Gambling and Betting Services – Recourse to Article  21.5 of the DSU by Antigua 
and Barbuda , WT/DS285/RW , adopted 22  May 2007, DSR  2007:V III, p.  3105 
US – Lamb  Appellate Body Report, United  States  – Safeguard Measures on Imports of Fresh, 
Chilled or Frozen Lamb Meat from New  Zealand and Australia , WT/DS177/AB/R , 
WT/DS178/AB/R , adopted 16  May 2001, DSR  2001:IX, p.  4051 
US – Pipes and Tubes 
(Turkey)  Panel Report , United  States  – Countervailing Measures on Certain Pip e and Tube 
Products from Turkey , WT/DS523/R  and Add.1, circulated to WTO Members 
18 December 2018, appealed 25 January 2019  
US – Ripe Olives from 
Spain  Panel Report, United  States  – Anti-Dumping and Countervailing Duties on Ripe 
Olives from Spain , WT/DS577/R  and Add.1, adopted 20 December 2 021 
US – Softwood Lumber VI 
(Article  21.5 – Canada)  Appellate Body Report, United  States  – Investigation of the International Trade 
Commission in Softwood Lumber from Canada – Recourse to Article  21.5 of the 
DSU by Canada , WT/DS277/AB/RW , adopted 9  May 2006, and  Corr.1, 
DSR 2006:XI, p.  4865 
US – Softwood Lumber VII  Panel Report, United  States  – Countervailing Measures on Softwood Lumber from 
Canada , WT/DS533/R  and Add.1, circulated to WTO Membe rs 24  August  2020, 
appealed 28 September 2020  WT/DS577/RW  
 
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  Short Title  Full Case Title and Citation  
US – Washing Machines  Panel Report, United  States  – Anti-Dumping and Countervailing Measures on Large 
Residential Washers from Korea , WT/DS464/R  and Add.1, adopted 
26 September  2016, as modified by Appellate Body Report WT/DS464/AB/R, 
DSR 2016:V, p.  2505 
US – Wool Shirts and 
Blouses  Appellate Body Report, United  States  – Measure Affecting Imports of Woven Wool 
Shirts and Blouses from India , WT/DS33/AB/R , adopted 23  May 1997, and Corr.1, 
DSR 1997:I, p.  323 
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  EXHIBITS  REFERRED TO IN THIS REPORT  
 
Exhibit  Short Title (if any)  Description  
EU-1 Preliminary Section  129 
determination  USDOC, Ripe Olives from Spain: Preliminary Section  129 
Determination Regarding the Countervailing Duty 
Investigation, C -469-818 (23 September  2022)  
EU-2 Final Section  129 
determination  USDOC, Ripe Olives from Spain: Final Section  129 
Determination Regarding the Countervailing Duty 
Investigation, C -469-818 (20  December  2022)  
EU-4 Notice of implementation of 
Section  129 determinati on International Trade Administration, Ripe Olives from Spain: 
Implementation of Determination Under Section  129 of the 
Uruguay Round Agreements Act , United  States  Federal 
Register Vol. 88 (19 January 2023), pp.  3384-3385 
EU-5 Section  771B Text of Section  771B of the US Tariff Act of 1930  as codified 
in United  States  Code (online versio n accessed  
13 August  2023), Title 19, Section  1677-2. 
EU-9 Legislative History of 
Section  771B United  States  Senate, "Amendment No. 326 (Purpose: 
Calculation of subsidies on certain processed agricultural 
products)", Congressional Record, Vol. 133, Part  13, 
100th Congress, 1st session, 26  June 1987, pp. 17764 -17766.  
EU-10 Asociación de Exportadores e 
Industriales de Mes a et al. v. 
United States   United States Court of International Trade, Slip Op. 20 -8, 
Asociación de exportadores e industriales de Aceitunas de 
Mesa, Aceitunas Guadalquivir, S.L.U ., Agro Sevilla Aceitunas 
S. Coop. And., and Ángel Camacho Alimentación, S.L. v. 
United  States ( 17 January  2020)  
USA-8 United  States  v. Eurodif S.A.,  
555 U.S. 305 (2009)  United  States  Supreme Court, United  States  v. Eurodif S.A., 
555 U.S. 305 (2009)  
USA-10 Chevron, USA, Inc. v. Natural 
Resources Defense Council, 
Inc., 467 U.S. 837 (1984)  United  States  Supreme Court, Chevron, USA, Inc. v. Natural 
Resources Defense Council, Inc., 467 U.S. 837 (1984)  
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  ABBREVIATIONS USED IN THIS REPORT  
Abbreviation  Description  
BCI business confidential information  
BPS basic payment scheme  
DSB Dispute Settlement Body  
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes  
GATT 1994  General Agreement on Tariffs and Trade 1994 
SCM Agreement  Agreement on Subsidies and Countervailing Measures  
Section  771B Section  771B of the US Tariff Act of 1930  
URAA  Uruguay Round Agreement s Act 
USDOC  United  States  Department of Commerce  
WTO World Trade Organization  
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  1  INTRODUCTION  
1.1  Complaint by the European  Union  
1.1.  This dispute concerns the United  States ' compliance with the adopted recommendations and 
rulings of the Dispute Settlement Body (DSB) in United  States  – Anti-Dumping and Countervailing 
Duties on Ripe Olives from Spain . The European  Union  claims that the United  States  has failed to 
comply with the adopted findings of the panel report concerning the incompatibility of Section  771B 
of the US  Tariff Act of 1930 ( Section  771B)  "as such " and "as applied " in the Final Affirmative 
Countervailing Duty Determination and Countervailing Duty Order of 1 August 2018 on ripe olives 
from Spain,  with Article  VI:3 of the General Agreement on Tariffs and Trade (GATT 1994) and 
Article  10 of the Agreement on Subsidies and C ountervailing Measures  (SCM Agreement ). 
1.2.  The DSB adopted the panel report in the original proceeding on 20 December 2021.1 
On 19 January  2022, the United  States  notified the DSB of its intention to implement the 
DSB's rulings and recommendations, pursuant to Article  21.3 of the DSU , and that it required a 
reasonable period of time in which to do so .2 On 1 July 2022, the European  Union  and the 
United  States  informed the DSB of their mutual agreement that the reasonable period of time for 
the United  States  to implement the DSB's recommendations and rulings would be 12 months and 
25 days from the date of the adoption of the panel report, expiring on 14  January  2023.3 
On 16 January 2023, the United  States  informed  the DSB that it had " completed its implementation 
of the DSB's recommendations in this dispute" .4  
1.3.  On 28 April 2023, the European  Union  requested consultations with the United  States  pursuant 
to Articles  1, 4, and 21.5 of the DSU, Article  30 of the SCM Agreement , and  Article  XXIII of the 
GATT  1994.5 
1.4.  The European  Union  and the United  States  held consultations  on 24 May 2023 . These 
consultations failed to resolve the dispute . 
1.2  Panel establishment and composition  
1.5.  On 14 July 2023 , the European  Union  requested the establishment of a panel pursuant to 
Article  21.5 of the DSU , with standard terms of reference.6 At the DSB's  meeting on 28 July 2023 , 
the United  States  accepted the establishment of a compliance panel and the DSB referred this 
dispute to t he original panel in accordance with Article  21.5 of the DSU .7 
1.6.  The Panel's terms of reference are the following:  
To examine, in the light of the relevant provisions of the covered agreements cited by 
the parties to the dispute, the matter referred to the DSB by the European  Union  in 
 
1 DSB, Minutes of the meeting held on 20 December 2021 , WT/DSB/M/4 59, para . 7.7. 
2 Communication from the United  States , WT/DS 577/10. 
3 Agreement under Article  21.3( b) of the DSU, WT/DS577/12.  
4 Status report regarding implementation of the DSB recommendations and rulings by the 
United  States , WT/DS577/13 . 
5 Request for consultations by the European  Union , WT/DS 577/15 (European  Union 's con sultation 
request) . On 13 February 2023, the European  Union  and the United  States  informed the DSB that the 
two parties had concluded agreed procedures under Articles  21 and 22 of the DSU,  which provided inter alia 
that "[s]hould the EU consider that the situation described in Article  21.5 of the DSU exists, the EU will request 
that the United  States  enter into consultations with the EU." (Understanding between the United  States  and the 
European  Union  regarding procedures under Articles  21 and 22 of th e DSU, WT/DS577/14  (Agreed procedures 
under Articles  21 and 22 of the DSU) , para.  1). 
6 Request for the establishment of a panel by the European  Union , WT/DS 577/16 
(European  Union 's panel request) . 
7 DSB, Minutes of the meeting held on 28 J uly 2023, WT/DSB /M/48 2. Under the agreed procedur es 
under Articles  21 and 22 of the DSU,  the United  States  agreed to  accept the establishment of a panel  under 
Article  21.5 of the DSU at the  first DSB meeting at which the European  Union 's panel request appear ed on the 
agenda  for the meeting. (Agreed procedures under Articles  21 and 22 of the DSU , para.  2). WT/DS577/RW  
 
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  document WT/DS 577/16  and to make such findings as will assist the DSB in making the 
recommendations or in giving the rulings provided for in those agreements.8 
1.7.  In accordance with Article  21.5 of the DSU, the Panel was composed on 31 July 2023 , 
comprising  the same panel members as in the original proceedings , as follows : 
Chairperson:  Mr Da niel Moulis  
 
Members:   Mr Martin Garcia  
   Ms Charis Tan  
 
1.8.  Brazil, Canada, China, India, Japan, the Russian Federation, Switzerland and Türkiye  notified 
their interest in participating in the Panel proceedings as third parties.  
1.3  Panel proceedings  
1.9.  Following the composition of the Panel, on 2 August 2023, the Panel invited the parties to an 
organizational meeting to discuss proposed working procedur es and a timetable  for these 
proceedings .9 On 3 August 2023, the European  Union  informed the Panel that it would be  unavailable 
to attend  a meeting in person before 22 August  2023 and alternatively proposed that the parties 
provide written comments on pro posed working procedures and a timetable.10 On 4 August  2023, 
the United  States  informed the Panel of its availability to attend an organizational meeting.11 On 
7 August  2023, the Panel invited the parties to comment in writing on proposed working procedur es 
and a timetable.12 On 10  August  2023, the parties provided their written comments. In its comments 
the European  Union  informed the Panel that it would be unable to submit its first written submission 
until 30 August 2023 and requested that the deadline be set on that date.13 The United  States  also 
requested additional time to file its first written submission.14 On 11 August 2023, the United  States  
provided further comments on the deadlines for the parties to file their  first written submission s.15  
1.10.  On 1 4 August  2023, the Panel adopted its Working Procedures16, Additional Working 
Procedures concerning  Business Confidential Information (BCI)17, and timetable.18 The Panel revised 
its timetable during the panel proceedings in light of subsequent developments.19 On 
28 November  2023, the Panel informed the parties of the expected date of the issuance of the 
Interim Report . 
1.11.  The European  Union  and the United  States  filed their first written submissions on 
30 August  2023 and 20 September 2023, respectively. Third parties filed their written submissions 
on 2 October  2023. The European  Union  and the United  States  filed their second written submissions 
on 4 October 2023 an d 18 October 2023, respectively.  
1.12.  The Panel held one substantive meeting with the parties on 25 and 26 October 2023. A  session 
with the third parties took place on 25 October 2023. At the request of the parties, the 
Panel's  meeting with the parties was opened to the public by means of a live closed -circuit television 
 
8 Constitution note of the Panel related to the European  Union 's recourse to Article  21.5 of the DSU, 
WT/DS577/17 . 
9 Panel communication to the parties (2 August 2023).  
10 European  Union 's communication (3 August 2023).  
11 United  States ' communication (4 August 2023).  
12 Panel communication to the parties  (7 August 2023).  
13 European  Union 's communication (10 August 2023).  
14 United  States ' communication (10 August 2023).  
15 United  States ' communication (11 August 2023).  
16 Working Procedures of the Panel (Annex A -1). 
17 Additional Working Procedures of the Panel concerning BCI (Annex A -2). 
18 Panel communication to the pa rties (14 August 2023). The Panel further informed the parties that it 
was available to meet with the parties on 23 August 2023 to further discuss the parties' proposals with respect 
to organizational aspects of this proceeding. Neither party requested a m eeting.  
19 The timetable was updated and revised on 8 November 2023 and 1 December 2023 . In addition, the 
Panel revised its timetable on 21 December 2023 following a request by the United States to exten d the 
deadline for parties to request review of precis e aspects of the interim report and to request an interim review 
meeting.  WT/DS577/RW  
 
