MEXICO – ANTI-DUMPING INVESTIGATION OF HIGH FRUCTOSE CORN SYRUP (HFCS) FROM THE UNITED STATES
Document: Recourse to Article 21.5 of the DSU by the United States Report of the Panel
Date: 22 June 2001
Document codes: WT/DS132/RW
Complainant: U.S.
Respondent: Mexico
Third parties: Jamaica, Mauritius, EU
Dispute stage: Panel
Agreements cited: Art. 1, 2, 3, 4, 5, 6, 7, 10, 12  Anti-dumping

MEXICO – ANTI-DUMPING INVESTIGATION OF
HIGH FRUCTOSE CORN SYRUP (HFCS) FROM
THE UNITED STATES
Recourse to Article 21.5 of the DSU by the United States
Report of the Panel
The report of the Panel on – Recourse to Article 21.5 of the DSU by the United States is being circulated
to all Members, pursuant to the DSU. The report is being circulated as an unrestricted document from
22 June 2001 pursuant to the Procedures for the Circulation and Derestriction of WTO Documents
(WT/L/160/Rev.1). Members are reminded that in accordance with the DSU only parties to the
dispute may appeal a panel report. An appeal shall be limited to issues of law covered in the Panel
report and legal interpretations developed by the Panel. There shall be no ex parte communications
with the Panel or Appellate Body concerning matte rs under consideration by the Panel or Appellate
Body.
Note by the Secretariat: This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60
days after the date of its circulation unless a party to the dispute decides to a ppeal or the DSB decides by
consensus not to adopt the report. If the Panel Report is appealed to the Appellate Body, it shall not be
considered for adoption by the DSB until after the completion of the appeal. Information on the current status
of the Panel Report is available from the WTO Secretariat.

I. INTRODUCTION AND FACTUAL BACKGROUND
1.1 On 24 February 2000, the Dispute Settlement Body ("the DSB") adopted the report and
recommendations of the Panel in Mexico - Anti-dumping Investigation of High Fructose Corn Syrup
(HFCS) from the United States (). In that report, the Panel concluded that Mexico's
imposition of the definitive anti-dumping duties on imports of high fructose corn syrup, grades 42 and
55, from the United States was inconsistent with the requirements of the Agreement on
Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (AD Agreement).
The panel and the DSB accordingly recommended that Mexico bring its measure into conformity with
its obligations under the AD Agreement.
1.2 On 20 September 2000, the Government of Mexico published a final resolution in which it
stated that it had revised the original final resolution imposing definitive anti-dumping duties on
imports of high fructose corn syrup, grades 42 and 55, from the United States to comply with the
Panel report's conclusions and recommendations.
1 Mexico determined to repay provisional duties on
entries and guarantees granted for the payment of provisional anti-dumping duties, with interest, for
the period 26 June 1997 to 23 January 1998. Mexico also "ratified its conclusion that during the
period under investigation, there was a threat of harm to the domestic sugar industry as a consequence
of imports of high fructose corn syrup under price discriminatory conditions originating from the
United States of America".
2 The revised final resolution confirmed "the final offsetting duties
established during the antidumping investigation".3
1.3 On 12 October, the United States submitted a communication seeking recourse to Article 21.5
of the DSU (WT/DS132/6). In that communication, the United States indicated its view that the
measures taken by Mexico to comply with the recommendations and rulings of the DSB were not
consistent with the AD Agreement. In particular, in the view of the United States, Mexico's
redetermination of a threat of material injury, including its consideration of the impact of dumped
imports on the Mexican sugar industry, its consideration of the potential effect of the alleged restraint
agreement in its determination of a likelihood of substantially increased importation, and its
explanation of the findings and conclusions it reached on all material issues of fact and law, failed to
comply with the recommendations and rulings of the DSB and was inconsistent with Articles 3.1, 3.2,
3.4, 3.5, 3.7, 12.2, and 12.2.2 of the AD Agreement. The United States further stated that because
there was "a disagreement as to the existence or consistency with a covered agreement of measures
taken to comply with the recommendations and rulings of the DSB" between the United States and
Mexico, within the terms of Article 21.5 of the DSU, the United States sought recourse to Article 21.5
in the matter and requested that the DSB refer the disagreement to the original panel, if possible,
pursuant to Article 21.5 of the DSU.
1.4 At its meeting on 23 October 2000, the DSB decided, in accordance with Article 21.5 of the
DSU, to refer to the original panel the matter rais ed by the United States in document WT/DS132/6.
The DSB further decided that the Panel should have standard terms of reference as follows:
“To examine, in the light of the relevant provisions of the covered agreements cited
by the United States in document WT/DS132/6, the matter referred to the DSB by the
United States in that document and to make such findings as will assist the DSB in

1 Final resolution revising, on the basis of the conclusion and recommendation of the Panel of the
World Trade Organization's Dispute Settlement Body, the final resolution of the anti-dumping investigation into
imports of high fructose corn syrup, merchandise classified in tariff headings 1702.40.99 and 1702.60.01 of the
General Import Tariff, originating in the United States of America, irrespective of the country of provenance,
20 September 2000, MEXICO-1 (hereinafter "Notice of Redetermination"). MEXICO-1 is the official Spanish
version of the text, MEXICO 1(a) is the English translation provided by Mexico in this proceeding.
2 Id. at para. 188.
3 Id.

making the recommendations or in giving the rulings provided for in those
agreements.”
1.5 A member of the original Panel was unable to participate in this proceeding. The parties
agreed on a new panellist on 13 November 2000. As a result, the Panel is composed as follows:
Chairman: H.E. Mr. Christer Manhusen
Members: Mr. Gerald Salembier
Mr. Paul O'Connor
1.6 The European Communities (EC), Mauritius and Ja maica reserved their rights to participate
in the Panel proceedings as third parties to the dispute.
1.7 The Panel met with the parties on 20-21 February 2001, and with the third parties on
21 February 2000.
1.8 The Panel submitted its interim report to the parties on 11 May 2001.
II. FINDINGS AND RECOMMENDATIONS REQUESTED BY THE PARTIES
2.1 The United States requests the Panel to “review Mexico's redetermination and conclude that
Mexico has failed to comply with the conclusions and recommendations of the DSB and Mexico's
obligations under the AD Agreement".
2.2 Mexico requests the Panel to “find that the measures adopted by Mexico to comply with the
recommendations and rulings of the DSB are consistent with the AD Agreement".
III. MAIN ARGUMENTS OF THE PARTIES
A. FIRST WRITTEN SUBMISSION OF THE UNITED STATES
3.1 The United States argues that, in its decision of January14, 2000, the Panel concluded that the
Government of Mexico’s imposition of a definitive anti-dumping measure on imports of high fructose
corn syrup (“HFCS”) from the United States was inconsistent with the requirements of the Agreement
on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the
“AD Agreement”). In particular, the Panel concluded that in making a threat of material injury
determination, Mexico inadequately considered (a) the potential effect of a restraint agreement
between Mexican sugar refiners and soft drink bottl ers, and (b) the impact of HFCS imports on the
domestic sugar industry. The Panel recommended that the Dispute Settlement Body (“DSB”) request
Mexico to bring its measure into conformity with its obligations under the AD Agreement.
3.2 In the view of the United States, Mexico has failed to do so. Instead, Mexico has issued a
new determination that, while purporting to comply with the Panel’s conclusions and
recommendations, is essentially a restatement of its or iginal determination. The United States asserts
that the new gloss that Mexico has put on its original determination cannot hide the fact that Mexico’s
threat of material injury determination continues to be based on “conjecture” and “remote possibility,”
is contradicted by fundamental facts in the record, and is inadequately explained. Mexico’s new
determination, therefore, fails to meet the standards required by the Panel and the AD Agreement.
3.3 Specifically, the United States argues, Mexico’s redetermination falls far short of what the
Panel Report and the AD Agreement require in three important respects.

3.4 First, there is still no basis for the Mexican authority’s conclusion that there is a likelihood of
substantially increased imports of HFCS from the United States. The United States recalls that the
Panel Report concluded that the original determination’s finding in this respect violated Article 3.7(i)
of the AD Agreement because the Mexican authority gave inadequate consideration to an agreement
between Mexican sugar refiners and soft drink bottlers to restrain the soft drink bottlers’ use of HFCS.
Moreover, argues the United States, the redetermination largely repeats the same information that was
previously submitted and again fails to explain how a substantial increase in imports is likely given
the fact of the restraint agreement. Consequently , the United States maintains that redetermination
suffers from the same defects the Panel identified in its review of the original determination, making
the redetermination inconsistent with Article 3.7 of the AD Agreement.
3.5 Second, the redetermination still fails adequately to address the factors set forth in Article 3.4
of the AD Agreement. The Panel Report found that the Mexican authority’s original determination
violated Articles 3.1, 3.4, and 3.7 of the AD Agreement because it failed meaningfully to analyze both
several individual Article 3.4 factors and the overall condition of the Mexican sugar industry.
According to the United States, the redetermination merely presents more data concerning the
individual Article 3.4 factors without providing the necessary analysis and explanation of these
factors. Moreover, argues the United States, the redetermination mischaracterizes pertinent
information concerning the condition of the Mexican sugar industry and fails to provide a reasoned
and fact-supported explanation concerning why improvements in important industry trends during the
period of investigation were not probative in ascertaining the likely future condition of the industry.
Consequently, in the view of the United States, the redetermination fails to conform to the
requirements of Articles 3.1, 3.4, and 3.7 of the AD Agreement.
3.6 Third, the redetermination is inconsistent with Articles 12.2 and 12.2.2 of the AD Agreement
because it relies on analytical models and forecasts without adequate explanation of the inputs on
which those methodologies were based.
3.7 The United States recalls that Mexico has had two opportunities to make a threat of material
injury determination that is consistent with its obligations under the AD Agreement. The
United States asserts that Mexico has done so on neither occasion. Indeed, according to the
United States, the facts found by the Mexican authority sufficiently contradict its conclusions on
redetermination so as to suggest that it cannot on its record provide a basis for finding threat of
material injury. Accordingly, the United States respectfully requests that this Panel review Mexico’s
redetermination and conclude that Mexico has failed to comply with the conclusions and
recommendations of the DSB and Mexico’s obligations under the AD Agreement.
1. SECOFI Disregarded The Panel's Conclusion That It Made An Insufficient Finding Of
The Likelihood Of Increased Imports
3.8 In its report, the United States notes, the Panel found that SECOFI’s conclusion that there was
a “likelihood of substantially increased importation” was inconsistent with the requirements of
Article 3.7(i) of the AD Agreement.
3.9 In particular, the United States argues, the Panel agreed with the argument of the
United States that SECOFI did not adequately consider an agreement between Mexican sugar refiners
and soft drink bottlers to restrain the soft drink bottlers’ use of HFCS. The United States recalls that it
demonstrated to the Panel that the US exporters participating in the inve stigation informed SECOFI
during the pendency of its investigation as to the existence of this agreement, which was publicly
revealed by SECOFI Secretary Herminio Blanco Mendoza to the Mexican Senate in September 1997.
3.10 The United States further recalls that the Panel stated that “[t]he question before us is whether
SECOFI’s analysis provides a reasoned explanation for its conclusion that, assuming [the restraint]
agreement existed, there was nonetheless a likelihood of substantially increased importation. ”

According to the United States, the Panel provided several grounds for answering this question in the
negative.
3.11 One ground was that SECOFI improperly premised its analysis on alleged increases in import
levels from 1996, the time of the conclusion of its period of investigation, rather than from the third
quarter of 1997, the latest period for which its record contained data on the volume of imports from
the United States. The United States notes that the Panel concluded that “[t]he question for purposes
of analysis of threat of material injury is not the level of imports already reached, but the likelihood of
increased imports.” The United States further notes that the Panel criticized SECOFI for
“conclud[ing] that such imports would have continued increasing by inertia.”
3.12 An additional ground was SECOFI’s finding that the restraint agreement does not “rule out
the possibility” that soft drink bottlers and other users would continue their purchases of imported
HFCS. The United States recalls that the Panel concluded that “not ruling out the possibility that
imports would continue does not support the finding that there is a ‘ likelihood of substantially
increased importation’ (emphasis added), as provided for in Article 3.7(i).”
3.13 The United States points out that the Panel also found that SECOFI’s determination did not
provide any discussion to support a conclusion that there was a likelihood that users other than soft
drink bottlers would increase their importation of HFCS. The Panel found this omission to be critical
in light of information in the record indicating that the restraint agreement affected purchasers
accounting for 68 per cent of imports and that most other purchasers’ ability to substitute HFCS for
sugar was limited.
3.14 Consequently, according to the United States, SECOFI could not implement the Panel’s
findings merely by reiterating on redetermination the same arguments and information that Mexico
presented to the Panel. Instead, the United States argues, for SECOFI again to conclude that there
was a likelihood of increased imports notwithstanding the restraint agreement, it was obliged either to
furnish additional explanation or to generate additional data that would support such a conclusion.
3.15 In the view of the United States, SECOFI failed to do so in its redetermination. Instead, it
merely repeated the same information and recitation of conclusions that Mexico had previously
presented to the Panel.
3.16 In particular, according to the United States, SECOFI made findings in its redetermination
that the restraint agreement “does not mean that in periods subsequent to the one under investigation
[non-soft drink bottlers’] share in the consumption of high fructose corn syrup would not increase”
and that “[b]oth the beverage industry and other i ndustries could acquire the imported product at low
prices.” Such findings, the United States asserts, are indistinguishable from the ones in the original
SECOFI determination that the Panel rejected. As the United States previously noted, the Panel
clearly concluded that findings based on “possible” propensity to increase purchases of imports do not
satisfy the requirement of Article 3.7(i) of the AD Agreement that there be a “likelihood of
substantially increased importation.” Indeed, the United States argues that Article 3.7 requires that “a
determination of threat shall be based on facts and not merely on allegation, conjecture, or remote
possibility.” Yet, according to the United States, SECOFI’s continued emphasis on what purchasers
other than soft drink bottlers could do is clearly based on conjecture and does not provide an adequate
basis for the required fact-supported determination on their likely behavior.
3.17 In the view of the United States, SECOFI’s redetermination is not flawed merely because it
fails to frame its conclusions in the proper langua ge. To the contrary, SECOFI’s redetermination
record provides no more support than its original record for any finding that HFCS purchasers other
than soft drink bottlers would be likely to increase purchases of HFCS and that these increased
purchases would result in substantially increase d importations. The redetermination does make two
findings that the United States anticipates, based on its arguments to the original Panel, Mexico will

argue support such a conclusion. However, according to the United States, neither finding actually
provides such support.
3.18 First, SECOFI postulated that increased imports are likely because imports from the
United States increased between the time SECOFI’s period of investigation concluded in 1996 and the
latest period for which SECOFI had import data, January-September 1997. However, continues the
United States, this finding is precisely the same finding from the original determination that the Panel
specifically rejected in paragraph 7.176 of its Report as inconsistent with Article 3.7(i). In the view of
the United States, the finding is equally invalid in the redetermination. Moreover, the United States
claims, SECOFI did not relate the 1997 increases to pu rchasers that were not subject to the restraint
agreement.
3.19 Second, SECOFI concluded that HFCS is theoreti cally substitutable for sugar in a variety of
products. The United States believes, however, that this finding is based on the same data that
SECOFI submitted to the Panel.
3.20 The United States recalls that the Panel did not find that this material provided adequate
support for SECOFI’s original determination that there was a likelihood of increased imports and it
should not do so here. The United States asserts that the material does not demonstrate that HFCS
users other than soft drink bottlers, which accounted for only 32 per cent of HFCS consumption in
1996, actually were substituting HFCS for sugar during SECO FI’s period of investigation. It merely
indicates that these users were theoretically capable of doing so in varying degrees depending on the
type of product. The United States further asserts that finding that HFCS users were likely to
substitute HFCS for sugar merely because they could do so as a theoretical matter is sheer conjecture
as is SECOFI’s unsupported and unexplained assumption of a 50 per cent substitution rate for all
HFCS users other than soft drink bottlers. Under Article 3.7, the United States recalls, a threat
determination may not be premised on such conjectural assumptions.
3.21 The United States argues that the conjectural basis of this finding is underscored by the
magnitude of the substitution into HFCS from sugar that SECOFI projected users other than soft drink
bottlers would make. The United States notes that SECOFI projected that HFCS imports from the
United States would increase to 350,000 tons in 1998. The United States also notes that SECOFI
projected that none of these imports would be by soft drink bottlers, which SECOFI assumed would
obtain from Mexican sources whatever HFCS that they were permitted to consume under the restraint
agreement.
3.22 Finally the United States recalls that SECOFI reported that HFCS imports from the
United States in 1996, the final year of its peri od of investigation, were 192,906 tons. Based on
SECOFI’s own data, the amount of these imports attr ibutable to users other than soft drink bottlers
was 61,729 tons.
3.23 Consequently, according to the United States, SECOFI in effect projected that imports of
HFCS from the United States by purchasers other than soft drink bottlers would increase by 467 per
cent in just two years. The United States ma intains that SECOFI’s redetermination provides
absolutely no information on the actual purchasing patterns of HFCS users other than soft drink
bottlers that would support the conclusion that they were likely to increase their imports at such an
astonishing rate. Moreover, according to the United States, the rate at which SECOFI projected these
users would increase their purchases from 1996 to 1998 is not supported by the relevant facts of
record. The projected rate of increase is far greater than the rate by which total HFCS imports from
the United States -- including those purchased by soft drink bottlers -- actually increased from 1994 to
1996.
3.24 In the view of the United States, SECOFI thus disregarded the Panel’s rulings concerning an
appropriate analysis of the restraint agreement. The United States asserts that it engaged in

