WT/DS341/R 
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ANNEX D 
  
ORAL STATEMENTS, FIRST AND SECOND PANEL MEETINGS 
 
 
Contents Page 
Annex D-1 Executive Summary of the Oral Statement of the 
European Communities – First Meeting D-2 
Annex D-2 Executive Summary of the Oral Statement of Mexico – First 
Meeting D-8 
Annex D-3 Executive Summary of the Oral Statement of the European 
Communities – Second Meeting D-14 
Annex D-4 Executive Summary of the Closing Statement of the European 
Communities – Second Meeting D-20 
Annex D-5 Oral Statement of Mexico – Second Meeting D-22 
 WT/DS341/R 
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ANNEX D-1 
  
EXECUTIVE SUMMARY OF THE ORAL STATEMENT 
OF THE EUROPEAN COMMUNITIES - 
FIRST MEETING 
 
 
(26 June 2007) 
 
 
 1. Mexico does not dispute that, under Article 13.1 of the SCM Agreement
, before the initiation 
of the investigation the EC had to be invited to c onsultations and that an i nvitation was not made until 
4 July 2003.  However, the parties disagree over the da te of the 'initiation' of the investigation: the EC 
says it was 2 July 2003, when the Minister signed the initiation measure, while for Mexico it was the date of publication of the measure on 16 July 2003.  Mexico reaches this conclusion on the basis of an 
analysis of Mexican law regarding the entry into forc e of the instrument.  The EC's contention is that 
the legal system in which the analysis has to be ca rried out is not that of Mexico but of the WTO.  
Footnote 37 to the SCM Agreement defines the word 'initiated' a "procedural action by which a 
Member formally commences an investigation".   
 2. The signing by the Minister is a 'procedural action'.  In contrast, the publication of the instrument in the Diario Oficial  may be procedural, but it cannot be considered as the first procedural 
action in the Mexican investigation procedure. 
 
3. Mexico cannot deny that the signing of the Resolution is a "formal" act, and, in relation to the word 'commence', there can be no doubt that that action taken by the Minister is focused on commencing the investigation: paragraph 122 of th e initiation Resolution affirms that "the Ministry 
accepts the request from Fortun y […] and declares the initiation of an investigation". 
 
4. Moreover, the EC's position is sustained by the objectives of that provision.  Mexico's haste in 
commencing the investigation did not provide a real  and adequate opportunity for prior consultations 
with the EC.  The consultations were not able to cl arify the situation and to allow Mexico and the EC 
to arrive at a mutually agr eed solution, which are the objectives of the consultations under 
Article 13.1 of the SCM Agreement , as, in a similar situation although under the Safeguards 
Agreement , the Appellate Body explained in US – Line Pipe.  
 5. The second of the EC's claims is that the Mexican investigation was not commenced 
following an application made by or on behalf of the domestic industry . 
 
6. Mexico claims that the EC's interpretation of Article 16.1 of the SCM Agreement  would mean 
that claims of injury in the form of material retardation of the establishment of a domestic industry 
would never be possible.  Such a claim is not correct.  While an entity with no domestic production 
would not be eligible for consideration as a domest ic industry, a firm that was producing but which 
was having difficulties in developing because of dumped or subsidized im ports would have the 
possibility of exploiting this option.   
 
7. Mexico quotes from the panel report in Mexico – Corn Syrup  in support of its argument that a 
firm that has ceased production may yet qualify as a domestic industry.  However, the extract does not  WT/DS341/R 
 Page D-3 
 
 
have the meaning given by Mexico, since it merely emphasizes the three different forms that injury 
can take, and the significance that these forms have for the conduct of the investigation. 
 8. Mexico seeks to evade the terms of the SCM Agreement  by arguing that Fortuny had the 
means to produce olive oil even though there was no production during the investigation period.  
However, the Agreement  repeatedly emphasises the significance of production.  This has also been 
underlined by Norway it its third-party submissi on, which makes reference to the Appellate Body 
report in US-Lamb . 
 9. Mexico invokes those cases where panels have  considered the level of evidence that is 
necessary to commence an investigation.  Howeve r, these cases concerned the issues of dumping 
(Guatemala – Cement II , Argentina – Poultry ) and injury ( Mexico – Corn Syrup ), which are ones that 
are also examined in depth during the course of th e investigation.  On the contrary, the question 
whether the application has been made by or on behalf of the domestic i ndustry will not be further 
examined during the course of the investigation.  Co nsequently, the examination of this issue carried 
out prior to initiation must be a thorough one.  It is  this standard that the Mexican authorities have 
failed to meet.  10. To justify that Mexican industry consisted solely  of Fortuny, Mexico refers to an article in the 
journal Claridades Agropecuarias .  Although this article was referre d to in the Preliminary and Final 
Resolutions, there is no record of its use in th e Initiation Resolution and it should therefore not be 
permitted as a justification of that Resolution.  Sec ondly, this article appear ed in June 2001, and it 
mentioned that one other firm, Llanos de San Franci sco, was in an experimental phase of production.  
Thirdly, contrary to what Mexico claims, from the article in Claridades  it cannot be deduced that 
Ybarra was the only company producing olive oil in Me xico: the article only declares that Ybarra was 
the main olive oil producer in Mexico at  that time.  Finally, the article in Claridades  refers to olive oil 
production figures in Mexico that are much higher (1 000 tons in 2000) than Fortuny's production 
(between 254 and 310 tons in 2001-02).  11. The sole items of supporting evidence that were cited by the Ministry in the Initiation 
Resolution were some letters from the Agriculture Department of the state of Baja California.  However, they seem to refer only to the installed and productive capacity of Fortuny.  In any event, 
the statement was made by an authority of the stat e of Baja California, whereas Mexico admits that 
there is also substantial olive production in the state of Sonora.  12. Finally, Mexico justifies the decision of the Minister regarding Fortuny's status as the sole 
Mexican producer by saying that this was confirmed by  the investigation.  However, a later finding of 
this kind is irrelevant to the question whether the original decision to initiate was justified as regards 
the standing of Fortuny.  13. The third of the claims made by the EC concerned Article 13(b)(i) of the Agreement on 
Agriculture .  Mexico refers to the fact that the rule expired at the end of 2003.  However, the EC 
considers that it applied to all proceedings initiated before that date, and the fact that it was within 
only a few months of expiry at the time of th e olive oil investigation was commenced was not a 
reason for disregarding it.  14. Moreover, Mexico argues that, although the complaint invoked the notion of material 
retardation, the investigation focused on that of  material injury (which was not prohibited under 
Article 13(b)(i)).  However, such an approach  cannot be reconciled with the terms of the Agreement 
on Agriculture , under which Mexico should have rejected a complaint based on material retardation.   
 15. Mexico argues that the 'due restraint' requirement of Article 13(b)(i) was no more than an 
obligation to respect a reasonable minimum standard .  However, this presentation of that provision 
adds nothing to the original, provided that what is  reasonable is recognised to be an objective matter WT/DS341/R 
Page D-4  
 
and not one to be decided by each WTO Member for it self.  If Mexico is arguing that the standard is 
the same for agricultural and non-agricultural produc ts, such a reading would deprive Article 13(b)(i) 
of utility, and clash with a principle of interpretation ( effet utile ) that has been repeatedly confirmed 
by WTO jurisprudence.  The EC has noted the Mini stry's haste in commencing the investigation: its 
failure to consult the EC in due time and in good fa ith, its inadequate consideration of the extent of 
the domestic industry, and its treatment of the alleged form of injury.  These are defects that could 
have been cured by taking more time and/or givi ng a more thorough examination to the complaint.  
They necessarily reflect a failure on the part of the Ministry to exerci se 'due restraint'.   
 16. In relation to Article 12.4.1 of the SCM Agreement and the obligation to provide non-
confidential summaries of confidential information  supplied to the investigating authorities, Mexico 
argues that an access to the confidential file under a protective order was possible and was used.  But 
this line of defence has already been re jected by the report of the panel in US – Oil Country Tubular 
Goods Sunset Reviews (Article 21.5 – Argentina) , confirmed by the report of the panel in Mexico – 
Steel Pipes and Tubes.  
 
17. Mexico also claims that the requirement to provide non-confidential summaries was satisfied 
by the provision of versions of parties' submissions, with the confidential material blanked-out.  But a 
document with confidential material deleted is patently not a summary  of the confidential material 
that it contained.  This was the conclusion of the panel in US – Oil Country Tubular Goods Sunset 
Reviews (Article 21.5 – Argentina) . 
 
18. On the disclosure obligation in Article 12.8 of the SCM Agreement , Mexico contends that it 
satisfied this disclosure obligation by issuing its Preliminary Resolution.  However, the Ministry 
should have informed the interested parties that th e Resolution had this purpose.  Moreover, following 
the adoption of the Preliminary Resolution of 18 Ma y 2004, the Ministry engaged in a considerable 
amount of fact finding.  In some, if not all, of these steps the Ministry was explicitly obtaining factual 
information from the interested parties.    19. Mexico seeks to defend itself against the accu sation that the Ministry exceeded the 18-month 
time limit set by Article 11.11 of the SCM Agreement  by invoking the complexity of the investigation 
and the need to treat the parties fairly.  Article  11.11 provides that 'in special circumstances' 
investigations may exceed the one year limit, but this  exception is explicitly limited by the rule that 'in 
no case' may they last more than 18 months.  Assuming, quod non , Mexico's arguments that the delay 
was due to requests by interested parties for mo re time to respond to the Ministry's enquiries, 
Mexico's defence is irrelevant.  The drafters specified  an absolute limit to the length of investigations 
and Mexico had no option but to respect that limit.   
 
20. Concerning the existence of subsidization and calculation of a 'benefit' , the EC has explained 
the notion of 'subsidized import', which is not defined in the SCM Agreement .  Mexico purports to 
find confusion as to whether the 'offsetting' is direct ed at the subsidies or at the benefits of the 
subsidies.  Given that the rules clearly identify the benefit afforded by the subsidy as setting the 
maximum level of countervailing duties, the EC does not find this a meaningful distinction.  The 
offsetting is directed at the subsidies, and its le vel is determined by calculating the benefit received 
under the subsidy.  21. Mexico claims that its measures on olive oil were targeted at the injury rather than the 
subsidy.  However, the errors that the Ministry made in calculating the amount of the subsidy cannot 
be disregarded simply because it then decided to set duties at lower levels, based on an injury 
criterion.    22. A major element of the EC's criticism of the Ministry's determination concerns the argument 
that the benefit of the subsidy was not 'passed-through' from the firms that had received it to affect the 
products imported into Mexico.  Mexico has entirely ignored the EC's arguments.     WT/DS341/R 
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 23. Another of the matters to which the EC took objection in the Ministry's finding of subsidization was its failure to take account of the f act that some of the olive oil exported from the EC 
to Mexico was actually made from olives bought from out side the EC, which had not been part of any 
aid scheme.  Mexico's attitude has been that, b ecause the companies could not prove what proportion 
had come from this source, no adjustment could be made.  
 24. The Agreement  does not explicitly address the situati on where information necessary for the 
completion of the investigation is not in the hand s of an interested party or Member.  Mexico's 
attitude appears to be that the investigating auth ority may demand such information from the party 
whose interest it is likely to serve, and if the part y cannot provide it, to assume that such information 
is completely unfavourable to that party.  Such an attitude misunderstands th e proper allocation of the 
burden of obtaining evidence necessary for a counter vailing duty investigation.  The Appellate Body 
explained in US - Wheat Gluten that the word 'investigation' suggests a proper degree of activity on 
the part of the competent authorities because authorities charged with conducting an inquiry or a study 
must actively seek out pertinent information.  Thus, the responsibility to obtain information lies on the 
investigating authority.  If the information is held  by interested Members or parties the authority can 
demand it from them.  But, where the information lies elsewhere, the authority may not, as Mexico sought to do, escape its own responsibility by giving an interested party the task of obtaining it, or of suggesting how the problem might be overcome.  
25. The same issue arose in respect of the inform ation regarding costs incurred in relation to the 
olive oil after production of the oil.  Again, there is  a responsibility on an investigating authority to 
obtain the information necessary for its findings, and the Ministry did not properly discharge it. 
 26. Moreover, even assuming, quod non , that the subsidy passed through from the olive growers 
to the producers of olive oil, the Mexican aut horities failed to adequately explain the methodology 
used to establish the countervailing duties and in pa rticular to justify the use of the ex-work export 
price as basis for the calculation.  Mexico calculate d for each company an ad valorem subsidy margin 
in the provisional resolution and a specific duty in th e definitive resolution, but apparently using the 
same methodology.  The ex-work export price is an  unsuitable basis for the calculation of a subsidy 
margin in the case of a production subsidy, which bene fits the total production and not only exports.   
 
