Document: WT/DS341/R Page B-1 ANNEX B THIRD PARTY SUBMISSIONS Contents Page Annex B-1 Executive Summary of the Third Party Submission of Canada B-2 Annex B-2 Executive Summary of the Third Party Submission of China B-6
Document codes: WT/DS341/R
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

ANNEX B

THIRD PARTY SUBMISSIONS

Contents Page
Annex B-1 Executive Summary of the Third Party Submission of Canada B-2
Annex B-2 Executive Summary of the Third Party Submission of China B-6
Annex B-3 Executive Summary of the Third Party Submission of Japan B-8
Annex B-4 Executive Summary of the Third Party Submission of Norway B-13
Annex B-5 Executive Summary of the Third Party Submission of the
United States
B-18
Annex B-6 Third Party Oral Statement of Canada B-24
Annex B-7 Third Party Oral Statement of the United States B-25

ANNEX B-1

EXECUTIVE SUMMARY OF THE THIRD PARTY
SUBMISSION OF CANADA

(21 June 2007)

I. INTRODUCTION

1. Canada considers that these proceedings raise significant systemic issues regarding
countervailing investigations conducted under the WTO Agreement on Subsidies and Countervailing
Measures (SCM Agreement). Canada's submission focu ses on two issues. The first issue concerns
the necessity for investigating aut horities to ensure that the procedural rights of parties to the
investigations are respected. The second issue rela tes to the necessity for a Member to demonstrate
the pass through of a subsidy. That is, in circ umstances where an input subsidy is received by
someone other than the producer or exporter of the product under investigation, investigating
authorities may not impose countervailing measures
 on the product unless they have demonstrated
that the subsidy was passed through to the producer or exporter of the product under investigation.

II. ARGUMENT

1. Procedural Claims

2. Canada notes that, among its specific claims of violation, the European Communities (the EC)
alleges several procedural violations by the Mexi can investigating authority both before and during
the course of the investigation. These include th e failure: to afford the EC an opportunity for
consultations prior to the initiation of the inv estigation, contrary to Article 13.1 of the SCM
Agreement; to require the complainant to provi de non-confidential summaries of confidential
information, contrary to Article 12.4.1 of the SCM Agreement; to disclose essential facts, contrary to
Article 12.8 of the SCM Agreement; and to provide a reasoned and adequate explanation of key
determinations underpinning the imposition of countervailing duties.

3. Canada, and indeed the broader WTO Membersh ip, has an overarching systemic interest in
ensuring that the investigating authorities of all Members adhere to the basic requirements of due
process (procedural fairness) as prescribed in the covered agreements, including the SCM Agreement.
In this regard, while Canada does not intend to opin e on the merits of the EC 's individual claims of
procedural violation, it feels compelled to ra ise certain concerns about the potential broader
ramifications of the denial of due process in trade remedy investigations.

4. Each party to a countervail investigation (or, for that matter, an anti-dumping or safeguard
investigation) is entitled to a reasonable opportunity to defend its interests. This ability depends
directly upon the party having adequate knowledge of the oppos ing case (i.e., of the specific
allegations and supporting evidence of parties adve rse in interest), and being afforded a reasonable
opportunity to present its own case (i.e., to present arguments and evidence in support of its own
position and to rebut opposing positions). Clearly, the EC 's claims of violation – if borne out – would
constitute critical breaches of the basic due process re quirements set out in the SCM Agreement. In
this regard, if substantiated, the failure of th e Mexican investigating authority to provide an
opportunity for pre-initiation consultations would have deprived the EC of any prospect of influencing
the initiation decision, while the aut hority's failures in respect of the disclosure of information in the

record would have deprived the EC of adequate knowledge of the case against it. Likewise, if
demonstrated, the absence of reasoned and adequate explanations of key dete rminations would have
compromised the ability of the EC to identify a nd assess all potential grounds for the invocation of
further related proceedings (e.g., administrative or judicial review).

2. Pass-Through

5. Canada would like to stress the importance of , when dealing with i nput products, conducting
a pass-through analysis where circumstances require it. The necessity of a pass-through analysis
flows from the GATT 1994 and the SCM Agreement a nd has been acknowledged by panels and the
Appellate Body.

6. When conducting an investigation concerning allegedly subsidized products, a Member must
establish that a subsidy exists before it may impo se countervailing duties, and it may not impose such
duties in an amount greater than the amount of the subs idy demonstrated to exist. Article VI:3 of the
GATT 1994 sets out this fundamental obligation. The obligation to not impose countervailing
measures in excess of any subsidy demonstrated to exist is reaffirmed in Article 10 of the SCM
Agreement.

7. Finally, Article 32.1 of the SCM Agreement c onfirms that the imposition of duties is unlawful
where a Member fails in this obligation. It provi des that "[n]o specific action against a subsidy of
another Member can be taken ex cept in accordance with the provis ions of GATT 1994, as interpreted
by this Agreement."

8. Nothing in the context or object and purpo se of these provisions alters the fundamental
obligation to demonstrate the existence and the amou nt of a subsidy with respect to a product before
imposing countervailing duties on that product. This includes, in the context of an investigation
concerning allegedly subsidized input products, the re quirement to demonstrate that an input subsidy
to an upstream recipient has been passed through to the downstream producers or exporters of the
product under investigation.

9. Article 1.1 of the SCM Agreement sets out an exhaustive definition of "subsidy" that applies
to this obligation. Under this provision, there is no "subsidy" when a "benefit" has not been conferred
upon a recipient. The panel in US – Softwood Lumber IV , referring to the findings of the Appellate
Body in Canada – Aircraft, found that the term "benefit" "implies some kind of comparison" and that
the "marketplace" provides a basis for this comparison.

10. In a pass-through context, the obligation on Members is to compare the transactions in
question to the marketplace to determine whether, and to what extent, a benefit under Article 1.1(b) of
the SCM Agreement is conferred. As explained by the panel in US – Softwood Lumber IV, the results
of such analysis may not be presumed:

The heart of the pass-through issue is wh ether, where a subsidy is received by
someone other than the producer or exporter of the product under investigation, the
subsidy nevertheless can be said to have confe rred benefits in respect of that product.
If it is not demonstrated that there has b een such a pass-through of subsidies from the
subsidy recipient to the producer or exporter of the product, then it cannot be said that
subsidization in respect of that product, in the sense of Article 10, footnote 36, and
Article VI:3 of GATT 1994, has been found. Thus, we find that a pass-through
analysis is required by these provisions … where there are such upstream
transactions.