conjecture, made conclusions that have absolutely no basis in the record before it, and failed to
address meaningfully the question the Panel deem ed pertinent -- whether, notwithstanding the
restraint agreement, imports of HFCS from the United States were likely to increase substantially
from the levels prevailing at the time SECOFI made its original determination. Accordingly, the
United States maintains that SECOFI’s analysis of the restraint agreement in its redetermination
suffers from the same flaws the Panel identified in its review of the original SECOFI determination.
Because there is still no basis for the conclusion that there is a likelihood of substantially increased
imports of HFCS from the United States, SECOFI ’s redetermination violates Article 3.7 of the
AD Agreement.
2. SECOFI Did Not Address The DSB's Rulings Regarding The Analysis Of The Likely
Impact Of The Dumped Imports
3.25 The United States recalls that the Panel stated that SECOFI’s original determination reflected
no meaningful analysis of a number of Article 3.4 factors such as the Mexican sugar industry’s
profits, output, productivity, utilization of capacity, employment, wages, growth, and ability to raise
capital. The United States further recalls that Panel also criticized the determination for providing no
analysis of the condition of the Mexican sugar industry during the period of investigation, and no
projected analysis of its condition for the near future.
3.26 The United States acknowledges that SECOFI’s redetermination, in contrast to its original
determination, does provide a recitation of data concerning the Article 3.4 factors discussed by the
Panel.
3.27 Nevertheless, according to the United States, the Panel did not indicate that Mexico could
satisfy its obligations under the AD Agreement merely by having SECOFI recite data in its record
concerning the current condition of the Mexican sugar industry.
3.28 The United States maintains that SECOFI did not perform this analysis in its redetermination.
Instead, its analysis (i) repeatedly mischaracterizes pertinent information on the condition of the
Mexican sugar industry; (ii) fails to provide a reasoned and fact-supported explanation concerning
why improvements in important industry trends duri ng the period of investigation were not probative
in ascertaining the likely future condition of the industry; and (iii) makes erroneous or unsupported
factual findings and calculations.
3.29 In the United States' view, SECOFI mischaracterized the data before it in several instances.
For instance, it found a “decreasing trend in employment,” although its data indicated that
employment actually increased during each year of its period of investigation. Similarly, it
characterized “the use of installed industry capacity” as a negative trend demonstrating the sugar
industry’s sensitivity to competition from imports. In fact, the United States points out, capacity
utilization increased by 16 per cent from 1994 to 1995, and by an additional 3 per cent from 1995 to
1996.
3.30 The United States argues that SECOFI’s mischaracterization of positive trends as signs of
industry weakness cannot be justified as an unbiased and objective evaluation of the facts and cannot
properly serve as the basis for an affirmative threat determination.
3.31 With respect to other factors, SECOFI’s redetermination cites facts indicating improved
industry performance over the period of investigation. Significantly, according to the United States,
the redetermination demonstrates that the domestic sugar industry was profitable in 1996 and that
profitability in 1996 increased substantially over 1995 – despite the increase in imports of HFCS from
the United States. The United States notes that the determination also indicates that in 1996 the price
of domestically-produced sugar in Mexico increased by a much higher percentage than prices for
HFCS imported from the United States – notwithstanding that the volume of these imports more than

doubled that year. According to the United States, these positive trends in profitability and prices,
combined with the other positive evidence on the record – capacity utilization increasing,
employment increasing, productivity increasing, operating costs decreasing, sales costs as a per cent
of revenue decreasing, and debt level remaining constant – all weigh against a conclusion that the
Mexican sugar industry was threatened with material injury.
3.32 The United States recalls that the Panel specifically stated that “[m]erely that dumped imports
will increase, and will have adverse price effects, does not, ipso facto, lead to the conclusion that the
domestic industry will be injured – if the industry is in very good condition, or other factors are at
play, dumped imports may not threaten injury.” In light of data showing that prices were increasing
and operating performance was improving during a time when HFCS imports from the United States
were increasing, the United States argues that there clearly were “other factors at play” besides the
imports in determining the condition of the Mexican sugar industry.
3.33 The United States asserts that SECOFI thus was obliged to provide fact-based analysis
sufficient to show why the improving trends relating to Mexican sugar industry performance it
observed in 1996 would reverse in the near future or why other considerations would render these
rising trends insignificant. According to the Unit ed States, it did not do so. Instead of analyzing the
historical data concerning the industry’s condition, as the Panel concluded was required by the
AD Agreement, the United States asserts that SECOFI relied on a variety of assumptions contrary to
the data.
3.34 One such assumption was that the projected increase in HFCS imports would cause a 9 per
cent decline in prices for domestically-produced su gar in 1997. According to the United States,
SECOFI’s projection appears to be based on its view that “in order to avoid greater displacement in
sales, the sugar industry would be required to reduc e sugar prices to cut the price differential with
respect to high fructose corn syrup.” However, th e United States asserts that SECOFI’s assumption
was contrary to the observed data during 1996, the final year of its period of investigation, when
increased HFCS imports caused neither a decline in the price of sugar nor a decline in the price
differential between sugar and HFCS. SECOFI ha s not shown that domestic sugar prices “had been
‘forced downward’ during the period of invest igation” and SECOFI nowhere demonstrates why
increased imports in 1997 were likely to cause price declines when increased imports in 1996 had
opposite effects. Consequently, in the view of the United States, SECOFI’s assumptions and
conclusions regarding likely price declines remain “in the realm of speculation” and must be rejected
as the type of allegation or conjecture insufficient to support a threat determination under Article 3.7.
3.35 Similarly, SECOFI assumed that further im ports would cause domestic sales revenues to
decline in 1997. The United States points out that this was contrary to what occurred during 1996.
The United States further notes that SECOFI calculated that this decline would in turn cause the
domestic industry to incur an operating loss. Again, according to the United States, this was contrary
to the actual experience during 1996, when the industry’s operating margins and profits increased.
The United States asserts that SECOFI nowhere explains in its redetermination why it was reasonable
to make such assumptions premised on facts contrary to those observed during the period of
investigation. Thus, according to the United States, these assumptions as well must be rejected as
premised on allegation or conjecture.
3.36 The United States maintains that there are several additional findings in the redetermination
relating to Article 3.4 factors that are not adequately explained, or do not reconcile with other factual
findings. The United States notes that the 5 per cent decline in “sales” that SECOFI calculates for the
entire Mexican sugar industry in its redetermination is precisely the same as the decline in the
industrial sector only that Mexico originally reported to the Panel. In its redetermination, SECOFI
attributes this “sales” decline to the imports of HFCS. Because HFCS does not compete with sugar
used in the household sector, argues the United States, any overall decline in sugar sales quantities

attributable to HFCS imports should have been considerably less for the sugar industry overall than
for the industrial sector alone.
3.37 Moreover, the United States notes, SECOFI emphasizes that the share of the Mexican
sweetener market held by the Mexican sugar industry declined from 98 per cent in 1994 to 93 per cent
in 1996, apparently suggesting to SECOFI that HFCS imports were responsible for the decline.
However, the United States further notes that SECOFI also states that the market share held by HFCS
imports increased from 1.17 per cent in 1994 to 4 per cent in 1996. Consequently, in 1994, the
Mexican sugar industry and imported HFCS combined for a 99.17 per cent share of the sweetener
market, whereas in 1996, they combined for only a 97 per cent share. Furthermore, according to the
United States, information in the redetermination indicates that Mexican HFCS production accounted
for 0.82 per cent of the sweetener market in 1996 and imports from sources other than the United
States accounted for less than 0.1 per cent of the sweetener market in 1996. Therefore, the United
States asserts, SECOFI’s redetermination fails to account for 2.18 per cent of the sweetener market in
1996. Given the small share of the market held by HFCS imports, the United States asserts that this
gap indicates that SECOFI did not adequately explain its conclusions regarding market share.
Moreover, the United States continues, any effects from this gap should not be attributed to HFCS
imports.
3.38 Additionally, the United States notes, the re determination indicates that between 1995 and
1996, employment increased 1 per cent, productivity rose six per cent, but production fell 2 per cent.
The United States argues that the 2 per cent decline in production cannot be reconciled with
SECOFI’s findings of increasing employment and increasing productivity, given that productivity is
calculated by dividing production by employment. In order for productivity to increase while
employment is also increasing, the United States continues, production must increase and the increase
must be by an amount greater than the increase in employment.
3.39 In the view of the United States, SECOFI’s pattern of mischaracterizing data in the record
concerning the Mexican sugar industry’s condition and failing to explain how its assumptions on the
likely condition of the industry may be reconciled with contrary information in the record
demonstrates that it did not meaningfully account for all factors that might support a negative
determination, as instructed by the Panel and as required by Articles 3.4 and 3.7 of the
AD Agreement. Nor, according to the United States, did SECOFI in any way demonstrate why there
was a clearly foreseen and imminent change in circumstances that threatened injury to an industry not
currently injured, as the Panel ruled was required by Article 3.7.
3. SECOFI Did Not Adequately Explain Its Analysis In Critical Respects
3.40 The United States notes that SECOFI’s analysis of the likely impact of HFCS imports on the
Mexican sugar industry focuses heavily on economic models and forecasts developed by that agency
for use in its proceeding. SECOFI used models and forecasts to calculate likely imports, likely prices,
and likely financial results for the Mexican sugar industry. As United States previously argued, the
results generated by these methodologies were based on unexplained inputs concerning conditions in
the Mexican sugar industry contrary to observed data for 1996 in the record. Hence, argues the
United States, the findings SECOFI made based on these models and forecasts must be rejected as
conjectural. Additionally, notes the United States, SECOFI failed to provide an adequate explanation
of its analysis as required by Articles 12.2 and 12.2.2 of the AD Agreement.

3.41 When an investigating authority chooses to base its determination on the results of an
economic model or forecast, argues the United States, information concerning the data used as inputs
in the model or forecast is clearly “relevant information” for purposes of the determination.4
3.42 Yet, according to the United States, SECOFI consistently failed to explain its use of
projections of industry behavior that were either contrary to or unsupported by the observed data
during its period of investigation as inputs in these models and forecasts. The examples that the
United States cites include its use of a 50 per cent substitution rate of HFCS for sugar, its projection
that sugar prices would decline by 9 per cent
5 and its projection that the Mexican sugar industry’s
sales revenues would decline by 15 per cent.
B. FIRST WRITTEN SUBMISSION OF MEXICO
1. Introduction
3.43 Mexico first notes its deep concern regarding the presentation of "US Exhibit 1" which
contains an inadequate translation of the revised final resolution, published in the Diario Oficial de la
Federación (DOF) of 20 September 2000. Mexico points out that as most members of the Panel, like
the WTO Secretariat, are English-speaking, it is reasonable to assume that they will regularly consult
this United States exhibit during the proceeding.
3.44 Mexico further points out that the above-mentioned translation was made by translators who,
to all appearances, are not experts in the field, since the translation contains a series of inaccuracies,
omissions and serious mistakes which, at best, tend to create confusion and, at worst, completely
reverse the meaning of the revised final resolution. The many translation errors are set forth in detail
in the First Written Submission.
3.45 Mexico asserts that on the basis of the findings and conclusions of the Panel in its report,
adopted by the DSB on 24 February 2000 (WT/DS132/4 and WT/DS132/4/Corr.1) and considering
that Mexico, during the ordinary DSB meeting of 20 March, indicated its intention to comply with the
Panel's recommendations and rulings, and that on 19 April the United States and Mexico, pursuant to
Article 21.3(b) of the DSU, notified the Chairman of the DSB that on 22 September 2000 the
reasonable period of time for implementation would expire, Mexico decided to revise the original
final resolution by initiating a proceeding under a decision published in the DOF on 15 May 2000.
3.46 Mexico recalls that this procedure ended on 20 September 2000 with the publication in the
DOF of the " Final resolution revising, on the basis of the conclusion and recommendation of the
Panel of the World Trade Organization's Dispute Settlement Body, the final resolution in the anti-
dumping investigation of high fructose corn syrup imports, merchandise classified in tariff headings
1702.40.99 and 1702.60.01 of the Schedule to the General Import Duties Act, originating in the
United States of America, irrespective of the country of export".
6
3.47 In the course of this proceeding, Mexico recalls, the investigating authority requested further
information from the interested parties for the explicit purpose of implementing the Panel’s

4 According to the United States, it is not challenging the ability of investigating authorities to use
economic models as an aid to their analysis of material injury and threat of material injury. Instead, the
United States’ argument concerns the data pertaining to a specific investigation that must be inputted into any
model to yield a result specific to that investigation
5 According to the United States, the projected 9 per cen t decline in sugar prices itself appears to be the
result of two unexplained models that SECOFI used to analyze pricing behavior. These are the “Granger
causality test,” and a “system of simultaneous equations.” By failing to explain these models, argues the
United States, SECOFI failed to provide relevant information on how it derived its predicted price decline data.
6 Notice of Redetermination, MEXICO-1.

recommendation.7 In particular, given the Panel’s findings and conclusions concerning the
inadequacies of the analysis of the impact of imports on the domestic industry, Mexico notes that the
investigating authority considered it appropriate to obtain additional information on this particular
aspect in order to bring the measure into conformity with the AD Agreement. Mexico points out that
several of the parties responded to these requests and the information they provided is set out in the
revised final resolution.
8
3.48 Mexico notes that, with regard to the allege d restraint agreement which, according to the
Panel’s findings and conclusions, Mexico did not take adequately into account in its determination of
the likelihood of substantially increased importation, SECOFI considered it appropriate, in order to
comply with the Panel’s recommendation in this resp ect, legally to incorporate in the record of the
proceedings (it was already physically present) the information from the Corn Refiners Association
which had previously been rejected and legally dismissed by the investigating authority for having
been submitted too late (on 22 January 1998, one day before the publication of the original final
resolution).
3.49 Mexico argues that its revised final resolution complies with the Panel’s recommendation
insofar as it brings the definitive measure into conformity with Mexico’s obligations under the
AD Agreement in each and all of the instances in which it was found by the Panel to be inconsistent
with that Agreement:
(a) By making good the inadequacies of SECOFI’s threat of injury analysis, in
accordance with the Panel’s findings, to bring it into conformity with Article 3 of the AD Agreement
in respect of the following:
(i) Consideration of the impact of the dumped imports on the domestic industry.
(ii) Determination of threat of material injury on the basis of the domestic
industry as a whole.
(iii) Adequate consideration of the potential effect of the alleged restraint
agreement on the likelihood of substantially increased importation.
(b) By ordering the refunding of the anti-dumping duties levied beyond the period of
application of the provisional measure, in the light of the Panel’s finding and conclusion with respect
to Article 7.4 of the AD Agreement.
(c) By ordering the refunding of the anti-dumping duties levied retroactively for the
period of application of the provisional measure, in the light of the Panel’s findings and conclusions
with respect to Articles 10.2, 10.4, 12.2 and 12.2.2 of the AD Agreement.
3.50 Mexico therefore requests that, in accordance with Article 21.5 of the DSU, the Panel find
that the measure adopted by Mexico to comply with the recommendations and rulings of the DSB is
consistent with the AD Agreement.

7 Ibid. paragraph 11.
8 Ibid., paragraphs 13, 14, 15 and 16.

2. Mexico Has Complied With The Recommendations And Rulings Of The Dispute
Settlement Body
(a) SECOFI has examined the probable impact of HFCS imports on the domestic industry and
has determined threat of injury on the basis of the industry as a whole
3.51 In order to comply with the Panel's findings, Me xico argues that it examined in greater detail
the economic factors mentioned in Article 3.4, basing its examination on the domestic industry as a
whole. In the revised final resolution, Mexico describes the state of the domestic industry during the
investigation period and the two previous years, as well as the impact of dumped imports and the state
of the industry in a subsequent period, on the basis of projections.
3.52 In particular, in relation to the performance of the economic indicators, Mexico claims that it
analysed the economic variables affecting the state of the domestic industry, both actual (period
analysed 1994-1996) and potential (1997), as described in paragraphs 128 to 139 of the revised final
resolution.
3.53 According to Mexico, threat of injury was determined for the whole of the domestic standard
and refined sugar industry on the basis of reasonable methodologies, using information supplied by
the National Chamber of Sugar and Alcohol Industries (hereinafter CNIAA) and working documents
in the administrative record of the investigation.
3.54 With respect to price analysis, Mexico asserts that it has adequately complied with the Panel’s
findings in paragraphs 7.141, 7.151, 7.152 and 7.153 of the Panel report. In particular, Mexico points
out that in paragraphs 80 to 126 of the revised final resolution the trends in the prices of HFCS
imports from the United States and the prices of domestically produced sugar, during the investigation
period and the two comparable previous periods, are analysed, together with the projected future
trends.
3.55 Mexico explains that the analysis was based on the average selling prices on the domestic
sugar market calculated from the sales volumes and values for the domestic industry as a whole. That
is to say, sales of standard and refined sugar to both industrial and household sectors were considered.
Mexico further explains that fluctuations in the prices of the imports investigated and in domestic
prices were also analysed over a three-year period, which included the investigation period.
3.56 In particular, the level and trend of weighted average prices of HFCS-42 and HFCS-55
imports from the United States were examined in relation to the weighted average prices for sales on
the domestic standard and refined sugar market in 1994, 1995 and 1996.
3.57 Mexico asserts that actual proof of the adverse impact of the price of the imports investigated
on the domestic price during the investigation period was obtained on the basis of a detailed analysis
of the month-by-month behaviour of both prices, the calculated margins of undercutting and dumping,
statistical evidence of causality and the prevailing economic environment, and account was taken, in
particular, of the existence of a "natural difference" between the prices of the two products.
3.58 In addition, Mexico notes that it estimated the prices of both products for 1997, taking into
account the analysis made and on the basis of the monthly trend in the price of HFCS imports from
the United States and the domestic selling price for sugar for the period 1994 to 1996. Mexico
explains that the method of estimation employed relied on a system of simultaneous equations and the
result was compared with the observed trend in the values of the variables incorporated (prices and
volumes) and checked by considering the consistency of the forecasts with the economic context and
conditions in the industry during the period analysed.