27. As regards the accusation that the Ministry fa iled to make an adequate investigation of the 
extent of the domestic industry , Mexico reveals that a sample of Maprinsa's production was found to 
consist of rapeseed oil (canola).  However, given th at Maprinsa claimed to have used domestically 
sourced oil, and provided the names of several tr aders from whom it had acquired it, the fact that a 
sample of Maprinsa's output was found not to contain olive oil hardly seems a reason for abandoning 
further enquiries.  A further indication of the inade quacies of the Ministry's investigations is also 
provided in the response by one of those bottlers, Oliv arera Tulyehualco, SA de CV, which refers to 
two national producers of olive oil located in Baja Ca lifornia.  The Ministry did nothing to investigate 
their existence or extent.  
28. Similar indications of inadequacy are found  in relation to Aceites Navarra.  Because the 
exporters had identified this firm as one that only bottled olive oil, the Ministry chose not to make 
further enquiries of it.  However, the crucial issu e was whether there were Mexican producers of olive 
oil, a point on which this firm could have provided direct evidence.  There is also no indication that the Ministry sought information from Olivos de California, a company indicated by Maprinsa as a 
producer of olive oil.  The firm Llanos de San Fr ancisco was also dismissed by the Ministry because, 
according to the article in Claridades Agropecuarias , it was only in an experimental stage.  However, 
the article was published in June 2001, and presuma bly relied on information gathered before that 
date.  Moreover, Llanos was operatin g at a sophisticated level, and it might well have been expected 
in the intervening period to have moved to actual production.  The inadequacy of the Ministry's WT/DS341/R 
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investigations is also reflected on the fact that fi rms merely bottling olive oil were not always clearly 
asked to identify domestic sources of oil.  29. The Ministry contacted the national association of oil and edible fat industries, ANIAME.  However, the association did not provide informat ion on national olive oil producers, but merely 
reported that Fortuny was the only such producer that was registered  with it.  
 30. Among the official bodies that the Ministry contacted as part of its investigation was the Mexican Institute of Industrial Property.  Mexico ha s provided the letter that the Ministry wrote to the 
Institute, but not the response.  Finally, the Minist ry never wrote to the authorities of the States of 
Baja California and Sonora, which are regions wher e the Final Resolution declares that olive tree 
cultivation plays a very important economic and social role.  31. The indicia of injury listed in Article 15.4 cannot be applied in the situation of Fortuny because it was not a producer during the investigati on period.  To circumvent this problem Mexico 
invents a new index of injury: the state of being una ble to restart operations.  There is no such index 
of injury in the Agreement , a fact which is directly linked to the definition of industry. 
 32. The third of the 'substantive' claims that  the EC makes against Mexico concerns the 
determination of injury
.  The Ministry failed to establish injury  in accordance with the criteria listed in 
Article 15.4 of the SCM Agreement .  First of all, the notion of prevention of restarting operations, that 
Mexico identifies as the injury suffered by its domestic industry, is not one recognized by the 
Agreement .  It is not enough for Mexico merely to descr ibe it as a form of material injury; it must be 
able to explain how that description is supported in the factors listed in Article 15.4.  The fundamental 
problem that Mexico faces is that there was no production, and if there was no production there can 
have been no industry, and without an industry there can have been no material injury. 
 
33. On the analysis of prices required by Article s 15.1 and 15.2, and despite the fact that in its 
chosen investigation period there were no sales by  Fortuny, the Ministry claims to have made 
comparisons based on 'actual prices'.  But the Fina l Resolution gave only undercutting margins for the 
previous two years.  However, the absence of price data for 2002 did not entitle the Ministry to use a 
spurious indicator of price based on Fortuny's cost s.  Any price resulting from such an exercise is 
entirely artificial, and provides no indicator that can plausibly be used when applying Article 15.  
 34. Moreover, the usefulness of the price comparis ons carried out under Article 15.1 and 15.2 is 
put in doubt by the bizarre pricing policy pursued by  Fortuny.  2001 was a time when olive oil prices 
were falling everywhere.  Thus, the fall in prices of exports to Mexico was merely part of an 
international trend.  However, Fortuny's reaction to this development was actually to increase its 
prices by 34 per cent.  In addition, Fortuny's price information prior to the end of 2001 is all derived 
from sales made by Fortuny's "predecessor", Formex  Ybarra, to a company, Distribuidora Ybarra, to 
which it was related.  As such it cannot be regarded  as a reliable basis on which to make comparisons 
with the prices of imported olive oil.  
35. The Ministry's examination of various indices of injury listed in Article 15.4 is constantly 
undermined by its decision to use data from periods of  nine months in successive years.  Mexico tries 
to justify the use of a nine-month investigation peri od by indicating that no distortion of information 
resulted from using such a period.  However, apart fro m the fact that this period was suggested by the 
complainant, no explanation was provided for excluding data from several months of the year and, at 
times, the Ministry felt compelled to support its conc lusions by reference to figures from the complete 
year.    36. Mexico says that the absence of  an explicit provision in the Agreement  means that a Member 
is under no obligation regarding the choice of the le ngth of the investigation period.  However, as 
confirmed by the Appellate Body in US – Hot-Rolled Steel,  the criterion of an 'objective examination'  WT/DS341/R 
 Page D-7 
 
 
stated in Article 15.1 governs all aspects  of the injury determination.  In Mexico – Anti-Dumping 
Measures on Rice , the Appellate Body applied this princi ple to the selection of the investigation 
period, found that the use of six-month periods did not provide an accurate and unbiased picture of what was being examined.  The recent panel report in Mexico – Steel Pipes and Tubes  reinforces this 
conclusion: the panel said that "absent any proper ju stification for doing so, such an examination on 
the basis of an incomplete set of data proposed by  an applicant cannot, in principle, be an objective 
examination of positive evidence".  37. In its First Written Submission the EC identif ied a series of causation factors, known to the 
Mexican authorities , which had not been investigated or ha d not been investigated adequately.  
Mexico has stressed that the prices charged fo r imported EC oil were below even the cost of 
production of Fortuny.  However, it simply attributed this to the effects of subsidization on the prices 
of EC exports.    38. In the light of Mexico's First Written Submis sion it is easier to understand the reasons for 
Fortuny's high costs.  The article in Claridades Agropecuarias  explains that the greater part of the 
olive harvest in Mexico is used in the production of table olives.  Consequently, olive growers in 
Mexico have a real choice of purchasers, and firms,  such as Fortuny, which are considering olive oil 
production, have an objective criterion for costing their basic raw material.  Moreover, because the 
olives are of varieties that are suitable for both u ses, they are not specialized for oil production and 
their yield of oil (16 per cent) is relatively low.   These considerations affecting cost remained 
unexplored in the Ministry's investigation.  Furthermore, it is not only the production costs that were 
not addressed by the authorities, but also the impact of the high operating costs of Fortuny and Ybarra 
was not taken into account.  39. The issue of cost also seems to be an el ement in other aspect of causation.  Alongside the 
dramatic fall in its sales, the main feature in Fortuny 's history in the period ex amined by the Ministry 
is the break-up of its arrangements  with Distribuidora Ybarra.  This separation meant the loss not only 
of the distribution network and the relations with re tailers, but also of the Ybarra trademark.  As 
regards the trademark, the Ministry seems to have gi ven very cursory attention to what seems to have 
been a crucial factor.  Thus, the Ministry made no reference to a significant study of the marketing of 
olive oil in Mexico by the International Olive O il Council in 2001, which shows that the trademark 
"Ybarra" has an extraordinary high rate of recognition in Mexico. 
 40. Mexico points out that Distribuidora Ybarra  ceased to buy from Fortuny because olive oil 
imported from the EC was cheaper.  However, the Mi nistry's investigations did not reveal how the 
prices of oil from Fortuny's "predecessor", Formex Ybarra, compared with those of oil imported from 
the EC.  It seems to have been presumed by the Mini stry that the price advantage of the imports was a 
recent development that just happened to coincide with the splitting-off of Fortuny.  However, the 
only new fact that was clearly established was th e separation of Fortuny from its sole customer, 
Distribuidora Ybarra.  It is entirely possible that th is development caused Distribuidora Ybarra to look 
more closely at its costs, and to take a more  hard-headed decision on its purchases.  Moreover, 
Fortuny chose the very moment, when it was losing its distributor and the valuable trademark, to 
increase its prices by 34 per cent.
 