11. Accordingly, where a subsidy is received by "someone other than the producer or exporter of
the product under investigation", a Member must esta blish whether and to what extent the benefit to
an upstream recipient passes to a downstream entity through the purchase of an input product.

12. In US – Softwood Lumber IV , the Appellate Body agreed with the panel's interpretation.
Drawing on the text of Article VI:3 of the GATT 19 94, the Appellate Body found that a Member may
not presume that a subsidy passes through transactions where "the producer of the input is not the
same entity as the producer of the processed produc t". The Appellate Body also explained in no
uncertain terms that analysis under Article 1.1(b) of the SCM Agreement is required:

Where a subsidy is conferred on input products, and the countervailing duty is
imposed on processed products, the initial reci pient of the subsidy and the producer
of the eventually countervailed product, may not be the same. In su ch a case, there is
a direct recipient of the benefit – the producer of the input product. When the input is
subsequently processed, the producer of the processed product is an indirect recipient
of the benefit – provided it can be establis hed that the benefit flowing from the input
subsidy is passed through, at least in part, to the processed product. Where the input
producers and producers of the processed products operate at arm's length, the pass-
through of input subsidy benefits from the direct recipients to the indirect recipients
downstream cannot simply be presumed; it must be established by the investigating
authority. In the absence of such analysis, it cannot be shown that the essential
elements of the subsidy definition in Article 1 are present in respect of the processed
product.
13. Thus, the Appellate Body and panels have stressed the importance of demonstrating that a
product is subsidized before imposing countervailing duties.

14. In this case, the different steps that led from the production of olives to the exportation of
olive oil and the relationships between the entiti es involved are not entirely clear to Canada.
However, Canada observes that the EC Regula tion that established the production aid scheme
indicated that the subsidy was granted to olive grow ers, albeit on the basis of the olive oil produced
from their olives. In these circumstances, it would appear to Canada that olives constitute an input
product in relation to the processed product, olive oil, that is exported from the EC to Mexico.

15. Moreover, Canada notes the EC argument that the great majority of exporting EC companies
had no involvement with olive growing and that th eir dealings were carried out entirely at arm's
length.

16. Therefore, under the circumstances of this cas e, it appears to Canada that the subsidy was
received by someone other than the producer or exporter. Accordingly, the requirement to
demonstrate the pass through of a subsidy under Ar ticle VI of the GATT and Articles 10 and 32.1 of
the SCM Agreement applies. So too does the reasoning of the Appellate Body in US – Softwood
Lumber IV, where it stated that in such circumstances a Member may not presume that the product
under investigation was subsidized; rather, a Member must demonstrate subsidization by means of a
pass-through analysis.

17. Where input producers, here olive growers, and producers and/or exporters of the processed
product, olive oil, operate at arm's length, the SCM Agreement requires clear evidence that input
subsidy passed through to the producers of the processed product, so that there is a clear
demonstration that the product against which c ountervailing measures are imposed is in fact
subsidized.

18. Accordingly, under the circumstances of this case, the investigating authority was required to
conduct a pass-through analysis to determine whethe r the subsidy that was granted to the olive

growers benefited the producers and/or exporters of th e olive oil subject to the investigation before it
imposed countervailing measures to offset any such subsidization.

ANNEX B-2

EXECUTIVE SUMMARY OF THE THIRD PARTY
SUBMISSION OF CHINA

(21 June 2007)

EXECUTIVE SUMMARY

China participates, as a third party, in this panel proceeding concerning the Mexico's
imposition of definitive countervailing measures on imports of olive oil originating in EC. In this
submission, China will briefly address three issues:

(1) Whether a Petitioner Must Have Actual Out put When It Files a Petition for a Countervailing
Duty Investigation?

China believes that this question requires a careful interpretation of the term producer. While
EC does not explicitly state so, its argument in this proceeding is to narrow the term to actual
producers who have live output. Broader reading of the term, however, may also include potential
producers who are substantially committed to the production of like product.

The ordinary meaning of the text in Article 11.4 of the SCM Agreement does not provide
definitive answer. The textual analysis does not either support a reading that producers may include
potential producers or preclude it.

The context of the text of Article 11.4, how ever, warrants a broader reading of the term
producer. If EC's narrow reading of the term producer were supported, no petition alleging injury in
the form of retardation would have been permi ssible. This would undermine footnote 45 of the SCM
Agreement and make the injury in the form of "retardation of the establishment of such an industry"
meaningless. Accordingly, China believes that EC's narrow reading of the term producer is not
warranted.

EC's own practice does not support su ch a narrow reading of the term producer as EC
suggested in this case. In an antidumping investigation on Imports of DRAMs from Japan conducted
by EC, the European investigating authority did not adopt such a narrow reading. In that proceeding,
the Commission found that the community industry comprises four producers. None of them,
however, had actual output when the application for investigation was filed.

(2) Whether the Domestic Industry Cannot Be "Injured" When the Petitioner Has No Actual
Output during the POI-Subsidy But Had Output during the POI-Injury?

Obviously, EC's claim 2 and claim 7 are closel y related. Both of them are based upon an
allegation that no domestic industry of olive oil existed in Mexico . However, the time point and
period for assessment of whether a domestic industry exists are different. For claim 2 (standing
issue), such time point, as EC put it, is "at the time of the application." On the other hand, for claim 7
(injury issue), such time period is "during the period of investigation used for the determination of the
existence and amount of subsidy."

China agrees that for different i ssues, e.g. standing issue and in jury issue, the time point and
time period, within which the production and output of domestic producers are measured, may be
different. China disagrees, however, that for injury issue the appropriate time period, against which

the existence of domestic industry is evaluated is only the POI-Subsidy. China believes that whether
or not a domestic industry exists shall be exam ined against the POI-Injury rather than the POI-
Subsidy. China has assumed as a fact that, during the POI-Injury, a domestic industry existed in
Mexico, and such an industry can be injured by the subsidized imports.

(3) Whether a "Pass-Through" Analysis Is Required Given the Facts Found in the Underlying
Investigation?