3.59 In conducting the financial analysis in its revised final resolution of 20 September 2000,
Mexico argues that it took account of the Panel's findings and conclusions, and on the basis of audited
financial information for 85 per cent of the Mexican sugar industry and information on debt
amortization from that industry, SECOFI examined th e financial factors set forth in Article 3.4 of the
AD Agreement. Also, according to Mexico, SECOFI made a projection of the financial performance
of the sugar industry in 1997 assuming HFCS imports from the United States had continued to
increase, varying only the revenue from domestic sales of sugar, and selling costs and operating
expenses – in proportion to the predicted volume of domestic sales – in their variable component only.
3.60 On this basis, SECOFI determined that in 1996, the domestic industry would perform
positively in terms of profits and profitability owing to an improvement in selling costs and operating
expenses. However, continues Mexico, SECOFI considered that owing to the specific characteristics
of the industry, profits would be highly sensitive to changes in income, and with a reduction in
income predicted for 1997, profits would be affected to a greater extent than income in percentage
terms, and that therefore operating profits would be reduced to such an extent that the domestic sugar
industry would be running at a loss and the possibi lity of achieving operational profitability would be
wiped out.
3.61 At the same time, SECOFI concluded that in 1996 the sugar making industry had maintained
its short-term credit worthiness and had seen an improvement in its accounts payable and receivable
indicators. However, according to Mexico, the ratio of total liabilities to net worth of 4.6 had placed
the industry in a situation of high levels of debt and saddled it, in 1996, with a high level of risk.
Similarly, Mexico continues, SECOFI concluded that based on the debt service as a proportion of
projected revenue, if the increasing trend in dumped HFCS imports were to continue, then the
domestic industry would be unable to meet its debt servicing obligations, especially if operating losses
were predicted for 1997.
3.62 Mexico argues that a joint evaluation of the above considerations led SECOFI to the justified
conclusion that dumped HFCS imports from the United States have had a negative impact, as
reflected in domestically produced sugar’s loss of internal market share, declining sales, falling
employment trends, earnings sensitivity, lower profitability, higher levels of debt and reduced ability
to raise capital, which indicates that if a definitive anti-dumping measure had not been introduced,
given increased importation at dumped prices, the injury to the domestic industry would have
manifested itself in the other indicators as well.
(b) SECOFI has analysed the potential effects of the alleged restraint agreement on the likelihood
of substantially increased importation in a manner consistent with Article 3.7(
I) of the
AD Agreement
3.63 Mexico recalls that the Panel concluded that SECOFI’s "consideration of the potential effects
of the alleged restraint agreement [between the sugar refiners and soft drink bottlers] was inadequate"9
and therefore determined that SECOFI's conclusion that there was a "likelihood of substantially
increased importation" was inconsistent with the requirements of Article 3.7(i) of the
AD Agreement
10, recommending that, inter alia , in this respect the measure be brought into
conformity with the Agreement.11
3.64 Mexico argues that in order to comply with the Panel recommendation adopted by the DSB,
SECOFI considered it appropriate and sufficient to incorporate in the record of the review the
information submitted by the Corn Refiners Association in the course of the original investigation.
On the basis of this information, Mexico asserts, SECOFI found that the alleged restraint agreement

9 Ibid., paragraph 7.178.
10 Idem.
11 Ibid., paragraph 8.4.

would apparently have the potential effect of limiting consumption of HFCS by the soft drink bottlers
to 350,000 tons. 12 Mexico further asserts that this information on the terms of the alleged restraint
agreement was considered sufficient since, according to paragraph 7.175 of the Panel report, the
question was not whether an alleged restraint agreement existed, but whether its potential effects on
the likelihood of dumped imports increasing in the near future had been adequately considered in the
analysis.
3.65 Thus, in accordance with the Panel’s findings, particularly those in paragraphs 7.175 to 7.178,
Mexico claims that it carried out a detailed analysis and determined by reasoned explanation the
likelihood of substantially increased importation of HFCS from the United States, taking into account
the evidence of the effects of the alleged restraint agreement and the arguments relating thereto
contained in the file on the anti-dumping investigation.
3.66 In determining the likelihood of substantially increased importation, Mexico argues that it
considered, in accordance with subparagraphs (i) and (ii) of Article 3.7 of the AD Agreement, the
existence of a significant rate of increase of dumped imports and freely disposable capacity of the
HFCS-producing industry in the United States. In that context, Mexico notes that it also explored the
effects of the alleged restraint agreement on the basis of the arguments and the information at its
disposal. Mexico concluded that the potential effects of the said alleged restraint agreement did not
preclude the likelihood of increased importation.
3.67 Mexico asserts that in the revised final resolu tion, SECOFI did not confine itself to repeating
the arguments it made before the Panel, as claimed by the United States. Although it is true that in the
new analysis, SECOFI also considered the information previously submitted to the Panel, Mexico
claims that this was because this information formed part of the requested explanation of how Mexico
had proceeded in its original final resolution. In Mexico’s opinion, there is nothing to prevent the use
of previously provided information in a subsequent proceeding intended to ensure that a panel’s
findings and recommendations have been correctly implemented.
3.68 In Mexico’s view, the question which had to be settled was whether in the near future relative
to the investigation period, even if the bottlers’ HFCS consumption were limited, the likelihood of
substantially increased importation would persist. On the basis of a comprehensive analysis of the
situation which, in accordance with the observations made in the investigation period, would prevail
in the near future, Mexico concluded that this likelihood would indeed persist.
3.69 Mexico argues that in an analysis of this kind, special consideration should be given to the
fact that the likelihood of substantially increased importation depends not exclusively on a single
factor such as the alleged limitation on the consumption of one group of users but also on a
concurrence of other factors which must be taken into account in determining probable future import
trends. To this end, Mexico claims that it is necessary to introduce into the analysis the trends,
observed during the investigation period and comparable previous periods, in prices, volumes, actual
and potential consumption, economic context and conditions in the industry and, in the light of these
data for the period investigated, to determine whether in the situation envisaged there is still good
reason to believe that there will be substantially increased importation in the near future.
3.70 Thus, according to Mexico, in its determinatio n, SECOFI based itself on the figures for the
consumption of sugar between 1994 and 1996 by sectors other than the soft drink bottlers and on the
actual rates of utilization of HFCS recorded in 1996 by those manufacturers from whom it had
requested information on the sweeteners consumed in their production processes. Mexico notes that it
also considered the rates of substitution of HFCS for sugar supplied by the main importer for the
investigation period, obtained from a recognized firm of economic consultants.

12 See "Informe Económico del Grupo Financiero Bancomer" of October 1997, MEXICO2.

3.71 Similarly, according to Mexico, SECOFI determ ined the likelihood of increased importation
by considering the effects of the alleged restraint agreement, on the basis of an estimate of the
potential HFCS consumption of sectors other than the bottlers in 1997 and 1998, using as input data
projections of the total sugar consumption for these years made by experts and applying those sectors’
share of total consumption as recorded in 1994, 1995 and 1996.
3.72 Mexico asserts that, in this context, it is reasonable to assume that the demand from the
bottlers, allegedly limited to 350,000 tons, would be met from domestically produced HFCS and not
imports, due to geographical proximity and lower transport costs, together with other advantages.
Mexico further asserts that this would lead to full utilization of the installed capacity of the domestic
HFCS producers, so that any additional demand from other users would necessarily have to be met by
imports.
3.73 Mexico explains that the underlying economic reasoning is that, in a context in which HFCS
prices are depressed relative to sugar prices and in the absence of any distortions of trade flows, such
as those caused by anti-dumping investigations, sectors other than the soft drink bottlers would have
incentives to substitute imports for the domestically produced product. In the limit, according to
Mexico, these sectors would substitute HFCS for all their sugar consumption, even though this
process would depend on relative prices and the rate of substitution. Mexico notes that, in 1996, the
weighted average rate of utilization in consumer industries other than soft drink bottling was 84 per
cent and, on the basis of a conservative assumption, it was determined that if only 50 per cent of
potential consumption was substituted and the rate of substitution remained constant, the demand for
HFCS thus generated would be equivalent to incr eased imports as compared with the investigation
period.
3.74 Mexico argues that, contrary to the claims of the United States, SECOFI’s determination was
not based on conjecture or remote possibility but on a forward-looking analysis of the situation
observed during the investigation period. Mexico considers that it would not be consistent with
Article 3.7 of the AD Agreement to determine the likelihood of increased importation on the basis of
a single factor or from trade flows already distorted by the effects of an anti-dumping investigation, or
repeatedly to update such a determination in the light of the latest data available to the investigating
authority.
3.75 In the light of the above, Mexico respectfully requests the Panel to take into account all the
factors analysed and reasons given in the revised final resolution which led the authority to make an
affirmative determination of the likelihood of a substantial increase in the imports investigated, since
no one of these factors by itself can necessarily give decisive guidance in this respect.
3.76 To recapitulate, in compliance with the findings and conclusions of the Panel report, in its
revised final resolution Mexico argues that it has adequately considered the potential effects of an
alleged restraint agreement on the likelihood of substantially increased importation, so that its
determination is consistent with Article 3.7 (i) of the AD Agreement.
(c) Mexico has complied with the provisions of Articles 12.2 and 12.2.2 of the AD Agreement
3.77 Mexico asserts that SECOFI’s revised final resolution
13 is consistent with the provisions of
Articles 12.2 and 12.2.2 of the AD Agreement. Mexico asserts that SECOFI made available in
sufficient detail the findings and conclusions reached by the authority on all the issues of fact and law
that SECOFI considered material. 14 Moreover, according to Mexico, SECOFI disclosed all relevant

13 Notice of Redetermination, MEXICO-1.
14 Under Article 12.2 of the AD Agreement, final public notices shall "set forth … in sufficient detail
the findings and conclusions reached on all issues of fact and law considered material by the investigating
authorities."

information on the matters of fact and law and reasons which led it to confirm the imposition of the
final anti-dumping measure, while paying due regard to the protection of confidential information.15
3.78 Similarly, in this context, in considering the consistency of SECOFI’s actions with
Articles 12.2 and 12.2.2, Mexico argues that the Panel should take particular account of the fact that
the revised final resolution, which concludes the procedure followed by SECOFI for the specific
purpose of complying with the recommendation adopted by the DSB , complements and amends the
original final resolution (of 23 January 1998) in all those aspects that were reviewed by the
investigating authority after the Panel had found them to be inconsistent with the AD Agreement.
3.79 At the same time, as usual in the anti-dumping practice of Mexico and other countries,
Mexico asserts that the authority’s relevant findings and conclusions that were included in the final
notice of 20 September, like all the relevant information on matters of fact and law and the reasons
which led SECOFI to confirm the imposition of the final anti-dumping measure, are based in their
turn on more data, information and working documents than, for reasons of confidentiality, scope or
relevance, are contained in the administrative record on the investigation, without this creating any
inconsistency with the provisions of Articles 12.2 and 12.2.2 of the AD Agreement.
3.80 Thus, in Mexico’s view, the Panel should consider that the revised final resolution constitutes
a public notice and, in having as its specific purpose the implementation of the DSB’s
recommendation, complements in various respects the original final resolution, while being based to
some extent on more information and documents than contained in the administrative record, without
Mexico having thereby breached the provisions of Articles 12.2 and 12.2.2 of the AD Agreement.
3.81 With the specific purpose of complying with the conclusions and recommendation expressed
in the Panel report, Mexico claims that SECOFI’s revised final resolution:
(a) Orders the refunding of the anti-dumping duties levied retroactively for the period of
application of the provisional measure, in strict compliance with the findings and
conclusions of the Panel report (paragraphs 7.194 to 7.198 and 8.2 (e)) in relation,
inter alia, to Articles 12.2 and 12.2.2 of the AD Agreement;
(b) Contains, in sufficient detail, explanations of the findings and conclusions on the
issues considered material, as well as all relevant information on the matters and
reasons which led SECOFI to confirm the imposition of the final measure in
accordance with the analysis made by the investigating authority.
3.82 In the light of all the above considerations, Mexico maintains that it has duly complied with
the provisions of Articles 12.2 and 12.2.2 of the AD Agreement.
3. Conclusion
3.83 On the grounds set out above, Mexico urges the Panel to declare that its revised final
resolution on threat of material injury, including: (i) its examination of the impact of HFCS imports
on the Mexican sugar industry as a whole; (ii) its examination of the potential effects of the alleged
restraint agreement on the likelihood of substantially increased importation; and (iii) its explanation
in the revised final resolution of the findings a nd conclusions reached by SECOFI with respect to
these issues, complies fully with the recommendations and rulings of the DSB and is consistent with
Articles 3.1, 3.4, 3.7, 12.2 and 12.2.2 of the AD Agreement.

15 Likewise, under Article 12.2.2, the final notice shall "contain, or otherwise make available through a
separate report, all relevant information on the matters of fact and law and reasons which have led to the
imposition of final measures … due regard being paid to the requirement for the protection of confidential
information."

C. SECOND WRITTEN SUBMISSION OF THE UNITED STATES
3.84 The United States notes that, in its First Written Submission, it provided three grounds why
the redetermination of Mexico’s Secretariat of Commerce and Industrial Development (“SECOFI”)
does not comply with the requirements of either the report of the Panel in this proceeding or the
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
(“the AD Agreement”):
(a) SECOFI’s redetermination, according to the United States, fails to explain how there
is a likelihood of substantially increased imports of high fructose corn syrup
(“HFCS”) from the United States in light of an agreement between Mexican sugar
refiners and soft drink bottlers limiting the bottlers’ use of HFCS. Consequently, the
redetermination, like the original determination, violates Article 3.7 of the
AD Agreement.
(b) The United States further argues that the redetermination fails adequately to address
the factors set forth in Article 3.4 of the AD Agreement concerning the likely impact
of the imports on the Mexican sugar industry. According to the United States, the
redetermination mischaracterizes pertinent information concerning the condition of
the Mexican sugar industry and fails to provide a reasoned and fact-supported
conclusion why improvements in industry trends during the period of investigation
were not probative in ascertaining the future condition of the industry. As a result,
the United States claims, the redetermination violates Articles 3.1, 3.4, and 3.7 of the
AD Agreement.
(c) Finally the United States asserts that the redetermination is inconsistent with
Articles 12.2 and 12.2.2 of the AD Agreement because it relies on analytical models
and forecasts without adequate explanation of the inputs used within the models.
3.85 According to the United States, Mexico’s First Written Submission, for the most part, does
not directly address the arguments of the United States concerning the specific respects in which
SECOFI’s redetermination is inconsistent with the conclusions and recommendations of the Dispute
Settlement Body (“DSB”) and the AD Agreement. Instead, the United States continues, Mexico
largely has done no more than summarize the redetermination and contend in a pro forma manner that
it satisfies the requirements of the DSB and the AD Agreement.
3.86 In the view of the United States, Mexico’s arguments only serve to confirm that SECOFI’s
redetermination is inconsistent with the Panel Report and the AD Agreement. Comparing Mexico’s
explanations of the redetermination with the redete rmination itself demonstrates that SECOFI did not
correct the serious deficiencies in explanation and consideration of pertinent factors critical to its
determination of threat of material injury that led the Panel to conclude that the original SECOFI
determination violated the AD Agreement.
1. SECOFI's Finding Of Likelihood Of Increased Imports Was Based On Conjecture
Rather Than Evidence
3.87 The United States notes that in attempting to justify SECOFI’s finding that there was a
likelihood of increased imports of HFCS notwithstanding the restraint agreement, Mexico asserts that
SECOFI based its redetermination “on facts and ev idence corresponding to the investigation period
and two comparable previous periods, as well as on estimates obtained using objective and reasonable
methodologies.”
3.88 In fact, according to the United States, this is precisely what SECOFI failed to do in its
redetermination. The United States argues that SECOFI premised its finding that there is a likelihood

of substantially increased imports not on facts and evidence corresponding to the period of
investigation, but on conjecture and on projections that have no factual basis in the record and that are
contrary to the facts that are in the record.
3.89 In particular, the United States argues, SECOFI’s finding is premised on a projection that
imports of HFCS from the United States by purchas ers other than soft drink bottlers would increase
from 1996 to 1998 by over twice the rate that purchases by all HFCS users increased from 1994 to
1996 (when soft drink bottlers consumed 68 per cent of HFCS imports and all other users consumed
only 32 per cent of HFCS imports). The United Stat es points out that although SECOFI’s projection
deviates markedly from the observed data during the period of investigation, its redetermination
provides no basis why such a deviation is likely. Nor, according to the United States, does Mexico’s
First Written Submission explain how one can di scern from the redetermination that SECOFI’s
projection is based either on “facts or evidence corresponding to the investigation periods” or on
“objective and reasonable” methods of calculation.
3.90 Similarly, Mexico’s First Written Submission does not explain how the redetermination
justifies SECOFI’s use of a 50 per cent substitution rate for all HFCS users other than soft drink
bottlers.
3.91 According to the United States, the only information in the record pertaining to rate of
substitution is information pertaining to the theoretical rate at which HFCS could be substituted for
sugar in various products. The United States argues that a finding that HFCS users were likely to
substitute HFCS for sugar merely because they could do so as a theoretical matter is sheer conjecture.
3.92 Even with respect to theoretical rates of substitution, the 50 per cent and 84 per cent
substitution rates referenced by Mexico are not based on evidence in the record. The United States
notes that the 84 per cent rate does not appear in the redetermination and Mexico provides no
explanation of where the rate originated. Although the 50 per cent rate does appear in the
redetermination, the United States asserts that it is not one based on evidence. Instead, asserts the
United States, the 50 per cent rate appears to be something selected arbitrarily by SECOFI.
2. SECOFI Did Not Adequately Analyze The Likely Impact Of The Dumped Imports
3.93 The United States does not dispute that SECOFI’s redetermination provides a recitation of
data concerning the Article 3.4 factors specified by the Panel. However the United States argues that
this recitation alone is insufficient to satisfy Mexico’s obligations under Article 3. The United States
notes that the Panel Report, consistent with the findings of other panels, indicates that the
AD Agreement requires an analysis of the pertin ent information, not merely a reference to it.
According to the United States, in its First Written Submission, Mexico neither challenges the
reasoning of the prior panel decisions presented by the United States nor offers any of its own that
would indicate that its mere recitation of data was sufficient.
3.94 The United States maintains that Mexico confirms that SECOFI’s projections as to the likely
levels of prices and profitability in the Mexican sugar industry are central to its analysis of likely
impact. According to the United States, SECOFI’s projections lead to results that are directly
contrary to the actual experience of the Mexican sugar industry during SECOFI’s period of
investigation. SECOFI projected that increased HFCS imports would cause prices for
domestically-produced sugar to decline in 1997. However, the United States notes, sugar prices
actually increased during 1996 from their levels in 1995, notwithstanding increased imports. The
United States points out that SECOFI also projec ted that the domestic sugar industry would incur an
operating loss in 1997 because of the increased HFCS imports. By contrast, in 1996 the Mexican
sugar industry was profitable, and profitability increased substantially over 1995. According to the
United States, Mexico neither acknowledges nor explains the serious discrepancies between
SECOFI’s projections for 1997 and the observed data for 1996.