 WT/DS341/R 
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ANNEX D-2 
  
EXECUTIVE SUMMARY OF THE ORAL STATEMENT 
OF MEXICO – FIRST MEETING 
 
 
(26 June 2007) 
  1. As explained in Mexico's first written submi ssion, the anti-subsidy investigation began on the 
day following publication of the initiation resolution in the Official Journal of 16 July 2003 and not on 
2 July as indicated by the EC.  Therefore, in sending the EC the invitation to hold consultations on 
4 July (as the EC itself acknowledges), Mexico acted in conformity with the text of Article 13.1 of the 
Agreement on Subsidies and Countervailing Measures (SCM Agreement).  Thus, we consider the 
EC's claim to be without foundation.  
2. With regard to Mexico's alleged violations of Articles 11.4 and 16.1 of the SCM Agreement, 
relating to the recognition of Fortuny as a domestic  producer and the examination of the degree of 
support from the domestic industry, we repeat that the Ministry treated Fortuny as a domestic producer in a manner consistent with the SCM Agreem ent, since, in Mexico's opinion, there was no 
valid reason to believe that there was no domestic  producer simply because Fortuny had temporarily 
suspended operations (a suspension which, moreove r, was linked with unfair imports), while having 
sufficient production facilities to resume them, particul arly as there were no factual or legal elements 
to suggest that it had disappeared as a legally reco gnized entity.  We recall that, in accordance with 
Mexico – Corn Syrup , the articles of an Agreement shoul d be interpreted reasonably and not 
necessarily literally.  
3. We consider that the investigating authority (IA) is under no obligation to restrict itself to the 
terms of the application.  Thus, the fact that Fo rtuny requested initiation for material retardation does 
not signify a violation of the SCM Agreement, si nce that Agreement does not impose any obligation 
in this respect.  In this connection, we refer to the argument set out in Mexico's first written 
submission to the effect that when a WTO Agreement is silent on a particular point, there is a reason 
for it; otherwise the negotiators would have expressly mentioned it in the Agreement.  Mexico 
decided to initiate on the basis of objective eviden ce of injury in the general sense as defined in 
footnote 45 to the SCM Agreement.  Then, during the i nvestigation, the IA determined that the type of 
injury suffered by the domestic industry was materi al injury.  In fact, the European exporters 
themselves agreed with the IA in pointing out that  the situation of the domestic industry corresponded 
more closely to material injury than to material retardation, since it was not a question of a new 
industry. 
 4. With regard to the question of whether Fo rtuny represented the domestic industry and the 
examination of the degree of support, it should again be pointed out that the Ministry had sufficient data to conclude that Fortuny accounted for 100 per cent of the domestic production of goods 
identical or similar to those investigated.  Fort uny provided information concerning its status as a 
producer and the domestic industry as a whole (data on production, installed capacity, employment, etc.).  The fact that it was producing 100 per cent of domestic output was corroborated by various documents, such as a specialized publication issued by  the Mexican Federal Gove rnment's Ministry of 
Agriculture, Livestock, Rural Development, Fisher ies and Food, which is accepted as an authoritative 
agricultural source, and by a statement from th e Ministry of Agricultural Promotion of the 
Government of the State of Baja California conf irming that the applicant had installed production 
capacity. WT/DS341/R 
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 5. Thus, having determined that Fortuny was a domestic producer and having evidence that the 
enterprise accounted for 100 per cent of olive oil production in Mexico, the Ministry correctly 
concluded that Fortuny constituted the entire domest ic industry, so that it was representative and the 
degree of support necessary to initiate a subsidy investigation was present. 
 
6. Contrary to what the EC maintains, th e Mexican IA fulfilled its obligations under 
Article 13(b)(i) of the Agreement on Agriculture.  On the one hand, the due restraint mentioned in that 
Article applied to the stage prior to the initiation of  an investigation, so that the EC's claim is 
unfounded.  On the other hand, in accordance with Article 1(f) of the Agreement on Agriculture, the 
due restraint clause expired on 31 December 2003, so th at as the rule was no longer in force when the 
measures were imposed there was no possibility of its being violated.  7. This having been made clear, we consider that in initiating the investigation the Ministry 
acted in a manner consistent with Article 13(b)(i ).  Due restraint does not constitute a different 
standard of initiation for agricultural products but an  appropriate and reasonable standard, such as that 
applied by the IA.  Moreover, the Ministry request ed additional information from the applicant (by 
issuing a prevención ) before initiating the investigation, in  an attempt to obtain more data. 
 8. Furthermore, we consider that initiating an i nvestigation promptly and efficiently can hardly 
be a violation of Article 13(b)(i), and even if it were, we should point out that 4 months elapsed 
between the application for initiation and the publicat ion of the commencement of the investigation, a 
period which, to a considerable extent, was ta ken up by the above-mentioned efforts to obtain 
additional information ( prevención ).  Thus, we cannot see any evidence of the unusual hurry claimed 
by the EC.  
9. In relation to the imposition of definitive  measures under the Agreement on Agriculture, we 
recall that the countervailing measures were imposed on the basis of the existence of material injury 
and not retardation, so that we fail to see the re levance of the EC's allegations in this respect. 
 10. We also disagree that the EC's assertions concer ning the alleged violations of Article 12 of the 
SCM Agreement constitute a prima facie presumption of  a violation on Mexico's part.  In accordance 
with the findings in Argentina – Ceramic Tiles , the purpose of Article 12.4.1 of the SCM Agreement 
is to provide a mechanism which a llows interested parties to become  acquainted with the confidential 
information, while at the same time protecting the in terests of the parties providing it.  In the olive oil 
investigation, the parties were aware of this in formation and were therefore able to defend their 
interests properly.  Mexican law allows
 the legal representatives of the interested parties access to all 
the confidential information .  That alone is sufficient to achieve the above-mentioned objective, as the 
panel found in the case Mexico – Steel Pipes and Tubes , recently circulated to Members.  
Furthermore, there is evidence that  the legal representatives of the exporters did in fact consult the 
confidential version of the administrative file, so th at there is no basis for any claim in this respect. 
 11. Moreover, the interested parties did provid e non-confidential summaries of the confidential 
information they submitted , so that the EC's claim that ther e were no such summaries is equally 
devoid of substance.  12. With regard to the EC's claim concerning Article 12.8 of the SCM Agreement, according to 
the panel's findings in Argentina – Ceramic Tiles , there being no guidance with respect to how an 
authority should comply with the obligation to ma ke known the essential facts, this can be done in a 
number of ways.  The Mexican IA disclosed the ess ential facts by presenting them to the interested 
parties in the Preliminary Resolution, which is c onsistent with the above-mentioned case-law.  Thus, 
there is no basis for the EC's claim in this respect.  WT/DS341/R 
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13. The EC argues that the duration of the inves tigation was incompatible with Article 11.11 of 
the SCM Agreement.  It also e ndeavours to excuse the lack of cooperation on its own part and on the 
part of its exporters with unfounded assertions.  14. With regard to the duration of the investigation, it should be pointed out that the amount of 
information involved placed a heavy burden on the inte rested parties, so that they all requested 
numerous extensions during the proceedings.  Almost  all these requests were granted by the authority 
with a view to gathering as much information as possible and enabling the parties to defend 
themselves.  Moreover, as a result of the informati on obtained at the public hearing, the authority had 
to request further details from the parties.  Likewise,  the exporters requested the IA to carry out an on-
the-spot investigation at Fortuny, which it did on 19  January 2005.  All this  led to delays in the 
proceedings.  Thus, the IA was not inactive, part ial or negligent, quite the opposite.  Given the 
complexity of the case, there was nothing for it but to extend the time allowed in order to establish a 
sound basis for a proper determination.  
15. The EC admits not having provided the informa tion requested by the Ministry and, moreover, 
maintains that it was not a valid request.  There is no justification for this, since in no circumstances 
could it have been considered exempt from providi ng the information requested of it.  We disagree 
with the EC when it says that "the  only means of insisting on the importance of the rules of the SCM 
Agreement" was to refrain from providing information.  The same applies to its claim that to provide 
this information would have been tantamount to "condoning" the actions of the Ministry.  To accept 
the claims of the EC would be equivalent to ceding control over the investigation to the parties, which 
is unacceptable, since it would do significant harm to the multilateral system.  Moreover, Article 12.7 
of the SCM Agreement does not mention any exceptions  to the obligation upon the parties to provide 
information requested;  therefore recourse was had to the "facts available", in accordance with that 
Agreement. 
 
16. Mexico gave an adequate a nd reasoned explanation of the existence of subsidization, its 
calculation of the benefit conferred on the oliv e oil exporters and the method applied in each 
particular case, in conformity with the SCM Agreement.  17. With regard to subsidization in general, we consider that the EC's argument has no basis in 
the SCM Agreement, since that Agreement does not re quire the pass-through analysis claimed.  In this 
connection, as we have already pointed out, we cons ider that when a WTO Agreement is silent, there 
is a reason for it.  In addition, the subsidy programme has been notified to the Committee on 
Agriculture as a subsidy-granting mechanism, and th e EC has not maintained that that programme 
does not exist or was not in effect during the investig ation period.  Thus, there can be no question that 
the subsidy existed, was in effect and was being applied. 
 18. In this context, Regulation 136/66/EEC clearly indicates that the subsidy is intended to promote the production of olive oil, so that the IA  assumed that the subsidy is actually granted for 
olive oil production.  Thus, it had no reason to carry out a pass-through analysis.  
19. With respect to the calculation of subsidy marg ins, we stress that even though the IA offered 
the parties the opportunity to propose methodologies and present documentary evidence, the exporters 
declined to provide the information necessary to enable the Ministry to  make the adjustments that they 
themselves had requested, so that their request was denied.  Nevertheless, even though the exporters 
failed to submit information or methodologies, the Mini stry decided to calculate an adjustment factor 
that reflected the percentage of subsidized olive o il in the production cost structure for the oil, using 
the facts available.  20. On the other hand, with regard to the comparison of the amount of the subsidy with the exporters' ex-factory sales prices, it is important to point out that the Ministry established unit subsidy WT/DS341/R 
Page D-11 
 
 
margins (dollars/kg) and that when margins of this type are calculated the use of ex-factory or c.i.f. 
export prices does not affect the result.  21. Regarding the dilemma allegedly faced by th e exporters in providing information requested 
by the IA, and the claim that they did not provi de it because the time-limit for concluding the 
investigation had expired, we repeat that we ca nnot see why this should constitute a valid reason for 
not cooperating.  22. Concerning the determination that Fortuny was the only domestic producer, we consider it 
important to point out that, as established in the Appellate Body report in United States – Softwood 
Lumber VI (21.5) , the examination of the conclusions of the IA should be based on the information 
contained in the record as well as on the consider ations contained in its resolutions.  Thus, we 
consider it important that the analysis of these asp ects should focus on the evidence contained in the 
record and that the question of whether the IA c ould reasonably have arrive d at the conclusions it 
notified should be decided on that basis.  As the EC has not established a prima facie presumption of 
violation on the part of Mexico, we request that its allegation be rejected. Moreover, the Ministry's 
actions and the evidence in its possession show that Fortuny was the only domestic producer. 
 23. In the final resolution it is clearly explaine d why it was confirmed that Fortuny complied with 
the requirements of representativeness and legitimacy to apply for an investigation.  The resolution 
also mentions the efforts made by the authority to investigate the existe nce of other domestic 
producers. 
 24. Moreover, it is wrong to assert that the Mini stry dismissed artisan production because it was 
not distributed through the same channels as imports.  The Ministry did not
 dismiss artisan 
production.  What happened is that it could not  establish the existence of producers other than 
Fortuny, whether artisanal or not.  It reached this conclusion after evaluating the replies to the 
requests for information that the IA sent to various  entities, requesting them to identify any domestic 
producer of olive oil .  The search was never restricted to manufacturers whose output was marketed 
through the same channels as the imported product.  Everything possible was done to gather data but, 
nevertheless, the search was unsuccessful.  
25. The EC submitted data from the Food and Ag riculture Organization of the United Nations 
according to which Mexican production barely amount ed to 200 tonnes, a figure consistent with 
Fortuny's production.  Moreover, the world mark et information provided by the exporters' 
associations ASOLIVA and ASSITOL does not menti on Mexico as an olive oil producing country.  
All this also indirectly confirmed that the applicant was Mexico's only producer. 
 