Pass-through is a unique concept under the SCM Agreement. It arises from the context that
subsidy is bestowed indirectly upon producers of product subject to the investigation. The issue is
confusing in this case because, under the EC pr oduction aid program, the aid was provided to olive
growers while EC, in its various regulations, states that the aid was bestowed upon olive oil . The
Ministry found in paragraph 116 of its Final Resolution that pass-through analysis is unnecessary
because the subsidy is provided upon olive oil which is both the produc t subject to investigation and,
in this case, the processed product.

China disagrees with Mexico, who relies heavily on the statement in relevant EC regulations
that the production aid is provided upon olive oil but elects to ignore the fact that the production aid is
provided to olive growers rather than manufacturers of olive oil . These complexities in factual
situations require special caution in ascertaining benefits and their recipients.

 As concluding remarks, China believes that certain aspects of Mexico's countervailing duty
investigation raise systemic issues. Mexico shall bring its measure in conformity with its obligation
in case the Panel finds any inconsistence. However, it is also China's view that some of EC's
arguments have driven the treaty interpretation to an extent beyond the expressed intent of the treaty
negotiators; and, therefore, should not be supported.

I. INTRODUCTION

1. As a third party to this dispute, Japan w ould like to address, from a systemic viewpoint to
ensure objective and consistent interpretation of the WTO Agreement, the following issues:

• Mexico's handling of the investigation raises serious systemic concerns;

• The Panel should examine whether Mexico's de termination concerning the domestic industry
was appropriate; and

• Mexico did not properly address the issue of subsidization.

II. ARGUMENT

A. MEXICO'S HANDLING OF THE INVESTIGATION RAISES SERIOUS SYSTEMIC
CONCERNS

2. Japan is of the view that the integrity of the dispute settlement process is compromised
whenever a Member conducts a domestic countervailing duty investigation that does not comply with
the procedural rules set forth in the ASCM. Japan will focus on two procedural issues that the EC
raised.

1. By Failing to Complete the Investigatio n within 18 Months, Mexico Did Not Comply
with the Deadline Set Forth in Article 11.11 of the Agreement on Subsidies and
Countervailing Measures

3. Mexico's investigation lasted more than 24 months from initiation to adoption of definitive
measures.
1 The EC contends that, by virtue of th is lengthy timeframe, Mexico's actions were
inconsistent with Article 11.11 of the ASCM, whic h stipulates that the duration of the investigation
shall be "in no case more than 18 months".

4. Japan sympathizes with the position of the EC on this issue. Although Japan understands the
need for Mexico to accept the parties' reasonable re quests for extension and verification, a Member's
approval of such extension requests does not free it from the obligation to complete an investigation
within the time limit set forth in Article 11.11.

5. Similarly, we need not address Mexico's questionable assertion of the object of Article 11.11.
Here, Article 11.11 states that inv estigations shall be concluded " in no case more than 18 months"
(emphasis added): the text is completely clear and allows for only one interpretation. The
Article 11.11 prohibition against extending inves tigations beyond 18 months does not allow for any
exception.

6. For these reasons, Japan is of the view that Mexico's investigation was inconsistent with
Article 11.11 of the ASCM.

2. Mexico's Failure to Provide Non-Confiden tial Summaries Was Inconsistent with
Article 12.4.1 of the Agreement on Subsidies and Countervailing Measures

7. The EC argues that Mexico committed another procedural violation of the ASCM by failing
to provide, or to require private parties to provide, non-confidential summaries of confidential

information submitted during the course of the investigation.
2 The relevant obligations are set forth in
Article 12.4.1 of the ASCM.

8. Mexico claims that all parties provided bot h confidential and non-conf idential versions of
their submissions.
3 Further, Mexico alleges that it fulfilled the object of Article 12.4.1 by allowing
counsel to all parties to the investigation access to the entire investigation file, including both
confidential and non-confidential data.4

9. In Japan's view, if Mexico failed, as the EC claims, to require non- confidential summaries of
the information listed by the EC, then Mexico acted inconsistently with Article 12.4.1. Mexico's
provision of access to the investigation files doe s not by itself fulfil Mexico's obligation under
Article 12.4.1.

10. Moreover, Mexico did not assert or seek to explain that it was faced with "exceptional
circumstances" such that the information provi ded could not be summarized, as is permitted by
Article 12.4.1.

3. Conclusion

11. It is the obligation of all Members to st rengthen and uphold the WTO system on all levels,
and to abide by all rules, both procedural and substa ntive. Nowhere is this more important than in the
rules area, where Members are granted the right to impose trade remedy measures only as long as they
comply with the disciplines set forth in the rele vant agreements. The failure to comply with
procedural obligations compromises due process and fairness, which leads to systemic weakness and
a lack of predictability that damages both Memb ers and private parties. For these reasons, the
procedural errors in Mexico's investigation are of concern to Japan.

B. THE PANEL SHOULD EXAMINE WHETHER MEXICO'S DETERMINATION
CONCERNING THE DOMESTIC INDUSTRY WAS APPROPRIATE

12. Japan is of the view that a critical issue of ge neral interest raised in this dispute is the proper
determination of the existence of a domestic indus try. The specific, very narrow, question Japan
wishes to address is as follows: must the domestic industry exist and be producing during the time that
an investigation takes place?

13. First, Japan agrees with the EC that in ge neral some level of domestic production must exist
during the period of investigation for the purpose of making an injury determination. The EC seems
to argue that the relevant period for the production of olive oil is "the investigation period of the
product subject to the investigation".
5 Japan understands this to be, by definition, a time period
separate from that during which the investigation is actually conducted.

14. However, the EC also appears to argue that the domestic industry must have produced during
the time that the investigation was conducted.
6 The EC interprets words such as "causing injury" in
Article 15.5 of the ASCM to refer clearly to the pr esent, "to what is happening when the investigation
is carried out ".7 In addition, the EC refers to the factors listed in Article 15.4 as requiring

2 Id., paras. 103-107.
3 Id., para. 89.
4 Mexico's First Submission, paras. 82-87.
6 Id., paras. 174-189.
7 Id., para. 180 (emphasis added).

consideration concerning "the condition of an existing industry". 8 The EC concludes that "there must
be an industry presently in existence; in other words, there must be existing producers".9

15. In Japan's view, the EC's apparent read ing of the ASCM would preclude a countervailing
measure in precisely the situation where the subs idy was most pernicious - where it knocked the
domestic producers out of the market. There is nothing in the ASCM indicating that the Members
intended to create this type of exception to the coverage of the ASCM.