3.95 Mexico also emphasizes its affirmative threat determination is justified by the Mexican sugar
industry’s need to generate operating profits to allow it to service its high level of indebtedness. In
the view of the United States this argument overlooks the fact that SECOFI made several findings in
its redetermination that the domestic industry’s positive operating results in 1996 improved the sugar
industry’s cash flow, thus enhancing its ability to obtain short-term financing and permitting it to
improve its debt service indices. Thus, by SECO FI’s own analysis, asserts the United States, the
presence of increased volumes of imported HFCS does not necessarily impair the domestic industry’s
ability to raise capital and finance debt.
3.96 Consequently, the only support for Mexico’s conclusion that SECOFI properly found that
“given increased importation at dumped prices, the injury to the domestic industry would have
manifested itself in the other indicators as well,” is SECOFI’s unexplained and seemingly conjectural
projections. The projections, continues the United States, simply cannot be reconciled with the actual
1996 data for the Mexican sugar industry showing that indicators of industry performance improved
while HFCS imports increased.
3. SECOFI Did Not Adequately Explain Its Analysis In Critical Respects
3.97 In the view of the United States, Mexico’s First Written Submission reinforces the problems
caused by SECOFI’s lack of explanation. For example, Mexico emphasizes that SECOFI’s
conclusion that an increase in import volume was likely notwithstanding the restraint agreement is
premised on a projection which uses as an input a 50 per cent substitution rate of HFCS for sugar by
purchasers other than soft drink bottlers. The United States asserts that nothing in SECOFI’s
redetermination or the administrative record explains how the 50 per cent figure was derived.
According to the United States, it appears that SECOFI simply chose this figure arbitrarily. Similarly,
Mexico refers to SECOFI’s use of “simultaneous equations” for projecting sugar prices. But,
according to the United States, Mexico provides no reference to anything in the record that would
indicate either what data SECOFI inputted into these “simultaneous equations” or what the equations
purport to represent.
3.98 In the view of the United States, Mexico’s argument is not advanced by its statement that all
material supporting SECOFI’s redetermination need not be in the redetermination itself if it is
available elsewhere in the administrative record. It is true, notes the United States, that under
Article 12.2.2, an investigating authority may choose to make the matters of fact and law supporting
the imposition of final measures available through a separate report. But, the United States asserts,
Mexico has failed to identify any separate report, or even any portion of the administrative record,
that provides the required explanation of the inputs it used for its projections.
D.
SECOND WRITTEN SUBMISSION OF MEXICO
1. Introduction
3.99 Mexico recalls that its first written submission in this proceeding set out the facts and
arguments which show that Mexico strictly complied with the conclusions and recommendation of the
Dispute Settlement Body (DSB) in accordance with the report of the Panel that examined the case
concerning Mexico – High Fructose Corn Syrup (HFCS) from the United States of 14 January 200016
(Panel Report). Accordingly, Mexico responded in general terms to the position taken by the
United States in its first written submission.
3.100 However, inasmuch as this second written submission is a rebuttal, Mexico asserts that its
fundamental purpose is to provide a more specific reply to the United States arguments by presenting

16 Mexico-Anti-dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States,
WT/DS132/R, adopted 24 February 2000 (hereinafter "Panel Report, WT/DS132/R").

facts and counter-arguments which will confirm for the Panel that Mexico has strictly complied with
the DSB's conclusions and recommendations by:
(a) Adequately considering the impact of dumped imports on the domestic industry and
determining threat of injury to the industry as a whole; and
(b) adequately analysing the potential effect of the alleged restraint agreement on the
likelihood of substantially increased importation, in accordance with Article 3.7(i) of
the AD Agreement.
3.101 According to Mexico, it has remedied the deficien cies in SECOFI's threat of injury analysis,
bringing it into conformity with the requirements of Article 3 of the AD Agreement, in addition to
adequately fulfilling the requirements of Articles 12.2 and 12.2.2 of the AD Agreement.
3.102 Thus, Mexico argues that it has brought its final anti-dumping measure into conformity with
the obligations imposed on Mexico by the AD Agreement in respect of each and all of the aspects
found to be inconsistent with the Agreement in the Panel Report.
3.103 Moreover, in its first written submission Mexico recalls that it expressed its concern at the
inadequate translation into English of the revised final resolution
17, which was submitted by the
United States as exhibit "US-1". However, bearing in mind that it is a document of key importance
for an understanding of the actions taken by SECOFI, Mexico notes that it has made an effort to
revise and submit as an annex to this second submission a more adequate translation of the revised
final resolution of 20 September 2000
18, specifically to avoid errors or confusion and to facilitate the
work of some English-speaking members of the Panel and of the WTO Secretariat.
2. Mexico Complied With The Conclusions And Recommendation Of The Panel And The
Dispute Settlement Body
(a) SECOFI examined the probable impact of HF CS imports on the domestic industry and has
determined threat of injury on the basis of the industry as a whole
3.104 According to Mexico, SECOFI revised and conducted a new review of the resulting impact of
HFCS imports on the domestic industry, including an adequate assessment of the economic factors
referred to in Articles 3.4 and 3.7 of the AD Agreement and on the basis of a variety of positive
evidence and facts, which led to confirmation of the determination of threat of injury.
3.105 Mexico rejects the United States arguments, for the revised final resolution includes all
relevant issues and findings of the new SECOFI analysis of trends in economic factors in order to
determine the resulting impact of HFCS imports on the domestic industry as a whole, in both real and
potential terms and was not confined to reciting data, as suggested by the United States.
19
3.106 In Mexico's view, SECOFI did not mischaracterize the data at its disposal, since the analysis
of employment and use of installed capacity was conducted objectively, without hiding or
mischaracterizing the increase in those variables. Moreover, the fact that in the period of
investigation, the sugar industry's sales declined to the same extent as did sales to the industrial sector
is coincidental, since the variations in volume are different.
20 Similarly, if the United States cannot

17 Notice of Redetermination, MEXICO-1.
18 See MEXICO-1(a).
19 See Notice of Redetermination, MEXICO-1, inter alia paragraphs 128 to 166.
20 See "Table of industrial sector indicators" MEXICO-3, and "Table of total standard and refined sugar
sales (household and industrial sector)" MEXICO-4.

reconcile 100 per cent of the sweetener market or the increase in productivity in the industry, it is
because it used the wrong data for its calculations.21
3.107 Again, Mexico is of the view that no attempts should be made to minimize the analysis of the
variables which already showed in the period of investigation the genuinely adverse impact of HFCS
imports from the United States, as in the case of sugar sales to the domestic market, the market loss of
production oriented to the domestic market and trends in stocks; given the likelihood of increased
imports, these factors would be projected as being more seriously affected, to the detriment of the
other factors affecting the domestic industry.
3.108 Mexico asserts that it adequately complied with the Panel's findings concerning price
analysis, particularly those contained in paragraphs 7.141, 7.151, 7.152 and 7.153 of the Panel Report.
According to Mexico, paragraphs 80 to 126 of the revised final resolution contain a review of trends
in the prices of HFCS imports from the United States and the prices of domestically produced sugar
during the investigation period and the two comparable earlier periods, together with the projected
future trends in the price of both products.
3.109 Mexico notes that the United States alleges that SECOFI's projections of future trends in
sugar prices for 1997 were based on assumptions contrary to the data observed in 1996 and that
SECOFI did not show that sugar prices declined during the investigation period as a result of dumped
HFCS imports. In addition, the United States indicates that, although the increased price differentials
in the case of very close substitutes might support a finding of injury or threat of injury, but that
SECOFI acknowledged that HFCS and sugar are not close substitutes.
22
3.110 In this connection, Mexico asserts that no such acknowledgement exists and that, even
though there are differences in the degrees of substitution, both products are substitutes in a range of
industrial applications. In Mexico's view, the United States is trying to divert the Panel's attention to
a topic which was fully documented in the determina tion of likeness in the original final resolution
and one which – it is important to recall – was not the subject of a challenge by the United States.
3.111 Again, according to Mexico, SECOFI demonstrated to the Panel – and this is fully
documented in the administrative record of the anti-dumping investigation - that in the period of
investigation, such substitution occurred in the reproduction processes in the baking, beverages (other
than soft drinks), dairy and processed food industries, in addition to the soft drink industry.
Moreover, asserts Mexico, there is a consensus among experts on the sweetener industry that,
precisely because of the existing substitution between sugar and HFCS in the industrial sector, the
prices of both goods are linked, and that both the existing differentials between them and the
movements in one or other price have proven effects on the conditions of competition in the industry.
3.112 Mexico argues that SECOFI also demonstrated the adverse impact of the prices of the
investigated imports on the domestic prices during the investigation period, on the basis of a detailed
analysis of month-by-month trends in the prices of sugar and HFCS, the margins of undercutting and
dumping calculated for the imports investigated, statistical evidence of causality and the prevailing
economic environment, and particularly the "natur al difference" between the prices of the two
products.
23

21 See "Productivity table" MEXICO-5, and "Methodology employed in statistical calculations
(analysis of imports and economic indicators)" MEXICO-6, as well as paragraph 26 of Mexico's first written
submission.
22 Mexico notes that, according to the United States , Mexico so acknowledged in paragraphs 5.568 and
5.569 in the Panel Report, WT/DS132/R. See footnote 51 to the first written submission of the United States.
23 See the "Summary tables on annual and monthly margins of undercutting between HFCS and sugar
from 1994 to 1996", MEXICO-7, the "Table of HFCS and sugar prices in the United States from 1991 to 1996",
MEXICO-8, the translation of the relevant part of the note on "Trade in Sweeteners in the North America

3.113 Mexico points out that the price trends observed in 1996 show that greater import penetration
was connected with increased undercutting and declining HFCS prices in relation to sugar. While
average prices in 1996 were higher than the year before, according to Mexico, this development is
explained by the adverse economic conditions observed in 1995. Consequently, Mexico argues, the
basis of comparison highlighted by the United States in its argument fails to note that in 1996,
compared with 1994, as well as during the investigation period, sugar prices declined in a context of
growing imports, lower prices and an increase in the price differential between the two products.
24
3.114 Furthermore, SECOFI estimated the prices of both products for 1997 on the basis of the
analysis carried out and the recorded monthly trend from 1994 to 1996 in the prices of HFCS imports
from the United States and the domestic selling price for sugar. Mexico claims that the method of
estimation employed was a system of simultaneous equations using a vector autoregressive model,
and the result was compared with the observed trend in the values of the variables incorporated
(prices and volumes), and checked by reference to the consistency of the forecasts with the economic
context and the conditions in the industry during the period analysed.
25
3.115 In short, according to Mexico, the arguments put forward by the United States concerning
SECOFI's price analysis in the revised final resolution are completely unfounded and should be
rejected. According to Mexico, it has been shown that Mexico's determination was based, inter alia,
on positive evidence and an objective examination of past trends and of projections of prices of the
investigated imports and their actual and potential impact on the prices of domestically produced
sugar, in conformity with the Panel's findings and conclusions in this respect.
3.116 Mexico points out that the United States argues that the positive trends in industry
profitability and other factors determined by SECOFI contradict the conclusion that the sugar industry
faced a threat of material injury. Mexico rejects the United States arguments because it claims that
SECOFI conducted an objective analysis of the probable impact on the industry's profits
26 without
confining itself merely to including data on that factor, as suggested by the United States. In fact,
notes Mexico, SECOFI's analysis recognizes the positive trend in profits, whereas the United States
fails to mention that SECOFI carried out a sensitivity analysis of the Mexican sugar industry27, which
was done on the basis of established methodologies such as the degree of operational and financial
leverage, which are amply explained in the " Methodological Note on the Financial Report on Injury
(HFCS)".28
3.117 In this regard, it was determined that a 1 per cent change in sales revenue involves a 7 per
cent variation in the industry's operating profits, which shows that sensitivity was very high in 1996.
Using projections of sugar prices and volumes, SECOFI obtained a projection of domestic sugar
industry earnings which showed that sales reve nue for 1997 would decline by 15 per cent, and

Region" published in Sugar and Sweetener Yearbook, MEXICO-9, and the translation of the relevant parts of
the publication Sugar and Sweeteners for various dates between 1995 and 1996, MEXICO-10. According to
Mexico, these documents, together with other working papers, support SECOFI's conclusion set out in the
revised final resolution.
24 In this connection, Mexico claims that SECOFI examined the level and trends in the weighted
average prices of HFCS-42 and HFCS-45 imports from the United States in relation to the weighted average
prices of standard and refined sugar sold on the domestic market in 1994, 1995 and 1996. Pursuant to the
finding contained in paragraph 7.153 of the Panel Report, WT/DS132/R, Mexico asserts that the average sales
prices of sugar on the domestic market were calculated on the basis of sales volumes and values for the whole of
the domestic industry. In other words, according to Me xico, consideration was given to sales of standard and
refined sugar to both the industrial and the household sectors. See the table on sugar sales to the domestic
market in MEXICO-11.
25 See "Methodological note on the projection of sugar and HFCS prices for 1997", MEXICO-12.
26 See MEXICO-13.
27 See MEXICO-15.
28 See MEXICO-14.

operating profits by 118 per cent. Similarly, according to Mexico, its calculation of projected
profitability for 1997 indicated a 12 percentage point s decline in the operating margin compared with
the previous period.
3.118 In Mexico's view, another matter which conclusively demonstrates the Mexican sugar
industry's high sensitivity is the ability to raise capital, since the analysis of the industry's leverage 29
showed an excessively high debt level in 1996, with a ratio of total liability to book capital of 4.6
times, placing the industry in a situation of low net investment and high debt levels exposing it to high
financial risk. SECOFI acknowledged that the in dustry's debt is a structural problem and not a
consequence of revenue from dumped imports; in other words, it took account of the prevailing
situation of domestic production in 1996 and its sensibility, concluding that with such a debt level the
risk to the industry is high and, hence, the financia l situation is vulnerable, so that any future change
might alter the profits trend of earlier periods by directing more resources to debt servicing.
3.119 On the basis of the matters set out in this section, Mexico emphatically rejects the
United States arguments that Mexico did not conduct an analysis in conformity with the provisions of
Articles 3.1, 3.4 and 3.7 of the AD Agreement. On the contrary, Mexico reiterates that SECOFI acted
in strict compliance with each and every one of the Panel's findings and conclusions so as to bring its
measure into conformity, inter alia, with those provisions of the AD Agreement.
(b) SECOFI analysed the potential effects of the alleged restraint agreement on the likelihood of
substantially increased importation, in a manner consistent with Article 3.7( I) of the
AD Agreement
3.120 In accordance with the findings of the Panel Report, particularly those contained in
paragraphs 7.176 and 7.177, Mexico maintains that it adequately considered the potential effects of
the alleged restraint agreement on the likelihood of substantially increased importation, thereby
making its determination consistent with Article 3.7 of the AD Agreement.
3.121 Mexico rejects the United States allegation that SECOFI confined itself to repeating the same
information and the same conclusions that it had previously submitted to the Panel. According to
Mexico, SECOFI, in this new analysis, considered the information provided previously to the Panel,
that it was not the only information considered by the investigating authority. In fact, the Panel's
finding obliged Mexico to take more elements into account and to provide an additional explanation
to that contained in the original final resolution and not, as the United States suggests, that the
explanation or additional data in question should be relative to the information previously submitted
to the Panel.
3.122 Mexico argues that, according to the finding contained in paragraph 7.175 of the Panel
Report, the question to be resolved by Mexico was whether, in the near future relative to the
investigation period, even if the soft drink bottlers' HFCS consumption were limited, the likelihood of
substantially increased importation would persist. Mexico considered that determination of the
prospects concerning the future behaviour of imports does not depend exclusively on one single
factor, such as the alleged restraint on consumption by one group of users, but that it is also necessary
to take account of competing factors.
3.123 Therefore, Mexico asserts that SECOFI considered the trends observed during the
investigation period and comparable earlier periods in prices, volumes, actual and potential
consumption, economic context and conditions in the industry. In the light of these data for the period
investigated, Mexico claims that SECOFI found that , in the situation envisaged, there was still good
reason to believe that there would be substantially increased importation in the near future.