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  broadcast to a separate viewing room in the WTO. The third-party session was also opened to the 
public by means of a  live closed -circuit television broadcast.20 
1.13.  On 12 December 2023, the Pane l issued the descriptive part of its Report to the parties. The 
Panel issued its Interim Report to the parties on 21 December 2023. The Panel issued its Final  Report 
to the parties on 8 February 2024 . 
2  FACTUAL ASPECTS  
2.1.  The European  Union  challenges the measures taken by the United  States  to comply with the 
DSB's recommendations and rulings in the original proceeding. In its panel request, the 
European  Union  refers to the following measures:  
a. the final determination of the United  States  Department of Commerce (USDOC) of 
20 December  2022 under Section  129 of the Uruguay Round Agreements Act (URAA), 
regarding the countervailing duty investigation of ripe olives from Spain  (final Section  129 
determination)21; 
b. the USDOC's notice of implementatio n of 13 January 202322; 
c. the preliminary determination memorandum of the USDOC of 23 September 2022  
(preliminary Section  129 determination)23; 
d. Section  771B, insofar as the inconsistency with Article  VI:3 of the GATT 1994 and 
Article  10 of the SCM Agreement  has not been removed24; and 
e. the countervailing  duty order issued on 1 August 2018 by the USDOC and applicable as 
from the same date, insofar as the final Section  129 determination effectively amends and 
maintains it in force and effect, at least with regard to the parts pertaining to the findings 
of the panel report concerning the incompatibility as such and as applied with the WTO 
agreements in relation to Section  771B.25 
3  PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS  
3.1.   The European  Union  requests the Panel  to find that  the USDOC's final Section  129 
determination concerning pass -through  of benefit and the definitive countervailing duty order that 
remain s in effect are inconsistent with the United  States ' obligations under Article  VI:3 of the 
GATT  1994 and Article  10 of the SCM Agreement .26 
3.2.  The European  Union  therefore  requests the Panel to find that the United  States ' measures 
taken to comply are inconsistent with the  rulings and recommendations of the DSB . The 
European  Union  further requests the Panel to recommend that the United  States  bring its measures 
 
20 After consultations with the parties, t he Panel adopted its Additional Working Procedures concerning 
holding an open meeting on 20  September  2023 (Additional Working Procedures for the Panel: Open Meeting 
(Annex  A-3)). Canada, Japan , and the Russian Federation made statements at the third-party session . 
21 European  Union 's panel request , p. 1. See also Final Section  129 determination (Exhibit  EU-2). 
22 European  Union 's panel request , p. 1 and fn 4  (noting "[t] he notice of the completed implementation 
was published in the U.S. Federal Register on 19 January, 2023, and can  be found at 88 Fed. Reg. 3384  
https://www.fede ralregister.gov/documents/2023/01/19/2023 -00930/ripe -olives -from-spain -implementation -o
f-determination -under -section -129-of-the-uruguay -round "). See also Notice of implementation of Section  129 
determination (Exhibit EU -4). 
23 European  Union 's panel request , p. 2 and fn 5 . See also Preliminary  Section  129 determination  
(Exhibit EU -1). 
24 European  Union 's panel request , p. 2. See  also Section  771B (Exhibit EU -5). 
25 European  Union 's panel request , p. 2 and fn 7  (referring to "Ripe Olives from Spain: Amended Final 
Affirmative Countervailing Duty Determination and Countervailing Duty Order, 83 FR 37469, 1 August 2018 "; 
"Ripe Olives from Spain: Antidumping Duty Order, 83 FR 37467, 1 August 2018 "; "Ripe Olives from Sp ain: 
Final Affirmative Countervailing Duty Determination, C -469-818, DOC, 11 June 2018, published in 83 FR 
28186, 18 June 2018 "; "Ripe Olives from Spain: Final Affirmative Determination of Sales at Less Than Fair 
Value, A -469-817, DOC, 11 June 2018, publis hed in 83 FR 28193, 18 June 2018 "; and " Ripe Olives from Spain, 
Investigation Nos 701 -TA-582 and 731 -TA-1377 (Final), US ITC, July 2018 "). 
26 European  Union's first written submission, para.  78; second written submission, para.  40. WT/DS577/RW  
 
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  into conformity with its obligations under the GATT 1994 and the SCM Agreement , including by 
revoking its determin ation and ceasing to impose countervailing duties.27 
3.3.  The United  States  requests that the Panel find that the United  States ' measures taken to 
comply are not inconsistent with the SCM Agreement  or the GATT 1994 , and  the United  States  
further requests that the Panel reject the European  Union 's claims to the contrary.28 
4  ARGUMENTS OF THE PARTIES  
4.1.  The arguments of the parties are reflected in their executive summaries, provided to the Panel 
in accordance with paragraph  23 of the Working Procedures adopted by the Pan el (see Annexes B -1 
and B -2). 
5  ARGUMENTS OF THE THIRD PARTIES  
5.1.  The arguments of Brazil,  Canada, Japan and the Russian Federation  are reflected in their 
executive summaries, provided in accordance with paragraph  26 of the Working Procedures adopted 
by the Panel (see Annexes C-1, C-2, C-3, and C -4). China, India, Switzerland and Türkiye  did no t 
submit written or oral arguments to the Panel.  
6  INTERIM REVIEW  
6.1.  On 21 December 2023 , the Panel issued its Interim Report to the parties.  On 18 January 2024 , 
the United  States  submitted a written request for the Panel to review aspects of the Interim Report. 
The European Union did not make any request to review the Interim Report . On 30 January 2024 , 
the European  Union  submitted comments on the United States'  request for review.  
6.2.  The United States' request  to review particular aspects  of the Interim Report,  the European 
Union's comments  made at the interim review stage , as well as the Panel's  discussion and disposition 
of the United States'  request , are set out in Annex  A-4. 
7  FINDINGS  
7.1  General principles regarding treaty interpretation, the applicable standard of review , 
and burden of proof  
7.1.1   Treaty interpretation  
7.1.  Article  3.2 of the DSU provides that the dispute settlement system serves to clarify the existing 
provisions of the covered  Agreement s "in accordance with customary rules of interpretation of public 
international law". It is generally accepted that the principles codified in Articles  31 and 32 of the 
Vienna Convention are such customary rules.29 
7.1.2   Standard of review  
7.2.  This dispute concerns claims raised by the European  Union  under  the GATT  1994 and the 
SCM Agreement . Article  11 of the DSU sets out a general standard of review for panels, providing, 
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 and conformity 
with the relevant covered  Agreements.  
7.3.  Article  11 of the DSU thus establishes the standard of review this Panel must apply with respect  
to both the factual and the legal aspects of the present dispute. A panel in an Article  21.5 proceeding 
is required to evaluate whether the measures found to be inconsistent with the WTO Agreement 
have been brought into conformity. The Panel conducts its analysis of the claims in light of the 
 
27 European  Union 's first written submission, para.  78; second written submission, para.  40. 
28 United  States ' first written submission, paras.  94-95; second written submission, paras.  35-36. 
29 Appellate  Body Report, Japan  – Alcoholic  Beverages  II, DSR 1996:1,  p. 104. WT/DS577/RW  
 
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  findings of the original panel in this dispute.30 As concerns actions taken by an investigating authority 
to bring a Member  into compliance, the obligation to conduct an "objective assessment" has been 
found to requir e panels to evaluate whether the competent authorities provided a "reasoned and 
adequate explanation" as to  (a) how the evidence on the record supported its factual findings; and 
(b) how those factual findings supported the overall determination.31 Panels and the Appellate  Body 
have understood this standard to mean that a panel may not undertake a de novo review of the 
evidence or substitute its judgment for that of the investigating authority. A panel must limit its 
examination to the evidence that was bef ore the investigating authority during the investigation and 
must consider all such evidence submitted by the parties to the dispute.32 At the same time, a panel 
must not simply defer to the conclusions of the investigating authority; a panel's  examination  of 
those conclusions must be "in -depth" and "critical and searching".33 We agree with these 
interpretations regarding the standard of review for panels  in matters such as this . 
7.1.3   Burden of proof  
7.4.  The general principles applicable to the allocation of the burden of proof in WTO dispute 
settlement require that a party claiming a violation of a provision of a WTO  Agreement must assert 
and prove its claim .34 Therefore, the European  Union  bears the burden of demonstrating that the 
United  States ' alleged implementation of the DSB's  recommendations and rulings has not achieved 
compliance with the applicable provisions of the GATT 1994 and the SCM Agreement . A complaining 
party will satisfy i ts burden when it establishes a  prima  facie case, namely a case which, without 
effective refutation by the defending party, requires a panel as a matter of law to rule in favour of 
the complaining party.35 Each party asserting a fact should  provide proof t hereof.36 
7.2  The European  Union 's claims  in relation  to Section  771B  of the Tariff  Act of 1930  and 
its application  in the ripe olives  from Spain  countervailing  duty investigation  
7.2.1   Introduction  
7.5.  The European  Union  challenges  the United  States ' implementation of the DSB's adopted 
recommendations and rulings in relation to  the USDOC's method of determining the existence and 
extent of indirect subsidization  – i.e. "pass -through" of benefit  – under Section  771B. In the original 
proceeding, the panel found that Section  771B was "as such " inconsistent with Article  VI:3 of 
the GATT  1994 and Article  10 of the SCM Agreement . The panel  further found  that the application 
of Section  771B in the countervailing duty investigation of ripe olives from Spain  was also 
inconsistent with Article  VI:3 of the  GATT  1994 and Article  10 of the SCM Agreement .37  
 
30 Appellate Body Report, Mexico – Corn Syrup (Article  21.5 – US), para.  109 (stating that "a panel 
acting pursuant to Article  21.5 of the DSU would be expected to refer to the initial panel report, particularly in 
cases where the implementing measure is closely related to the original measure, and where the claims made 
in the proceedings under Article  21.5 closely resemble the claims made in the initial proceedings").  
31 Appellate  Body Report s, US – Countervailing  Duty Investigation  on DRAMS , para. 186; US – Lamb , 
para. 103. 
32 Appellate  Body Report, US – Countervailing  Duty Investigation  on DRAMS , paras.  187-188. See also 
Panel Reports,  US – Softwood  Lumber  VII, para.  7.5; US – Pipes and Tubes (Turkey) , para.  7.4; US – Coated  
Paper  (Indonesia) , para.  7.7; US – Washing  Machines , para.  7.5; China  – Autos  (US), para.  7.5; 
China  – Broiler  Products , para.  7.5; and China  – GOES , para.  7.4. 
33 Appellate  Body Reports, US – Softwood  Lumber  VI (Article  21.5 – Canada) , para.  93; US – Lamb , 
paras.  106-107. See also Panel Reports,  US – Softwood  Lumber  VII, para.  7.4; US – Pipes and Tubes (Turkey) , 
para. 7.4; US – Coated  Paper  (Indonesia) , para.  7.7; US – Washing  Machines , para.  7.5; China  – Autos  (US), 
para. 7.5; China  – Broiler  Products , para. 7.5; and China  – GOES , para. 7.4. 
34 Appellate  Body Report, US – Wool Shirts  and Blouses , DSR 1997:1, p.  337. 
35 Appellate  Body Report, EC – Hormones , para. 104. 
36 Appellate  Body Report, US – Wool Shirts  and Blouses , DSR 1997:1, p.  335. 
37 The European  Union  has not presented claims in this compliance proceeding concerning findings in 
the original proceeding in relation to the USDOC's determination of specificity with respect to the 
BPS programme or the manner in which the USDOC calculated the final subsidy margin for investigated 
Spanish ripe olive processor, Aceitunas Guadalquivir, S.L.U. which was subsequently used to calculate the 
"all-others" rate. See, e.g. Panel Report, US – Ripe Olives from Spain , para s. 8.1(a)(v), 8.1(a)(vi), 8.1(d)(i), 
8.1(d)(ii), 8.1(d)(iv) , and 8.1(d)(v). These aspects were also addressed by the USDOC as part of the 
administrative proceedings and re vised determination undertaken by the USDOC following the adoption of the 
panel report f rom the original proceeding.  WT/DS577/RW  
 