16. Article VI:6 of the GATT 1994 and Articles 10 and 15 of the ASCM clearly require a finding
of injury during the period of investigation. Without any production during that period there can be
no evidence of injury as a result of an overall evalua tion of the elements listed in Article 15.4 of the
ASCM. However, this does not mean that domesti c production needs to occur throughout the period
of investigation or the time period during which investigation is being conducted.

17. In Japan's view, if a company produces the subject merchandise even for a limited period of
time during the period of investigation, the compan y should be qualified as a part of the domestic
industry for the purpose of injury determination.

18. Mexico's determination states, "[f]or the pur pose of evaluating injury, comparable periods of
three years, including the period investigated we re used, i.e. April to December 2000, 2001, and
2002."
10 Although Fortuny stopped production of olive oil in March 2002, it did engage in production
in 2000 and 2001.

19. The Panel might find that Mexico appropriate ly set a longer period of investigation for the
injury analysis (one that included 2000 and 2001) than for the subsidy determination. Such a finding
would support a further finding that Mexico did not err when it conducted an assessment of injury
based on information related to this period, since it would mean that there was some production
during the period of investigation.

C. MEXICO DID NOT PROPERLY ADDRESS THE ISSUE OF SUBSIDIZATION

20. Mexico failed to properly analyze the subsidy issue by declining to engage in a pass-through
analysis to determine whether and to what extent the subsidy given to olive growers benefited olive
oil producers and exporters.
11

21. Mexico bluntly rejects the need for a p ass-through analysis. Apparently, the Mexican
authority found that a purpose of the EC subsidy scheme was to promote olive oil production, and
therefore concluded that a pass-through analysis was not required.

22. Mexico is correct that the ASCM does not expressly require a pass-through analysis.
However, in light of the provisions under Article 1.1(b) of the ASCM as well as Article VI:3 of
GATT 1994, where the direct recipients of the alle ged subsidy are not those who produce or export
the product subject to the investigation, as in th is case, the authority shall determine whether the
producers or exporters concerned have actually indi rectly received any benefit from the subsidy.
Article 14 of the ASCM also requires that an inv estigating authority, before imposing countervailing
duties, calculate the amount of a subsidy in terms of the benefit conferred.

23. Well-established WTO practice shows that th e investigating authority must perform an
analysis to determine the link between a subsidy and its alleged recipient. In United States - Softwood

9 Id., para. 182.
10 Final Resolution, para. 3.

Lumber IV, the Appellate Body noted that "the pass-thr ough of input subsidy benefits from the direct
recipients to the indirect recipients downstream cannot simply be presumed; it must be established by
the investigating authority".
12Moreover, guidance on how to assess the impact of a subsidy granted to
raw material producers on the price which processors of that material have to pay was provided under
the earlier GATT regime. (See, United States - Canadian Pork , a GATT panel interpreting the
obligations under GATT Article VI.).
13

24. Mexico's argument is also flawed in th at it mischaracterizes the purpose of countervailing
duties. Mexico contends that "countervailing duties are not a mechanism to offset either a benefit or a
subsidy"; according to Mexico, "[t]heir purpose is to offset the injury caused by an actionable
subsidy".
14

25. Article VI:3 of the GATT 1994 as well as footnot e 36 to the ASCM clarifies the definition of
the countervailing duty as "a special duty levied for the purpose of offsetting any subsidy
bestowed…." Article 19.4 of the ASCM provides th at countervailing duties may be levied only up to
the amount of the subsidy found to exist. In additio n to this "capping" of the duty amount at the "full
amount of the subsidy", Article 19.2 of the ASCM leaves to the discretion of the authority whether or
not to set the duty at a lesser amount that would be adequate to remove the injury.

26. Furthermore, in U.S. – Softwood Lumber IV, the Appellate Body suggested that, for processed
products in particular, the use of a pass-through an alysis may be necessary to preserve the connection
between the countervailing duty to be imposed and the subsidy determined to have been granted.
15 In
this way the authority can measure the extent to which a subsidy granted on an input may be included
in the determination of the amount of the subsidy on the processed product.16

27. Japan does not consider that, in light of th e significance of a pass-through analysis, Mexico's
reference to the purpose of the subsidy or its assertion that countervailing duties are designed to offset
injury (not the subsidy), justifies its rejection of a pass-through analysis. Therefore, in the view of
Japan, Mexico erred in its determination that benefits were conferred to the exporters concerned.

III. CONCLUSION

28. Japan respectfully requests the Panel to exam ine carefully the facts and arguments presented
by the EC and Mexico in light of the comments a bove, in order to ensure objective and consistent
interpretation of the WTO agreements, particularly the ASCM and the DSU. We welcome any
questions that the Panel may have regarding this submission.

12 United States - Final Countervailing Duty Determination with Respect to Certain Softwood Lumber
from Canada (US – Softwood Lumber IV), WT/DS257/AB/R (17 February 2004), para. 143.
13 See United States - Countervailing Duties on Fresh, Chilled and Frozen Pork from Canada, adopted
11 July 1991, BISD 38S/30, para. 4.10.
14 Mexico's First Written Submission, para. 122.
16 See Id.

I. INTRODUCTION

1. As a third party to this dispute, Norway would like to address the following issues discussed
in the First Written Submissions of the EC and Mexico:

• whether Mexico correctly defined the dom estic industry as required by the GATT 1994 and
the Agreement on Subsidies and Countervailing Measures (ASCM) (Section II);

• whether Mexico fulfilled certain procedural requirements in the ASCM (Section III); and

• the appropriate Standard of Review (Section IV).