29 See MEXICO-13 and MEXICO-16.

3.124 Mexico rejects the United States interpretation that the likelihood of increased imports is
determined from the date of publication of the original final resolution. Mexico argues that SECOFI's
determination is based not only on the increase in imports already recorded in 1997, as the
United States suggests. Mexico adopted the point made by the Panel in paragraph 7.176 of the report
so as to determine the existence of such a likelihood on the basis of anticipated import trends in the
near future relative to the period investigated, i. e. in 1997, using a forward-looking analysis of a
present situation, i.e. the period investigated, 1996.
30 In Mexico's view 31, if such a determination
were based on import trends observed during the conduct of the investigation itself, inadequate
consideration would be given both to trade flows and to consumption forecasts distorted by the effects
of the initiation of the anti-dumping investigation.32
3.125 Mexico claims that it based its case on the actual situation observed among industrial users of
HFCS and sugar in 1996 and the result of the review carried out in the original investigation on the
commercial interchangeability, uses and functions of both products. 33 Mexico argues that the
United States is trying to disregard its own experi ence in substituting HFCS for sugar in applications
other than soft drink bottlers, such as milk, confectionery and bakery products and various beverages
and foods.34
3.126 Mexico asserts that its determination was based on actual sugar consumption figures from
1994 to 1996 of industrial users other than soft drink bottlers, and on the actual rates of utilisation of
HFCS recorded in 1996 by those industrial users, who were requested to provide information on the
consumption of sweeteners in their production processes. 35 Mexico also asserts that SECOFI
considered rates of HFCS substitution for sugar supplied by the main importer for the period
investigated, which were obtained from a recognized economic consultancy firm. Mexico argues that
SECOFI determined the likelihood of increased importation by considering the effects of the alleged
restraint agreement, on the basis of an estimate of potential HFCS consumption by sectors other than
soft drink bottlers in 1997 and 1998, using as an input projections by specialists of total sugar
consumption for those years, and applying those sectors' share of total consumption as recorded in
1994, 1995 and 1996.
36

30 According to Mexico, it is obvious that, in the circumstances of an anti-dumping investigation, a
forward-looking analysis of this nature by the investigating authority with regard to imports beyond or outside
the period investigated cannot be extended indefinitely and must have a certain cut-off point, although the
AD Agreement lays down no specific requirement in this respect.
31 When the analysis of imports within the investigation period and the forward-looking analysis
outside the investigation period show not only an increasing trend but substantial increases compared with
previous levels (combined with the proven buoyancy of those levels), Mexico asserts that they should be
considered for purposes of a determination of the likelihood of substantially increased importation.
32 Mexico notes that the effect of reduced imports as a result of anti-dumping investigations was
analysed and documented by Staiger and Wolak in the articles mentioned in MEXICO-18.
33 See paragraphs 400 to 422 of the original final resolution as well as the note on "Substitution of
HFCS for sugar in the USA", MEXICO-19.
34 See in MEXICO-19 the note on substitution of HFCS for sugar in the United States. In addition,
Mexico claims that the administrative record includes various studies and analyses on development of the HFCS
in the United States that fully document the pattern of demand and replacement of sugar by HFCS in industries
other than soft drink bottlers.
35 Paragraphs 65 to 93 of the original final resolution refer to the industrial users other than soft drink
bottlers who were asked for information on their sugar and HFCS consumption during the period investigated,
as well as the replies of those users, on the basis of which the actual rates of substitution in 1996 were
calculated. See the information and summary tables describing the degrees of substitutability between HFCS
and sugar documented by SECOFI in MEXICO-20.
36 Mexico notes that MEXICO-21 contains the projections of total sugar consumption for 1997 and
1998 on which SECOFI based its work and which were obtained from a paper by Peter Bazanall, a recognized
expert on sweeteners, and from an estimate contained in a report by the United States Department of Agriculture
(USDA).

3.127 According to Mexico, the main aspects of the economic context in which the determination of
the likelihood of increased imports was made include: (a) the growth rate of the imports investigated
from 1994 to 1996; (b) the export potential of the United States HFCS industry; (c) the price
differential recorded during the investigation period between HFCS and sugar, which is an incentive
for substitution; (d) the non-existence of trade restrictions on imports and a decline in tariff rates of
such imports; and (e) the proven functionality of HFCS as a sugar substitute in a variety of industries
in the Mexican market, further supported by the accumulated experience of the development of the
United States market.
3.128 Furthermore, contrary to the United States contention, Mexico notes that it did not state that
HFCS consumption in 1996 by soft drink bottlers and by other industries was similar, which does not
mean that potential consumption by those industries is insignificant. While soft drink bottlers stand
out as the main sugar consumers, Mexico points out that the other industries, particularly those which
already consumed HFCS in the period of investigation, demand a substantial volume of sugar likely to
be displaced by a low-cost substitute product.
37 Thus, in a context in which HFCS prices are
depressed relative to sugar prices and in the absence of any distortion of trade flows, industrial users
other than soft drink bottlers would have economic incentives to substitute dumped-cost HFCS
imports for sugar.
3.129 According to Mexico, the United States erroneous ly alleges that SECOFI did not have at its
disposal information to demonstrate that HFCS users other than soft drink bottlers were actually
substituting HFCS for sugar during the period of investigation. 38 Mexico rejects this argument,
because it claims that it did in fact obtain information, directly from industrial users on HFCS
consumption in their production processes, and it is attached to this written submission.39
3.130 Mexico recalls that the United States argued that the conjectural basis for the SECOFI
determination is reflected in the scale of the estimated substitution and in the assumption that soft
drink bottlers would not consume imported HFCS. Mexico categorically rejects the United States
interpretation. First of all, according to Mexi co, SECOFI's estimate relies on an objective and
admissible economic analysis, taking into account the actual conditions prevailing in the Mexican
market, which provided reasonable grounds for the likelihood of HFCS being substituted for sugar, as
shown, inter alia, by the trend observed during the period analysed, 1994-1996. In Mexico's view,
under a forward-looking hypothesis for 1997, the restrictive effect of the alleged agreement would not
be crucial in curbing the increase in demand for HF CS imports by soft drink bottlers. Furthermore,
Mexico claims it has been shown that HFCS de mand from other industries would be strengthened
and they would increasingly substitute HFCS for their sugar consumption.
40
3.131 Mexico argues that the elements in support of SECOFI's conclusion are stronger than those
that might support a conclusion of the kind the United States is seeking to impose 41, i.e., that, given

37 See in MEXICO-21 the "Table on actual sugar consumption by sector".
38 See paragraph 31 of the first written submission by the United States.
39 See MEXICO-20.
40 Taking into account the key characteristics of the foreseeable economic context for 1997 in
accordance with the points made in paragraph 51 of the second written submission.
41 Mexico argues that the United States is attempting to impose a standard of analysis and a conclusion
that would absurdly require the authority to obtain information concerning the alleged restraint agreement,
which neither Article 3 nor any other provision of the AD Agreement requires for a determination of threat of
injury, since this would imply that SECOFI should have precise knowledge and information concerning the
validity, compulsory nature and actual application of the alleged agreement. Mexico claims that knowledge of
these elements and possession of information based thereon is impossible in both practical and legal terms,
given the time-scale of the investigation and the powers of the investigating auth ority. Hence, according to
Mexico, SECOFI could not simply make arbitrary and vague assumptions about them outside the period
investigated. In fact, in Mexico's opinion, an analysis of the type suggested as appropriate by the United States

the existence of the alleged agreement and notwithstanding the probable economic framework for
substitution, the other sugar-consuming industries would simply abandon the market or, if necessary,
revert to their consumption pattern under the cond itions existing before the introduction of HFCS in
their production processes.
3.132 On the basis of the points made in this section, Mexico maintains before this Panel that
SECOFI's review and final conclusion about its analysis of the potential effects of the alleged restraint
agreement on the determination of the likelihood of increased importation was based not on
conjecture or remote possibility, but on a forward-looking analysis of the situation observed during
the period under investigation, following an objectiv e, legitimate and reasonable examination of the
information contained in the administrative record. 42 Accordingly, Mexico contends that its
determination is consistent with Article 3.7 of the AD Agreement and that it strictly complies with the
findings and recommendation of the Panel Report.
(c) Mexico complied with the provisions of Articles 12.2 and 12.2.2 of the AD Agreement
3.133 Mexico notes that the United States alleges that SECOFI's revised final resolution is
inconsistent with the provisions of Articles 12.2 and 12.2.2 of the AD Agreement, based on the
erroneous assumption that SECOFI analysed the probable impact of imports on the domestic industry
using economic models and projections of industry trends, the results of which were based on
unexplained data relating to the state of the industry. In this connection, Mexico firstly rejects the
United States argument that SECOFI does not provide adequate information about its analysis and the
data on which the methodology employed was based. Similarly it categorically opposes the
United States suggestion that SECOFI's findings, based on various economic models and projections
should be rejected because of their allegedly "conjectural" nature.
43
3.134 In this same context, Mexico totally reject s the interpretation by the United States in
paragraph 54 of its first written submission, where, with reference to Articles 12.2 and 12.2.2 of the
AD Agreement, it states that "[…] When an investigating authority chooses to base its determination
on the results of an economic model or forecast, information concerning the data used as inputs in the
model or forecast is clearly 'relevant information' for purposes of determination".44
3.135 Mexico maintains that the relevant informatio n referred to in these articles, particularly
Article 12.2.2, does not necessarily have to consist of the data used by the investigating authority in
the economic models and projections on which its analysis and determination were based. In fact,

would have been possible if it had been shown that authority should arrive at a determination based on
conjecture and remote possibility, rather than on facts as required by the AD Agreement.
42 Mexico points out that, as it indicated in its first written submission, in order to comply with the
Panel recommendation adopted by the DSB, SECOFI considered it appropriate and sufficient to incorporate in
the review file the information submitted in the course of the original investigation by the Corn Refiners
Association. According to Mexico, despite the fact that the information in question had been submitted too late
(one day before publication of the original final resolu tion) and could not therefore be taken into account in the
ordinary investigation, it was appropriate in the circumstances to incorporate it legally in the record of this
proceeding so that it could be taken into account and th e terms of the alleged restraint agreement could thus
somehow be ascertained. On the basis of that inform ation, Mexico asserts that SECOFI observed that the
alleged restraint agreement would apparently have the potential effect of limiting HFCS consumption by soft
drink bottlers to 350,000 tons (MEXICO-2). Mexico note s that this information on the terms of the alleged
restraint agreement was considered adequate, since paragraph 7.175 of the Panel Report, WT/DS132/R, stated
that the question was not whether an alleged restraint agreement existed, but whether its potential effects on the
likelihood of dumped imports increasing in the near future had been adequately considered in the analysis.
Nevertheless, Mexico claims that, from the United States' standpoint, no information that could have been
available to any authority under international anti-dump ing practice in a case of this kind would have been
sufficient for the purposes of the analysis suggested as appropriate by the United States.
43 See paragraphs 6 and 53 of the first written submission of the United States.
44 Ibid., paragraph 54.

Mexico asserts that Article 12.2 does not lay down any precise formulas or specific terms in which an
authority is required to express its findings or conclusions in the public notice. On the contrary, it
simply states in general terms that these will re late to the issues considered material by the
investigating authority. Nor does Article 12.2.2 lay down any specific formulas or terms, and even
though it does in fact require the inclusion of all relevant information on the matters of fact and law
and reasons which have led to the imposition of final measures, it does not specify what that
information should be. Rather, according to its own wording, it takes as limiting factors the relevance
and confidentiality of the information.
3.136 Mexico argues that it is clear that the United States is once again attempting to base its
argument on an excessive and inadmissible interpretation of Articles 12.2 and 12.2.2 of the
AD Agreement when it suggests that the notice should include the data that were used by the
investigating authority in the economic models and projections on which its analysis and
determination were based. In Mexico's opinion, this interpretation and the absurd suggestion by the
United States is even contrary to the spirit of the last sentence of Article 12.2.2, which expressly calls
for due regard to be paid by the authority to "the protection of confidential information". Mexico
maintains that this means that the authority is enti tled to consider that certain information should be
left out of the notice and be included in the administrative record in such a way as to protect the
confidentiality of that information.
3.137 It is therefore clear, according to Mexico, that no valid interpretation of the AD Agreement
could warrant the view that the scope of these provisions implies that the final public notice must
contain explanations concerning the data on which the methodology used by the authority in its
models and projections is based.
3.138 Nor do any of the Panel Report's findings and conclusions contain this implication, argues
Mexico. Mexico points out that, despite the fact that the findings and conclusions of the Panel Report
in this connection did not deal directly with Article 12, since the United States arguments related not
to this provision but to Article 3, the Panel, in finding that Mexico had failed to comply with its
obligations under Article 3, also simultaneously concerned itself with establishing what requirements
had to be met by a final determination, and it even referred expressly to Article 12.2.2.
45 However,
according to Mexico, none of the relevant findings or conclusions of the Panel is consistent with the
United States position and its inadmissible interpretation of Article 12.2.2.
3.139 Mexico maintains that is has complied with the standard established by the Panel, particularly
with paragraphs 7.12846 and 7.14047 as follows:
• SECOFI carried out a review of the impact of HFCS imports on the domestic
industry, which, included an adequate evaluation of the economic factors referred to
in Articles 3.4 and 3.7 of the AD Agreement. On the basis of a variety of positive
evidence and facts – not conjecture as suggested by the United States – that review
led it to confirm its determination of a threat of injury to the domestic sugar industry.
• The final notice of 20 September was not confined to reciting data, as asserted by the
United States. Paragraphs 128 to 166, inter alia
48, of the revised final resolution

45 See footnote 610 of the Panel Report, WT/DS132/R.
46 In this connection, in the last part of paragraph 7.128 of the Panel Report, WT/DS132/R, the Panel
stated that "[…] the consider ation of each of the Article 3.4 factors must be apparent in the final determination
of the investigating authority" (footnote omitted).
47 Apart from what was stated in paragraph 7.140, footnote 610 of the Panel Report, WT/DS132/R,
indicated that: "[…] the mere recitation of data does not constitute explanation, or findings and conclusions,
sufficient to satisfy the requirements of Article 12.2 of the AD Agreement […]" and it adds that "[…] unless
consideration of a factor is reflected in the final determination, we do not take cognizance of underlying
evidence in the record […]".

provide sufficiently detailed explanations of the findings, conclusions and relevant
information contained in the new analysis of trends in economic factors conducted by
SECOFI in ascertaining the resulting impact of HFCS imports on the domestic
industry as a whole, in both real and potential terms, as well as the reasons which led
SECOFI to confirm the final measure, with due regard for the protection of
confidential information.
• SECOFI's findings related to the whole of the domestic industry, based on data and
information duly documented in the record, as well as on models and projections
constituting reasonable methodologies which were also justified in the record by
means of methodological notes explaini ng how SECOFI proceeded in various
calculations.
49
3.140 Mexico also maintains that, in accordance with the findings and conclusions of the Panel
Report, particularly those contained in paragraphs 7.176 and 7.177 50, SECOFI took into account
additional items of relevant information in order to analyse the potential effects of the alleged restraint
agreement and arrive at an adequate determination of the likelihood of a substantial increase in HFCS
imports. Thus, from paragraph 55 onwards, the revised final resolution includes a more detailed
explanation than that contained in the original final resolution, which sets forth in adequate detail the
findings and conclusions which led SECOFI to determine that the potential effects of the alleged
restraint agreement did not eliminate the well-founded likelihood of substantially increased HFCS
imports. Mexico asserts that that determination is not based on conjecture, allegation or remote
possibility, as contended by the United States, but on facts and evidence which support the conclusion
of a well-founded likelihood of increased importation despite the existence of the alleged restraint
agreement.
3.141 Mexico also refutes three specific examples mentioned by the United States in an attempt to
justify its argument that SECOFI did not adequa tely explain the use of projections of industry
trends.
51
(a) the United States questions the alleged use by SECOFI of a 50 per cent substitution
rate in respect of industrial users other than soft drink bottlers52, so as to conclude that
there was a likelihood of increased importation. On this point, Mexico claims that the
United States confuses the degree of substitution in the various industries with the

48 In this connection, Mexico points out once again that the revised final resolution closing the
procedure followed by SECOFI for the specific purpose of complying with the recommendation adopted by the
DSB complements and amends the original final resolution (of 23 January 1998) in all those aspects reviewed
by the investigating authority, because the Panel ha d considered them to be inconsistent with the
AD Agreement.
49 See, inter alia, exhibits MEXICO-6 "Methodology employed in statistical calculations (analysis of
imports and economic indicators"), MEXICO-12 "Methodol ogical note on 1997 price forecasts for sugar and
HFCS", MEXICO-14 "Methodological note on the financial report on injury (HFCS)" and MEXICO-21
"Methodological note on analysis of the likelihood of increased importation".
50 As mentioned earlier, Mexico asserts that on this point the United States raised no argument
concerning the requirements of Article 12 of the AD Agreemen t. It is for this reason that the conclusions of the
Panel Report refer to inconsistency with Article 3.7(i). Nevertheless, on this subject, Mexico also considered
that, in order to implement the DSB recommendation, it was essential to bear in mind that, in its findings, the
Panel had also dealt with this aspect of the required content of the final determination.
51 See paragraph 55 and, in part, paragraph 53 of the first written submission of the United States.
52 Ibid., second part of paragraph 55.

potential consumption of sugar liable to substitution by HFCS, to which Mexico
refers in paragraph 59 of the revised final resolution.53
(b) the United States suggests that SECOFI did not adequately explain the use of data in
pricing models and projections or the methodology used and that SECOFI's sugar
price projections for 1997 were based on assumptions contrary to the data observed in
1996.
54 Mexico contends that, on the basis of the analysis carried out and the
recorded monthly trend from 1994 to 1996 in the prices of HFCS imports from the
United States and the domestic selling prices for sugar, SECOFI estimated the prices
of both products for 1997. The method of estimation employed was a system of
simultaneous equations using a vector autoregressive model. The result was
compared with the observed trend in the values of the variables incorporated and
checked by reference to the consistency of those forecasts with the economic context
and conditions in the industry during the period analysed.
55 Mexico points out that
paragraph 98 of the revised final resolution clearly sets out the information used in
the projections. The source of the information and the way it was obtained are
described in paragraphs 85 and 86 of the resolution.
(c) Finally, the United States questions SECOFI's use of the projection that industry sales
revenue would decline by 15 per cent. 56 Mexico asserts that the United States is
mistaken in stating that the revised final resolution does not provide data on projected
sales revenue. In fact, paragraph 152 of the revised final resolution contains a
detailed explanation of how the investigating authority calculated projected revenue.
The United States assertion is therefore totally false.57
3.142 On the basis of all the arguments set forth herein, Mexico rejects the United States position,
which Mexico claims is clearly based on an excessive and inadmissible interpretation of Articles 12.2
and 12.2.2 of the AD Agreement, and reiterates to the Panel that Mexico has adequately complied
with those provisions.
3. Conclusions
3.143 On the basis of the foregoing, and in accordance with the timetable established for this
proceeding, Mexico submits its rebuttal of the arguments put forward by the United States in its first
written submission, with the aim of adequately establishing the facts and setting forth the
counter-arguments which will confirm to the Panel that Mexico has strictly complied with the
conclusions and recommendations of the Panel and the DSB, inasmuch as it has remedied the
shortcoming in the threat of injury analysis and brought its final determination into conformity with
the requirements of Article 3 of the AD Agreement, while at the same time complying with
Articles 12.2 and 12.2.2 of the Agreement.