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  7.6.  On 5 July 2022, f ollowing the adoption of the panel  report from the original proceeding, the 
United  States  Trade Representative requested that the USDOC issue determinations as necessary  to 
"render the determinations in the [ripe olives from Spain countervailing duty] proceeding not 
inconsistent with the DSB recommendations and rulings".38 The USDOC accordingly initiated 
administrative proceedings under Se ction 129 of the URAA, and o n 20 December 2022, t he USDOC 
issued a final determination in those proceedings.39 
7.7.  In this compliance proceeding, the European  Union  argues that the USDOC did "nothing" in the 
Section  129 proceeding to address findings of the original panel that Section  771B is inconsistent 
both " as such " and "as applied" with Article  VI:3 of the GATT 1994 and Article  10 of the 
SCM Agreement . The European  Union  emphasizes that Section  771B remains in place, 
unamended.40 In addition, despite asser tions by the United  States  that it has "re -evaluated the 
meaning of certain ambiguous provisions of Section  771B"41, which the United  States  says was for 
the purpose of interpreting and applying Section  771B in a WTO -consistent manner, the 
European  Union  rejects that any such re -evaluation or re -interpretation can achieve compliance. To 
the contrary, the European  Union  maintains that the USDOC through its alleged re -evaluation 
"explicitly disagrees with" the findings f rom the original proceeding concerning Section  771B and 
thereby "openly disregards the DSB findings and recommendations".42 The European  Union  contends 
that the United  States must accept those adopted recommendations and rulings as final and is not 
permitt ed to re -argue its case as concerns the interpretation of Section  771B. Finally, despite 
assertions by the USDOC that it is able to exercise its discretion to apply Section  771B in a manner 
consistent with the panel's findings in the original proceeding, t he European  Union  contends that 
this is not the case. The European  Union  argues that the USDOC has done nothing more than apply 
Section  771B in the Section  129 proceeding in the same manner as it was  applied in the original ripe 
olives investigation. Speci fically , the European  Union  submits that the USDOC again relied solely on 
the two conditions listed in Section  771B as the basis to determine that subsidies provided to raw 
olive growers  in Spain  passed through in full  to investigated  ripe olive processors . Accordingly, the 
European  Union  argues that the United  States  is wrong in asserting that the USDOC carried out its 
pass-through analysis in the ripe olives Section  129 proceeding consistently with Article  VI:3 of 
the GATT  1994 and Article  10 of the SCM Agreement .43 
7.8.  The United  States  maintains that it carefully reviewed the DSB recommendations and rulings 
from the original proceeding, undertook a domestic implementation process that was fully 
transparent and consistent with domestic and WTO proce dural rules, and took appropriate steps to 
bring its measures into compliance with the recommendations adopted by the DSB in this dispute .44  
7.9.  To address the "as such" findings from the original proceeding, the United  States  asserts that 
the USDOC "re -evalu ated the meaning" of certain ambiguous terms in Section  771B45, finding that 
those terms could be interpreted in a way that is not inconsistent with the adopted panel findings . 
More specifically, t he United  States  maintains that the USDOC determined that, as a matter of US 
law, the USDOC has the discretion to consider all case -specific and relevant information on the 
record of the proceeding when making its determination of whether , and to what extent, it should 
attribute subsidies granted to an upstream raw agricultural product to the downstream processed 
agricultural product. Thus, the United  States  argues that the USDOC was able to re -interpret the 
statute to render it not "as such" inconsistent with applicable WTO rules.46  
7.10.  Turning to th e original panel's "as applied" findings, the United  States  asserts that the USDOC 
employed its new interpretation of Section  771B when applying that provision to the facts of the ripe 
olives investigation in the Section  129 proceeding . In doing so, the United States  contends that the 
USDOC provided a detailed and reasoned attribution analysis in this Section  129 proceeding  that is 
 
38 Preliminary Section  129 determination (Exhibit EU -1), p.  3. 
39 Final Section  129 Determination (Exhibit EU -2). As explained therein at page 2, the final Section  129 
determination adopts and incorporates by reference findings r eached in the preliminary Section  129 
determination issued on 23 September 2022 . (Preliminary Section  129 Determination ( Exhibit  EU-1)). 
40 European  Union 's first written submission, para.  3; second written submission, para.  2 
41 United  States ' first written submission, para.  5. 
42 European  Union 's first written submission, para.  3; second written submission, para.  6.  
43 European  Union 's second written submission, para.  2. 
44 United  States ' first written submission, para.  1.  
45 United  States ' first writt en submission, para.  5. 
46 United  States ' first written submission, paras.  5-6.  WT/DS577/RW  
 
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  not inconsistent with its WTO obligations , thereby properly address ing the "as applied" findings of 
the panel.47  
7.2.2   The Panel's t ask in this compliance proceeding and the nature of the actions taken 
by the United  States  to achieve compliance with DSB recommendations and rulings  
7.11.  The task of a panel in a WTO compliance proceeding is described in Article  21.5 of the DSU 
which provides,  in relevant part:  
Where there is disagreement as to the existence or consistency with a 
covered  agreement of measures taken to comply  with the recommendations and rulings 
[of the DSB] such dispute shall be decided through recourse to these dispute settlement 
procedures, including wherever possible resort to the original panel.  The panel shall 
circulate its report within 90 days after the date of referral of the matter to it.  
7.12.  As prescribed in this text, Article  21.5 establishes  an expedited proce ss for determin ing 
whether a Member has properly implemented the recommendations and rulings of the DSB  in a 
given dispute.48 The mandate of a panel established under Article  21.5 is to examin e "the existence 
or consistency with a covered agreement of measures taken to comply with the recommendations 
and rulings" of the DSB . In this compliance dispute, t he United  States ' "measures taken to comply" 
are the USDOC's  revised analysis and application  of Section  771B, as reflected in the preliminary 
and final Section  129 determinations  challenged by the European  Union .49 Our task entails reviewing 
whether the USDOC's actions , as reflected in the identified Section  129 determinations, have 
implemented the relevant aspects of the recommendations and rulings of the DSB .  
7.13.  Before turning to the merits of the European  Union 's non -compliance claims with respect to 
the substance  of the USDOC's revised analysis, we first address the European  Union 's submission 
that the USDO C's alleged re-evaluation and consequent "revised understanding of Section  771B"50 
in the ripe olives Section  129 proceeding , "by its very nature ", cannot bring the United  States  into 
compliance with the adopted recommendations and rulings of the DSB .51 
7.14.  The European  Union  maintains that the adopted findings of the original panel were that 
Section  771B requires  the USDOC to act in a WTO -inconsistent manner. The European  Union  argues 
that because these findings are final, the United  States ' compliance measure must remedy the 
"as such" and "as applied" inconsistenc ies identified by the original panel in its adopted report . 
In this light, the European  Union  argues that there is no basis for the United  States  to assert 
compliance through the USDOC's decision to "revisit " its understanding of the meaning of 
Section  771B. The European  Union  argues that this is because , according to the findings of the 
adopted panel report, there exists no possible interpretation of Section  771B that could allow the 
USDOC to act consistently with its relevant WTO obligations , and thus any revised interpretation of 
Section  771B suggesting that it  may now be applied in a WTO -consis tent manner is inapposite for 
achieving compliance with the adopted recommendations and rulings .52  
 
47 United  States ' first written submission, para.  7. 
48 Appellate  Body Report, EC – Bed Linen (Article  21.5 – India) , para. 98; and Panel Reports, 
US – Countervailing Measures on Certain EC Products (Article  21.5 – EC), para. 7.74; Chile – Price Band 
System (Article  21.5 – Argentina) , para. 7.135.  
49 In its panel request, the European  Union  identifies the measures  at issue to be  the 
USDOC's  preliminary and  final determinations in the Section  129 proceeding initiated by the United  States  to 
address the DSB's adopted recommendations and rulings from the original proceeding, as well as the 
unamended text of Section  771B. ( European  Union 's panel request , pp. 1-2). In its submissions, the 
United  States  similarly refers to USDOC's revised analysis and application of Section  771B in the Section  129 
determination as constituting the measures taken to comply. See, e.g. United  States ' first written submission, 
paras.  5, 10, and 49 ("[t]he USDOC's revised analysis and reasoned application of Section  771B in the 
Section  129 determinations constitutes measures taken to comply") . 
50 United  States ' first written submission, para.  50. 
51 European  Union 's second written submission, para.  14. 
52 European  Union 's first written submission, para.  51; second written submission, paras.  9-10; and 
response to Panel question No. 1, para . 12. The European  Union  further  argues that the Panel is not itself 
permitted to revisit "as suc h" findings of violation from the original proceeding that have been adopted by the 
DSB. (European  Union 's first written submission, paras.  52-54; second written submission, paras.  1 and 6-7 
(referring to Panel Report, US – Carbon Steel (India) (Article  21.5 – India) , para.  7.301 )). WT/DS577/RW  
 
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  7.15.  The European  Union  argues that the nature of a finding that a law is "as such" inconsisten t 
with a Member's WTO obligations  provides important guidance for how that Member would need to 
proceed to bring itself into conformity. Thus, the European  Union  maintains that  in cases in which  
the text of a law is found to require WTO -inconsistent conduct , an amendment to or repeal of the 
offending legal provision woul d normally be expected.53 Nevertheless , irrespective of the precise 
manner in which compliance is achieved, the European  Union  submits that a Member must modify 
the legislative authority of that measure in respect of the inconsistency at issue .54 In the 
European  Union 's view, such a change would need to ensure that the offending legal provision is 
interpreted in a WTO -consistent manner on a prospective basis. In this respect, the European  Union  
contends that the USDOC's alleged "re-interpretation ", "re-evaluation"  or "re -examination"  of 
Section  771B may "at best" be considered as a one -time interpretation relevant for complying in 
respect of the original panel 's "as applied " finding s. Whatever relevance the USDOC's revised 
understanding of Section  771B may have concerning the original proceeding, the European  Union  
maintains that it cannot be understood to constitute a commitment to apply Section  771B in a 
WTO-consistent manner.55 
7.16.  We note that the DSU neither defines nor specif ies the form that a "measure taken to comply" 
must take.56 On its face , the DSU does not explicitly preclude the possibility that a Member may 
seek to achieve "compliance" for the purpose of Article  21 of the DSU by "re-interpret ing", 
"re-evaluating" and "re -examin ing", a domestic law found to be "as such " inconsistent with its WTO 
obligations . In our view, it follows from the focus and subject matter of Article  21 that  a "measure 
taken to comply" , regardless of its form, must achieve substantive compliance. Thus, in the case of 
an alleged compliance action taking the form of a "re-interpretation ", "re -evaluation" or 
"re-examination"  of a domestic law previously found to be "as such" inconsistent with a 
Member's  WTO obligations, such action must be shown to render the domestic law no longer "as 
such" inconsistent with the relevant WTO rules. Accordingly, we are not convinced by the 
European  Union 's submission that the USDOC's "revised understanding of Section  771B" could not 
even potentially constitute a "measure taken to comply"  for the purpose of Article  21.5 of the DSU .57  
7.17.  Likewise, we are not persuaded by the European  Union 's contention that the USDOC's revise d 
analysis and determinations concerning the applicability of Section  771B must b e understood to 
constitut e an attempt to "revisit"  or re -litigate issues that were fully resolved in the original 
proceeding . Recalling that Article  21.5 of the DSU  does not define what may constitute a "measure 
taken to comply", we do not see a legal basis to automatically equate  a Member's "re-interpret ation", 
"re-evaluat ion" or "re -examin ation" of an offending legal provision for the purpose of showing 
compliance to "revisiting" , in the sense of re-litigating , the findings of the original panel . Indeed, 
such actions may simply reflect a Member's genuine attempt to comply with the findings of the 
original panel , which will likewise inform a compliance panel's examin ation of the "measure taken to 
comply" . 
7.18.  The European  Union  also argues that the USDOC 's "revised understanding" of Section  771B 
does not address the basis for the "as such" inconsistency identified in the original panel's  findings.  
Moreover, regardless of whether the USDOC's actions addressed the findings from the original 
proceeding in any relevant way, the European  Union  argues that the USDOC's determination in the 
ripe olives Section  129 proceeding cannot achieve compliance because the USDOC's Section  129 
determination does not have binding legal effect for the future and may also be subject to judicial 
review.58 While the European  Union  accepts that a formal commitment to act in a WTO -consistent 
manner going forward could serve to achieve compl iance, the European  Union  maintains that the 
ripe olives Section  129 determination contain s no evidence of such a formal commitment  to "address 
future applications of Section  771B".59 
7.19.  The United  States  maintains that, as with other determinations made by t he USDOC, prior 
Section  129 determinations are relevant and instructive for how the USDOC will evaluate and apply 
an applicable law in future proceedings. Further more, the United  States  submits that  consistency is 
 
53 European  Union 's second written submission, para.  19. 
54 European  Union 's second written submission, para.  19. 
55 European  Union 's second written submission, paras.  18-19. 
56 European Union's first written submission, para.  56. See also Panel Report, US – Gambling 
(Article  21.5 – Antigua and Barbuda) , paras.  6.23-6.24. 
57 European  Union 's first written submission, para.  63; second written submission, paras.  3, 15, and 20. 
58 European  Union 's response to Panel question No. 1, paras.  18-20 and 39 . 
59 European  Union 's second written submission, para.  20.  WT/DS577/RW  
 