II. DEFINITION OF THE DOMESTIC INDUSTRY

2.1 Introduction

2. The EC contends that Mexico failed to define domestic industry in a manner that is consistent
with the GATT 1994 and the ASCM.
1 According to the EC, the wrongful determination of the
domestic industry lead to both a wrongful injury determination and a failure by Mexico to determine
that there was sufficient industry support for the initiation of the investigation.2

3. The present case concerns an investigation wher e the Investigating Aut hority found injury to
an established industry. Norway understands the Fi nal Resolution (imposing the definitive measures)
to be based on "material injury to the domestic industry".
3 The case does not concern "material
retardation to the establishment of such an industry", as also confirmed by Mexico.4

2.2 Whether injury was caused to an established industry

4. Article VI.6 (a) of the GATT 1994 requires that injury must be to an "established domestic
industry". The definition of "domestic industry" in ASCM Article 16.1 provides that "domestic
industry" must be understood as referring to: "the domestic producers as a whole of the like products
or to those of them whose collective output of th e products constitutes a ma jor proportion of the total
production of those products." This provision de fines the domestic industry in relation to two
elements, "producers" and the "products" they produce. The ordinary meaning of the words
"producers" and "product" indicate in Norway's view that there must exist a certain domestic
production for there to be a "domestic industry".

5. Relevant context for the interpretation of th e definition of "domestic industry" is found in
ASCM Article 15.4 and Article 15.5, and the conclu sion to be drawn from these provisions supports
the view that "domestic industry" must be unde rstood to mean an existing industry with on-going
production.

6. The object and purpose of the rules on countervailing duties in the ASCM is to provide a right
for Member to impose such measures under certain conditions. However, those rights have to be
balanced against the right to u se subsidies under certain conditions.
5 The necessity to find the right

1 EC's First Written Submission, paras. 158 ff.
2 EC's First Written Submission, paras. 93 – 94.
3 Norway refers in this respect to the translation pr ovided in EC's First Written Submission, para. 199,
where the EC cites the Final Resolution, para. 438.
4 Mexico's First Written Submission, paras. 227 and 229.
5 Appellate Body Report, US – Softwood Lumber IV , para. 64 and Appellate Body Report, US –
Countervailing Duty Investigation on DRAMS, para. 115.

balance in this equation suggests a narrow interpre tation of "domestic industry" when it comes who
should be protected. An industry that does not produce the like product should, therefore, not be
afforded a protection as envisaged in the ASCM under the provisions relating to injury to an
established industry.

7. In the present case, the Investigating Au thority found that the domestic industry was
constituted of only one company – Fortuny de Mexico , SA de CV (Fortuny). Mexico admits that
Fortuny ceased production before the IP, in March 2002, just before the investigating period started.
6
The question for the Panel is thus whether a company having ceased to produce before the IP, can still
be considered to form (part of) the established domestic industry, in an investigation into injury to an
established industry. Based on the facts as presented by the parties to the dispute so far, it would
seem that Fortuny, having ceased production, cannot be considered part of the domestic industry
producing the like product.

8. Norway notes that Mexico employs the te rm "suspensión de actividades de Fortuny".
7
Norway does not pronounce itself on the proper connotations to be given to this Spanish term, or the
factual situation of Fortuny and its possible plans for any resumption of production after the
investigation period. Norway only notes that, to the extent that the Panel considers it necessary to
also evaluate whether a "suspension" of productio n has different implications upon which companies
may be considered part of an established industr y, the Panel must take into account that its
interpretation must not undermine the distinction be tween investigations into injury caused to an
established industry as opposed to an investigation into subsidization causing material retardation of
the establishment of an industry.

2.3 Industry support for the initiation

9. To the extent that the Panel finds that Fortun y could not be considered part of the domestic
industry for purposes of the contested investigati on, the initiation itself is vitiated, and the
investigation as such should never have been initiated.

III. PROCEDURAL ISSUES

10. In this section, Norway will discuss the allegati ons by the EC that Mexico violated procedural
rules in ASCM Articles 12.4.1 and 12.8. Rather than go in to the factual details of the case, Norway
will outline how to interpret the mentioned provisions.

3.1 The duty to ensure non-confidential summaries of confidential information

11. The EC contends that Mexico failed to requi re the complainant to provide non-confidential
summaries of confidential info rmation, inconsistent with ASCM Article 12.4, and likewise that
Mexico did not ensure that such summaries contained sufficient detail.
8

12. Mexico argues, amongst others, that its system provides opportunity for a legal representative
of any interested party to see confidential inform ation through its system of "protected access".
9
Mexico also argues that all interested parties did actually present non-confidential summaries of all
confidential information presented to the Mexican investigating authority.10

6 Mexico's First Written Submission, paras. 222 and 226.
7 Mexico's First Written Submission, para. 226.
8 EC's First Written Submission, paras 103 – 108.
9 Mexico's First Written Submission, paras 84 – 85.
10 Mexico's First Written Submission, para. 89.

13. Norway will not discuss the factual aspects here , but point to two issues raised by the parties
to the dispute: (i) The relationship between a system of "protected access" to the obligation to provide
non-confidential summaries; and (ii) the need to refe r, in the preliminary or final resolution, to
whether non-confidential summaries were requested or provided.

14. In cases where a Member has set up a system of "protected access" allowing interested parties
access to all confidential information (provided thei r legal representative meets certain requirements),
due process concerns may be safeguarded. However, the interested party will only be incited to go
through that process if it knows that there is confid ential information there to see. The submission of
non-confidential summaries of confidential informa tion, or statements explaining why such
information cannot be summarized, being placed in the non-confidential file, serves as a marker for
the interested party to have its legal representa tive go through the process of gaining access to the
confidential file. Norway, therefore, believes that th e existence of a system of "protected access" to
the confidential file does not in itself absolve the Investigating Authority of its duty to request the
provision of non-confidential summaries of confidential information submitted to it.

15. As to the second issue, Norway believes that the reference to whether Mexico required, and
interested parties provided, certain non-confidentia l summaries, is not an issue that revolves around
whether there is a "statement" or "reference" to this effect in the final or preliminary resolution. The
question for this Panel is whether Mexico actua lly required the provision of such summaries from
interested parties, whether access to such information was provided, whether any reliance upon such
information was disclosed in accordance with ASCM Article 12.8, and whether sufficiently detailed
information was provided in the relevant reports or notices under ASCM Article 22.