26. Thus, the Ministry obtained information from the interested parties,  government agencies and 
numerous entities not party to the investigation, and from all these data it was unable to deduce the 
existence of other domestic producers.  All the ev idence led it to believe that the domestic industry 
consisted of Fortuny.  Consequently, the IA based its conclusions on an objective examination of the 
available facts, acting in a manner consistent with Article 15 of the SCM Agreement.  The IA did not 
concentrate on determining what happened to Fortuny prior to the investigation period.  The material 
injury consisted in the fact that the subsidized  imports prevented it from resuming its operations. 
 27. Finally, concerning the relevance of the pr oduction element for determining whether or not a 
producer exists, we refer to the considerations set out in our first written submission, where the 
reasons why Fortuny was in fact a domestic producer are explained. 
 28. At the same time, with resp ect to the determination concerning the existence of injury, we 
note that the discussion falls under three heads:  (a) the nature and existence of the alleged injury;  
(b) the examination of volumes and prices;  and (c) the determination of material injury. 
 WT/DS341/R 
Page D-12  
 
29. With regard to the nature and existence of the alleged injury, we first of all refer to our 
previous argument to the effect that the investigati on began with the definition of injury in the general 
sense as set out in footnote 45 to the SCM Agre ement, which in our opinion is perfectly valid. 
 30. We repeat that, with respect to both the pr ovisional and the definitive measure, the IA made 
its determinations on the basis of an analysis of material injury, because it was not a question of a new 
industry but of one that had already existed for se veral decades and had suspended its activities, and 
then found itself unable to resume them because of  the subsidized imports.  As already noted, the 
exporters themselves argued that the situation of  the domestic industry corresponded more closely to 
material injury than to retardation. 
 
31. It would appear that in sugg esting that the injury occurred before the investigation period the 
EC is assuming that the injury caused to the dom estic industry was the suspension of Fortuny's 
activities, which, we stress, is incorrect.  The Mini stry determined that the injury consisted in the 
prevention of the resumption of operations by the domestic industry.  The suspension of production 
was something that happened in the period examined for effects of injury, and was relevant to the 
material injury analysis; however, contrary to what  the EC says, this does not mean that the IA had 
determined the existence of material retardation.  In fact, the Ministry never issued a simultaneous 
determination of material injury and retardation. 
 32. With regard to the examination of volumes a nd prices, we consider it important to point out 
that the EC does not make any claim as such c oncerning import volumes and therefore does not offer 
a prima facie presumption of violation.  33. Concerning the examination of prices, the Mexican IA found that the prices of the subsidized product decreased during the first two years of the period examined for effects of injury, only to 
increase once Fortuny had suspended its production activity.  An objective examination, based on 
positive evidence, of the effect of the subsidized  imports on prices was carried out and it was found 
that the prices of those imports were even lower than domestic production costs, all this on the basis 
of relevant information.  The subsidy largely explains  the differential with resp ect to the real domestic 
costs and prices recorded during the examination period.  
34. In addition, the IA obtained information from the real prices reported by Fortuny, which were 
confirmed by data provided by Distribuidora Ybarra , Fortuny's main customer.  Distribuidora Ybarra 
stated that it had stopped buying from the domestic  producer for price reasons, thus confirming the 
evidence on price undercutting.  
35. As regards the determination of material inju ry, the IA's examination by which it determined 
its existence covered three years, which included the pe riod investigated for the effects of the subsidy.  
The analysis of the trends and behaviour of the re levant factors was based on monthly and annual data 
in order to establish the situation more precisely and, in accordance with Article 15.4 of the SCM 
Agreement, the actual and potential effects of  the imports on domestic production were also 
examined. 
 
36. The trends in domestic production must be assessed comprehensively and not merely by 
comparing one year with another.  Thus, we note that there was a steady d ecline in the applicant's 
production indicators, which confirmed that the s ubsidized imports from the EC had adversely 
affected the situation of the domestic industry to the extent of forcing it to interrupt its operations and 
preventing it from resuming them. 
 37. With respect to the use of nine months of successive years in the exam ination of injury, the 
EC has failed to offer a prima facie presumption of vi olation on the part of Mexico, confining itself to 
asserting that this undermined the objectiveness of the ex amination of injury.  In this connection, the 
SCM Agreement does not lay down any guidelines c oncerning the time interval that should be WT/DS341/R 
Page D-13 
 
 
considered in carrying out the analysis, and we th erefore consider that there cannot have been any 
violation of the SCM Agreement.  38. It should be made clear that it is incorrect  that the IA only analyzed the information for 
9 months of each year.  The Ministry evaluated the data on trends at a monthly or annual level, from 
January 2000 to November 2003 and even beyond.  In our opinion, this in no way affected the 
objectivity of the injury analysis.  39. With respect to the analysis of non-attribution of injury, it is sufficient to glance at the final 
resolution to confirm that reasons of a quantitative a nd qualitative nature were considered in order to 
determine that other factors were not causing the in jury suffered by the domestic industry, so that the 
EC's arguments do not constitute a prima facie presumption of violation on Mexico's part.  40. At the same time, the importer Distribuidora Ybarra provided the Ministry with material to enable it to determine whether any of the factors me ntioned by the EC were a cause of injury to the 
domestic producer.  Specifically, it indicated that it had stopped buying Fortuny's product for price 
reasons .  Thus, the problem was not the alleged loss of a distribution network or difficulties relating to 
the supply or quality of the product, but the low prices of European oil.  41. With regard to the loss of the Spanish br and Ybarra, both the impor ters and the exporters 
submitted a " marketing study " as proof of their claim.  After examining it, the Ministry determined 
that it was not sufficient to show that the loss of  the trademark was a cause of injury, since it only 
reflected the level of identification of the mark by  the consuming public and not whether or not they 
preferred it to other brands.  Moreover, preference fo r the Ybarra brand would also have affected the 
market share of the other European brands, whic h was not the case.  Consequently, the Ministry 
rejected the claim of these interested parties. 
 
42. With respect to the consumer's alleged mistru st of the Fortuny product, considering that the 
reason given by Distribuidora Ybarra for stopping  buying Fortuny oil concerned price and not 
consumer preference, it was clear that this was not a cause of injury for the ap plicant either.  As for 
Fortuny's allegedly high costs, the Ministry not on ly analyzed them but also considered several 
additional factors.  The final resolution describes ho w the production costs were taken into account in 
order to determine whether the resumption of opera tions was economically feasible.  The conclusion 
reached at the end of the feasibility study was that  the subsidized imports from the EC were being 
sold to Mexico at low prices and it was that wh ich was preventing Fortuny from resuming operations, 
which is consistent with the above-mentioned information from Distribuidora Ybarra. 
 
43. Thus, the IA not only analyzed the factors me ntioned by the EC, but also examined all the 
aspects that it considered might affect the state of the domestic industry, so that the EC's argument has 
no validity.  WT/DS341/R 
Page D-14  
 
  
ANNEX D-3 
 
 
EXECUTIVE SUMMARY OF THE ORAL STATEMENT 
OF THE EUROPEAN COMMUNITIES – 
SECOND MEETING 
 
 
(13 October 2007) 
 
 1. The EC will concentrate its Second Oral Statement to respond to the evasive defence 
presented by Mexico in its Second Written Submission. 
 
2. In relation to the claim concerning Article 13.1 of the SCM Agreement
, contrary to Mexico's 
suggestion, the EC does not imply that the Agreement  should be interpreted in a way that would allow 
an exporting Member to block an investigation by  refusing to participate in consultations.  The 
reference to expeditiousness in Article 13.3 makes an y such interpretation impossible.  In any case, 
the EC did not refuse to participate in pre-initiation consultations on olive oil.  On the contrary, it 
accepted quite swiftly, only three days afte r having received the invitation from Economía. 
 3. As regards the date of initia tion of the investigation, Mexico accuses the EC of basing its 
arguments on mere assertion.  However, in footnote 37, the SCM Agreement  provides a definition of 
the term 'initiated', and its First Oral Statement the EC has given a detailed explanation of why the 
action in the Mexican procedures that most closely ma tches that definition is the Minister's signature.  
 4. Finally, Mexico argues that according to the EC's interpretation an investigation would be 
initiated as soon as the investigation authority carri es out any activity.  However, the relationship 
between any ancillary administrative action con cerning the complaint and the initiation of the 
investigation is not an issue that is relevant to  the present dispute.  In our case, the initiation was 
decided by the Minister, who is the highest post in Economía, when he signed it on 2 July 2003. 
 5. The EC's second claim is that Economía failed to determine that the application
 by Fortuny 
was made "by or on behalf of the domestic industry ", contrary to Article 11.4 of the SCM Agreement .  
 
6. The EC notes that Mexico continues to conf use the meaning of article 11.4 (standing test at 
initiation stage), which is relevant  under this claim, and Article 16. 1 (definition of domestic industry). 
As a result of this confusion, Mexico states that  the term domestic industry has two "meanings" and 
that there are two ways of meeting the obligati on to examine the domestic industry.  But this 
interpretation is wrong since Article 11.4 clearly requires that the investigating authority has to 
determine the degree of support of th e domestic industry before initiati on.  The investigating authority 
cannot solely rely on information provided in th e application of the domestic industry, as done by 
Economía in this case.  The analysis described in  Mexico's Second Written Submission refers to the 
investigation period and thus cannot  make good failings at the initiation stage of the investigation. 
 7. Mexico continues to criticize the EC's contentio n that production and output are at the heart of 
the notion of 'industry' in the Agreement.  Far from being mere assertion, as alleged by Mexico, the 
contention has been supported by a careful analysis of the terms of the Agreement . 
  WT/DS341/R 
 Page D-15 
 
 
8. Mexico attempts to use the notion of materi al retardation as a means of attacking the EC's 
contentions, while acknowledging that the case under analys is relates to material injury.  In particular, 
Mexico argues that the notion of establishment implie s the starting up of an undertaking rather than its 
setting up on a secure basis.  Mexico gives a definiti on of the Spanish term 'establecer' (establish) in 
support of its view.  However, the EC's interpreta tion is also supported by an authoritative Spanish 
dictionary, the "María Moliner", which defines 'est ablecer' as 'dejar puesta una cosa en un sitio para 
que permanezca y realice su función en él' (to put  something in a place to remain and fulfil its 
function there).  Moreover, the term "establecimiento " (establishment) is defined as "local en que se 
desarrolla una actividad […] industrial" (premises wh ere an industrial activity takes place).  Both 
terms, "establecer" and "establecimiento", derive fro m the Latin word 'stabilire', which is linked to the 
notion of stability, something which is quite difficult to find in Fortuny's activities. 
 9. The fact that there may be difficulties in applying the notion to situations were an industry undergoes temporary closures in no way undermines th e validity of the concept proposed by the EC. 
Borderline situations are an everyday legal occu rrence.  They would also arise in applying the 
criterion proposed by Mexico. 
 10. Mexico asserts that, as interpreted by the EC, the SCM Agreement  would provide no remedy 
for companies in the situation of Fortuny.  This argument does not take into account the possibility 
provided by the SCM Agreement  to initiate an "ex officio" investigation. 
 
11. The third of the claims made by th e EC concerns Article 13(b)(i) of the Agreement on 
Agriculture . 
 12. The EC claims, firstly, that Mexico should not have entertained a complaint based on the 
notion of material retardation.  Mexico's respon se is that, although Fort uny based its claim on an 
allegation of material retardation, Economía did not define which of the three kinds of injury it was 
relying on when initiating the investigation.  Ho wever, Economía was obliged not to commence an 
investigation unless it had sufficient evidence of injury.  It must not  be allowed to invoke its own 
breaches of the rules in order to avoid other obligati ons, and must therefore be taken to have initiated 
the investigation on whatever basi s it was requested, which in this case material retardation.  Mexico 
says that the findings of an investigating authority are not limited to the particular kind of injury 
specified by the complainant.  That, however, is not the issue in the present in stance.  Rather the issue 
is the connection between the type of injury identif ied in the complaint and that given as the basis for 
commencing the investigation.  13. Secondly, Mexico critics the EC for failing to  provide a comprehensive definition of 'due 
restraint'.  'Due restraint' was the expression used by the drafters and presuma bly they thought it was 
an adequate expression, or they w ould have added a definition (as they did, for example, regarding the 
notion of injury).  The New Shorter Oxford Dictionary  defines "restraint" by reference to the verb "to 
restrain", which means "hold back or prevent fro m some course of action" or "restrict, limit". 
 14. Mexico repeats that 'due restraint' is the sa me standard that applies to the initiation of all 
investigations.  The EC has already made referen ce to the doctrine of 'effet utile', and Mexico has 
given no explanation of why that doctrine should not apply in this context.  There must be some 
circumstances in which 'due restraint' could have th e effect of prohibiting an investigation that might 
otherwise have been initiated.  Mexico does not atte mpt to show how its decision to initiate reflected a 
standard of due restraint. 
 