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  a fundamental principle that the USDOC fol lows, for purposes of the fair administration of the law,  
when interpreting statutes and regulations.  According to  the United  States , the USDOC would not 
depart from prior interpretations or determinations absent a reasonable justification.60 Thus, the 
United States  maintains that the ripe olives Section  129 determinations "give effect to the revised 
interpretation of Section  771B and the scope of future assessments under the statute".61 
7.20.  The United  States  acknowledges that Section  129 determinations  may be subject to review 
in US domestic court proceedings and reversed by a final decision of a US court. However, the 
United  States  emphasizes that an agency 's interpretation of a statute , such as one undertaken by 
the USDOC,  would be recognized as  the governing interpretation unless a final and binding judicial 
decision finds that interpretation unreasonable or contrary to the plain text of the statute .62  
7.21.  Our task in this  compliance proceeding is to assess whether the United  States  has brought 
Section 771B and its application in the ripe olives Section  129 proceeding into conformity with its 
WTO obligations .63 The United  States ' compliance actions were the USDOC's "re-interpretation ", 
"re-evaluation" and "re -examination"  of Section  771B and its reliance on that "re-interpretation ", 
"re-evaluation" and "re -examination" when applying Section  771B in the ripe olives Section  129 
proceeding . In the end result, for reasons explained below, the Panel has concluded that those 
actions  do not achieve the intended result  of compliance . This is  because the USDOC's actions  do 
not evidence the revised understanding of Section  771B, which  interpretation the United  States  
maintains has been adopted . Consequently, they  fail to properly respond to the adopted 
recommendations and rulings  of the DSB . We take note of the United  States ' explanations of the 
normative value of an agency's  interpretation of United  States  law and of the status of Section  129 
determinations under its domestic legal system, but we do not see  the normative value claimed by 
the United  States  to be demonstrated in that determination.  
7.2.3   Analysis of the United  States ' implementation measure s in relation to findings in 
the original proceeding  
7.22.  In this section, we evaluate the European  Union 's claim that the 
United  States ' implementation measures fail to address the original panel's findings that 
Section  771B is " as such " inconsistent with Article  VI:3 of the  GATT  1994 and Article  10 of the 
SCM Agreement , and its claim that the application of Section  771B in the Section  129 proceeding 
also violates those same provisions. We first  describe  the relevant original panel findings. Thereafter, 
we review the relevant aspects of the USDOC's  analysis and determinations conc erning the 
applicability of Section  771B in the ripe olives Section  129 proceeding . Then we evaluat e the merits 
of the  European  Union 's remaining arguments in support of its claims of non -compliance . 
7.2.3.1   Findings in the original proceeding in relation to Secti on 771B of the Tariff Act of 
1930  and its application in the ripe olives countervailing duty investigation  
7.23.  In the original proceeding, the European  Union  challenged the USDOC's determination in the 
Spanish ripe olive s countervailing duty  investigation  that the benefit arising from subsidies granted 
to raw olive growers  in Spain could be attributed to the three investigated Spanish ripe olive 
producers .64 The USDOC attributed the benefit of such subsidies over relevant arm's  length 
transac tions between upstream raw olive growers and downstream ripe olive producers, in the full 
 
60 United  States ' response to Panel question No. 2, para s. 3 and 8.  
61 United  States ' response to Panel question No. 2, para.  3. 
62 In support of its position, the United  States  refers to prior decisions by the United  States  Supreme 
Court, setting out that  an agency interpretation of a statute is the governing interpretation unless a final and 
binding judicial decision finds that inte rpretation unreasonable or contrary to the plain text of the statute . 
(United  States ' response to Panel question No. 25, fns 37 -38 (referring to United  States  v. Eurodif S.A. , 555 
U.S. 305 (2009)  (Exhibit USA -8) and Chevron, USA, Inc. v. Natural Resources Defense Council, Inc. , 467 U.S. 
837 (1984 ) (Exhibit USA -10))). 
63 This ties with the objective to achieve a satisfactory settlement of the matter in accordance with the 
rights and obligations under the DSU and the covered agreements, as provided i n Article  3.4 of the DSU . 
64 The USDOC published its final determination in the investigation of ripe olives from Spain on 
18 June 2018, and published an amended final determination and countervailing duty order on 1 August 2018, 
following the correction of  certain ministerial errors. (Panel Report, US – Ripe Olives from Spain , para.  2.1). 
For further explanation, see also Panel Report, US – Ripe Olives from Spain , para.  7.174; Preliminary 
Section  129 Determination (Exhibit EU -1), p. 2. WT/DS577/RW  
 
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  amount of the subsidy attributable to the olives grown by  the growers, based on the 
USDOC's  application of Section  771B.  
7.24.  Section  771B applies in the United  States ' countervailing duty investigations involving an 
agricultural product processed from a raw agricultural product  when the requirements of the statute 
are satisfied . It provides as follows : 
In the case of an agricultural product processed from a raw agricultural product in which  –  
(1) the demand for the prior stage product is substantially dependent on 
the demand for the latter stage product, and  
(2) the processing operation adds only limited value to the raw commodity,  
countervailable subsidies fo und to be provided to either producers or processors of the 
product shall be deemed to be provided with respect to the manufacture, production, 
or exportation of the processed product.65 
7.25.  The original panel report found that Section  771B is "as such" incons istent with the 
United  States ' obligations under Article  VI:3 of the GATT 1994 and Article  10 of the SCM Agreement  
because:  
Section  771B … requires  the USDOC to presume  that the entire  benefit of a subsidy 
provided in respect of a raw agricultural input p roduct passes through to the 
downstream processed agricultural product, based on a consideration of only  the 
two factual circumstances  prescribed in that provision , without leaving open the 
possibility of taking into account any other factors that may be r elevant to the 
determination of whether there is any pass -through and, if so, its degree.66 
7.26.  The original  panel additionally found the USDOC's  application of Section  771B in the ripe 
olives investigation "to be inconsistent with Article  VI:3 and Article  10 for the same reasons that 
Section  771B is inconsistent 'as such' with those same provisions", explaining that the inconsistency 
"follows from the operation of the la w itself".67 The original panel  based its finding on the fact that 
the USDOC made its determination of pass -through for the investigated ripe olive producers based  
on the two factual circumstances set out in Section  771B without considering  any other poten tially 
relevant information related to the market or the competitive conditions affecting the investigated 
product.68  
7.27.  The original  panel  based its findings on the understanding that  both Article  VI:3 of the 
GATT  1994 and Article  10 (and footnote 36) of the SCM Agreement  entitle  Members to offset indirect 
subsidi zation by imposing duties on imported products that benefit from subsidies conferred on 
upstream companies and products . The original  panel  agreed with past panels and the 
Appellate  Body that Member s are not entitled to simply presume that a subsidy bestowed on an 
input product passes through  from an input product to the downstream product . Instead , the original  
panel explained that  an investigating authority must strive to work out, as accurately as possible, 
how much of the subsidy has flowed indirectly from an input product to the downstream product . 
This is  to ensure that findings of the existence and extent of pass -through take into account all 
relevant facts and circumstances  for th e purpose of ensuring  that a countervailing duty is not 
imposed in excess of the estimated subsidy .69  
7.28.  The original  panel  also recognized that neither Article  VI:3 of the GATT 1994 n or Article  10 of 
the SCM Agreement  prescribe that a particular methodology  must be followed to perform a 
pass-through analysis where one is required . Members have discretion in determining  whether and 
to what extent the benefit of a subsidy provided directly to a producer of an upstream product has 
 
65 Section  771B (Exhibit EU -5). 
66 Panel Report, US – Ripe Olives from Spain , para.  7.170  (emphasis original ). See also ibid. 
para. 8.1.b.i.  
67 Panel Report, US – Ripe Olives from Spain , paras.  7.170 and 7.175 -7.176 . 
68 Panel Report, US – Ripe Olives from Spain , para s. 7.175 -7.176 . 
69 Panel Report, US – Ripe Olives from Spain , para.  7.150.  WT/DS577/RW  
 
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  passed -through to the downstre am product.70 The original panel  emphasized that the discretion 
afforded to an investigating authority is not unfettered, recalling the need for an investigating 
authority to analyse to what extent direct subsidies on inputs may have indirectly flowed to the 
investigated processed produc t. In light of this , the original  panel  explained that :  
[A]n investigating authority must provide an analytical  basis for its findings of the 
existence and extent of pass -through that takes into account facts and circumstances  
that are relevant  to the exe rcise and that are directed to ensuring that any 
countervailing duty imposed on the downstream product is not in excess of the total 
amount of subsidies bestowed on the investigated product.71 
7.29.  Thus,  the original panel  did not understand an investigating authority's  discretion in arriving 
at a determination of  pass-through of subsidies under Article  VI:3 to be so wide as to permit it to 
exclude any consideration of facts and circumstances that may be relevant to the very analysis that 
it must perform.72  
7.30.  For the purpose of a determination of pass -through,  the original  panel found that  
Section  771B does not leave open the possibility for  the USDOC to consider factors that may be 
affecting the market for the investigated product beyond  those factual circumstances listed in  
Section  771B. The original  panel  held the view that other factors could be relevant to an analysis of 
pass-through including , potentially,  the degree to which raw input sellers face pricing pressure, the 
market power of different producers and processors, and th e extent to which national or international 
competition could affect the reliability of input product pricing.73  
7.31.  In the or iginal panel proceedings,  the United  States  argued that markets for raw agricultural 
commodities are systematically characterized by "perfect competition" . The United  States  had 
asserted  that producers of these products are unable to charge a price higher than that of all other 
producers (whether subsidized or not). In these circumstances, the United  States  contended that 
market prices could not be used to assess whether the benefit of a subsidy granted to the upstream 
raw product has passed -through. Theref ore, the United  States  argued that, because a raw 
agricultural commodity is often devoted completely to the production of a processed product and a 
product processed from a raw agricultural commodity is often produced substantially from the raw 
product , a subsidy that affects the production of the raw product necessarily affects trade in the product  
whenever these two circumstances exist .74 The original  panel  did not agree with the  view that markets 
for raw agricultural product s falling within the scope  of Section  771B will "systematically " be perfectly 
competitive.75 
7.32.  The original  panel also found that the language in Section  771B requires  the USDOC to 
determine that the countervailable subsidies provided to a raw agricultural input pass through  to the 
downstream processed product if the two factual circumstances are determined to exist : 
We further more note that Section  771B directs  the USDOC to simply " deem " 
countervailable subsidies found to have been  provided to upstream producers of the 
raw agricultural product to have passed -through  to the downstream processed product.  
We understand this to mean that there is no possibility for the USDOC to attribute to 
the downstream processed product anything less than the full amount of the subsidies 
provided to upstream producers of the raw agricultural product . We do not see how an 
evaluation of the two factual circumstances in Section  771B alone  would provide a basis 
to calculate with any precision the degree o r the extent of pass -through. Thus, not only 
does Section  771B require the USDOC to presume  the existence of pass -through when 
the two designated factual circumstances are present, it also effectively requires the 
USDOC to treat the full amount of any coun tervailable subsidy provided to a raw 
agricultural input as if it had passed -through to the investigated processed product.76 
 
70 Panel Report, US – Ripe Olives from Spain , para.  7.151. 
71 Panel Report, US – Ripe Olives from Spain , para.  7.154. (emphasis original; fn omitted)  
72 Panel Report, US – Ripe Olives from Spain , para.  7.154. 
73 Panel Report, US – Ripe Olives from Spain , para.  7.167. 
74 Panel Report, US – Ripe Olives from Spain , para.  7.163. 
75 Panel Report, US – Ripe Olives from Spain , para.  7.166. 
76 Panel Report, US – Ripe Olives from Spain , para.  7.168. (emphasis original; fns omitted)  WT/DS577/RW  
 
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  7.33.  In the original proceeding, the United  States  did not argue that Section  771B leaves the 
USDOC with any discretion to attribute le ss than the full amount of subsidies found to have been 
provided  to upstream producers .77 
7.2.3.2   The USDOC's revised analysis  and application of Section  771B in the ripe olives 
Section  129 proceeding  
7.34.  On 5 July 2022, the United  States  Trade Representative requested that the USDOC initiate 
Section  129 proceedings to revise aspects of the countervailing duty determination in the ripe olives 
from Spain investigation that were found to be WTO -inconsistent in the original proceeding .78 With 
respect to the European  Union 's claims, the USDOC revised its analysis and determination pertaining 
to the calculation of subsidies provide d to investigated  ripe olive processors  under Section  771B.  
The revised aspects of the USDOC's  analysis and  determinations concerning the applicability of 
Section  771B are contained in the USDOC's preliminary and final determinations in the Section  129 
proceeding.79  
7.35.  At the outset of its analysis  in the preliminary Section  129 determination , the US DOC 
acknowledged that Section  771B "remains U.S. law" .80 The USDOC explained that it "must continue 
to evaluate its applicability in the ripe olives from Spain proceeding, and continue to apply it, if the 
circumstances in this case so warrant ".81 The USDOC  concluded that Section  771B continues to apply 
in the circumstances .82 
7.36.  In its consideration of Section  771B, the USDOC undertook a "statutory interpretation"  of the 
terms "raw agricultural product", "prior stage product", and "latter stage product" . It did so for the 
purposes of its analysis of whether the demand for the prior stage product  in the ripe olives 
investigation  is substantially dependent on the demand for the latter stage product .83 The USDOC 
explained that, as the Tariff Act of 1930 does not define the terms "raw agricultural product" , "prior 
stage product"  and "latter stage product" as those terms are used in Section  771B, it could interpret 
the terms "raw agricultural product"  and "prior stage product"  so as to define them in t he ripe olives 
investigation as "table and dual -use raw olive varietals that are biologically distinct from other raw 
olive varietals"; and could consider the "latter stage product" to be " table olives … the next -stage 
olive product inclusive of ripe olive s".84  
7.37.  The USDOC then reviewed a series of record facts to evaluate the extent to which different 
raw olive varietals should be included in its analysis  as the "prior stage product", determining that  
55.28% of the identified varietals were processed into t he latter stage product, table olives. This 
formed the basis for it  to uphold its finding of substantial dependence , made pursuant to 
Section  771B(1).85 The USDOC also reaffirmed its finding that olive processing adds only 3% in value 
to the raw product , thus upholding i ts finding made pursuant to Section  771B(2)  that olive 
processing adds only limited value .86 
 