3.2 The duty to disclose essential facts

16. The EC claims that Mexico is in breach of the requirement to disclose essential facts before a
final determination is made, as the investigating authority did not (as the EC is aware) communicate a
disclosure within the meaning of ASCM Article 12.8.
11 Mexico, on the other hand, argues that it
provided disclosure through the "Resolución Preliminar" (RP) of 10 June 2004.12

17. This issue raises first substantive issues as to what inform ation was actually provided in any
disclosure provided by the Investigating Authority of Mexico, and second whether the provision of
such information in the RP allowed interested pa rties sufficient time and opportunity to defend their
interests.

18. Absent the factual record, Norway will not address the substantive issue of whether any
disclosure of Mexico actually provided the required information. Norway will only high-light certain
arguments that may be of importance to the Panel when interpreting the requirements of ASCM
Article 12.8 and applying that interpretation to the facts of this particular case.

19. WTO Panels and the Appellate Body have, in the anti-dumping context, interpreted the
parallel provision in Article 6.9 of the Anti-Dumping Agreement on several occasions. Panels have
found that the aim of disclosure is to "actually disclose to the interested parties the essential facts
which, being under consideration, are anticipated by the authorities as being those which will form the
basis for the decision whether to apply definitive measures."
13 Article 12.8 is meant to place interested
parties in a position where they can properly unders tand, verify, and challenge the facts that are likely
to lead the investigating authority to impose definitive measures.

11 EC's First Written Submission, para. 109.
12 Mexico's First Written Submission, paras. 93 – 94.
13 Panel Report, Argentina – Ceramic Tiles, para. 6.125.

20. The Panel will have to assess whether the RP c ontained the required information, and whether
Mexico provided interested parties with the opport unity to comment and defend their interests based
on this document. Norway notes that – according to the time-line of events presented by the EC in its
First Written Submission14 - a number of new questionnaires were sent out, and new submissions and
verification visits took place after 10 June 2004. Th e Panel will thus also have to assess whether,
based on the evidence presented by the EC, there are any new facts submitted after the RP that fall
within the scope of essential facts subject to disclosure, and that were not disclosed.

IV. STANDARD OF REVIEW: THE DUTY TO PROVIDE A REASONED AND
ADEQUATE EXPLANATION IN SUPPORT OF THE AUTHORITY'S
CONCLUSIONS

21. The EC claims that Mexico violated ASCM Articles 22.3 and 22.5 because the investigating
authority failed to provide a reasoned and adequate explanation for many of its findings.
15 Under these
provisions the investigating authority is given a comprehensive obligation to provide a transparent
statement of the reasons for the imposition of defi nitive countervailing duties. Thus, the authority
must set forth the relevant facts in the record, a nd must explain "in sufficient detail" the factual and
legal determinations made on the basis of the evid ence in the record that led to the imposition of
measures. The Appellate Body and panels have consistently ruled that the investigating authorities
are required to provide a reasoned and adequate explanation , among others, of how the evidence in
the record supports the authority's determination. 16 The authority's explanation must demonstrate in a
"clear and unambiguous" manner that the substan tive conditions for imposition of trade remedy
measures have been satisfied.17 If an authority fails to explain itself adequately, it cannot demonstrate
that it has respected the substantive requirements of the ASCM governing those determinations.

22. In concluding, Norway submits that the Appe llate Body – with regard to the standard of
review – has stated that a panel must examine whether the authority has provided a "reasoned and
adequate explanation" of "how individual pieces of evidence can be reasonably relied on in support of
particular inferences, and how the evidence in the record supports its factual findings".
18

V. CONCLUSION

23. Norway respectfully requests the Panel to exam ine carefully the facts presented by the parties
to this case in light of our arguments, in order to ensure a proper and consiste nt interpretation of the
ASCM.

14 EC's First Written Submission, paras. 59 – 70.
15 EC's First Written Submission paras. 77 – 85.
16 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 99.
17 Appellate Body Report, US – Line Pipe, para 217.
18 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 99.

Table of Reports Cited

EC– Pipe Fittings (Panel) Panel Report, European Communities – Anti-Dumping Duties on
Malleable Cast Iron Tube or Pipe Fittings from Brazil ,
WT/DS219/R, adopted 18 August 2003, as modified by Appellate
Body Report, WT/DS219/AB/R
EC – Pipe Fittings (AB) Appellate Body Report, European Communities – Anti-Dumping
Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil ,
WT/DS219/AB/R, adopted 18 August 2003
EC – DRAMS Panel Report, European Communities – Countervailing Measures
on Dynamic Random Access Memory Chips from Korea ,
WT/DS299/R, adopted 3 August 2005
Mexico – Rice (Panel) Panel Report, Mexico – Definitive Anti-Dumping Measures on
Beef and Rice , WT/DS295/R, adopted 20 December 2005, as
modified by Appellate Body Report, WT/DS295/AB/R
Mexico – Rice (AB) Appellate Body Report, Definitive Anti-Dumping Measures on
Beef and Rice, WT/DS295/R, adopted 20 December 2005
US – DRAMS (Panel) Panel Report, United States – Countervailing Duty Investigation
on Dynamic Random Access Memory Semiconductors (DRAMS)
from Korea, WT/DS296/R, adopted 20 July 2005, as modified by
Appellate Body Report, WT/DS296/AB/R

I. INTRODUCTION

1. The United States makes this third party submi ssion to provide the Panel with its view of the
proper legal interpretation of certain provisions of the Agreement on Subsidies and Countervailing
Measures ("SCM Agreement") that are relevant to this dispute. The United States recognizes that
many of the issues raised in this dispute are solely or primarily factual in nature. The United States
takes no view as to whether, under the facts of this case, the measure at issue is inconsistent with
Mexico's WTO obligations.

II. THE PERIOD OF INVESTIGATION FOR DETERMINING INJURY MAY BE
LONGER THAN THE PERIOD EXAMINED FOR DETERMINING A SUBSIDY

2. The EC makes an argument concerning Article 15.1 and the difference in the period of
investigation for subsidy and injury.
1 The EC's argument is not entirely clear on this point. To the
extent that the EC is arguing that the periods of investigation for subsidy and injury must be
completely coincident, there is no basis in the prov isions of the SCM Agreement for such a finding.
Article 15.1 of the SCM Agreement provides that a determination of injury "shall be based on positive
evidence and involve an objective examination of ... the effect of the subsidized imports on prices in
the domestic market for like products ... ." Howe ver, the SCM Agreement does not require that the
period investigated for purposes of determining in jury exactly match the period investigated for
purposes of determining subsidization.