15. Finally, Mexico appears to argue that the failu re to respect the due restraint standard had no 
effect on the investigation as a whole.  This at complete variance with WTO law and practice, as 
demonstrated by such cases as Guatemala – Cement II , and Argentina – Poultry Anti-Dumping 
Duties , where the panels condemned anti-dumping dete rminations because of infringements of the 
rules regarding initiation. WT/DS341/R 
Page D-16  
 
 16. The claims under the fourth of the EC's headi ngs also fall into two parts.  The first of the 
claims concerns Article 12.4.1 and Mexico's failure to provide  non-confidential summaries of 
confidential information  supplied to the investigating authorities. 
 
17. Although Mexico reproduces ten paragraphs from the report in Mexico – Steel Pipes and 
Tubes  to support its arguments, paragraph 7.398 of the report refutes its contention that allowing 
access to the confidential file serves to satisfy the obligation in Article 12.4.1.  Mexico has finally 
admitted this in its Second Written Submission.  
18. Mexico's summation of the panel rulings in Mexico – Steel Pipes omits the vital fact that the 
panel had found that the non-confidential summaries satisfied the Agreement  because sufficient 
reasons had been given for excluding summaries of the confidential information.  No such reasons 
were given in the present investigation.  The EC is not claiming that Economía wrongly accorded 
confidential treatment.  Rather the EC contends th at, in according such treatment, Economía failed to 
provide non-confidential summaries.  The issues of  access to non-confidential information and to 
confidential information are quite separate.  Moreov er, contrary to the impression that Mexico seeks 
to create, the panel in Mexico – Steel Pipes and Tubes  said nothing to suggest that access to 
confidential information would compensate for failu re to provide non-confidential summaries (or to 
explain why they could not be provided).  Furthe rmore, contrary to Mexico's assertion, very 
substantial amounts of information are blanked out in the non-confiden tial versions made available by 
Economía. 
 19. The real issue is not how the interested parties submitted information, but whether Economía ensured proper provision of non-confidential summari es, and Economía completely failed in this 
respect.  Where Mexico has provided non-confidential versions of documents, they do not satisfy the 
requirement of Article 12.4.1 because they do no t contain non-confidential summaries of the 
confidential information.  20. Mexico's arguments in its Second Wr itten Submission regarding Article 12.8
 merely repeat 
what it has said previously, so the EC will not  add anything to its own previous remarks.  
 
21. The fifth of the EC's 'procedural' claims concerns the breach of the 18-month time limit  set by 
Article 11.11 of the SCM Agreement .  Mexico's Second Written Submission adds nothing to its 
previous observations on this issue, except to  accuse the EC of trying to find excuses for not 
cooperating with the investigation, and thereby a void the application of 'facts available' by the 
investigating authority.  But the EC has not chosen  to make a claim against Mexico regarding the use 
of 'facts available'. 
 22. The first of the claims on the substantive rules of the SCM Agreement  concerns the existence 
of subsidization and the calculation of the be nefit supposedly received by the imported olive oil
.  
Once again, Mexico's treatment of this subject is a repetition of its earlier observations.  As regards 
the purpose of the subsidy, the EC will emphasize once more the futility of trying to determine 
whether the original subsidy was given to olives or to olive oil.  The crucial issue is whether the 
imported olive oil was a subsidized import.  The EC  has already shown that given the transformation 
in the product and the arm's-length transfers invol ved in its movement from olive tree to import, 
Economía was not justified in assuming a pass thr ough of the subsidy and s hould have carried out a 
proper investigation of the issue. 
 
23. Mexico challenges the EC's invocation of Articles 1 and 14 of the SCM Agreement  as the 
basis for its claims.  The EC has fully explained its choice in answer to the Panel's Question 46. 
 24. Mexico seeks to confuse the issues by means of shallow debating points concerning the 
calculation of the subsidy and the calculation of the benefit, as mentioned in Article 14.  The EC  WT/DS341/R 
 Page D-17 
 
 
claims that Economía failed to explain how it calc ulated the benefit conferred on the recipient, 
contrary to the obligation in Article 14.  Howeve r, in accordance with the practice of WTO dispute 
bodies where an allegation of substantive infringement  is coupled with one of failing to explain or 
publicize the point in question, the EC has concentr ated on the substantive infringement, which is the 
failure to examine the issue of pass-through wh en calculating the amount (if any) by which the 
imported olive oil is subsidized. 
 25. Finally, Mexico complains that the EC has not  explained in what way Economía did not make 
appropriate adjustments.  However, the EC fully addressed this issue in its First Written Submission. 
 
26. As regards the issue of the domestic industry
, Mexico makes an attempt to justify Economía's 
finding that Fortuny constituted the whole of the Me xican olive oil producing industry.  The EC has 
shown that Economía failed to take steps that c ould reasonably be expected of it to determine the 
extent of the domestic industry, and in particular  disregarded evidence of the existence of producers 
other than Fortuny. 
 
27. Thus, Mexico tries to justify Economía's  investigation of Mapr insa and its suppliers. 
Economía asked Bufete Químico to test a sample of just one of Maprinsa's two supposed olive oil 
products and found it was in fact rapeseed oil.  Fr om this it concluded that Maprinsa did not market 
olive oil, although one of Maprinsa's suppliers, Oliv arera Tulyehualco, had informed Economía that it 
obtained olive oil from Baja California.  Economía entirely disregarded this information.  Mexico 
states that Olivarera Tulyehualco supplied rapeseed oil to Maprinsa.  This is a completely new 
assertion, because in the Final Resolution Economía said that Olivarera Tulyehualco informed that it 
was not an olive oil producer and that it bottled th e product under investigation, which is olive oil not 
rapeseed oil.   
28. Regarding the firm Llanos de San Francisco, it was negligent of Economía not to have made 
enquiries regarding its activities during the invest igation period.  Mexico cites the periodical 
Claridades Agropecuarias  as though its pronouncements were always irrefutable.  However, it is 
evident that much of the information in the article  is anecdotal, and at times it seems implausible. 
 29. As regards to the question of registration with the producers' organisation ANIAME, where 
only Fortuny was listed in respect of olive oil, Econ omía took this as evidence of the existence of a 
producer, but Economía did not enquire into the take-up among producers of registration with 
ANIAME, so Mexico's statement that any olive oil producer would have registered is mere assertion. 
 30. Mexico does not deny that Economía did not approach the authorities in Sonora, one of the 
two major olive producing states.  However, in basi ng its assertion of low produ ction on the article in 
Claridades Agropecuarias  Mexico chooses to overlook the table on page 11 of that article, which 
shows that the level of olive production in Sonora regularly rivalled that of Baja California (4,930 
tons and 4,127 tons, respectively, in 1999).  Mexi co argues that production in Sonora is not used for 
making olive oil, but the extract from Claridades  on which it bases this assertion states just the 
contrary: according to Claridades , less than 5 per cent of the oliv es is processed as table olives in 
Caborca, the main region producing olives in Sonora. 
 31. The EC has shown that, contrary to Mexico 's assertions, Economía had clear indications of 
olive oil production in Mexico apart from Fortuny.  Such evidence was ava ilable to Economía and 
was not pursued.  The responsibility of the investiga ting authority is not merely to reach a reasonable 
decision on the basis of the file, but to make sure th at the file contains sufficient supporting evidence. 
Mexico is not entitled to assume that Fortuny, whic h it admits had zero output during the investigation 
period, would completely overshadow a ny such producers that might exist. 
 32. Mexico shifts from the individual steps that were or were not taken to the legal framework 
that applied to them.  It proposes to equate the 'm ajor proportion' criterion of Article 16.4 with the 'by WT/DS341/R 
Page D-18  
 
or on behalf of' standard of Article 11.4.  Howeve r, it provides no reasoning or authority to support 
taking such a step.  33. Finally, Mexico seeks to retrospectively ju stify Economía's exclusive reliance on Fortuny by 
saying that the figure for total Mexican production of  olive oil in 2000 was very similar to that of 
Fortuny.  In fact the figure given by Fortuny is 742 tonnes, while that for total production is given as 
1,000 tonnes.  Those data alone should have give n Economía reason to doubt that Fortuny was the 
sole producer.  The figure of 1 000 tonnes is given in the Claridades  article but it is not provided, as 
one would have expected, as part of a table showi ng annual production figures and citing a source.  It 
is worth recalling that the Interna tional Olive Oil statistics refer to an olive oil production in Mexico 
of 1,500 tonnes in 2000/2001, 2,000 tonnes in 2001/2002 and 2,500 tonnes in 2002/2003. 
 34. Mexico's Second Written Submission has little to  add to its previous responses to the EC's 
claim that, without output, Fortuny cannot constitute a domestic industry.  It is not the EC's position 
that companies must have output throughout the subsidy investigation period in order to count 
towards the domestic industry.  Rather, it is that a company with no production whatsoever during the 
period cannot qualify.  The EC does not deny the rele vance of trends over the period leading up to the 
investigation period.  Nevertheless, the only veri fied evidence of subsidization available to the 
investigating authority will be that from the inv estigation period and unless the domestic companies 
concerned have output in that period,  no injury can be demonstrated. 
 
35. The third of the 'substantive' claims  concerns the determination of injury
.  Mexico's latest 
contentions on this topic reflect the confused basis on which Economía de veloped its arguments.  
Thus, Mexico appears to argue that, since the notion of 'decline in output', is one of the factors of 
injury listed in Article 15.4 of the SCM Agreement , therefore zero output should be taken into 
account.  However, the EC's point is that if output is  zero there can be no industry within the terms of 
the Agreement.   
 36. Mexico calls for 'potential' injury to be c onsidered, but does not explain how that notion is 
relevant to the present case.  Neither Mexico is entitled to complete the investigation now, because 
Economía made no findings of potential injury in respect of the factors listed in Article 15.4. 
 