77 Panel Report, US – Ripe Olives from Spain , fn 327.  
78 Status report regarding implementation of the  DSB recommendations and rulings by the 
United  States , WT/DS577/13 . 
79 Preliminary Section  129 determination (Exhibit EU -1) pp. 10-19; Final Section  129 determination 
(Exhibit EU -2), pp. 9-29. 
80 Preliminary Section  129 determination (Exhibit EU -1), p.  11. 
81 Preliminary Section  129 determination (Exhibit EU -1), p.  11. 
82 Preliminary Section  129 determination (Exhibit EU -1), p.  11. 
83 The USDOC found that the demand for distinct biological varietals of raw  olives (the prior stage 
product) is substantially  dependent on the demand for table olives (the latter stage product).  (Preliminary 
Section  129 determination (Exhibit EU -1), p.  11). 
84 Preliminary Section  129 determination (Exhibit EU -1), p.  12. The USDOC noted that the Tariff Act of 
1930 defines "raw agricultural product" as "any farm or fishery product" for purposes of id entifying the relevant 
industry for the domestic like product and that the USDOC through practice adopted a similar definition of the 
term. The USDOC noted that there is no statutory definition for "latter stage product" . (Preliminary Section  129 
determination (Exhibit EU -1), pp. 11-12 (referring to Section  771(4)(E)(iv) of the Tariff Act of 1930 
(emphasis  omitted) )). 
85 Preliminary Section  129 determination (Exhibit EU -1), pp.  10-16. In the original countervailing duty 
determination , the "substanti al dependence" finding had been based on the fact that the olives identified by 
the USDOC as being  processed into the latter stage product constituted 8% of the prior stage product.  
86 Preliminary Section  129 determination (Exhibit EU -1), p.  16. WT/DS577/RW  
 
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  7.38.  In addition to  the revision of its analysis of substantial dependence under Section  771B(1), 
the USDOC also included a section  in its Section  771B analysis entitled "Additional Considerations" . 
In this section , it explained that it "wishe [d] to further clarify the evaluation it conducts pursuant 
[sic] Section  771B" as part of its analysis in the Section  129 determination.87 In this regard, the 
USDOC disagreed with the original panel's findings , which it characterized to be that the term "shall" 
in Section  771B precludes the USDOC  from "consider [ing]" factors other than those expressly 
identified in Section  771B. The USDOC explained:  
Although the Panel concluded that the word "shall" in [Section  771B] ("shall  be deemed 
to be provided …") does not leave open the possibility for [the USDOC] to consider factors 
other than [the two factors in Section  771B, the USDOC]'s analysis is not so limited. 
[The USDOC] must evaluate all the available record evidence in making its determinations 
and, thus, considers all potentially relevant data and information that i s on the record. 
Thus, if the record of a proceeding indicates that [the USDOC] should consider additional, 
relevant,  [sic] considerations as part of its [S]ection 771B analysis, then consistent with 
our duty to evaluate all of the record information, [the  USDOC] will do so .88 
7.39.  The USDOC then explained that it "considered ma ny other factors in its analysis" in the 
Section  129 proceeding, "including determining the extent to which different olive varietals should 
be included in its [Section] 771B analysis" . For the USDOC , this analysis  demonstrat ed that "[the 
USDOC] did, in fact, take into account other considerations in addition to the two factors specifically 
enumerated in Section  771B".89 
7.40.  The USDOC went on to  address  the original  panel's findings in relation to the requirement 
that countervailable subsidies provided to producers or processors of the raw agricultural product 
"shall be deemed" to be provided with respect to the manufacture, production, or exportation of the 
processe d production . Contrary to the original panel's findings, the USDOC  found that Section  771B 
leaves the USDOC with flexibility to attribute less than the full amount of subsid ies. The USDOC 
explained its considerations on this issue as follow s: 
Although the Panel found that the word  "deemed" in [S]ection  771B leaves no possibility 
for [the USDOC] to attribute anything less than the full amount of subsidies provided to 
upstream producers of the raw agricultural product, the statute does not define 
"deemed" as it is used in this context, nor does it expressly prescribe the manner in 
which [the USDOC] is to effectuate this determination. Therefore, Congress conferred 
broad discretion upon [the USDOC] in making this determination. Given this broad 
discretion, [the USDOC] may consider case -specific facts and determine the appropriate 
manner to attribute the subsidies to the manufacture, production, or exportation of the 
processed product, including whether less than the full amount of subsidies should be 
attributed (i.e., found to provide a benefit) to the manufacture, production, or 
exportation of the processed product.90 
7.41.  The USDOC concluded this part of its preliminary determination  by explaining  that "[t]he 
flexibility and discretion conferred by Congress is exemp lified in [the USDOC's ] benefit calculation 
methodology for grower subsidies in this very proceeding".91 That methodology  led the USDOC to 
attribute : (a) the entire amount of the basic payment scheme ( BPS) subsidies to upstream raw olive 
growers, in cases where the subsidy recipient grows only olives ; and ( b) less than 100% of BPS 
subsidy payment s to upstream raw olive growers, in cases where an investigated  grower received 
subsidies  for "a combination of crops", not just olives .92 According to t he USDOC , this methodology 
 
87 Preliminary Section  129 determination (Exhibit EU -1), p.  17. 
88 Preliminary Section  129 determination (Exhibit EU -1), p.  17. See also  Final Section  129 determination 
(Exhibit  EU-2), pp.  19-20 and 22-23. 
89 Preliminary Section  129 determination (Exhibit EU -1), p. 17; Final Section  129 determination 
(Exhibit  EU-2), p.  20. 
90 Preliminary Section  129 determination (Exhibit EU -1), pp.  17-18 (fn omitted). See also Final 
Section  129 determination (Exhibit EU -2), pp.  20-21. 
91 Preliminary Section  129 determination (Exhibit EU -1), p.  18. 
92 To do this, the USDOC calculated the ratio of raw olive sales to total sales (of raw olives and other 
products) and applied this to the BPS grant amount by multiplying the grant amount with the percentage of 
olive sal es. This direct  benefit determined for raw olives was then expressed as a weighted average benefit per 
kilogram, and attributed to ripe olive processors. (Preliminary Section  129 determination (Exhibit EU -1), p.  19. 
See also Final Section  129 determination  (Exhibit EU -2), p.  21). WT/DS577/RW  
 
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  reveals  that " less than 100 percent of the BPS subsidy payment amount is used  when determining 
the benefit to the respondent"93, and thus demonstrates that the USDOC "exercised [its] discretion 
under [ Section  771B] in 'deeming' coun tervailable subsidizes [ sic] provided to producers or 
processor s of the raw agricultural product to be provided with respect to the manufacture, 
production, or exportation of the processed product ".94 
7.42.  Following the issuance of the preliminary determination , interested parties in the investigation 
commented that legislative changes to Section  771B would be required to implement the original 
panel's findings . In response, the USDOC commented that there is no prescribed methodology in 
Section  129 for how the U SDOC may reach a determination that is not inconsistent with the adopted 
recommendations  and rulings of the DSB . The USDOC considered the interested parties ' comments 
and rejected their arguments , including the comment  that a statutory change was required for the 
USDOC to be able to consider all relevant information, notwithstanding the provisions of 
Section  771B. The USDOC reiterated in its final determination  "that consistent implementation is 
permissible under the te rms of [S]ection  771B"95, because Section  771B may reasonably be 
interpreted as allowing the USDOC  to consider all case -specific and relevant record information in 
its analysis and to determine  whether less than the full amount of subsidies should be attri buted .96 
7.2.3.3   Whether the United  States ' implementation measures address the " as such " 
inconsisten cy of Section  771B  
7.43.  The European  Union  argues that the United  States  made no relevant change with respect to 
Section  771B in the ripe olives Section  129 determinati on to achieve compliance with the 
DSB's  adopted recommendation s and rulings. According  to the European  Union , the 
United  States ' stated actions  were limited to re -evaluating the meaning of the term "prior stage 
product" and making a revised factual determination  in relation to the first factor in Section  771B in 
the context of the ripe olives proceedings , and otherwise  excluding  crops other than raw olives from 
the assessment of benefit received by upstream olive growers . The European  Union  argues th at 
these steps are irrelevant for demonstrating compliance with the "as such" findings from the original 
proceeding.97  
7.44.  The United States disagrees with the European Union's assertion that the United States made 
no relevant change with respect to Section 7 71B and argues that the USDOC's revised interpretation 
is the measure taken to comply and constitutes a change in US law.98 The United  States  argues that  
the key finding of the original panel was that the text of Section  771B precluded the consideration 
of factors that may be relevant  to the assessment of pass -through, other than the two factors 
specifically enumerated in Section  771B. In undertaking the Section  129 determination in the ripe 
olives proceeding, the United  States  contends that the USDOC adopt ed a revised interpretation of 
Section  771B explaining  why the USDOC is able to consider additional factors beyond those 
specifically enumerated in Section  771B. Furthermore, t he United  States  maintains that the 
application of Section  771B in the ripe oliv es Section  129 proceeding objective ly demonstrates that 
the USDOC applied its revised interpretation of Section  771B and that it conducted a holistic analysis 
of the question of pass -through that addressed all relevant information on record, in addition to the 
two factors of Section  771B. Accordingly, the United  States  argues that the ripe olives Section  129 
proceeding demonstrates that the United  States  brought its measure into conformity wit h its WTO 
obligations.99  
7.45.  In the sections that follow, w e examine whether the different aspects of the USDOC's alleged 
"revised analysis and reasoned application of Section  771B"100 in the ripe olives Section  129 
determination bring the United  States  into conformity with the recommendations and rulings of the 
 
93 Preliminary Section  129 determination (Exhibit EU -1), p.  19. (emphasis or iginal)  
94 Preliminary Section  129 determination (Exhibit EU -1), p.  19. 
95 Final Section  129 determination (Exhibit EU -2), p.  19. (fn omitted)  
96 Final Section  129 determination (Exhibit EU -2), pp.  19-20. 
97 European  Union 's first written submission, paras.  11-12, 25, 43 -47, 60-63, and 67 -71; second written 
submission, paras.  12-13, 23, 34 -35 and 37; and opening statement  at the meeting of the Panel , para.  21. 
98 United States ' opening statement  at the meeting of the Panel , para.  5. 
99 United  States ' first written submission, para s. 5-6, 48-50, 52, 60 -61, and 67 -72; comments on the 
European  Union 's response to Panel question No. 8, para.  30.  
100 United  States ' first written submission, para.  49 WT/DS577/RW  
 
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  DSB in relation to the original panel's conclusion that Section  771B is "as such" inconsisten t with 
Article  VI:3 of the GATT 1994 and Article  10 (footnote 36) of the SCM  Agreement .  
7.2.3.3.1   The USDOC's reconsideration of the meaning of "raw agricultural product" and 
"prior stage product"  in Section  771B  
7.46.  As we explained in section  7.2.3.2  above , the Section  129 preliminary determination contains 
a section  entitled "Statutory Interpretation". In this section , the USDOC reconsidered the meaning 
of the terms "raw agricultural pro duct" and "prior stage product" , which it indicated was being done 
"for purposes of the analysis under Section  771B(1)" .101 After noting that the Tariff Act of 1930 does 
not define "raw agricultural product", "prior stage product" and "latter stage product" , the USDOC 
stated that "the statutory language does not require the latter stage product to be the subject 
merchandise or the foreign like product" and also that it would "apply the same fundamental rule of 
statutory construction to the term 'prior stage product'" .102 Following its interpretation, the USDOC 
explained that it would "conduct[] the analysis under Section  771(B)(1) of the Act using a 'raw 
agricultural product' and 'prior stage product' that is defined as table and dual -use raw olive varietals 
that are biologically distinct from other raw olive varietals and a 'latter stage product' that is defined 
as table olives".103  
7.47.  This is the extent of the USDOC's statutory interpretation  in the section of the Section  129 
preliminary determination entitled " Statutory Interpretation" . The USDOC  then turn ed to review data 
previously submitted by the respondents and the petitioner in the underlying investigation, which 
the USDOC concluded  "demonstrate [s] that there are only five biological varietals of raw olive s that 
the [Government of Spain] considers suitable for table olive production".104 This section  also sets 
out the USDOC's reconsideration of whether the demand for the prior stage product  (certain 
biological varietals of raw olives)  is substantially depend ent on demand for the latter stage product  
(table olives) , and recalls the determination from the original investigation that olive processing 
added only limited value to the raw commodity.105 
7.48.  We do not see any basis to accept that this aspect of the USDOC's "statutory interpretation " 
of the terms "raw agricultural product" and "prior stage product" is relevant to addressing the 
"as such" inconsisten cy of Section  771B and to achiev ing compliance  with the DSB recommendations 
and rulings. The original panel found that the problem with Section  771B was that it directs the 
USDOC to find that the entire  benefit of a subsidy provided to a raw agricultural input product passes 
through to the downstream processed agricultural product, without any necessary consideration of 
facts and circumstances for this purpose other than those specifically referred to in its 
two enumerated conditions. In our view , the USDOC's "statutory interpretation " does not address  
this problem . This is  because it is entirely focused on elements pertaining to the operation of the 
first of Section  771B's two enumerated conditions .106 Thus, we do not agree with the United  States  
when it argues that the USDOC's  "revised interpretation of the statute"107 demonstrates that 
Section  771B leaves open the possibility for the USDOC to take all relevant facts and circumstances 
into account for the purpose of conducting a pass -through analysis that is consistent with Article VI:3 
GATT and Article  10 of the SCM Agreement.108 
 