3. In the dispute involving the United States ' countervailing duty measure concerning DRAMs
from Korea, the period for determining the subsidy was 18 months, whereas the period for
determining injury exceeded three years in duration.
2 In evaluating the investigation by the
United States, the panel stated:

Article 15.2 does not require an investigating authority to demonstrate that all of the
subject imports covered by the period of injury investigation are subsidized ... . It is
not necessary that the period of review for subsidization must mirror the period of
review for injury.3
4. In EC – Pipe Fittings , the EC's investigating authority had examined a longer period for its
injury determination than for its dumping determinat ion. The panel found that the EC's approach was
not inconsistent with the EC's obliga tions under Articles 3.1 and 3.2 of the Agreement on
Implementation of Article VI of GATT 1994 ("AD Agreement"), the provisions that mirror the
obligations of Articles 15.1 a nd 15.2 of the SCM Agreement. 4 In its finding, the panel noted that the
Recommendation Concerning Period of Data Collection for Anti-Dumping Investigations of the WTO
Committee on Anti-Dumping Practices recommends that the period of investigation in an injury
investigation be longer than the period of investigation in a dumping investigation.5

1 First Written Submission of the European Communities, paras. 204-07.
2 US – DRAMS (Panel), paras. 2.2, 7.243.
3 US – DRAMS (Panel), para. 7.245.
5 EC – Pipe Fittings (Panel) , para. 7.321 (noting that the EC's period of investigation for the dumping
investigation covered one year, while the period of investigation for injury covered three years).

III. THE TEXT OF ARTICLE 15 OF THE SCM AGREEMENT DOES NOT REQUIRE
THE INVESTIGATING AUTHORITY TO BASE ITS INJURY DETERMINATION
ON THE TYPE OF INJURY ALLEGED BY THE PETITIONER OR APPLICANT

5. The EC takes issue with the fact that, while the Mexican domestic industry's complaint
alleged injury based on material retardation of an industry, Mexico's affirmative injury determination
was based on a finding of present material injury.
6

6. Article 15 of the SCM Agreement provides th e obligations of Members with respect to a
"Determination of Injury," and then in a footnote defines "injury" as meaning material injury, threat of
material injury, or material retardation to the establishment of an industry (emphasis added). Nothing
in the text of the SCM Agreement provides that a determination of injury by an investigating authority
must be based on the same type of injury as that alleged by the petitioner or applicant.

IV. THE PANEL SHOULD DETERMINE WHETHER MEXICO'S INJURY ANALYSIS
BASED ON AN EXAMINATION OF CERTAIN MONTHS OF EACH YEAR IS
CONSISTENT WITH THE "OBJECTIVE EXAMINATION" REQUIREMENT IN
ARTICLE 15.1 OF THE SCM AGREEMENT

7. The EC has criticized Mexico's choice of i nvestigation periods encompassing only the months
of April through December in the years 2000, 2001, and 2002.
7 The EC claims that Mexico's choice
of investigation periods "undermined" the "objectiveness of the [injury] examination." Article 15.1 of
the SCM Agreement requires that the investigating authority's injury determination be based on an
"objective examination" of the evidence pertaining to volume, price and impact. Article 3.1 of the
AD Agreement identically requires authorities to base injury determinations in antidumping
investigations on an "objective examination" of the evidence pertaining to volume, price, and impact.
In past disputes, the Appellate Body has raised c oncerns about analyzing only parts of years in an
injury investigation under Article 3.1 of the AD Agreement.
8

8. In Mexico – Rice , the Appellate Body examined whet her Mexico's use of investigation
periods encompassing only six months of each of the three calendar years examined satisfied this
requirement.

9. The panel in that dispute had found that Me xico's injury analysis did not satisfy this
requirement for two reasons:

[F]irst, whereas the injury analysis was selective and provided only a part of the
picture, no proper justification was provided by Mexico in support of this approach;
and secondly, [Mexico's investigating authorit y] accepted the ‘period of investigation
proposed by the applicants because it a llegedly represented th e period of highest
import penetration and would thus show the most negative side of the state of the
domestic industry.'
9
The Appellate Body sustained the panel's analysis.10

6 First Written Submission of the European Communities, paras. 194-197.
7 First Written Submission of the European Communities, para. 211. See also First Written Submission
of Mexico, para. 253-54.
8 Mexico – Rice (AB), paras. 173-88.
9 Mexico – Rice (AB), para. 176.
10 Mexico – Rice (AB), para. 183.

10. While there may be circumstances in which th ere could be "convincing and valid reasons for
examining only parts of years,"
11 such an injury analysis could raise concerns under Article 15.1 of
the SCM Agreement depending on the underlying reasons for that approach.

V. ARTICLE 15.5 OF THE SCM AGREEMENT DOES NOT REQUIRE AN
INVESTIGATING AUTHORITY'S NON-ATTRIBUTION ANALYSIS TO BE
PERFORMED ON A QUANTITATIVE BASIS

11. The EC also claims that Mexico breached Article 15.5 of the SCM Agreement because it
failed to ensure that injury allegedly caused by other factors was not attributed to the subsidized
imports. In support of this claim, the EC argues that the non-attribution analysis should be
"preferably on a quantitative basis."12

12. The United States takes no position with respect to whether Mexico's analysis demonstrated
that any injury caused by other f actors was not attributed to the subsidized imports. Nonetheless, the
United States would point out that, although Article 15.5 of the Agreement sets out several factors
that "may" be considered by investigating author ities in ascertaining whether there is a "causal
relationship" between subsidized imports and injury to the domestic industry,
13 it does not specify the
type of information that an authority must collect and examine for this purpose, or identify the detail
in which the authority must explain its analysis of the information. Rather, Article 15.5 simply
provides that the investigating authority must determine, on the basis of "all relevant evidence" before
it, whether such a causal relationship exists.