37. Mexico's explanation of the ruling at paragraph 7.77 of the Mexico – Corn Syrup  panel report 
is not easy to understand.  The point at issue was th e extent to which, as regards threat of material 
injury, projections of injury should be examined.  However, the issue had arisen in regard to the 
contents of the application for an investigation rath er than to the scope of the investigation itself.  
Mexico says that the panel ruling di d not purport to confine the use of projections to cases of threat of 
injury.  However, the panel did emphasize the importa nce of past experience as the source of evidence 
for future developments, and it evidently had in mind the use of data from the investigation period.  In 
that respect the panel's ruling is clearly at odds with the approach adopted by Economía. 
 38. Mexico accuses the EC of contradicting itself in  denying the existence of injury when Fortuny 
has ceased production.  This is to misrepresent the EC's case, which is that if there is no production 
there is no industry, and if there is no industry ther e can be no material inju ry.  Mexico also asserts 
that its output of olive oil fell because of subsid ized imports, but Economía failed to establish this 
causal link.  39. The last claim concerns the Ministry's consideration of causation by 'other factors'
, and 
Mexico alleges that the EC changed its accusation regarding the examination of known factors from 
saying that there had been no examination to say ing that the examination was inadequate.  The 
criticism is of no significance but it is in any case wrong.  The EC has from its first submission focused on the issue of inadequacy.   WT/DS341/R 
 Page D-19 
 
 
40. Finally, Mexico argues that the 'other known factors' identified by the EC had no effect on the domestic industry.  This criticism reflects a lack of  understanding of the nature of these proceedings, 
whose function is to review the decision taken by Me xico, not to retake that decision.  Consequently, 
the EC merely seeks to establish that the factors th at it has identified are ones that should have been 
properly examined, and that Economía, in so far as it looke d at them at all, did so inadequately, so that 
the resulting determination constituted an infringement of Article 15.5. 
 WT/DS341/R 
Page D-20  
 
  
ANNEX D-4 
 
 
EXECUTIVE SUMMARY OF THE CLOSING STATEMENT 
OF THE EUROPEAN COMMUNITIES – 
SECOND MEETING 
 
 
(13 October 2007) 
  1. Mexico should have never in itiated this investigation since no standing test was performed, 
no due restraint was exercised and no pre-initiati on consultations were held.  Also during the 
investigation, besides the blatant exceeding of th e 18-month deadline, Economía did not comply with 
its WTO obligations as regards the determina tion of pass-through, injury and casual link. 
 2. The EC will not to rehearse the arguments th at have already been presented to the Panel.  
What the EC intends to do is pick out a handful of issues that we think call for special attention, and 
but which we think have not been adeq uately ventilated in these proceedings. 
 
3. First, the Panel will by now be well aware of  the somewhat curious path which was taken by 
Mexico's investigation of olive oil.  Fortuny launc hed its complaint on the basis of an allegation of 
injury  taking the form of material retardation of  the establishment of domestic industry.  The 
investigating authority began the investigation with out any clear idea of whether what was at issue 
was material retardation or material injury.  It was onl y in the course of the investigation, in particular 
in the Provisional Resolution, that the authority fo rmed the view that what had occurred amounted to 
material injury rather than material retardation.  It is clear that, in order to achieve or avoid a 
particular result, an authority is impeded from redefi ning that result in the course of the proceedings.   
 4. Mexico seeks to pass off its actions as a matter of administrative discretion or convenience.  
However, what might be convenient for the inves tigating authority and for the complainant Fortuny 
was not convenient for other interested parties or  Members.  The exporters and the EC sought to 
defend their interests on the reasonable understandi ng that what was at issue was a question of 
material retardation, only to discover in the Provi sional Resolution, that the nature of the injury 
identified by the investigating authority was quite different.  Of course they had the opportunity to 
address the issue following the publication of the Pr ovisional Resolution, but by that time they had 
devoted considerable efforts to pursuin g what proved to be an irrelevancy. 
 5. The EC is not trying to slip into these pro ceedings a claim based on failure to give parties a 
fair hearing during Economía´s investigation.  We have deliberately chosen to concentrate our claims 
on particular issues in order to simplify the proceed ings.  Nevertheless, the negative consequences for 
interested parties of the investigating authority's act ions give further emphasis to the EC's claim that 
Mexico has not properly initiated th e investigation because it did not ma ke an adequate determination 
of injury in accordance with Article 15.4 of the SCM Agreement . 
 6. The EC would also like to add that the conf usion by Economía between  material injury and 
material retardation has been maintained by  Mexico all through the Panel proceedings. 
 7. The second point that the EC would like to bring to your attention in this Closing Statement concerns the documentation supplied by Mexico
 to defend this action.  Mexico has shown a  WT/DS341/R 
 Page D-21 
 
 
regrettable tendency to make arguments on the basis of documents that it does not produce.  It was 
only in response to the specific re quest of the Panel that many re levant documents were produced. 
 8. Unfortunately, when they were produced, the manner in which they were presented made the 
task of the EC, and that of the Panel, extremely difficult.  Although Mexico produced what it says is 
the list of documents in the administrative file, the si gnificance of many of the elements in that list is 
obscure.  The problem was compounded by Mexico's failure to make any connection between the individual documents included in the list and th e exhibits that it presented to the Panel. 
 9. Furthermore, some of the exhibits appear  to be almost miscellaneous collections of 
documents, whose precise nature was sometimes very  difficult to determine and, indeed, in some 
cases continues to elude us.  We do not accuse Mexico  of deliberately trying to create confusion, but 
we have to say that this was sometimes the result of its actions.  10. Confusion is also an aspect of the third topic th at we wish to bring to the Panel's attention.  In 
making its claims the EC has clearly distinguished between those errors that were committed by the 
investigating authority  in the initiation of the investigation, a nd those that arose in the course of the 
investigation.  Thus, the EC has made separate claims concerning the notion of industry when the 
decision to initiate is being made, whic h is addressed in Article 11.4 of the SCM Agreement , and to 
the determination of injury to industry made in the s ubstantive findings of the investigating authority.  
Unfortunately, Mexico has moved back and forth be tween the topics as and when  it appeared to best 
serve its interests.  This distinction between initia tion and substantive investigation also applies to 
other aspects of the EC's claims.  Thus, in regard to the failure to provide summaries of confidential 
information or give an explanation for this failure the EC has laid special emphasis on the 
communications made to the investigating authority by  Fortuny prior to initiation.  The obligations in 
Article 12.4 apply as much to such communications as they do to those made in the course of the 
investigation. 
 11. Finally, the European Communities would like  to thank the Panel, the Secretariat and the 
interpreters for so thoroughly and effi ciently carrying out your responsibilities. 
 12. The EC would also like to thank Mexico's de legation for its efforts to defend such a difficult 
case for them.  The EC considers Economia's inves tigation to be peculiar, confuse, unfounded and, 
most importantly, irreconcilable with the WTO Agreements.  For these reasons and because the system of EC production aid in the olive sector was replaced at the beginning of 2006 by an entirely 
different system, the EC has requested the Panel to  suggest to Mexico the complete repeal of the 
measure against olive oil. 
 
 WT/DS341/R 
Page D-22  
 
ANNEX D-5 
 
 
ORAL STATEMENT OF MEXICO - 
SECOND MEETING 
 
 
(2-3 October 2007) 
  Representatives of the European Communities (EC) and of the third parties in these 
proceedings, Members of the Panel and officials of  WTO Secretariat, good morning and thank you for 
the opportunity to present, orally, our country's position in this dispute.  
 Rather than running through our arguments once again, in this oral submission we shall be 
emphasizing the essential points that we think the Panel should take into account.  1. Regarding the EC argument concerning the oblig ation to hold consultati ons prior to initiation, 
it appears that under the EC system an applica tion is accepted when submitted by the applicant and 
received by the Investigating Authority (IA), while  the formal action initiating the investigation is 
publication in the Official Journal of the European Union, from which moment presumably the investigation clock begins to run.  2. In Mexico, the applicant files his applicati on and the IA merely receives it and stamps it to 
acknowledge receipt, which does not imply that it has been accepted, only received for examination.  
In other words, receipt of the document does not imply acceptance.  Once th e IA has analysed the 
information, it determines whether or not to dr aw up a draft acceptance of the document.  If the 
application is satisfactory, the IA sends this draf t to the Minister of the Economy, who can decide 
whether or not to accept the application.  If the Minister accepts the application, he signs the 
document which is then sent to the Official Jour nal (DOF) for publication.  Up until that moment, 
what has happened is that the application has b een submitted and accepted, but nobody knows that the 
application exists .  The investigation has not begun. 
 3. Consequently, if for some reason the document is not published, it will have no legal force 
whatsoever.  In fact, the investigation clock does not begin to run until the day following publication, 
clearly because by then, the interest ed parties know that an investig ation has been initiated.  The 
Minister's signature does not mean the initiation of the investigation.  If this were the case, the periods 
would have to run at that date, which simply ca nnot happen, since apart from the applicant, nobody 
knows that an application has been filed.  4. Footnote 37 of the SCM Agreement states that  initiation is the formal action by which an 
investigation is commenced, but it gives no indicati on as to what requirements must be met for that 
action to take place.  A "formal action" is an action which meets the legal requirements for being considered as valid.  Clearly, each domestic legal sy stem establishes what those requirements are.  If 
the negotiators had intended that all Members should use only one particular action or type of action 
to consider an investigation as ha ving been initiated, they would at least have established the specific 
requirements for that "formal action" .  Given that this is not the case, we assume that each Member 
has to define the legal act by which the investiga tion is initiated.  We do not understand why the EC 
maintains that such questions cannot be le ft to the legal systems of each country. 
 5. The EC merely repeated that the signatu re of the Mexican Minister of the Economy 
constitutes the formal act of initiation without explai ning why this is the case.  Taken to the extreme, 
its argument would mean that the pre-initiation actions  taken by the IA to determine whether or not an  WT/DS341/R 
 Page D-23 
 
 
application is appropriate w ould have to be treated as part of th e investigation, and that consequently, 
the formal act of initiation would simply be recei pt of the application, which is unacceptable.  
Consequently, regarding its reply to question 6, th ere can be no confusion as to whether the Mexican 
or the WTO legal system should be used, since th e SCM Agreement does not establish what the act of 
commencement is;  and as there are not two sets of rules applicable, there can be no conflict. 
 
6. During the first hearing, the EC stated that the obligation in Article 13.1 of the 
SCM Agreement was to invite a Member to hold cons ultations before initiating the investigation.  
However, in its replies it maintains that there is  an obligation to hold the consultations prior to 
initiation.  This new interpretation would mean that  a Member invited to hold consultations could 
decline or ignore the invitation, and afterwards clai m before a panel that the Member invited violated 
the SCM Agreement because the consultations did not take place prior to initiation.  This is 
unacceptable.  In fact, Article 13.3 of the SCM Agreement states that the consultations are not 
intended to prevent the expeditious initiation of an investigation, which confirms that there cannot be 
any obligation to hold consultations before in itiation, since that would obstruct initiation. 
 
7. The EC insists that the term "domestic industr y" alludes exclusively to the producer that is 
producing at the time its application is filed.  Mexi co takes the view that the EC's interpretation of 
Articles 11 and 16 of the SCM Agreement would have unacceptable consequences.  The fact that Fortuny was not producing at the time of initiation has no effect on whether it can be regarded as a 
domestic producer, for reasons which have already been  mentioned in this dispute.  Fortuny had to 
suspend production because of the subsidized imports  from the EC, and the injury inflicted, for the 
purposes of an investigation, was that it w as being prevented from resuming production. 
 8. The EC has not explained how the concept of "production" could be used as a factor to be 
analysed, when the injury suffered by the domes tic industry is the material retardation of its 
establishment.  We do not agree with the EC's inte rpretation of the scope of the term "establishment" 
("material retardation of the establishment of such an industry") in the English version of footnote 45 
to the SCM Agreement.  Even supposing, for the sake of argument, that – as the EC claims – "to 
establish" means "to achieve a level of maturity",  we do not see how a company that produced olive 
oil for decades could not be regarded as being matu re, and being a mature company, it could not be 
assumed to be a new industry.  Nor is it clear to  us how a company that is producing could be 
regarded as not being established.  The concept of "maturity" is not contemplated in the SCM 
Agreement, and therefore its use could give rise to unfortunate interpretations.  If that were the main 
concept in the case of material retardation, then  investigation for material retardation could be 
initiated even if the industry were already producin g, since it may not have reached "maturity", which 
is untenable. 
 