101 Preliminary Section  129 determination (Exhibit EU -1), p.  11. 
102 Preliminary Section  129 determination (Exhibit EU -1), p.  12. 
103 Preliminary Section  129 determination (Exhibit EU -1), p.  12. 
104 Preliminary Section  129 determination (Exhibit EU -1), p.  12. 
105 Preliminary Section  129 determination (Exhibit EU -1), pp. 14-16. 
106 The European  Union  asserts that the reason for the USDOC's change of the terms "raw agricultural 
product" and "prior stage pro duct" was not done to comply with the  DSB's  adopted  recommendations and 
rulings but was done to comply with a judgment of the United  States  Court of International Trade that had 
reversed the USDOC 's substantial dependence analysis. The European  Union  submits  that the Court had taken 
issue with the USDOC's substantial dependence finding in that only 8% of Spanish raw olives were used for 
ripe olives, while over 90% were used for olive oil. (European  Union 's comments on United  States ' response to 
Panel question No. 18, para.  96 (referring to  Asociación de Exportadores e Industriales de Mesa et al. v. 
United  States  (Original Exhibit EU -50) (Exhibit  EU-10), p. 28)). 
107 United  States ' comments on European  Union 's response to Panel question No. 8, para.  30 
108 We address separately below the United  States ' argument that the USDOC's consideration of certain  
factual information related to its reconsideration of the "raw agricultural product" and "prior stage product" in 
the ripe olives investigation, is relevant to addressing the " as such " inconsisten cy of Section  771B.  WT/DS577/RW  
 
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  7.2.3.3.2   The USDOC's  "additional consideration s"  
7.49.  We recall that t he USDOC's preliminary  Section  129 determination also includes a section 
entitled "Additional Considerations" in which the USDOC sought to  "furthe r clarify the evaluation it 
conducts pursuant [ sic] Section  771B".109 In this part of its preliminary determination , the USDOC 
first addresses the original panel's  assessment of the term "shall" in Section  771B in connection with 
the original panel's findin g that Section  771B does not leave open the possibility for the USDOC to 
consider factors other than the two factual circumstances that Section  771B lists explicitly.  The 
USDOC states that its "analysis is not so limited ".110 The USDOC  also addresses the panel's finding 
that the term " deemed" in Section  771B leaves no possibility for the USDOC to  attribute to the 
downstream processed product anything less than the full amount of the subsidies provided to 
upstream producers of the raw ag ricultural product .111 However, the USDOC explains that the lack 
of any statutory definition of the term "deemed" means that " Congress conferred broad discretion " 
on the USDOC in determining whether anything less than the full amount of subsidies provided t o 
upstream producers of a raw agricultural product should be attributed to the producers of the 
downstream processed product. We consider each of these aspects of the USDOC's "additional 
considerations" below.  
7.2.3.3.2.1   The USDOC's assessment that it has discretion to take into account 
considerations in addition to the specifically enumerated factors in Section  771B  
7.50.  In the preliminary Section  129 determination, the USDOC refers to a "duty" for the USDOC 
to evaluate all relevant record information and evidence in undertaking its Section  771B analysis 
and making its determination .112 Likewise, i n the final Section  129 determination, the USDOC refers 
to a "guiding principle"  which it asserts is  applicable in all USDOC investigations , namely  to evaluate 
all potentially relevant data and information that is on the record of an investigation.113 
The United  States  argues that this ability to consider all potentially relevant data and information  on 
the record "speaks to "114 the original panel's  finding . Specifically, t he United  States  refers to the 
original panel's  finding that  Section  771B requires the USDOC to presume that the entire  benefit of  
a subsidy provided in respect of a raw agricultural input product passes through to the downstream 
processed agricultural product,  based on a consideration of only two factual circumstances , without 
leaving open the possibility of taking  into account  any other factors that may be relevant.115 
According to the United  States , therefore,  the USDOC's  ability to take into account additional 
relevant considerations as part of its Section  771B analysis is responsive to the panel's " as such " 
finding of inconsisten cy. 
7.51.  We disagree with the United  States  that a "duty" for the USDOC  to evaluate all relevant record 
information address es the problem with Section  771B that the panel identified . Section  771B 
requires  the USDOC to determine the existence of pass-through whenever the two enumerated 
factual circumstances  under the statute are satisfied, in the absence of any consideration of other 
facts and circumstances that may be relevant to a WTO-consistent showing of pass -through.116 The 
original panel  found that there is a n inflexible  requirement in Section  771B to determine  the 
existence of pass-through in situations where the two factual circumstances are satisfied . This 
requirement persists irrespective of other information that the USDOC might consider. In our 
assessment, this would be the case even in situations where con sideration and analysis of those 
other factors might suggest that pass -through is not likely.  This follows from  the operation of the 
law itself, which we recall , once again, requir es that countervailable subsidies provided to the 
producers of  the upstream raw agricultural input product  "shall be deemed" to be provided with 
respect to the downstream  processed product  in cases w here the two factual circumstances are 
found to exist. Thus, regardless of whether other factors may be "considered ", the USDOC would  in 
all cases be required to determine the existence  of pass -through if the two factual conditions in 
 
109 Preliminary Section  129 determination (Exhibit EU -1), p.  17. 
110 Preliminary Section  129 determination (Exhibit EU -1), p.  17. 
111 Preliminary Section  129 determination (Exhibit EU -1), pp. 17-18. 
112 Preliminary Section  129 determination (Exhibit EU -1), p.  17. 
113 Final Section  129 determination (Exhibit  EU-2), p.  19. The United  States ' arguments in the original 
proceeding did not refer to  a "guiding principle" being applicable  in all USDOC investigations to evaluate all 
potentially relevant data and information that is on the record of an investigation. We understand this 
"guiding  principle" to be a general principle that existed b efore the compliance proceeding.  
114 United  States ' first written submission, para.  58. 
115 United  States ' first written submission, paras.  58-61. 
116 Panel Report, US – Ripe Olives from Spain , paras.  7.167 -7.168 , 7.170,  and 8.1.b.i.  WT/DS577/RW  
 
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  Section  771B are fulfilled, even in situations where consideration and analysis of those other factors 
might suggest that pass -through is not likely. In this light, we are not convinced by  the 
United  States ' contention that the duty to consider all relevant information on the record 
"speaks  to"117 the original panel's finding. The United  States ' submission overlooks the original 
panel's conclusion that the inflexible nature of Section  771B renders any consideration of factors 
beyond those in the enumerated conditions inutile  for the purpose of establishing pass -through in 
accordance with Article  VI:3 of the GATT 1994 and Article  10 of the SCM Agreement.118 
7.52.  The United  States  submits that the fact that the USDOC may take into account factors beyond 
those specified in the enumerated conditions of Section  771B is further demonstrated by the 
USDOC's application of Section  771B in the ripe olives Section  129 determination . According to the 
United  States , the USDOC's pass -through determination takes into account additional unique 
aspects of the table olives market.119 The United  States  refers to the USDOC 's consider ation of  
factual information that the USDOC "received in other segments of the ripe olives from Spain 
proceeding"120 in determining the biological varietals of raw olives that were relevant to its 
assessment of substantial dependence. This included information  from different sources121 on: 
higher pricing for raw olives destined for table olives ; insurance premiums charged for different 
types of olive varietals ; higher water requirements for orchards dedicated to growing table and 
dual-use olive varietals ; pruning pra ctices ; and applicable standards and industry requirements for 
table olive production .122  
7.53.  The United  States  maintains that the USDOC's evaluation of this information is particularly 
relevant as the additional record information the USDOC considered in the ripe olives proceeding 
"speaks to the pa rticular nature of the market and products at issue "123, including " all factors related 
to the nature of the specific market for the input product at issue and all of the conditions of 
competition in that market" .124 According to the United  States , this demonstrates that  the USDOC 
may consider factors that may be affecting the market for the investigated product other than those 
Section  771B lists explicitly.125 
7.54.  As is evident from the Section  129 preliminary and final  determinations, the USDOC 
considered this information  when defining the prior stage product , which it used in  assessing  whether 
the demand for the prior stage product (certain biological varietals of raw olives) is substantially 
dependent on demand for the latter stage product (table olives) , for purposes of the analysis under 
the first Section  771B factor .126 Although the United  States  contends that the USDOC did not " only 
re-evaluate the prior -stage product", and "these same facts are relevant to other aspe cts of the 
investigation"127, we find no indication in the determinations that any of this information was 
meaningfully assessed in any other context.  We thus  see no factual basis to conclude  that the USDOC 
considered the information for purposes of evaluating the likelihood of the ex istence  and extent  of 
pass-through , beyond what is called for under the two factual circumstances in Section  771B. 
7.55.  Accordingly, we are not persuaded by the United  States ' submission that any duty the USDOC 
may have  to take into account considerations beyon d the two factors specifically enumerated in 
Section  771B would ensure that other information will be meaningfully taken into account or form 
part of the analytical basis for a  WTO-consistent  determination of pass -through. We also do not 
 
117 United  States ' first written submission, para.  58. 
118 We also share the European  Union 's concern that  the USDOC's collect ion and placement of relevant 
information  on the record  will be limited in circumstances where the USDOC  continues to be obliged to 
determine that there has been 100% pass through of countervailable subsidies when the two enumerated 
factors are established . (European  Union 's comments on United  States ' response to Panel question No. 17, 
paras.  86-87). 
119 United  States ' first written subm ission, para.  61. 
120 Preliminary Section  129 determination (Exhibit EU -1), p.  17. 
121 The USDOC considered information from the Government of Spain's Ministry of Agriculture Food 
Information and Control Agency, International Olive Council, and Interaceituna.  
122 Preliminary Section  129 determination (Exhibit EU -1), pp. 12-17. 
123 United  States ' first written submission, para.  57. 
124 The United  States  maintains that the information that USDOC considered speaks to the nature of the 
specific market for the input product at issue and all of the conditions of competition in that market and are 
thus f actors similar to those discussed by the panel in the original proceeding as relevant for an assessment of 
pass-through . (United  States ' second written submission, para.  28). 
125 United  States ' first written submission, para.  57. 
126 Preliminary Section  129 determination (Exhibit EU -1), pp.  12-16. 
127 United  States ' first written submission, para.  83. WT/DS577/RW  
 
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  agree with the United States  when it argues  that the application of Section  771B in the ripe olive 
Section  129 determinations demonstrates that the USDOC undertook such an analysis or that this 
would be mandated in future determinations .128 
7.2.3.3.2.2   The USDOC's  evaluation of "deemed" and its  assessment that it has discretion 
to attribute less than the full amount of subsidies  under Section  771B  
7.56.  As part of its consideration of the applicability  of Section  771B in the Section  129 proceeding , 
the USDOC also respond ed to the original  panel's finding that Section  771B directs  the USDOC to 
"deem " that countervailable subsidies found in an investigation  have passed -through  to the 
downstream processed produc t, thereby  leaving no possibility for the USDOC to attribute anything 
less than the full amount of subsidies provided to upstream producers of the raw agricultural product.  
7.57.  As indicated  above129, the USDOC stated that Congress "conferred broad discretion" upon the 
USDOC in determining the appropriate manner to attribute  subsidies to the process ed product, 
including attributing less than the full amount of the subsidies.130 The USDOC asserts that th is 
discretion arise s due to the fact that the term "deemed" as it is used in Section  771B is not defined 
and that Section  771B does not otherwise prescribe the manner in which countervailable subsidies 
provided to producer s or processors of the raw agricultural product are to be attributed to the 
downstream product.131 The USDOC further stated that the flexibility and discretion conferred by 
Congress is "exemplified" in the benefit calculation methodology for olive grower subsidies that the 
USDOC used in the ripe olives Section  129 proceeding.132 The USDOC reiterated these views  in the 
final determination . The USDOC noted, for instance , that Section  771B does not explicitly require 
that countervailable subsidies must be deemed to have passed through "fully" or "to the full 
extent".133 The USDOC also did not agree with the view that definitions of the term "deemed"  
submitted by the investigated ripe olive processors134 establish  that the term is unambiguous, such 
that the USDOC lacks flexibility in making its determination.135  
7.58.  In our view , the USDOC's interpretation of the term "deem ed" fails to respond to the original 
panel's  finding , which more broadly addressed the operation of Section  771B and the fact that it 
stipulates  that countervailable subsidies found to be provided to the producers of the upstream 
product  "shall be deemed " to be provided with respect to the downstream  processed product , in 
cases w here the two factual circumstances are found to exist.  
7.59.  We find it useful to recall that in the original proceeding the United  States  argued that 
Section  771B provides an "appropriate  method" to determine the existence of pass -through in light 
of the special commercial and economic circumstances present in the markets for raw agricultural 
commodities. The United  States  maintained that raw agricultural markets are systematically 
charact erized by "perfect competition" which prevents producers from charg ing a price higher than 
the price a processor could obtain from another producer (which may have been subsidized or not). 
In these circumstances, the United  States  argued that market prices  could not be relied upon as a 
way to analyse whether the benefit of a subsidy granted to the upstream raw input producer has 
 