53 See MEXICO-21 which, according to Mexico, show s that the 1996 substitution rate was applied to
the estimated consumption of sugar-consuming industries for 1997 and 1998 so as to calculate each industry's
potential consumption, and a 50 per cent reduction rate was applied to the total of such potential consumption in
order to obtain an objective yet conservative estimat e of potential demand. See also paragraphs 63 and
footnote 48 of Mexico's second submission.
54 See the second part of paragraph 55 of the fi rst written submission by the United States and
footnote 68.
55 See "Methodological note on projected sugar and HFCS prices for 1997", MEXICO-12. See also
paragraphs 20 to 24 of Mexico's second submission.
56 See paragraph 55 and footnote 68 of the first written submission of the United States.
57 See paragraphs 36 and 37 of Mexico's second submission, as well as the tables "Projected income for
1997" MEXICO-16, "Calculation of fixed and variable costs in accordance with the degree of operating
leverage" MEXICO-17, and "Methodological note on the financial report on injury" MEXICO-14, and
paragraphs 153, 154 and 166 of the revised final resolution.

3.144 Mexico also requests the Panel to declare that its revised final determination concerning the
threat of material injury to the domestic sugar industry, including (i) its consideration of the impact of
HFCS imports on the Mexican sugar industry as a whole; (ii) its consideration of the potential effects
of the alleged restraint agreement on the likelihood of substantially increased importation; and (iii) its
explanation, in the revised final resolution, of th e findings and conclusions reached by SECOFI with
regard to those questions, fully complies with the conclusions and recommendations of the Panel and
the DSB and is consistent with Articles 3.1, 3.4, 3.7, 12.2 and 12.2.2 of the AD Agreement.
E. ORAL STATEMENT OF THE UNITED STATES
3.145 The United States argues that there are three specific grounds on which SECOFI’s
redetermination violates the AD Agreement.
1. The Restraint Agreement And Article 3.7(i)
3.146 According to the United States, the redetermination, like the original determination, violates
Article 3.7 of the AD Agreement because it provides no basis for the conclusion that there is a
likelihood of substantially increased importation of HFCS from the United States.
3.147 In this respect, the United States considers it noteworthy that the redetermination’s analysis of
the restraint agreement between Mexican soft drink bottlers and sugar refiners contains almost exactly
the same flaws as the arguments Mexico presented in the original Panel proceeding.
3.148 Specifically, according to the United States, the Panel rejected SECOFI’s original analysis
because SECOFI improperly premised its analysis on alleged increases in imports from 1996, the time
of the conclusion of its period of investigation, rather than from the third quarter of 1997, the latest
period for which its record contained data on the volume of imports from the United States. The
United States notes that the Panel concluded that “the question for purposes of analysis of threat of
material injury is not the level of imports already reached, but the likelihood of increased imports”
and criticized SECOFI for “conclud[ing] that su ch imports would have continued increasing by
inertia.”
3.149 Yet, the United States argues, SECOFI’s redetermination provides the same flawed analysis.
The United States notes that SECOFI concluded that increased imports were likely in part because
imports from the United States during the first three quarters of 1997 exceeded the levels of the
previous year. Moreover, SECOFI did not claim that these increases were attributable to purchasers
not subject to the restraint agreement. The restraint agreement was not announced until
September 1997. Therefore, increased imports of HFCS by soft drink bottlers between January and
September 1997 would not be likely to continue after September 1997 because of the existence of the
restraint agreement. Indeed, the United States r ecalls, SECOFI assumed that after the restraint
agreement took effect all of the soft drink bottl ers’ consumption of HFCS would be supplied from
Mexican HFCS production.
3.150 The United States notes that the Panel also found SECOFI’s original analysis to be improper
because SECOFI found merely that the restraint agreement “does not rule out the possibility” of
future imports.
3.151 In paragraph 56 of the redetermination, SECOFI again makes conclusions regarding the
possibility of increased imports notwithstanding the restraint agreement.
3.152 The United States points out that the Panel also found SECOFI’s analysis to be improper on a
third ground. It found that SECOFI’s determination did not provide any analysis to support a
conclusion that there was a likelihood that users other than soft drink bottlers would increase their
importation of HFCS.

3.153 According to the United States, the information on which SECOFI relies in its
redetermination is not materially different from th e information the Panel previously considered and
rejected.
3.154 SECOFI has projected that imports of HFCS by purchasers other than soft drink bottlers
would increase by 467 per cent, from approximately 62,000 tons in 1996 to 350,000 tons in 1998.
According to the United States, this rate of increase is more than double the rate by which total HFCS
imports from the United States – including those by the soft drink bottlers now covered by the
restraint agreement – increased during SECOFI’s period of investigation. SECOFI provides no
information in its redetermination why purchases by these HFCS users, which only accounted for
approximately one-third of HFCS consumption in 1996, would be likely to increase at such an
astonishing rate.
3.155 SECOFI’s estimate of the likely volume of HFCS imports by purchasers other than soft drink
bottlers is based on a series of computations. According to the United States, a careful examination of
these computations reveals that notwithstanding Mexico’s claims to the contrary, they are not based
on the actual purchasing patterns of users of HFCS. Instead, the United States asserts, they are based
on speculation and conjecture.
3.156 In the view of the United States, there are two fundamental flaws with SECOFI’s
computations. The first relates to Mexico’s claim that: “In 1996, the weighted average rate of
utilization in consumer industries other than soft drink bottling was 84 per cent.”
3.157 This 84 per cent figure appears nowhere in SECOFI’s redetermination. It appears that the
84 per cent figure is a weighted average of theoretical or technical substitution rates of HFCS for
sugar for the various types of industries listed in Exhibit Mexico-21.
3.158 It is noteworthy, the United States argues, that the list of purchasing industries and
substitution rates in Mexico-21 is not identical to the only listing of substitution rates in the
redetermination. That listing appears at paragraph 57 of the redetermination. According to the United
States, Mexico claims that this rate reflects data obtained directly from industrial users on HFCS
consumption in their purchasing process. The United States further asserts that Mexico apparently
would like the Panel to believe that this data reflects the actual rate that these users substituted HFCS
for sugar in 1996.
3.159 This is not the case, argues the United States. The data in Mexico-20, insofar as used by
SECOFI as the basis for the substitution rates us ed in Mexico-21, pertain merely to purchasers’
technical ability to substitute HFCS for sugar. Indeed, Mexico-20 describes these substitution rates as
the “technical” degrees of substitution. The United States asserts that this information is different
from the material that Mexico submitted in the original Panel proceeding only insofar as it came from
purchasers. According to the United States, both this material and the material in the original
proceeding merely concern whether a purchaser has the theoretical or technical ability to substitute
HFCS for sugar. There is a critical distinction, however, between the theoretical or technical ability to
substitute and actual substitution. The United States notes that the Panel rejected data on theoretical
substitution during the prior proceedings and it argues that the Panel should do so here. According to
the United States, SECOFI’s redetermination provides no information pertaining to actual substitution
rates.
3.160 The Unites States argues that, to the extent that there is information in Mexico-20 that reflects
substitution rates of individual purchasers, SECOFI did not use it in either Mexico-21 or its
redetermination. Instead, claims the United States, for purposes of Mexico-21, SECOFI simply
selected the highest technical substitution rate reported to it from any source. The United States notes
that SECOFI did so despite the fact that several industrial users – such as juice producers and jam
makers – reported substitution rates below the maximum.

3.161 The second fundamental flaw in SECOFI’s redetermination, the United States argues, relates
to SECOFI’s assumption that purchasers other than soft drink bottlers would substitute HFCS for 50
per cent of their potential sugar consumption in 1997 and 1998. The 50 per cent assumption is not
based on record evidence, alleges the United States. It is a number that SECOFI selected arbitrarily.
3.162 In the view of the United States, it is not surprising, therefore, that neither the redetermination
nor Mexico’s two submissions to this Panel provides any reasoned explanation of how this 50 per cent
figure was derived. According to the United States, careful scrutiny of Exhibit Mexico-21, however,
reveals how Mexico used the 50 per cent figure.
3.163 Mexico-21 indicates that SECOFI went through several steps. First, SECOFI calculated the
percentage of HFCS that purchasers other than so ft drink bottlers could substitute for sugar in their
operations. This, claims the United States, was based on theoretical or technical substitution rates.
Second, SECOFI estimated the volume of sugar that would be consumed by these industries in 1997
and 1998 by taking an estimate of total Mexican sugar consumption in those years and allocating a
share to each industry. The United States claims that these shares were not based on actual
consumption patterns but on assigning weights based on the share of the consumer price index
allocable to each industry. See Mexico-20. Then, SECOFI applied these technical substitution rates
to each industry’s total estimated consumption of sugar in 1997 and 1998 to derive SECOFI’s
estimate of the total amount of HFCS that industrie s other than the soft drink bottling industry could,
theoretically, substitute for sugar in 1997 and 1998. Lastly, SECOFI reduced this number by 50 per
cent and concluded that this amount represented thes e users’ likely HFCS purchases. In other words,
the United States argues, SECOFI assumed that these purchasers would substitute 50 per cent of the
HFCS that they could substitute for sugar.
3.164 In the view of the United States, a careful examination of Mexico-21 confirms that SECOFI’s
assumption had utterly no basis in reality. The United States further claims that Mexico-21 indicates
that, during the 1994-96 period, sugar purchases by industrial users other than soft drink bottlers were
generally stable or increasing slightly despite the fact that: (1) these users could theoretically
substitute HFCS for sugar to varying degrees and (2) imported HFCS was available from the
United States. The United States notes that these purchasing patterns, incidentally, confirm that the
substitution rates in Mexico-20 were theoretical, not actual. If the substitution rates were actual,
argues the United States, one would have seen significant declines in the amount of sugar these
industrial users purchased.
3.165 According to the United States, SECOFI, however , projected that these users would cut their
use of sugar by as much as 50 per cent within a two-year period. The United States claims that this
projection was not an extrapolation of the historical trends and was not in any way based on these
trends. Instead, continues the United States, the projection was totally contrary to the observed data
during SECOFI’s period of investigation.
3.166 In the view of the United States, this confirms that SECOFI’s projections were not, as Mexico
claims, obtained using objective and reasonable methodologies. SECOFI’s analysis was not premised
on the situation observed during its period of investigation, argues the United States, nor was it based
on facts. Instead, the United States claims, its conclusion that substantially increased imports were
likely notwithstanding the restraint agreement is based on conjecture.
2. Analysis Of Likely Impact And Article 3.4
3.167 According to the United States, SECOFI’s rede termination does not provide a reasoned and
fact-supported analysis concerning why improvements in important industry trends during its period
of investigation were not probative in ascertaining the likely future condition of the industry.

3.168 SECOFI’s redetermination indicates that the Mexican sugar industry’s performance improved
in several critical respects during 1996, a year when imports of HFCS from the United States
increased. In particular, the domestic industry was profitable in 1996, and its profitability increased
substantially over 1995 levels. Additionally, in 1996 the price of domestically-produced sugar in
Mexico increased by a much higher percentage than prices for HFCS imported from the
United States. According to the United States, the evidence also shows that, in 1996, the Mexican
sugar industry had increasing capacity utilization, rising employment and productivity, declining
operating costs, declining sales costs as a percentage of revenue, and stable debt levels.
3.169 In the view of the United States, SECOFI was thus obliged to provide a fact-based analysis
demonstrating why such positive trends for the Mexican sugar industry in 1996 would reverse in the
near future or why other considerations would make these rising trends insignificant. The
United States argues that SECOFI did not do so.
3.170 Indeed, as confirmed by Mexico’s written submissions to the Panel, SECOFI relied on its
projections of the likely levels of sales, prices and profitability in the Mexican sugar industry in
conducting its analysis of likely impact. Accordin g to the United States, these projections cannot
support SECOFI’s determination. They are not fact-based and they yield results that are directly
contrary to the experience of the Mexican sugar industry during the period of investigation.
3.171 The United States notes that SECOFI projected a 10 per cent decline in sales volume and a
9 per cent decline in sales prices for the domestic sugar industry in 1997. However, paragraphs 60,
100, 138, 151, and 166 of the redetermination indicate that SECOFI’s projections of declines in
domestic sales volumes and prices were tied to SECOFI’s flawed assumptions regarding likely import
volumes. The United States asserts that SECOFI’s projections of likely import volumes were based
on conjecture contrary to fact. These same defects make SECOFI’s projections of likely sales
volumes for the Mexican sugar industry invalid. The United States further argues that SECOFI’s
pricing projections, because they are dependent on the volume projections, also cannot serve as the
basis for an affirmative threat determination.
3.172 Moreover, the model used by SECOFI to project sugar prices is a “vector autoregression”
analysis. This meant that SECOFI projected future values of variables such as price and volume
based on the historical relationship between these variables during its period of investigation.
Underlying this type of model are two critical assumptions, notes the United States. One is that the
variables historically moved in a consistent manner. The second is that the variables would continue
to move in the future in the manner that they had in the past.
3.173 According to the United States, neither of these assumptions was valid with respect to the
Mexican sugar industry. First, there was no consistent relationship between import volumes, sales
quantities of domestically-produced sugar, and the prices of domestically-produced sugar during
SECOFI’s period of investigation. The United States notes that import volumes increased throughout
the period of investigation. The United States further notes that the quantity of domestic sugar sales
declined slightly during the period of investigation. By contrast, sugar prices declined in 1995, but
increased sharply in 1996. In particular, the price of refined sugar increased by 48 per cent in 1996,
while the price of HFCS-55 increased by only 5 per cent that year. The United States observes that
HFCS-55 was the product that constituted the bulk of the imports and that SECOFI asserted competed
most directly with refined sugar. In light of this historical experience, and in light of the agreement of
industry participants reported in paragraphs 111 and 112 of the redetermination that sugar prices had
been “highly unstable” during its period of investigation for reasons having nothing to do with HFCS
imports, the United States argues that SECOFI was obliged to explain why it was justified in relying
on a model whose assumptions were not based on fact. According to the United States it did not do
so.

3.174 With respect to the second assumption, because of the restraint agreement and the other
reasons discussed above, the United States maintains that there was no basis to conclude that import
volumes would increase in the future in the ma nner that they did during SECOFI’s period of
investigation. With respect to this issue as well, the United States asserts that SECOFI did not satisfy
its obligation to explain why its reliance on its “vector autoregression” analysis was reasonable.
3.175 Finally, according to the United States, the internal documents from SECOFI’s administrative
record presented by Mexico to the Panel are inconsistent with the results of SECOFI’s pricing
projections. Exhibit Mexico-16 contains the proj ection used in SECOFI’s redetermination, namely
that sugar prices would decline by 9 per cent from 1996 to 1997. According to the United States,
exhibit Mexico-12, in which SECOFI described the basis for its pricing projections, does not support
SECOFI’s use of the 9 per cent figure. The third page of Mexico-12 contains a chart indicating
projected 1997 prices for standard sugar. The chart in Mexico-12 indicates that standard sugar prices
would be stable, not declining, in 1997. Indeed, the prices projected for 1997 are at the same levels
under which the Mexican sugar industry operated profitably in 1996. SECOFI acknowledges this fact
about the standard sugar pricing projections at paragraph 98 of its redetermination. But, the
United States argues, SECOFI’s projections of stable standard sugar prices and declining overall
sugar prices for 1997 are irreconcilable, given that SECOFI’s record indicates that: (1) standard and
refined sugar shared identical pricing trends for 35 of the 36 months in 1994, 1995, and 1996, and (2)
standard sugar accounted for the majority of Mexican sugar volumes. In the view of the
United States, SECOFI has failed to explain why it was justified in relying on pricing projections that
were both internally inconsistent and irreconcilable with historical data.
3.176 The United States argues that SECOFI’s projections of sharp declines in profitability in 1997
are based entirely on its flawed projection of declines in sugar sales volumes and sugar sales prices.
Thus, according to the United States, SECOFI’s projections of the sugar industry’s financial
performance are equally invalid. Moreover, the record data contradicts SECOFI’s projections. In
1996, sugar industry profits increased substantially despite increasing volumes of imported HFCS.
According to the United States, SECOFI has failed to explain why it relied on projections contrary to
the facts observed during its period of investigation.
3.177 The United States notes that Mexico contends that SECOFI’s conclusions on industry
profitability are justified in light of the "financial sensitivity" of the Mexican sugar industry. It asserts
that this "financial sensitivity" makes the sugar indu stry particularly susceptible to losses in revenue.
Losses in revenue may be caused either by losses in sales volume or reductions in price. However,
according to the United States, SECOFI’s record provides no basis -- apart from the results yielded by
SECOFI’s defective models -- for the conclusion th at the Mexican sugar industry was likely to face
either lower sales volumes or reduced prices. Consequently, the record also contains no basis for any
conclusion that losses in revenue are likely.
3.178 Moreover, the notion that the "financial sensitivity" of the Mexican sugar industry will cause
its performance to deteriorate whenever imports increase is contrary to the data in the SECOFI record.
According to the United States, SECOFI’s own analysis indicates that the presence of increased
volumes of imported HFCS does not necessarily impair the Mexican sugar industry’s ability to raise
capital and finance debt. Indeed, the United States continues, SECOFI found that, notwithstanding
increasing HFCS imports in 1996, the sugar industry’s cash flow improved, thus enhancing its ability
to obtain short-term financing and permitting it to improve its debt service indices.
3.179 In sum, the United States argues that Mexico has not satisfied its obligation to analyze the
Article 3.4 factors as to impact. The United States further argues that Mexico has not provided any
fact-based analysis; it has merely manipulated data from projections. Finally, the United States
argues that the projections cannot serve as a substitute for analysis because they are based on
conjecture and yield results contrary to the actual data observed during the course of the investigation.