9. Moreover, both the Spanish and French versions  of the SCM Agreement state, in footnote 45, 
that a cause of injury is materi al retardation in the creation
 of an industry.  In other words, those two 
versions of the SCM Agreement do not support the EC's interpretation that the term implies "to 
achieve a level of maturity".  
10. The EC points out that regardless of whether an investigation is initiated as a result of an 
application or ex officio, domestic production must n ecessarily exist.  We insist  that according to its 
interpretation, there would be no possibility of a new domestic industry being established, which is 
contrary to the concept of "creati on" of a domestic industry.  If the EC's claim were valid, there would 
be no need for the material retardation requirement – material injury would suffice.  The EC has not 
explained what treatment would have to be give n to those cases where production is temporarily 
suspended for planned or unforeseen stoppages, or to  a cyclical or seasonal industry, to cite a few 
examples.  WT/DS341/R 
Page D-24  
 
11. Judging from the EC's reply to question 20, both Members appear to agree that the due 
restraint clause applies only to the period prior to the initiation of the investigation and not to the imposition of countervailing duties.  12. Nor do we believe that there is any foundati on for the assertion that the imports were exempt 
from the imposition of countervailing measures.  We  can find no support in the SCM Agreement or in 
the Agreement on Agriculture fo r such an interpretation. 
 13. The IA considered that it was not possible to initiate an investigation for material retardation 
with respect to a company which, as already mentio ned in this dispute, had existed since the 1940s, 
was producing olive oil, had all the production fac ilities it needed to operate and had never been 
involved in any proceedings that might imply its being shut down or could affect its operations 
(liquidation or insolvency proceedings, re-registratio n, change of corporate purpose, etc).  Thus, the 
IA determined that the most appropriate course of action would be to initiate the investigation without 
specifying the particular mode of injury suffered by the applicant.  Consequently, there is no violation 
whatsoever of the SCM Agreement or the Agreement on Agriculture. 
 14.  In its reply to question 22, the EC refuses to say what is meant by due restraint under the 
Agreement on Agriculture and merely argues that the actions of the IA lacked restraint.  We do not 
understand how the EC can refuse to explain a concept and then claim that the IA acted in a manner 
contrary to that unexplained concept.  At the same time, the EC argues that due restraint is "clearly" 
an additional obligation for Members, but, it should be emphasized, does not explain why it 
constitutes an obligation additional to that of mainta ining a reasonable standard.  It seems to us that 
these assertions do not constitute a prima facie presum ption of a violation on the part of Mexico, and 
we therefore request that they be dismissed.  
15. We repeat that, in our opinion, due restraint is a concept that relates to an appropriate and 
reasonable standard for allowing an investigation to  be initiated.  It does not involve doing anything 
differently in cases of agricultural, as compared w ith non-agricultural, products.  Furthermore, the IA 
took measures which demonstrate the application of a reasonable standard (such as sending the 
applicant a request for information, so-called " prevención ", before initiating the investigation). 
 
16. In its reply to question 25 the EC states that  if an investigation was initiated prior to the 
expiry of the implementation period, then Article 13(b)(i) of the Agreement on Agriculture applies to 
any determination, in the course of that investig ation.  Once again, we can find no support for this 
claim.  The due restraint was only applicable to the initiation because Article 13(b)(i) so provides and 
because after that it was no longer in effect.  As re gards initiation for retardation, we repeat that the 
investigation was not initiated for this mode of  injury.  Accordingly, we cannot see why the due 
restraint clause would have to be  applied to the determinations
 issued during the olive oil 
investigation.  17. Regarding the EC complaint that Mexico's argument concerning systematic access to all the 
confidential information was rejected in  two panel reports, we do not agree. 
 
18. With respect to United States – OCTG (Article 21.5 – Argentina) , unlike what happens in the 
US system, under the Mexican system the parties do have access to confidential information, so that 
in the olive oil investigation, the impairment of due process for the parties which the Panel examined 
in the mentioned case did not exist. 
 
19. Regarding the panel report Mexico – Steel Pipes and Tubes , as we discussed in our rebuttal, 
the Panel's findings concerned two different aspects :  first, whether or not the non-confidential 
summaries permit a reasonable understanding of the c onfidential data;  and second, the standard of 
review applicable to the decisions of the IA c oncerning the granting of confidential treatment to  WT/DS341/R 
 Page D-25 
 
 
specific information, as well as whether or not that  information could be summarized and the way in 
which the IA should have communicated these decisions.  20. The Panel determined that the non-confiden tial summaries were inadequate, but as Mexico 
had acted in a manner consistent with Article 6.5 and 6.5.1 of the AD Agreement as regards the 
evaluation and granting of confid ential treatment, and by maintaining a system of access to 
confidential information that permitted the effective legal representation of an interested party and 
could serve as a supplement to fulfilment of the prov isions of Article 6.5 of the AD Agreement, there 
had been no violation by Mexico of the AD Ag reement.  Mexico considers that the Panel's 
determinations are not applicable to this dispute in  the way that the EC suggests.  In any case it seems 
to us that the report supports Mexi co's position in this dispute. 
 21. At the same time, the EC claims that the IA  did not evaluate whether "good cause" had been 
demonstrated for certain information to  be considered confidential.  In Mexico – Steel Pipes and 
Tubes , the Panel determined that this claim was unfounded because there was no provision (in this 
case in the SCM Agreement) establishing what process the IA should follow when it considered that a 
request for confidential treatment was justified.  22. On the other hand, the exporters did in fact ex amine the confidential information.  In the case 
of the EC, even though it had the right to examin e that information, for reasons unknown to us, it 
refrained from exercising that right.  This cannot be  attributed to the IA.  We cannot see what this 
alleged impairment of its ri ghts of defence consists of. 
 23. On the matter of the non-confidential summaries, the EC maintains that its claim relates to the 
non-existence of such summaries, and not to their inadequacy.  Regarding the non-existence of the 
summaries, Exhibit MEX-38, which contains the index of the record, shows that there are non-
confidential summaries of every one of the documents  to which confidential treatment was accorded.  
The fact that the non-confidential summaries did not take the form requested by the EC does not mean that they do not exist.  The summa ries are there, and if there is any problem with them, it clearly 
cannot be their non-existence as the EC claims.  24. We further recall that the SCM Agreement offe rs no guidance with regard to the form which a 
non-confidential summary should take.  In any case, if the summaries do not satisfy the condition of 
permitting a reasonable understanding of the confidentia l information, the problem would be one of 
sufficiency and not of existence.  25. Moreover, the EC failed to demonstrate that the PR was insufficient to acquaint the parties 
with the essential facts considered during the inves tigation.  It only stated that a provisional measure 
could hardly acquaint the parties with the essential f acts.  Consequently, it has not established a prima 
facie presumption of violation by Mexico.  26. With regard to the exceeding of the 18-month limit under the SCM Agreement, in our submissions we explain the reasons why – and th e documents that support our assertions – the IA 
decided to extend the period for the investigation, by giving priority to the need to gather more 
information and afford the parties an adequate oppor tunity to defend themselves.  Thus, the granting 
of the extensions requested by the parties, the ve rification visit to the applicant's premises and the 
actions taken by the IA in response to the questions raised by the parties themselves were the cause of 
the delay in the proceedings.  The EC's claim is not based on any specific and genuine impairment of 
its rights of defence or those of its exporters.  It is merely an invalid excuse for not supplying the 
information that the IA requested of it.  27. The EC continues to admit not having provide d the information requested by the IA and, 
moreover, maintains that it was not a valid request.  There is no justification for this, since in no 
circumstances could it have been considered exempt  from providing the information requested of it.  WT/DS341/R 
Page D-26  
 
We disagree with the EC when it says that "the onl y means of insisting on the importance of the rules 
of the SCM Agreement" was to refrain from providing in formation.  The same applies to its claim that 
to provide this information would have been tant amount to "condoning" the actions of the IA.  To 
accept the claims of the EC would be equivalent to ceding control over the investigation to the parties, 
which is unacceptable, since it would do significan t harm to the multilateral system.  Moreover, 
Article 12.7 of the SCM Agreement does not mention any exceptions to the obligation upon the 
parties to provide information requested;  therefor e recourse was had to the "facts available", in 
accordance with that Agreement.  We fail to unders tand the nature of the EC's alleged "dilemma" in 
responding to these requests by the IA.  
28. We request the Panel to take these circumstan ces into consideration in its analysis, since the 
delay was due not to negligence on the part of the IA but to a desire to obtain the best information possible, as requested by the in terested parties themselves. 
 29. The EC states that the recipient of the be nefit under the subsidies programme is the olive 
grower and that this is consistent with Article  5 of Council Regulation (EC) No. 1638/98, amending 
Regulation No. 136/66/EEC.  It also claims that in the FR in this investigation, part of that Article was 
deliberately omitted.  30. We do not think that there was any omission in the FR.  The FR never referred to Article 5 of Council Regulation (EC) No. 1638/98, but to Artic le 5 of Regulation No. 136/66/EEC, and did not 
omit any substantive part thereof.  In any case, we do not detect any element in Article 5 of Council 
Regulation No. 1638/98 that could be used to suppor t the claim that the subsidization programme was 
not directed at olive oil.  On the contrary, that Article also indicates that it is a subsidized good. 
 31. As stated earlier, the EC's subsidi zation programme is covered by Regulation 
No. 136/66/EEC, and was notified by the EC to the WTO's Committee on Agriculture as a 
subsidization mechanism.  Consequently, it is a s ubsidy whose existence, va lidity and application are 
not open to question.  Moreover, it is directed, in  Article 5 of both Regulations, towards encouraging 
the production of olive oil.  Both regulations are categ orical in this respect.  It was therefore assumed 
that the subsidy was given for the production of oliv e oil.  In that connection, paragraphs 126 to 178 
of the FR set out the methodology used to determine both the amount of the subsidy and its effect on 
olive oil prices and the resulting benefit. 
 32. Likewise, in its reply to question 54, the EC does not explain why it considers that the necessary adjustments to the amount of the subsidy granted were not made.  Consequently, we cannot 
give any further details in this respect. 
 
33. The EC claims that Mexico did not identif y its domestic industry on the basis of positive 
evidence and thereby violated Article 15.1 of the SCM Agreement. However, the EC does not 
indicate what concrete action should have been taken by the IA during the investigation into the domestic industry.  Moreover, it states that its claim in paragraph 173 of its FWS was made to 
"illustrate the consequences of the non-existence of the domestic industry, rather than as an attempt to 
claim an inadequate inquiry  into the extent of the domestic industry". 
 34. In other words, the EC sets aside its claim re garding an alleged inade quate enquiry into the 
extent of the domestic industry and instead adopts the position that the domestic industry did not exist .  
Consequently, it is enough to show that the domestic industry did exist in order to invalidate its claim. 
 