128 Our concern about the prospect of meaningful consideration in future determinations rests on the 
failure of the Section 129 determination to evidenc e the statutory re -interpretation professed by the 
United  States . If that had been evidenced , a second question to be asked would be whether  the character and 
effect of a re -interpretation such as this would cure  an "as such" inconsistency . In answers to t he 
Panel's  questions in this regard , the United  States  referred to the ability of the USDOC to "reference[] [the 
determination] in future proceedings"; state d that the re -interpretation  would serve "as useful guidance for 
future USDOC investigations under Section 771B"; and advise d that USDOC "would not depart from prior 
interpretations or determinations unless there were a reasonable justification to do so" . 
(United  States'  response s to Panel question No. 2, para.  3; and question No. 2 4(a), para.  61). 
129 See paras.  7.40-7.41 above.  
130 Final Section  129 determination (Exhibit  EU-2), p.  21. 
131 Preliminary Section  129 determination (Exhibit EU -1), p.  18. 
132 Preliminary Section  129 determination (Exhibit EU -1), p.  18. 
133 Final Section  129 determination (Exhibit  EU-2), p.  21. 
134 In the ripe olives Section 129 proceeding, investigated ripe olive processors submitted definitions of 
the terms  "deem" and "deemed" as "to consider that someone or something has a particular quality" or "to 
consider or judge something in a particular way" . (Final Section  129 determination (Exhibit  EU-2), p.  20 
(referring to Macmillan Dictionary Online and Cambridge Dictionary Online )). 
135 Final Section  129 determination (Exhibit EU -2), p.  20. WT/DS577/RW  
 
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  passed through to a downstream processer .136 The United  States  argued that a raw agricultural 
commodity is often devoted completely to the production of a processed product and a product 
processed from a raw agricultural commodity is often produced substantially from the raw product . 
The United  States  maintained that whenever these two circumstances exist , a subsidy  that affects the 
production of the raw product necessarily affects trade in the product .137 The original panel  found that 
the United  States ' explanation is reflected in the legislative history of the enactment of 
Section  771B138, which was submitted to the original panel and has been resubmitted by the 
European  Union  in this proceeding.  
7.60.  Section  771B was enacted to provide a specific method to assess  pass-through  in the context 
of countervail ing duty  investigations of processed agricultural products when the raw agricultural 
product is being subsidized . Based on our reading , Section  771B is structured and designed  to direct  
that subsidies provided to  the producer of an upstream raw agricultural product "shall be deemed " 
to be provided to the downstrea m processed product in cases in which the two factual circumstances 
are determined to exist . Other factors  that might touch upon the question of the extent  of any  
pass-through  are not required to be considered and are irrelevant to the question of whether the 
countervailable subsidies provided to the producers have passed through to the processors where 
the two factual circumstances are found . In this regard, we recall that  the original panel  did not find 
it necessary to express any views on whether input p rice comparisons would offer  the only 
meaningful way to assess the existence or extent of pass-through .139 The point made by the original 
panel was that an evaluation limited  to the two factual circumstances in Section  771B alone  would  
not provide a sufficient basis to calculate with any precision the degree or the extent of  
pass-through .140 Thus,  we do not find compelling the United  States ' arguments that Section  771B 
bestows a broad discretion to determine  not only the existence of, but al so the extent  to which  
pass-through  occurs (including an amount less than  the full amount of subsidies provided to 
upstream producers of the raw agricultural product ).141  
7.61.  We are also not convinced by the United  States ' assertion that any relevant "broad  discretion " 
conferred on the USDOC through the operation of the term "deemed"  is "exemplified"142 in the 
benefit calculation methodology for grower subsidies that was used in the ripe olives Section  129 
proceeding.  A consideration for th e purpose of finding that the countervailable subsidies did not pass 
through to their full extent, or at all, is not to be found in the USDOC's Section  129 determination.  
7.62.  We note that t he USDOC confirmed that it applied the same benefit calculation methodo logy 
in the Section  129 proceeding that it did in the underlying  ripe olives  investigation. As a first step in 
its calculation, the USDOC determined the benefit provided under the investigated  program mes to 
the upstream raw olive grower s as the direct subs idy recipient s. In cases where the investigated 
grower was determined to grow only olives, the USDOC utilized the entire grant amount to calculate 
the benefit  provided to the upstream grower . However, in cases where it was determined that a 
particular grower produces  a combination of crops and not just olives, the USDOC allocated a portion 
of the grant amount that was received by the grower to olive production . In the latter situations, 
the allocated portion  was then used to calculate the benefit amount tha t passed through  to the 
respondent.143 According to the USDOC , the circumstances  in which it did not allocate the entire 
 
136 Panel Report, US – Ripe Olives from Spain , para.  7.164. See also Legislative History of Section  771B 
(Exhibit EU -9). 
137 Panel Report, US – Ripe Olives from Spain , para.  7.163. 
138 In particular, members of the US Congress expressed concern s that legislation in place like the 
"upstream subsidies" test applicable for conducting a pass -through assessment for components used to 
produce finished manufactured products, as contained in Section  1677-1(b) (Section  771A of the Tariff Act of 
1930) , was  incompatible with the nature of agricultural commodity markets. Because the "upstream subsidies" 
test required the USDOC to assess the extent to which the price for the input product is lower than would 
otherwise be paid in an arm's length transaction as the basis to detect pass -through, members of the 
US Congress expressed concern that this test applied to agricultural commodities would "understate the 
magnitude of the subsidy and permit wholesale circumvention" of US countervailing duty laws. (Legislative 
History of Section  771B (Exhibit EU -9), p.  17766. See also Panel Report, US – Ripe Olives from Spain , 
para. 7.164). 
139 Panel Report, US – Ripe Olives from Spain , para.  7.155. 
140 Panel Report, US – Ripe Olives from Spain , para . 7.168. 
141 We note that interested parties in the Section  129 proceeding presented arguments that the use of 
the term "deemed" in Section 771B reflected Congress's instruction to presume the existence of pass -through 
of a subsidy . (Final Section  129 determination (Exhib it EU-2), p.  20). 
142 Preliminary Section  129 determination (Exhibit EU -1), p.  18. 
143 Preliminary Section  129 determination (Exhibit EU -1), p. 19. WT/DS577/RW  
 
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  grant amount to upstream raw olive growers , show that "less than 100 percent of the BPS subsidy 
payment amount is used  when determining the benefit to the respondent ".144  
7.63.  In its assessment of Article  VI:3 of the GATT 1994 and Article  10 (and footnote 36)  of the 
SCM Agreement , the original panel explained that both of these provisions make clear that  Members  
are entitled  to offs et indirect subsidization by imposing duties on imported products that benefit 
from subsidies conferred on upstream companies and products . However, Members are not entitled 
to presume that a subsidy bestowed on an  upstream  input product passes through  to the 
downstream product  as such a presumption would not ensure that any countervailing duty imposed 
on the downstream product is not in excess of the total amount of subsidies bestowed on the 
investigated product, as is required under Article  VI:3 of the GA TT 1994 and Article  10 of the 
SCM Agreement. Thus, the original panel  explained that an investigating authority must undertake 
an analysis to determine , as accurately as possible, how much of the subsidy has flowed indirectly 
from an input product to the downstream product .145 
7.64.  The USDOC's  explanation of its approach speaks to adjustments made to the determination 
of direct  benefit to upstream growers . We accept that these adjustment s may serve to ensure that 
the countervailing dut ies imposed on ripe oli ves do not reflect subsidy amounts provided for products 
other than raw olives. However , the original panel found that investigating authorities are required 
to provide an analytical  basis to establish the existence and extent of pass -through of subsidies  from 
the upstream input product  to the downstream  processed product , i.e. indirect  subsidi zation. The 
original panel found that Section  771B does not allow  or provide for this possibility because, by its 
operation, it requires the USDOC to presume  that the entire  benefit of a subsidy provided in respect 
of a raw agricultural input product passes through to the downstream processed agricultural product, 
based on a consideration of only two f actual circumstances. In this way, Section  771B prevents the 
USDOC from undertaking a meaningful consideration of facts and circumstances  that may be 
relevant  to a WTO -consistent determination of pass-through . This means that, i n terms of 
Article  VI:3 of t he GATT  1994 and Article  10 of the SCM  Agreement , Section  771B fails to ensure  
that the duties imposed on the investigated product are not in excess of the total amount of subsidies 
bestowed indirectly on that product.  
7.65.  As discussed above146, we see no indication in the  ripe olives Section  129 determination that 
an assessment was undertaken to evaluate  whether and to what extent the subsidies allocated to 
the upstream production of raw olives were determined to pass-through  to the ripe olive producers. 
The USDOC  applied the same benefit calculation methodology for grower subsidies in the 
Section  129 proceeding as it did in the original proceeding.147 However, as we have explained, this 
approach does not provide the requisite analytical  basis to establish t he existence and extent of 
pass-through of subsidies  provided to raw olive production to the investigated downstream ripe olive 
processors, i.e . indirect  subsidization .148  
7.66.  We therefore disagree with the United  States  when it argues that the USDOC , in the light of 
its various statements and actions in the Section  129 determination,  now has broad discretion  under 
Section  771B to determine not only the existence of but also the extent  to which  pass-through 
occurs, including discretion to determine th at less than the full amount of subsidies provided to 
upstream producers of the raw agricultural product passes through to the downstream processed 
product. We also disagree that the benefit calculation in the ripe olives Section  129 proceeding 
supports th ese assertions.  
7.2.3.3.3   Overall assessment  
7.67.  The United  States  has argued that the USDOC undertook a revised interpretation of 
Section  771B that explains why , contrary to the original panel's finding, the USDOC is able to 
consider additional factors  when applying Section 771B beyond those specifically enumerated  
therein.  The United  States  has also argued that the USDOC has discretion to determine the 
appropriate manner to attribute the subsidies to the manufacture, production, or exportation of the 
 
144 Preliminary Section  129 determination (Exhibit EU -1), p. 19. (emphasis original)  
145 Panel Report, US – Ripe Olives from Spain , para s. 7.150 and 7.154.  
146 See para.  7.54 above.  
147 Preliminary Section  129 determination (Exhibit EU -1), pp. 18-19. 
148 In this respect, see the arguments of the European  Union  and Canada. ( European  Union 's first 
written submission, pa ras. 11, 25, 43 -48, 62 , and 67 -71; Canada's third party submission, paras.  16-20). WT/DS577/RW  
 