13. Article 15.5 also provides that the investigating authorities must examine any known factors
other than the subsidized imports which are injuring the domestic industry to ensure that injury caused
by these other factors is not attributed to the su bsidized imports. As the Appellate Body has
recognized, the non-attribution provision of Article 3.5 of the AD Agreement, which mirrors the non-
attribution provision of Article 15.5 of the SCM Agreement, does not prescribe the specific methods
that investigating authorities must use to demonstr ate that any injury caused by factors other than
unfairly traded imports is not attributed to such imports. The Appellate Body has stated that
"provided that the investigating authority does not attribute the injuries of other causal factors to
dumped imports, it is free to choose the methodology it will use in examining the ‘causal relationship'
between dumped imports and injury."
14

14. Consequently, the EC's assertion that any non-a ttribution analysis should preferably be on a
quantitative basis finds no support in the text of the SCM Agreement.
15 In support of its argument,
the EC cites a panel report concerning an EC countervailing duty measure against DRAMs from
Korea.16 However, in that report, the panel's concer n was that the investigating authority conduct a
sufficient analysis rather than merely "check th e box" with respect to the non-attribution analysis. 17
The panel suggested ways that a non-attribution anal ysis could be made more concrete, but the panel
did not suggest that an otherwise sufficient non-attrib ution analysis should be rejected merely because
the investigating authority's analys is was not quantitative. Further, in a panel report issued nearly
contemporaneously with EC – DRAMS , the panel found that the United States was not required to

11 Mexico – Rice (Panel), para. 7.82.
12 First Written Submission of the European Communities, paras. 215-227.
13 Article 15.5 provides that "{f}actors which may be relevant in this respect include, inter alia, the
volume and prices of imports not sold at dumping prices, contraction in demand or changes in the patterns of
consumption, trade-restrictive prac tices of and competition between the foreign and domestic producers,
developments in technology and the export performance and productivity of the domestic industry."
15 First Written Submission of the European Communities, para. 218.
16 First Written Submission of the European Communities, para. 218, citing EC – DRAMS ,
paras. 7.405, 7.437.
17 EC – DRAMS, para. 7.405.

quantify the injury caused by other factors in order to perform the non-attribution analysis required by
Article 15.5 of the SCM Agreement.18

18 US – DRAMS (Panel), para. 7.353.

ANNEX B-6

THIRD PARTY ORAL STATEMENT OF CANADA

(26 June 2007)

1. Madam Chair, Members of the Panel, Canada first thanks you for your service on this panel.
Canada's written submission, filed at the end of last week, addressed two of the issues raised by this
case, two issues that Canada believes are of fundame ntal systemic importance to WTO Members. I
would like to briefly recall those issues without repeating our submissions.

2. First, Canada emphasized the importance of a Member's investigating authority respecting the
principles of due process contained in the SCM Agreem ent. A further example of the concerns that
motivated Canada's decision to intervene regardi ng the importance of respecting the principles of due
process is Mexico's assertion that it would act consistently with Article 13.1 of the SCM Agreement if
it sent an invitation for consultations anytime up to the day before the investigation was formally
initiated. In Canada's view, such an approach is inconsistent with the object and purpose of this
provision, which is aimed at affording a reasonable opportunity for meaningful consultations between
the exporting Member and importing Member, with a view to reaching a mutually agreed solution
before an investigation is launched. The fact that Article 13.1 requires that the timing of the invitation
allow for consultations before the investigation is formally initiated is conf irmed by Article 13.2 of
the Agreement, which speaks of the opportunity to "continue" the consultations "throughout the
period of investigation."

3. Second, with respect to the issue of pass- through, although the facts of this case are not
entirely clear, it seems that the subsidy at issue is granted to the European producers of olives. It
further appears that a number of arm's length tr ansactions take place before the exportation of the
actual product subject to the investigation of th e Mexican investigating authority. In these
circumstances, based on the relevant provisions we have cited in our brief and a line of cases up
through the Appellate Body's decision in Softwood Lumber IV , it is Canada's submission that the
Mexican investigating authority should have conducted a pass-through analysis to determine whether
and to what extent the subsidy granted to the oliv e growers had passed through to the producer and/or
exporter of the olive oil subject to the investigation.

4. This concludes Canada's oral statement. We would be glad to answer any questions the panel
members may have concerning our written submission or oral statement.

ANNEX B-7

THIRD PARTY ORAL STATEMENT OF
THE UNITED STATES

(26 June 2007)

1. Madame Chair and members of the Panel, the United States is pleased to present its views as
a third party in this dispute. As the Panel w ill recall, the United States has already filed a written
submission, and we will not repeat the discussion cont ained therein. Since that submission, we have
had an opportunity to review all of the other third pa rty submissions filed, and we wanted to raise one
matter today for the Panel's attention. We would like to comment on the discussion by Norway in its
third party submission regarding Article 12.8 of the SCM Agreement.

2. Norway suggests that Mexico did not satisfy the requirements of Article 12.8 because Mexico
failed to identify "which facts in the file [are] lik ely to lead the authority to impose final duties."
However, the claim advanced by the EC regarding Article 12.8 of the SCM Agreement is that there
was no disclosure of any kind under Article 12.8 of the SCM Agreement, and not that Mexico did not
disclose a particular fact, or that Mexico breached Ar ticle 12.8 by failing to iden tify particular facts.
Thus, the question presented by Norway is not implicated by the EC's claim, and it would therefore be
inappropriate for the Panel to reach it.

3. It is well-established that the burden of est ablishing a breach of an obligation under a covered
agreement lies with the complaining party. Furthe r, the burden of establishing a fact lies with the
party asserting that fact.
1 For the EC to establish a breach of Article 12.8, it is the EC that would need
to identify which facts were "essential" and to de monstrate that Mexico did not inform Members and
interested parties of such facts in sufficient time.

4. In light of this, it would be inappropriate for the Panel to identify particular facts that need to
be disclosed under Article 12.8, as Norway suggests, because it is not the role of panels to establish a
claim for a party where the burden for establishing that claim lies with the party. As the Appellate
Body has stated, "panels have a significant investigative authority. However, this authority
cannot be used by a panel to rule in favour of a complaining party which has not established a
prima facie case of inconsistency based on specific legal claims asserted by it."2

5. This concludes my presentation. Thank you for your attention.

Measures Concerning Meat and Meat Products (Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, adopted
13 February 1998, para. 97.
2 Appellate Body Report, Japan – Measures Affecting Agricultural Products , WT/DS76/AB/R,
adopted 19 March 1999, para. 129.