35. We repeat that the FR sets out the reasons why the IA confirmed that Fortuny did meet the 
requirements of representativeness and legitimacy in order to request and proceed with the 
investigation, in accordance with Articles 11.4 and 16 of the SCM Agreement.  This section describes 
the efforts that were made by the authority to de termine whether there were other domestic producers. 
  WT/DS341/R 
 Page D-27 
 
 
36. Now, with respect to certain comments by the EC concerning some other possible additional 
inquiries, we repeat that  these do not suffice to disr egard the authority's evaluation of the extent of 
the domestic industry.  The IA's findings in this re gard are based on the information contained in the 
record taken as a whole.  
37. Our submissions reflect the complexity of  the inquiries and the proactive and unbiased 
attitude of the IA.  In most cases, these inquiries were indeed carried out (for example Maprinsa and 
its suppliers, although they did not produce olive oil), while in other cases there were sufficient 
reasons and evidence in the record to suggest th at the inquiries were not necessary (according to 
official data, Llanos de San Francisco was still at the experimental stage;  Aceites Navarra, according 
to the exporters themselves, did not produce olive o il;  and according to official data, the State of 
Sonora does not produce olive oil).  Moreover, attention was drawn to the relevance of the reply by the ANIAME and to the IA's evaluation of the repli es given by the different authorities, replies which 
confirmed the presumption that Fortuny was repre sentative of the domestic industry as a whole. 
 
38. Added to all of this is the requests that we re sent to the non-participating enterprises.  Thus, 
far from having acted negligently, the IA undertook all possible inquiries.  We do not consider that the fact that suppliers of canola oil were not investigat ed or that requests for information were not sent to 
a State whose production was non-existent according to  official data and other evidence are sufficient 
grounds for determining that Mexico acted incons istently with the SCM Agreement.  We repeat, 
moreover, that the IA did not only have the inform ation collected, but also took into account the fact 
that no other company came forward as a domestic producer. 
 39. In addition – according to th e evidence in the r ecord – assuming, for the sake of argument, 
that there was another domestic producer, it would not be likely either that its  level of production was 
such that it nullified Fortuny's legitimate status as the entity which acted for or on behalf of the 
domestic industry or had a decisive impact on the examination of injury caused by the subsidized 
import. The EC itself, in its reply to question 65, stated that by representing 100 per cent of domestic 
production, there was in fact no need to ex amine the concept of "collective output". 
 40. At the same time, we recall that, acco rding to the data in the article in " Claridades 
Agropecuarias ", information also submitted by the EC, Mexico's total annual output of olive oil was 
estimated at around 1,000 tonnes in 2000, and accord ing to the correction submitted in our reply to 
question 18 and the corresponding explanations, Fort uny produced a similar amount in 1999 and 2000 
(specifically, according to the data supplied by Fortuny, it produced 1,306 tonnes in 1999 and 742 tonnes in 2000, or an average of 1,024 tonnes per yea r).  We note that in the course of this hearing, 
Mexico is ready to provide any clarifications th at could be helpful concerning the production data 
mentioned in its written submissions  and its replies to the Panel. 
 41. The EC has stated that under its procedures,  if a domestic industry ceased to produce during 
an investigation, the investigation would conclude  without the imposition of measures.  For Mexico, 
the rigid application of such a criterion could m ean that even where domestic producers had suffered 
the maximum degree of injury during the investigati on and because of this had ceased to produce, the 
domestic industry would end up by disappearing.  Imports that are the subject of unfair practices 
would then have destroyed the domestic producers' market.  42. Contrary to what is stated by the EC, th e important point regarding the existence of a 
domestic industry is not simply to determine whethe r in fact it is producing or not or if it produced 
before the investigation was initiated or once it ha d commenced.  The point is to determine, on the 
basis of various factors, whether the domestic indus try exists or not and once it has been determined 
that it does exist to examine whether the suspension of production is the result of the injury suffered 
because of imports of products that are the subject of an unfair practice.  WT/DS341/R 
Page D-28  
 
43. We agree with the EC's final indication to th e effect that the process cannot be automatic but 
that the merits of each case should be taken into account.  In the investigation into olive oil it was 
shown that the reason why the domestic industry could not resume
 operations was the presence of 
subsidized imports.  Consequently, according to the me rits of this case, it was considered that, even 
though there was no output during the period inv estigated, there was a domestic industry – a 
determination that was reached after various factor s had been analysed, as stated on several occasions 
during this dispute.  44. We consider that a domestic producer does not necessarily have to be producing at the time of 
submitting an application or during the investigation because in trade a producer may possibly have to 
suspend production of the article in question temporar ily without this meaning that it loses its status as 
a domestic producer.  45. The EC would appear to contend that when production reaches zero this cannot be considered 
a decline in that production.  In our view, the wo rd "decline" implies that an indicator has moved 
downward over a lapse of time.  It is not possible va lidly to contend that if this decrease reaches zero, 
it should be excluded as a "decline", and the EC does not explain how such a situation could be considered.  To accept the EC's interpretation woul d be tantamount to awarding a premium for unfair 
imports because the maximum degree of injury h as been achieved (inciting the domestic industry to 
cease production).  
46. Furthermore, in our view the EC's argumen ts are contradictory for the following reasons:  
(1) it claims that the decline in output to zero is not r eally a decline;  it has al so stated that a domestic 
industry that is not producing simply does not exis t;  (2) nevertheless, in its reply to question 80 it 
states that provisional suspension of a domestic industry may be considered as an injury factor;  (3) if 
it claims that decline in output to zero is not properly  speaking a decline, then it is not clear to us how 
such decline could be analysed as an injury factor;  (4) if it claims that a domestic industry that is not 
producing does not exist, then we do not understand how it could be considered as a factor in the 
decline in output to zero since, according to what th e EC has claimed, this industry does not exist. 
 47. In our opinion, the decline in output means a decrease over time, and if such decrease reaches 
zero, this simply means that the in jury factor has reached its maximum level.  It is indisputable that 
once it has been determined that a domestic industry exists and that it has scaled down or suspended 
operations as a result of the unfair practice, this constitutes a highly relevant factor in the injury 
analysis.  48. At the same time, we recall that the materi al injury consisted of the impediment to the 
domestic producers' resuming operations, making it necess ary to examine the trend in production.  It 
is thus obvious that the decline in Fortuny's output had to be taken into accoun t in this examination.  
On the other hand, regarding its argument that  production was suspended months prior to the 
submission of the application, the EC does not take  into account various steps that Fortuny had to 
undertake before requesting an investigation.  In pr actice, the lapse of time between the suspension of 
operations, where applicable, and the submission of an application for initiation may be as much as 
one year or even more. 
 49. In its reply to question 81, the EC indicates th at the word "potential" in Article 15.4 of the 
SCM Agreement does not have great significance, at l east as regards investigations that are based on 
an allegation of material injury.  Mexico considers that an investigation into material injury should 
take into consideration the potential situation of the industry in the immediate future in order to 
examine whether the unfair practice could persist and continue to cause injury, and to assess the future 
situation of the domestic industry, as well as to dete rmine what would be the alternative situation if 
there were no subsidized imports.  Article 15.4 of  the SCM Agreement clearly indicates that there 
should be an examination of "actual and potential decline" of the factors enumerated therein and 
makes no distinction as to whether the potential examin ation only applies to cases of threat of injury.  WT/DS341/R 
 Page D-29 
 
 
 50. Moreover, Article 15.2 of the SCM Agreement provi des that, in order to consider the effect of 
the subsidized imports on prices, the authority shou ld consider whether there is price undercutting, 
prices are depressed or price increases prevented.  In  a situation where price increases are prevented, 
we do not see how the relevant analysis can be made without potential aspects and the EC has not 
explained this.  Moreover, the injury suffered by  a domestic industry at the present time does not 
produce all its effects immediately.  As it is usuall y a question of trends, these effects can occur in the 
future and can serve to carry out a proper examina tion of injury.  We do not therefore accept that the 
word "potential" is of marginal or no importance in Article 15.4 of the SCM Agreement, and despite 
what the EC contends, in a proper examination, we do not see how injury could be double counted. 
 
51. Likewise, we consider that paragraph 7.77 of the Panel report in the Mexico – Corn Syrup  
dispute does not support the EC's statement.  This paragraph merely indicates that in cases of threat of 
injury it is relevant to include projections in th e application, but failure to include them does not 
suffice to reject the application.  The Panel's finding  did not refer to the material injury examination 
but to the application for initiation in which the threat of material injury is claimed.  It is therefore 
important to include projections in the application
 regarding threat of in jury because the injury 
claimed implies future developments;  but this does not mean that potential data should only be 
considered in the case of applicati ons regarding threat of injury. 
 52. With regard to the EC's assertions concerni ng models, we note that any model or estimate is 
by nature an approximation of something, inasmuch as the results of its application are not real data 
but information that reflects the "possible reality" to a greater or lesser degree of accuracy.  In fact, the 
exactitude of any model can be verified a posteriori  once its greater or lesser accuracy in predicting 
the future has been proven.  We do not, ther efore, understand how one can advocate the use of 
models, projections or estimat es and then question them. 
 
53. At the same time, it is incongruous for the EC to maintain that there is no information on injury and in the next line to indicate that this is because the Mexican industry had ceased to produce, 
when what is being claimed is that the Mexican industry's production fell to zero as a result of the 
practice of exporting subsidized products from Europe.  It is also important, as indicated in Mexico's 
replies concerning the price undercu tting under which the imports from th e EC entered, that the Panel 
should bear in mind that this examination was not only made in relation to the costs estimated by 
Fortuny in its business plan, but also the real -historical costs incurred by Formex, Fortuny's 
predecessor.  In any event, the prices of the subs idized imports from the EC were also well below 
Fortuny's production costs.  
54. As mentioned in our FWS, the EC originally claimed that various factors (loss of the 
distribution network, loss of the Ybarra brand, high  costs, etc.) were specifi c reasons for the injury 
suffered by the applicant, and that the IA had failed to  carry out a proper analysis of these factors.  In 
contradiction to the foregoing, the EC claims that th ese factors were not examined by the IA and that 
this is inconsistent with the SCM Agreement.  In other words, the EC first asserts that the analysis 
was not proper and then claims that there was no analysis at all. 
 
55. Regarding the alleged absence of analysis, we already stated in our FWS that this statement 
would be invalidated if it were shown that these factor s were in fact analysed.  We also explained in 
our FWS what was involved in that analysis.  
56. Regarding the alleged lack of a proper analys is, we reiterate what is stated in our FWS, 
namely that these (and other) factors were properly analysed.  Our FWS clearly shows what was involved in the aforementioned analysis and the re asons why the Ministry made the determinations 
contained in the FR.  WT/DS341/R 
Page D-30  
 
57. In addition, the EC has provided no evidence that these factors explained the state of decline 
of the domestic industry, still less that the evidence sufficed for this purpose, or to break or even 
undermine the causal link between the subsidized impor ts and the injury to the domestic industry (as 
expressly acknowledged in its reply to question 92).  As we have already stated, simple assertions 
cannot constitute a prima facie presumption of violation on Mexico's part. 
 
58. We repeat that the IA did not only properly  analyse the factors indicated by the EC but, in 
addition, also examined all those aspects which it considered might affect the situation of the 
domestic industry, therefore, the EC's argument is without substance.  
59. Finally, Mexico would like to note that owing to the inherent complexity of this procedure 
and for practical reasons (e.g. translation into Sp anish of certain documents), our remarks may at 
times lack precision, and we would be glad to pr ovide any clarifications that may be needed. 
 
 
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