Th United States claims that Mexico has not attempted to explain or reconcile its projections with the
contrary data.
3. Notice And Article 12
3.180 In the view of the United States, Mexico violated Articles 12.2 and 12.2.2 of the Agreement
because SECOFI consistently failed to explain its use of inputs for its projection of industry behavior
that yielded results either contrary to or unsupported by the observed data during its period of
investigation.
3.181 The United States argues that SECOFI’s failure to explain the inputs that it used in its
projections makes it impossible for one reading the determination to ascertain how SECOFI derived
its projections of industry behavior. The necessary explanation is not in the determination, nor is it in
the type of separate report referenced in Articles 12.2 and 12.2.2. Indeed, Mexico has informed this
Panel that SECOFI’s analysis of the restraint agreement was premised on substitution rates of HFCS
for sugar for various industries. According to the United States, the substitution rates Mexico now
states that SECOFI used are different from the substitution rates set forth in paragraph 57 of the
redetermination. Moreover, their derivation cannot be traced from anything in the redetermination or
any separate report made available to the parties.
F.
ORAL STATEMENT OF MEXICO
3.182 Firstly, according to Mexico, it should be stressed that the United States was hasty in
resorting to the Dispute Settlement Body without ex ercising its judgement as to whether action under
those procedures would be fruitful, as requir ed by Article 3.7 of the Dispute Settlement
Understanding, and without consulting Mexico in respect of the new final resolution.
3.183 Secondly, Mexico recalls that since this procedure concerns the implementation of the
AD Agreement, the work of this Panel is governed by the standard of review in Article 17.6 of that
Agreement. In other words, given that the dispute between the parties involves detailed discussions
concerning the implementation of the various provisions of the AD Agreement, the Panel must bear in
mind that Mexico's arguments cannot be disregarded, unless it can be demonstrated that they are
based on an inadmissible interpretation of that Agreement.
1. SECOFI Examined The Probable Impact Of Corn Syrup (HFCS) Imports On The
Domestic Industry And Determined Threat Of Injury On The Basis Of The Industry As
A Whole
3.184 On the basis of the Panel's findings and conclusions, Mexico asserts that SECOFI undertook a
fresh examination of the impact of HFCS imports on the domestic industry as a whole, including an
adequate actual and potential evaluation of the economic factors and indicators mentioned in
Article 3.4 of the AD Agreement. On the basis of various positive evidence and facts, the
investigating authority confirmed its determination of threat of injury to the whole domestic sugar
industry.
3.185 With respect to price analysis, Mexico claims that it adequately complied with the Panel's
findings. The revised final resolution fully sets out the trends in the prices of HFCS imports from the
United States and the prices of domestically produced sugar during the investigation period and the
two comparable earlier periods, together with the projected trends for the near future.
3.186 The fundamental argument of the United States is that SECOFI's determination is not
supported by "factual materials" and that the results of the projections are directly contrary to the
actual experience of the Mexican sugar industry during the investigation period. According to
Mexico, that argument is based on a partial examination of isolated aspects of the revised final

resolution. Mexico further claims that the United States has not examined all the information which
was available to SECOFI when it made its determination.
3.187 In Mexico's view, actual proof of the adverse impact of the price of the investigated imports
on the domestic price during the investigation period was obtained on the basis of a detailed analysis
of the month-by-month trends in both prices, the calculated margins of undercutting and dumping,
statistical evidence of causality and the prevailing economic environment, with special emphasis on
the "natural difference" between the prices of the two products.
3.188 Mexico asserts that the price trends observed in 1996 showed that greater import penetration
was connected with increased undercutting and declining HFCS prices in relation to sugar. In other
words, given the process of substitution between the two products, an increase in the price differential
stimulates demand for the alternative product at a lower price. In the circumstances, the sugar
industry adjustment mechanism, given the conditions of competition imposed by imports and the
structural restraints in the industry, is geared to preventing greater market displacement, by containing
or reducing domestic prices.
3.189 On the basis of the monthly trends for 1994 to 1996 observed in the price of HFCS imports
and the domestic selling price for sugar, Mexico notes that SECOFI estimated the prices of both
products for 1997. Mexico also notes that the method of estimation employed was a system of
simultaneous equations using a vector autoregressive model. The result was compared with the
observed trend in prices and volumes and checked by reference to the consistency of the forecasts
with the economic context and conditions in the industry during the period analysed.
3.190 According to Mexico, the reasoning behind the SECOFI determination was consistent with
observed price trends during 1996. Indeed, average prices in that year were higher than the year
before, even allowing for HFCS imports. This development is explained by the adverse conditions
observed in 1995, which unduly depressed both the consumption and the prices of practically all
goods on the domestic market.
3.191 Mexico argues that the United States' argument concerning price trends ignores the fact that
sugar prices declined from 1994 to 1996, as well as during the January-December 1996 investigation
period, which was characterized by growth in dumped imports at lower prices with higher
undercutting margins.
3.192 Mexico points out that it determined from the original final resolution that, although sugar
and HFCS are not perfect substitutes, since they are not identical products, in no way can it be
inferred that they are not close substitutes. Acco rding to Mexico, this aspect is fully documented in
the administrative record. Experts on the sweeteners industry agree that, precisely because of the
existing substitution between HFCS and sugar in the industrial sector, the prices of the two goods are
related, and both the existing differentials between them and the movements of one price or the other
have a proven impact on the industry's competitiveness.
3.193 Mexico considers that its determination should not be evaluated in isolation, for in order to
arrive at a determination of threat of injury all elements must be considered together, because they are
interrelated. In addition, Mexico claims that even though not all the factors supported the
determination of threat of injury, the negative effects already observed in the period analysed made
for a positive determination in this respect.
3.194 SECOFI determined that the high rate of growth in HFCS imports at significantly low prices
caused a reduction in sugar sales on the Mexican market of 2.5 and 5 per cent in 1996 compared with
1994 and 1995 respectively, given the substitution of HFCS for sugar in a wide variety of industrial
products. This drop in sales, according to Mexico, resulted in the fact that in 1996 production for the
domestic sugar market recorded a 4.2 percentage points reduction in its share of domestic

consumption compared with 1994, while the share of HFCS imports from the United States increased
by 2.76 percentage points. In Mexico's view, this shows an important link between the share lost by
the sugar industry in the domestic market and the proportionately greater share gained by HFCS
imports, for in the investigation period alone 60 per cent of the domestic sugar industry's loss of
market share was absorbed by HFCS from the United States.
3.195 Mexico claims that the industry's 16 per cent increase in the use of installed capacity and
2 per cent increase in productivity in 1995 compared with 1994, as well as the corresponding 3 and
6 per cent increases for 1996 compared with 1995, are explained by the rising levels of domestic
production, because although the installed capacity and the number of employees rose from 1994 to
1996, domestic sugar production recorded greater increases as a result of having to increase the
cultivated surface area, yields per hectare and factory efficiency. Mexico further claims that the
trends in employment, wages and stocks described in the revised final resolution are explained by the
labour and production conditions of the Mexican sugar industry.
3.196 Moreover, the investigating authority determin ed that during the investigation period the
sugar industry's profits and profitability indicators had shown a positive trend attributable to improved
selling and operating costs. However, Mexico notes that owing to the specific characteristics of the
Mexican sugar industry, operating profits and net profits remain highly sensitive to changes in sales
revenue, as reflected in the fact that a decline in sales revenue would result in a disproportionately
sharp fall in operating profits and net profits.
3.197 Mexico does not deny that in the period analysed, 1994-1996, the sugar industry faced
structural problems. However, dumped HFCS imports from the United States did not allow the sugar
industry to recover in the investigation period, in view of the fact that in 1996, compared with 1994,
the drop in domestic market sales prices, the fall in domestic market sales, the loss of market share for
domestic production in apparent domestic consumption and the increase in stocks indicated that,
should the increasing trend in HFCS imports continue, economic factors would be affected in
accordance with projections.
3.198 In accordance with those projections, SECOFI determined that, if imports continued,
domestic market sales prices would fall by 9 per cent, while sugar sales on the Mexican market would
drop by 10 per cent compared with those recorded in the investigation period, and this would result in
a 4 point loss of share in apparent domestic consumption. A projection of the domestic sugar
industry's earnings was also obtained in which sales revenue in 1997 would fall by 15 per cent and
operating profits by 118 per cent, with an operational profitability indicating an operating margin of
12 percentage points with respect to 1996.
3.199 In Mexico's view, the conclusions concerning the significant rate of growth recorded in
imports at prices significantly lower than those of the domestic sugar industry during the period
analysed, the sufficient freely available capacity, the high export potential of the United States HFCS
industry and the joint evaluation of economic factors led SECOFI to the determination that, if the final
anti-dumping measure had not been adopted, the domestic industry would have suffered injury.
3.200 On the basis of the points set out above and the contents of the first submission and the
rebuttal, Mexico maintains that it has complied with the Panel's findings and conclusions and with its
obligations under the AD Agreement, since the revised final resolution fully considered all the facts
concerning the prevailing state of the domestic industry based on the information in the administrative
record of the investigation.

2. Effects Of The Restraint Agreement On The Likelihood Of Substantially Increased
Importation
3.201 Mexico claims that its findings in its revised final resolution support the fact that the potential
effects of an alleged restraint agreement on the likelihood of substantially increased importation were
sufficiently examined. Therefore, the determination on this matter meets the requirements of
paragraphs 7.176 and 7.177 of the Panel Report and is consistent with Article 3.7 of the
AD Agreement.
3.202 In its determination, Mexico asserts that it took into account, in addition to the effects of the
alleged restraint agreement, competition from other factors such as observed trends during the 1994-
1996 investigation period in prices, volumes, actual and potential consumption, the economic context
and conditions in the industry. Similarly, the revised final resolution was based on all the information
at the investigating authority's disposal when the authority made its determination.
3.203 In Mexico's view, the United States has not considered the entire basis of the authority's
determination in making its argument; it simply pinpoints aspects which it evaluates outside the
context of the anti-dumping investigation, without relating them to various items of information at the
authority's disposal. According to Mexico, the United States arguments are not based on an
examination of all the information at the disposal of the investigating authority and are founded on an
incorrect reading of the revised final resolution, and consequently do not demonstrate that Mexico
acted inconsistently with the AD Agreement.
3.204 In its first written submission, the United States argued that the findings used by Mexico in
the revised final resolution do not support its conclusion and it questions the estimates of the likely
increase in imports, asserting as well that those estimates were based on the same information and
were made in the same way as in the original final resolution.
3.205 In this respect, Mexico reiterates that its determination considered, but was not based on,
import trends observed subsequent to the period investigated, i.e. imports effected during the course
of the investigation itself, since consideration would then be given to both trade flows and
consumption forecasts distorted by the effects of initiating the investigation. In most cases, this would
be tantamount to concluding that there was no likelihood of increased importation, since imports tend
to decrease substantially as a result of the investigation effect.
3.206 In addition, Mexico notes, the analysis was not restricted to a single factor but considered
observed trends in the period under investigation and comparable earlier periods, in prices, volumes,
actual and potential consumption, the economic context and the conditions of the industry. SECOFI
evaluated the effects of the alleged restraint agreement on the basis of estimates of potential HFCS
consumption in 1997 and 1998, for sectors other than the soft drink bottlers, taking as an input
projections of total sugar consumption for those years undertaken by specialists, and applying the
share of those sectors in total consumption in accordance with figures recorded in 1994, 1995 and
1996.
3.207 According to Mexico, the determination of the likelihood of increased imports was made by
taking into account the following context: (a) th e growth rate of the imports investigated from 1994
to 1996, (b) the export potential of the United States HFCS industry, (c) the price differential recorded
during the investigation period between HFCS and su gar, which is an incentive for substitution, (d)
the non-existence of trade restrictions on imports and a decline in tariff rates for such imports, and (e)
the proven functionality of HFCS as a sugar substitute in a variety of industries in the Mexican
market, further supported by the accumulated experience of development of the United States market.
3.208 Mexico claims that the United States fails to take into account the whole of Mexico's findings,
so it does not consider the facts as a whole but simply isolated aspects that do not reflect the general

picture considered by the investigating authority when it made its determination of the likelihood of
increased importation.
3.209 On all the above grounds, Mexico maintains that the analysis of the potential effects of the
alleged restraint agreement on the likelihood of increased imports made in the revised final resolution
complied with the Panel's findings and conclusions and was consistent with the AD Agreement.
3. Mexico Complied With The Provisions Of Articles 12.2 And 12.2.2 Of The
AD Agreement
3.210 Throughout the proceeding, Mexico maintained - and reiterates once again - that SECOFI
acted in a manner that was fully consistent with Articles 12.2 and 12.2.2 of the AD Agreement.
3.211 Similarly, Mexico argues, the final notice of 20 September did not confine itself simply to
presenting more data concerning the factors specified in Article 3.4 "without providing the necessary
analysis and explanation of these factors", as claimed by the United States. 58 On the contrary, the
notice included all the relevant findings, conclusions and information which show clearly that
SECOFI's analysis significantly evaluated all the economic factors listed in Article 3.4 of the
AD Agreement which influenced both the state of the sugar industry during the investigation period
and the situation in the near future according to projections, in order to determine the resulting impact
of imports on the domestic industry as a whole.
3.212 Mexico asserts that SECOFI also took into account more elements of relevant information in
order to analyse the potential effects of the alleged restraint agreement and arrived in an appropriate
manner at its determination of the likelihood of a substantial increase in HFCS imports.
3.213 According to Mexico, no admissible interpretation of Articles 12.2 and 12.2.2 implies that
"relevant information" must necessarily consist of data used by the investigating authority in the
economic models and projections on which its analysis and determination were based. Nor do any of
the findings and conclusions of the Panel Report contain this implication.
3.214 Similarly, Mexico continues, Article 12.2 does not lay down precise formulas or specific
terms in which an authority is required to express its findings or conclusions in the public notice. It
only states in general terms that these will relate to the issues considered material by the investigating
authorities. Again, Article 12.2.2 also lays down no specific formulas or terms. Even though it does
in fact require the inclusion of all relevant information on the matters of fact and law and reasons
which have led to the imposition of final measures, it does not specify what that information must be
but rather takes as limiting factors the relevance and confidentiality of the information.
3.215 Accordingly, Mexico argues that SECOFI's findings related to the whole of the domestic
industry, based on data and information duly documented in the administrative record, as well as on
models and projections constituting reasonable methodologies which were also justified in the record
by means of methodological notes explaining how SECOFI proceeded.
3.216 On the other hand, Mexico is not unaware of the findings and conclusions of the Panel which
examined the Thailand – Angles case. Indeed, despite the fact that no specific allegation of a breach
of Article 12 had been made either, the latter Panel, like the one concerned with Mexico – HFCS ,
concerned itself with emphasizing the connection of Article 12 with the context of Article 3
(paragraph 7.151 of the Thailand – Angles Panel Report).
3.217 However, according to Mexico it should be made clear that the circumstances of that
investigation differed from the circumstances in this case. Among other things, unlike the Thailand –

58 Essentially in paragraph 5 of its first written submission.

Angles case, which examined an ordinary anti-dumping investigation, the case before the Panel now
concerns a review procedure for complying with a DSB recommendation, where the interested parties
had the opportunity during the proceeding, at the time of and subsequent to the revised final
determination, to obtain access to both the public and the confidential version of the record, by means
of the appropriate procedures.
3.218 Mexico also points out that, so far, no representative of the United States has asked for access
to the administrative record, either to the public or the confidential version. As regards the interested
parties, they had access to the public version of the record on various occasions during the proceeding
and only one of the interested parties, via its legal representative, asked for access to the confidential
version of the administrative record, and this was granted in accordance with established procedures
for access to confidential information.
3.219 Thus, having set out its arguments on this subject, Mexico rejects once again the stance of the
United States and reiterates before the Panel that Mexico has duly complied with the requirements of
Articles 12.2 and 12.2.2 of the AD Agreement.
4. Conclusion
3.220 On the basis of all the arguments set forth th roughout its written submissions and which have
been expressed this morning, Mexico reiterates its respectful request to the Panel to declare that
SECOFI's actions, including:
(a) its consideration of the impact of HFCS imports on the Mexican sugar industry as a
whole;
(b) its consideration of the potential effects of the alleged restraint agreement on the
likelihood of substantially increased importation, and;
(c) the revised final resolution of 20 September;
fully comply with the Panel's findings and conclusions and are sufficient to bring Mexico's final anti-
dumping measure into conformity with, inter alia , Articles 3.1, 3.4, 3.7, 12.2 and 12.2.2 of the
AD Agreement, as recommended by the DSB in its ruling of 24 February 2000.
IV. ARGUMENTS OF THE THIRD PARTIES
A.
ORAL STATEMENT OF THE EUROPEAN COMMUNITIES
4.1 The European Communities (the “EC”) notes with considerable concern that, contrary to the
requirement contained in Article 6.2 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes (the “DSU”), the request for the establishment of a panel in the present
proceedings does not mention whether consultations were held between Mexico and the United States
before the disagreement on the compatibility of the Mexican measures with a covered agreement was
referred to the Panel
59.
4.2 Furthermore, the notice concerning the request for consultations foreseen in Article 4.4 of the
DSU was not provided to the Dispute Settlement Body (“DSB”) and was not circulated to the WTO
Members. The EC asserts that there is thus no indi cation whether such consultations were held in the
present case.