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  processed product.  The United  States  maintains that the USDOC's revised interpretation 
demonstrates that it  has taken appropriate measures to implement the "as such" findings of the 
panel in the original proceeding . The United  States  has additionally argue d that the ripe olives 
Section  129 proceeding provides ample demonstration that its revised interpretation achieves 
compliance . 
7.68.  We have concluded that the USDOC's re-interpretation of the meaning of "raw  agricultural 
product" and "prior stage product" in Section 771B does not have a bearing on achieving compliance . 
We have found that the revised interpretations of these terms are  entirely focused on elements 
pertaining to the operation of one of Section  771B's two enumerated conditions and do no t 
demonstrate  that Section  771B leaves open the possibility for the USDOC to take all relevant facts 
and circumstances into account for the purpose of conducting a pass -through analysis that is 
consistent with Article  VI:3 GATT and Article  10 of the SCM Agreement.  
7.69.  We have similarly found unavailing  the United  States ' assertions that the USDOC 's duty to 
evaluate all potentially relevant data and information that is on the record of an investigation  has 
any bearing on achieving compliance . Section  771B require s the USDOC  to determine the existence 
of pass -through whenever the two factual circumstances are satisfied , irrespective of additional 
information that the USDOC may have before it and may consider. The USDOC's claims of discretion 
in evaluating  relevant record data and information do not address our fundamental concern that the 
USDOC will still be  required to determine the existence  of pass -through if the two factual conditions 
in Section  771B are fulfilled . We therefore disagree with the United  States  that any  alleged  duty and 
discretion to take into account record information , beyond the two factors specifically enumerated 
in Section  771B, ensures that other information will be meaningfully taken into accoun t or form part 
of the analytical basis for a WTO -consistent determination of pass -through.  
7.70.  Finally, we  have rejected the United  States ' assertion s that the USDOC retains broad 
discretion to assess the extent to which pass -through occurs and may determine less than 
100%  pass-through in cases where pass -through is determined to occur. Such assertions are at 
odds with the statutory approach embodied in Section  771B, which directs that subsidies to  
producers of the upstream raw agricultural product "shall be d eemed " to be  provided to the 
downstream processed product solely based upon consideration of the two factual circumstances in 
Section  771B, without a requirement to assess other factors  that might touch upon the question of 
the extent  of any pass -through . In our view, such an approach does not allow the USDOC to 
discharge its responsibilities  in a manner that accords with Article  VI:3 of the  GATT  1994 and 
Article  10 of the SCM Agreement, and does  not provide a basis to calculate with any precision the 
degree or the extent  of pass -through . We are also not convinced  that the flexibility and discretion 
the United  States  maintains was conferred to the USDOC is evidenced  in the benefit calculation 
methodol ogy for grower subsidies that was used in the ripe olives proceedings. To the contrary, we  
have found that the USDOC did not provide  the requisite analytical  basis to establish the existence 
and extent of pass -through of subsidies  provided to raw olive pro duction to the investigated 
downstream ripe olive processors.  
7.71.  We therefore disagree with the United  States ' submission that it  has presented evidence that 
the USDOC has flexibility under Section  771B to consider the unique circumstances in each 
proceeding to evaluate  the appropriate manner to determine whether there is any pass -through and, 
if so, its degree.149 Contrary to the United  States ' assertions, the USDOC's analys es of pass -through 
have suggest ed, on more than one occasion , that it  is based solely on consideration of the two 
factual circumstances in Section  771B. For instance, at  the outset of its analysis in the Section  129 
proceeding, the USDOC acknowledge d that " Section  771B of the Act directs  [the USDOC ] to deem 
countervailable subsidies provided to producers of a raw agricultural product as though they have 
been provided with respect to the manufacture, production, or exportation of the processed 
agricultural product, 'if two criteria are met '".150 Furthermore, we have found nothing in other parts 
of the USDOC's Section  129 determination to substantiate the United  States ' position s on the 
meaningfulness of consideration of factors by the USDOC other than the two criteria contained in 
Section  771B or its flexibility to determine less t han full pass -through.  
7.72.  For the foregoing reasons, we therefore find that the European  Union  has established that the 
revised aspects of the USDOC's  analysis and determinations concerning the applicability of 
 
149 Final Section  129 determination (Exhibit  EU-2), pp.  20-21. 
150 Preliminary Section  129 determination (Exhibit EU -1), p. 11. (emphasis added)  WT/DS577/RW  
 
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  Section  771B, as reflected in the preliminary an d final Section  129 determinations , fail to implement 
the relevant aspects of the adopted DSB rulings and recommendations that Section  771B is "as such" 
inconsistent with Article  VI:3 of the  GATT  1994 and Article  10 of the SCM Agreement . 
7.2.3.4   Whether the applic ation of Section  771B in the Section  129 proceeding also 
violates Article  VI:3 of the GATT 1994 and Article  10 of the SCM Agreement  
7.73.  The European  Union  claims that the application of Section  771B in the Section  129 proceeding 
also violates Article  VI:3 of the GATT 1994 and Article  10 of the SCM Agreement , demonstrating that 
the United  States  has failed to comply with findings from the original proceeding.  The 
European  Union  argues that since the United  States  made no relevant change to Section  771B to 
bring it into conformity with the DSB recommendations and rulings concerning the inconsistency of 
Section  771B "as such", the application  of Section  771B in the  ripe olives  Section  129 proceeding  is 
necessarily also WTO-inconsistent.151 This argument  results from the findings in the original 
proceeding that the inconsistency of Section  771B "follows from the operation of the law itself".152 
Accordingly , the European  Union  argues that there is no need to address the revi sed aspects of the 
Section  771B analysis  to establish that the application of Section  771B in the Section  129 proceeding 
is also WTO -inconsisten t.153 
7.74.  The United  States  argues that the USDOC's revised  application of Section  771B in the 
Section  129 determination  exemplifies  the consistency of Section  771B and additionally shows that 
the USDOC properly addressed the "as applied" findings of the original panel.154 The United  States  
submits that the USDOC's consideration of information that only certain  biological varietals of raw 
olives are fit for the production of table olives shows that the USDOC considered information that 
also speak s to the nature of the market for both the raw and processed agricultural goods and thus 
allowed the USDOC to "conside r factors that may be affecting the market for the investigated product 
other than those Section  771B lists explicitly ".155 The United  States  argues that the European  Union  
errs by wrongly assuming that this detailed analysis  of specific olive varietals tha t should be 
considered when identifying the "prior stage product"  means that the USDOC only re-evaluated the 
prior stage product , and that the European  Union  ignores the fact that these same facts are relevant 
to other aspects of the investigation.156 The United States  also argues that w hen conducting the 
benefit calculation, the USDOC likewise took into consideration other information related to the 
granting of subsidies to the upstream input producer  (such as BPS subsidy  program me 
characteristics) , and that it did this  to ensure only the amount of investigated subsidies proportional 
to raw olives were attributed to the investigated ripe olive producers  in the Section  129 proceeding . 
The United  States  claims that by ensuring that "less than 100 percent of the BPS subsidy payment 
amount is used when determining the benefit to the respondent ", the USDO C thereby provid ed a 
more reasoned and supported analytical basis for the benefit calculation.157 
7.75.  In the preceding section, we found that  the USDOC's  analysis and determinations concerning 
the applicability of Section  771B in the Section  129 determinations fail to implement the relevant 
aspects of the adopted DSB rulings and recommendations that Section  771B is " as such " inconsistent 
with Article VI:3 of the  GATT  1994 and Article  10 of the SCM Agreement .  
7.76.  As part of our review , we noted that the USDOC  had reconsidered the meaning of the terms 
"raw agricultural product" and "prior stage product" for purposes of the analysis of whether demand  
for the prior stage product is substantially dependent  on the demand for the latter stage product 
under the first  enumerated factor in Section  771B. Based on its consideration of the data and 
 
151 European  Union 's first written submission paras.  64-65 and 67 -68; second written submission, 
para. 21; and opening statement  at the meeting of the Panel , para s. 10 and 29. 
152 Panel Report, US – Ripe Olives from Spain , paras.  7.170 and 7.175.  
153 The European  Union , in any event, recalls its arguments that the USDOC's steps, first, to modify the 
definition of the "prior stage product" for purposes of its substantial dependence analysis, and second, to 
attribute subsidy payments to upstream raw olive production where  a respondent and/or suppliers grow a 
combination of crops and not just olives, are both irrelevant to the analysis  of pass -through.  
European  Union's  first written submission paras.  69-77; second written submission, paras.  23-25 and  34-35. 
154 United  States ' first written submission, para.  53. 
155 United  States ' first written submission, para.  57 (referring to Panel Report, US – Ripe Olives from 
Spain , para.  7.167 ). 
156 United  States ' first written submission, para.  83 (referring to European  Union 's first written 
submission, paras.  66-77). 
157 United  States ' first written submission, para.  81. WT/DS577/RW  
 
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  information on record, the USDOC evaluated the extent to which different raw olive varietals should 
be included in its analysis  as the "prior stage product", determining that  55.28% of the identified 
varietals were processed into the latter stage product, table olives. This formed the basis to uphold 
its finding of substantial depend ence and its ultimate determination that subsidies granted to 
growers of raw olives in Spain could  be attributed to three investigated  ripe olive producers .158  
7.77.  We did not agree with  the United States' proposition that the USDOC's consideration of 
information and related analysis in this context reflect s relevant consideration s outside  of its analysis 
of substantial dependence in relation to the first factor of Section  771B. Such considerations failed 
to show that the USDOC took into account additional factors relevant to its analysis of pass -through.  
7.78.  We also rejected the United  States ' argument s that the USDOC retains broad discretion to 
assess the extent to which pass -through occurs , or that it  may determine that less than 100% 
pass-through occurs  where the two enumerated factors under Section  771B are found to exist. To 
the contrary, w e found that the USDOC applied the same benefit calculation and determined that 
the entire amount of subsidies allocated to raw olives production passed through to ripe olive 
processors without any assessment of factors other than the two specifically enumerated fa ctors in 
Section  771B. We therefore disagreed that the United  States  has presented evidence demonstrating 
that it had undertaken an appropriate determination of whether there is any pass -through and, if 
so, its degree . 
7.79.  These findings reflected our view tha t the USDOC's  analysis and determinations concerning 
the applicability of Section  771B in the Section  129 determinations fail to implement the relevant 
aspects of the adopted DSB rulings and recommendations that Section  771B is " as such " inconsistent 
with Article  VI:3 of the  GATT  1994 and Article  10 of the SCM Agreement . They further demonstrate 
that the application of Section  771B in the Section  129 proceeding also violates Article  VI:3 of the 
GATT 1994 and Article  10 of the SCM Agreement . This results from the fact  that the USDOC found 
that subsidies granted to growers of raw olives in Spain could be attributed to three investigated  
ripe olive producers  based solely on its determination that both factual circumstances identified in 
Section  771B were established , without consideration of any other potentially relevant information 
relating to the market or the competitive conditions affecting the investigated product . In view of 
this latter finding , we additionally  find that the USDOC's determinati on under Section  771B in the  
ripe olives  Section  129 determination  is inconsistent  with Article  VI:3 of the GATT 1994 and 
Article  10 of the SCM Agreement . 
8  CONCLUSIONS AND RECOMMENDATIONS  
8.1.  For the reasons set forth in this Report, the Panel concludes , with respect to the 
European  Union 's claims that the United  States  has failed to bring its measures into conformity with 
the adopted recommendations and rulings of the DSB in relation to Section  771B of the Tariff Act 
of 1930, as follows : 
a. the European  Union  has demonstrated that the USDOC's  revised analysis of Section  771B, 
as contained  in the preliminary and final Section  129 determinations , fails to implement 
the relevant aspects of the adopted DSB recommendations and rulings that Section  771B 
is "as such " inconsistent with Article  VI:3 of the  GATT  1994 and Article  10 of the 
SCM Agreement ; and  
b. the European  Union  has demonstrated that the application of Section  771B in the ripe 
olives Section  129 determination s is inconsistent with Article  VI:3 of the  GATT  1994 and 
Article  10 of the SCM Agreement and consequently, that the United  States  has failed to 
bring its measure s into conformity with the adopted DSB recommendations  and rulings .  
8.2.  Under Article  3.8 of the DS U, in cases where there is an infringement of the obligations 
assumed under a covered agreement, the action is considered prima facie  to constitute a case of 
nullification or impairment. We conclude that, to the extent that the measures at issue are 
incons istent with the GATT 1994 and the SCM Agreement , they have nullified or impaired benefits 
accruing to the European  Union  under these agreements.  
 
158 Preliminary Section  129 determination (Exhibit EU -1), pp. 11-16. WT/DS577/RW  
 
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  8.3.  We also conclude that the United  States  has failed to implement the  adopted  recommendations 
and rulings of the DSB to bring Section  771B of the Tariff Act of 1930  into conformity with its 
obligations under the GATT 1994 and the SCM Agreement . To the extent that the United  States  has 
failed to comply with the  adopted  recommendations and rulings of the DSB in the ori ginal dispute, 
those adopted recommendations and rulings remain operative . 
8.4.  Pursuant to Article  19.1 of the DSU, we recommend that the United  States  bring its measures 
into conformity with its obligations under the GATT 1994 and the SCM Agreement .  
8.5.  The European  Union  has requested that we recommend that the United  States  revoke its 
determination and cease to impose countervailing duties.159 The Panel does not have the ability to 
make specific recommendations in this way.160 The DSU recognizes that a panel may suggest ways 
in which the Member concerned could implement the Panel's recommendation . Having carefully 
considered the European  Union 's request, we decline to make  such suggestion  or any specific 
suggestion. The aim of dispute settlement is to achieve  a satisfactory settlement of matter s brought 
before the DSB in accordance with the rights and obligations of the parties under the DSU and the 
covered agreements. The Panel considers that its report supports that aim by clarifying the existing 
provisions o f the relevant agreements and without dictating to the parties how they could settle their 
dispute should they choose to do so.  
__________  
 
 
 
159 European  Union 's first written submission, para.  78; second written submission, para.  40. 
160 Pursuant to Article  19.1 of the DSU , where a panel concludes that a measure is inconsistent with a 
covered agreement, it shall recommend that the Member concerned bring the measure into conformity with 
that agreement . A panel may, in addition, suggest ways  in which the Member concerned could implement the 
recommendation .