MEXICO – DEFINITIVE COUNTERVAILING MEASURES ON OLIVE OIL FROM THE EUROPEAN COMMUNITIES
Document: Request for Consultations by the European Communities
Date: 4 April 2006
Document codes: WT/DS341/1; G/L/773; G/SCM/D69/1; G/AG/GEN/72
Complainant: EU
Respondent: Mexico
Third parties: Canada, China, Japan, Norway, U.S.
Dispute stage: Panel
Agreements cited: Art. VI  GATT 1994Art. 1, 11, 12, 13, 14, 15, 16, 22  Subsidies and Countervailing Measures (SCM)Art. 13, 21.1  Agriculture

MEXICO – DEFINITIVE COUNTERVAILING MEASURES ON OLIVE OIL
FROM THE EUROPEAN COMMUNITIES

Request for Consultations by the European Communities

 The following communication, dated 31 March 2006, from the delegation of the European
Communities to the delegation of Mexico and to th e Chairman of the Dispute Settlement Body, is
circulated in accordance with Article 4.4 of the DSU.

 The European Communities hereby requests cons ultations with Mexico pursuant to Article 4
of the Understanding on Rules and Procedur es Governing the Settlement of Disputes ( DSU),
Article XXIII of the General Agreement on Tariffs and Trade 1994 ( GATT 1994), Article 30 of the
Agreement on Subsidies and Countervailing Measures ( SCM Agreement ) and Article 19 of the
Agreement on Agriculture , concerning the imposition of definitive countervailing measures on
imports of olive oil originating in the Europ ean Communities by the "Resolución final de la
investigación por subvención de precios sobre las im portaciones de aceite de oliva" published in the
Diario Oficial de la Federación of 1 August 2005.

 The European Communities considers that the in itiation and conduct of the investigations, as
well as the imposition of the definitive counterva iling measures are inconsistent with Mexico's
obligations under inter alia Article VI (in particular VI:3 and VI:6) of the GATT 1994, Articles 1, 10,
11 (in particular paragraphs 2 3, 4, 6, 9 and 11), 12 (in particular pa ragraphs 3 and 4), 13, 14, 15, 16,
19, 22 and 32 of the SCM Agreement and Articles 13(b)(i) and 21.1 of the Agreement on Agriculture.

 The inconsistencies include, but are not limited to, the following:

– a failure to respect Article 21.1 of the Agreement on Agriculture;

– the initiation of an investigation on the basis of an application which did not include sufficient
evidence and the failure by the Mexican author ities to review the accuracy and adequacy of
the evidence provided in the application to de termine whether the evid ence was sufficient to
justify the initiation of an investigation, in violation of Article 11.2 and 11.3 of the
SCM Agreement;

– the initiation of an investigation in the absen ce of a determination by the Mexican authorities
that the application was made by or on behalf of the domestic industry, in violation of
Articles 11.4 and 16 of the SCM Agreement;
WT/DS341/1, G/L/773,
G/SCM/D69/1, G/AG/GEN/72

– the decision to initiate an investigation on a br oader injury basis than the one established in
the application and without having sufficient evid ence of the existence of material injury or
threat thereof or causal link to justify the initiation, in violation of Article 11.6 of the
SCM Agreement;

– the failure to reject the application and to terminate promptly the investigation as soon as the
Mexican authorities were satisfied that th ere was not sufficient evidence of either
subsidization or injury to justify proceeding with the case, in violation of Article 11.9 of the
SCM Agreement;

– the failure to conclude the investigation with in one year, and in no case more than 18 months,
after its initiation, in violation of Article 11.11 of the SCM Agreement;

– the failure by the Mexican authorities to include adequate information of the factors on which
the allegation of injury was based in its public notice of the initiation of an investigation in
violation of Articles 12.4.1, 12.4.2 and 22.2 (iv) of the SCM Agreement;

– the failure to grant the opportunity for consulta tions before the initiation of the investigation
with the aim of clarifying the situation as to matters referred to in paragraph 2 of Article 11 of
the SCM Agreement and arriving at a mutually agreed solution, in violation of Article 13.1 of
the SCM Agreement;

– the initiation of a countervailing duty investig ation on imports of an agricultural product
(olive oil) outside the circumstances c ontemplated in Article 13(b)(i) of the Agreement on
Agriculture;

– the imposition of countervailing duties following an investigation that was not initiated and
conducted in accordance with the provisions of Article VI of the GATT 1994, the
SCM Agreement and the Agreement on Agriculture , in violation of Article 10 of the
SCM Agreement;

– the failure of the Mexican authorities to prope rly determine the existence of subsidisation,
inter alia , by failing to evaluate the existence of any "pass-through" of any benefit, in
violation of Articles 1.1(b), 10 and 32.1 of the SCM Agreement;

– the failure to provide all relevant informa tion on the matters of fact and law and reasons
which have led to the imposition of final measu res, in violation of Articles 12.3, 12.4.1,
12.4.2 and 22 (inter alia paragraph 5) of the SCM Agreement;

– the failure to calculate the benefit to the recipient conferred pursuant to paragraph 1 of
Article 1 of the SCM Agreement, in violation of Article 14 of the SCM Agreement;

– the failure to explain the method of calculation and its application to each particular case in a
transparent and adequate way, in violation of Article 14 of the SCM Agreement;

– the imposition of countervailing measures despite the failure to correctly define the domestic
industry, in violation of Article VI:6 of the GATT 1994 and Articles 15.4, 15.5 and 16 of the
SCM Agreement;
WT/DS341/1, G/L/773,
 G/SCM/D69/1, G/AG/GEN/72

– the imposition of countervailing measures despite the failure to examine any known factors
other than the alleged subsidized imports which were causing injury to the domestic industry ,
in violation of Article 15.5 of the SCM Agreement;

– the imposition of countervailing measures despite th e failure to determine that the effect of
the alleged subsidization was such as to cause material injury to an established domestic
industry, in violation of Article VI:6 of the GATT 1994 and Article 15 of the SCM Agreement,
notably Article 15.1 and 15.4;

– the imposition of countervailing duties which are levied in excess of the amount of the alleged
subsidy found to exist, in vi olation of Article VI:3 of GATT 1994 , Article 19.4 and
footnote 36 of the SCM Agreement;

 The European Communities reserves the right to raise additional claims and legal matters
regarding the above-mentioned measures during the course of the consultations.

 The European Communities looks forward to receiving a reply from the Government of
Mexico to this request. The European Communities is ready to consider with Mexico a mutually
convenient date for consultations in Geneva.