59 Cf. Doc. WT/DS132/6.

4.3 The EC notes in this context that an inconsistent and contradictory practice has developed in a
number of cases in which parties had recourse to procedures pursuant to Article 21.5 of the DSU with
regard to the requirement of first entering into consultations under Article 4 of the DSU before filing a
request for the establishment of a panel.
4.4 In the context of the Bananas dispute, the EC recalls that it has made it clear 60 that it
considers consultations pursuant to Article 4 of the DSU to be necessary before the establishment of a
panel can be requested pursuant to Article 21.5 of the DSU. The reason, according to the EC, is the
reference contained in Article 21.5 that any dispute on implementation “shall be decided through
recourse to these dispute settlement procedures”. In the view of the EC, “these dispute settlement
procedures” include consultations and a right to an appeal. This is so for reasons related to the
multilateral character of the procedures, which include procedural rights of other WTO Members,
particularly potential third parties, and a standardised dispute settlement procedure the basic features
of which may not be amended simply because that pleases the parties in an individual case.
4.5 In the view of the EC, if the parties to a dispute were entirely free to develop procedures of
their own choice ( quod non ), this would jeopardise third party rights enshrined in the DSU
(particularly in Articles 4.11 and 10). Nothing would stop the parties from agreeing bilaterally not
only to jump the procedural step of consultations, bu t also to jump other procedural steps such as the
panel stage and to submit their dispute to the Appell ate Body straight away (e.g. in order to “gain
time” and to exclude third parties who cannot participate in Appellate Body procedures if they did not
reserve their right to participate in the preceding panel procedure). It would also mean that the parties
would be free to agree among themselves that a panel report pursuant to Article 21.5 of the DSU is
not binding and that it may be subjected to some kind of review by another international body outside
the WTO.
4.6 The EC believes that these scenarios are not compatible with the multilateral nature of the
procedures under the DSU, the procedural rights of third parties and indeed the general matrix of
procedural checks and balances built into the dispute settlement system. The DSU contains sufficient
flexibility to adapt the basic procedural requirements to the needs of the parties in individual disputes.
As an example, Article 4.7 (second sentence) of the DSU allows the parties to shorten the 60-day
period on the basis of a bilateral agreement. If the parties to the dispute agree, the EC argues, a panel
under Article 21.5 of the DSU may be established at the first meeting where the request is considered
by the DSB (Article 6.1 of the DSU). Panels may propose special working procedures after
consultations with the parties (Article 12.1 of the DSU). The EC asserts that all these provisions
indicate that there is some flexibility in the procedures, which is largely dependent on the agreement
of the parties to the dispute. None of these prov isions, however, allows the parties to the dispute to
simply omit one of the essential procedural steps before requesting the next one.
4.7 The EC argues that the procedural step of holding consultations is of fundamental importance
for the dispute settlement system. Consultations give the parties an opportunity to resolve their
differences without an adjudication of the dispute and will, at the very least, allow the parties to
clarify on what precise issues their disagreement continues. In this way, consultations contribute to
discharging panel proceedings from issues on which there is no real and serious disagreement. In
addition, any request for consultations under Article 4 of the DSU must be circulated to the entire
WTO membership in order to identify and circumsc ribe the dispute, thus allowing potential third
parties to prepare their request to participate in the pr ocedure. In this regard, the EC recalls that third
parties may participate in consultations requested under any of the provisions cited in Article 4.11 and
footnote 4 of the DSU. Thus, argues the EC, third party rights are clearly impaired by the omission of
the formal consultation stage in a dispute settlement procedure.

60 Cf. the statement of the EC representative at the DSB meeting of 22 September 1998, Doc.
WT/DSB/M/48, p. 7.

4.8 According to the EC, all these important functions of the consultations are undermined if the
parties to the dispute are considered to be free to “jump the gun” and go to a panel procedure without
holding formal consultations under Article 4 of the DSU first. Moreover, consultations must anyhow
take place in order to agree on the procedure to be followed, and it is obvious that this is also an
occasion to consult on substantive issues. Thus, in reality no time is gained in jumping this
procedural step, except that third parties are put at a disadvantage and that the panel may have to
address issues on which there is no real disagreement.
4.9 In conclusion, the EC is of the view that the existing rules of the DSU do not allow parties to
a dispute to bilaterally agree simply to dispense with consultations under Article 4 of the DSU. Any
other approach leads to unbearable procedural uncertainty about the limits of the procedural
guarantees for both parties and to curtailing third party rights clearly enshrined in the DSU.
4.10 If the parties to the dispute do not respect their obligations under Article 4 of the DSU, argues
the EC, the Panel should draw the consequence an d make a ruling that the dispute is not properly
before it (or inadmissible, to use a term of art), since all the procedural steps that are required before a
dispute may be submitted to a panel have not been followed in the present case
4.11 On the basis of the foregoing considerations, the EC is of the view that the Panel should
consider that the dispute is not properly before it because no consultations were requested nor held
before the request for the establishment of a panel was submitted to the DSB.
B.
JOINT STATEMENT OF JAMAICA AND MAURITIUS
4.12 Jamaica and Mauritius as third parties in the original dispute had made a joint oral statement
before the panel to highlight the potential impact this dispute could have on the trade in sugar by
Jamaica, Mauritius and other suppliers in securing continued, predictable and increased opportunities
for access to the United States market in accordance with the provision of Article XIII of GATT 1994.
4.13 Jamaica and Mauritius noted that they were aware at the time that the issue at hand concerned
imports of High Fructose Corn Syrup (HFCS) into the Mexican market. They also recognise that
since then, the panel has ruled that Mexico’s imposition of the definitive anti-dumping measures on
imports of HFCS for the United States is inconsistent with the requirements of the AD Agreement on
several scores and that Mexico has been requested by the DSB to bring its measures into conformity.
They are aware that the current case must be concerned with whether the new determination made by
Mexico does indeed comply with the Panel’s recommendations.
4.14 Jamaica and Mauritius understand that the primary duty of this panel is to assess whether
Mexico’s revised final determination is in conformity with the panel’s conclusions and
recommendations in respect of Mexico’s obligations under the AD Agreement.
4.15 They nonetheless believe that in making their assessment of the issue at hand the panel should
not lose sight of the broader disagreement over sweetener trade between th ese two countries and the
impact that a resolution of this new dispute may have on third parties which are traditional suppliers
of sugar to the US market.
4.16 Jamaica and Mauritius note previous statements made by representatives of the Mexican
sugar industry in the press and other public fora to the effect that HFCS and sugar disputes are inter-
related and that one cannot be resolved without resolving the other.
4.17 They note that this new dispute arises at a crucial time of the NAFTA time table for sugar
trade. They recall that prior to the entry into force of the NAFTA Agreement in 1994, Mexico was a
net sugar importer. However, under the NAFTA Agr eement, Mexico has since seen its initial market

share of 7,258 tonnes per annum for the period 1994 – 1996 increase to 25,000 tonnes for the 2000 –
2001 quota year.
4.18 This amount may after this date increase to as much as 250,000 tonnes per annum until 2008
at which time NAFTA would allow Mexico unlimited access at zero tariff for its sugar exports.
4.19 Jamaica and Mauritius, as traditional suppliers, have already seen their access reduced in the
US market as sugar imports have declined since 1985. They are concerned that an increase in
Mexico’s sugar exports to the United States as a direct or indirect result of the resolution of this new
dispute or indeed other proceedings will increasingly exacerbate the existing prejudice to the
traditional suppliers to the US market. They wish to recall that the diminution of opportunity for
access to the US sugar market will particularly impact on single commodity producers like Jamaica
and Mauritius.
4.20 They note in this regard the assurances given by the United States delegation at the WTO
Committee on Agriculture in responding to queries that:
(a) Raw cane sugar tariff quotas are allocated according to Article XIII of GATT 1994.
(b) Mexico’s NAFTA allocations do not count in a country’s share allocation in the TRQ
(G/AG/N/USA/15 at pp. 22 and G/AG/R/16) and
(c) Mexico does not receive additional access if there are subsequent tariff quota
allocations (G/AG/N/USA/13 at pp. 18 of G/AG/R/14).
4.21 Jamaica and Mauritius remain nonetheless pre-occupied by the possible serious erosion of
their share as traditional sugar suppliers as a result of substantial increase of Mexico’s access under
NAFTA as from the 2000 – 2001 quota year and any other settlement arising from the present dispute
and request that any finding of this Panel not impact negatively on the trade of traditional suppliers,
particularly single commodity producers like Mauritius and Jamaica.
V. INTERIM REVIEW
5.1 On 11 May 2001, the Panel issued its interim report to the parties. On 18 May 2001, the
parties filed written requests regarding review of review precise aspects of the interim report. Neither
party requested a further meeting with the Panel. Therefore, in accordance with the working
procedures adopted by the Panel, the parties were given the opportunity to file further written
comments, which they did on 1 June 2001.
5.2 The original comments of the United States were limited to typographical and stylistic
corrections, which we have incorporated in the Report, as appropriate. Mexico's further written
comments were limited to certain asserted translation errors, which we took into consideration.
5.3 Mexico's original comments requested re view of our consideration of SECOFI's
determination of likelihood of increased imports, stating that our analysis is incomplete because it
does not take account of various analytical elements of Mexico's arguments. The United States
responded to these substantive points in its further written comments.
5.4 Mexico notes that in this dispute, it stressed that the quantitative scenario regarding demand
for HFCS by industries other than soft drink bottlers was not the only basis for its conclusion with
respect to the likelihood of increased imports. Mexico reiterates that SECOFI's determination of the
likelihood of increased imports was based on a comprehensive analysis of concurrent factors,
including, inter alia , the increase in imports during the investigation period and the most recent
period for which data was available, the freely disposable capacity of the United States industry, the

trend in and level of import prices, and the foreseeab le economic context, together with the existence
of the alleged restraint agreement. Mexico main tains that SECOFI's conclusion of a likelihood of
increased imports is supported by the analysis of the mentioned factors. In Mexico's view, our
decision was based only on consideration of the calculation of projected demand for HFCS.
5.5 Mexico also asserts that even if the already increased level of imports were merely
maintained, the presence of these imports would suffice to cause a threat of material injury to the
domestic industry. In this regard, Mexico refers to the findings of the Panel in United States –
Safeguard Measures on Imports of Fresh, Chille d or Frozen Lamb Meat from New Zealand and
Australia (WT/DS177/R and WT/DS178/R, 21 December 2000) at paragraph 7.187:
" … Moreover, we also deem it possible that imports continuing on an elevated level
for a longer period without further increasing at the end of the investigation period
may, if unchecked, go on to cause serious injury (i.e. may threaten to cause serious
injury). That is, if increased imports at a certain point in time cause less than serious
injury, it is not necessarily true that a threat of serious injury can only be caused by a
further increase, i.e., additional increased imports. In our view, in the particular
circumstances of a case, a continuation of imports at an already recently increased
level may suffice to cause such threat."
5.6 We considered carefully Mexico's comments on the interim report, but did not make any
changes to the report in connection with the points made by Mexico on interim review. These
arguments were fully expressed during the course of the proceedings, and considered in making our
decision. We recognized, in paragraph 6.9 of our findings, that there was evidence concerning the
rate of increase in imports during the period of investigation, as well as the available capacity in the
United States and the existence of other markets, which was considered by SECOFI in making its
determination of likelihood of increased imports. However, whether this evidence indicated a
likelihood that imports would continue was not the issue with which we were concerned. Our concern
was with SECOFI's analysis of the effects of the alleged restraint agreement on the likelihood of
increased imports, which had been faulted by the original panel in its Report. It is in that connection
that we considered the projected demand for HFCS by users other than the soft-drink bottlers affected
by the alleged restraint agreement, and concluded that an unbiased and objective investigating
authority could not have reached the conclusions reached by SECOFI. In our view, it is clear that
SECOFI's finding of threat of material injury rested on the determination that imports would increase
significantly despite the alleged restraint agreement, and that this conclusion rested on the projected
levels of HFCS demanded by users other than soft-drink bottlers.
5.7 We note in addition that, in the redetermination, SECOFI did not conclude that there was a
threat of injury to the Mexican sugar industry even if imports did not increase, but merely continued
at the levels already reported during the period of investigation. Therefore, we consider Mexico's
reliance on the findings of the Panel in United States – Safeguard Measures on Imports of Fresh,
Chilled or Frozen Lamb Meat from New Zealand and Australia , WT/DS177/R and WT/DS178/R,
adopted as modified in WT/DS177/ABR and WT/DS178/ABR, 16 May 2001 to be inapposite. Since
SECOFI's decision was not based on this rationale, it is not appropriate for us to consider whether a
decision based on this rationale should be sustained.
5.8 Mexico also requested a change to the text of paragraph 6.21 of the Report. We did not make
this change, as Mexico's proposed language did not correctly convey the import of our analysis as
reflected in that paragraph.
5.9 Mexico argues that our finding in paragraph 6.31does not refer to changes in factors such as
sugar prices, sales, domestic market share and inventories between 1994 and 1996, and requests that
we include a statement to the effect that the increase in dumped HFCS imports from the United States
meant that the industry could not recover during the investigation period, since 1996, as compared to

1994, saw a decrease in domestic sugar prices, a fall in domestic sales, a loss of market share and an
increase in inventories. Mexico maintains that the evaluation of these factors made it possible for
SECOFI to project an adverse effect on the industry.
5.10 Mexico's arguments concerning the condition of the domestic industry regard are reflected in,
inter alia, paragraphs 3.113 - 3.114 and 3.187 - 3.197 above, and our conclusions in paragraphs 6.26,
6.29, and 6.30 reflect our consideration of those arguments. We recognize that the domestic sugar
industry did not, in 1996, show levels of performance equal to those of 1994 in some respects.
However, this does not detract from our conclusion that SECOFI's analysis and conclusion failed to
explain why, when the condition of the industry improved significantly from 1995 to1996 despite
significantly increased imports, it was threatened with material injury in 1997. We therefore did not
make the change requested by Mexico, as paragraph 6.31 accurately reflects our views.
VI. FINDINGS
A. INTRODUCTION
6.1 On 24 February 2000, the Dispute Settlement Body ("the DSB") adopted the report and
recommendations of the Panel in Mexico - Anti-dumping Investigation of High Fructose Corn Syrup
(HFCS) from the United States (WT/DS132/R). In that report, the Panel concluded that Mexico's
imposition of definitive anti-dumping duties on imports of high fructose corn syrup, grades 42 and 55,
from the United States was inconsistent with the requirements of the Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade 1994 (AD Agreement). The Panel
concluded, inter alia , that the determination of threat of material injury was inconsistent with the
requirements of the AD Agreement in that the Mexican investigating authority, SECOFI, had
inadequately considered the potential effect of an alleged agreement between Mexican soft-drink
bottlers and sugar producers to limit the amount of HFCS used by the bottlers, and had inadequately
considered the impact of HFCS imports on the Mexican sugar industry. The Panel and the DSB
accordingly recommended that Mexico bring its measure into conformity with its obligations under
the AD Agreement.
6.2 The United States and Mexico having agreed on a reasonable period for implementation,
Mexico decided to revise the original final determination underlying the imposition of anti-dumping
duties following a newly initiated proceeding. On 20 September 2000, the Government of Mexico
published the final resolution in that proceeding. In that resolution, SECOFI stated that it had revised
the original final resolution imposing definitive anti-dumping duties on imports of HFCS from the
United States to comply with the Panel report's conclusions and recommendations.
61 M e x i c o
determined to repay provisional duties on entries and guarantees granted for the payment of
provisional anti-dumping duties, with interest, for the period 26 June 1997 to 23 January 1998. 62
Mexico also "ratified its conclusion that during the period under investigation, there was a threat of
harm to the domestic sugar industry as a consequence of imports of high fructose corn syrup under
price discriminatory conditions originating from the United States of America". 63 The revised final
resolution confirmed "the final offsetting duties established during the antidumping investigation".64
6.3 The United States asks us to determine whether the redetermination by SECOFI in the HFCS
anti-dumping case complied with the ruling of the original Panel, and the recommendation of the

61 Final resolution revising, on the basis of the conclusion and recommendation of the Panel of the
World Trade Organization's Dispute Settlement Body, the final resolution of the anti-dumping investigation into
imports of high fructose corn syrup, merchandise classified in tariff headings 1702.40.99 and 1702.60.01 of the
General Import Tariff, originating in the United States of America, irrespective of the country of provenance,
20 September 2000, MEXICO-1(a) (hereinafter "Notice of Redetermination").
62 The United States raised no issue concerning this aspect of Mexico's implementation.
63 Notice of Redetermination, MEXICO-1(a) at para. 188.
64 Id.

Panel and the DSB to "bring the measure into conformity". The United States also asks us to
determine whether the redetermination is consistent with the provisions of the AD Agreement,
specifically, Articles 3.1, 3.4, 3.7, 12.2 and 12.2.2 thereof. The United States maintains that the
answer to both questions is no. In the United States' view, while the redetermination sets out
additional evidence and discussion relevant to the findings of likelihood of increased importation and
threat of material injury, these merely add a gloss to the original determination without remedying the
errors found by the original Panel.
6.4 Mexico argues that SECOFI complied fully with the original Panel's ruling and
recommendation in issuing the redetermination underlying this dispute. Mexico further asserts that
the redetermination is fully consistent with the sp ecific provisions of the AD Agreement cited by the
United States in its claims of error. In Mexico's view, SECOFI in the redetermination provided all the
information and analysis necessary to bring the measure into conformity with the AD Agreement with
respect to the errors identified by the original Panel in its ruling. Mexico argues that SECOFI
requested additional information from interested pa rties, in particular concerning the impact of
imports on the domestic industry.
65 Mexico further argues that SECOFI carefully analyzed the
information before it, and concluded that, first, even assuming the alleged restraint agreement existed,
imports would increase significantly, and second, these dumped imports would depress domestic
sugar prices, and as a consequence dumped imports threatened material injury to the domestic
industry.
6.5 We are thus faced principally with determining whether SECOFI's conclusion in the
redetermination, that dumped imports of HFCS from the United States threaten material injury to the
Mexican industry producing sugar, is consistent with Articles 3.1, 3.4 and 3.7(i) of the
AD Agreement. Were we to find the redetermination consistent with the provisions of the
AD Agreement, we would conclude that Mexico complied with the recommendation to bring its
measure into conformity.
66 However, as is discussed in detail below, we conclude that SECOFI's
redetermination is not consistent with Articles 3.1, 3.4 and 3.7(i) of the AD Agreement. Therefore,
we conclude that Mexico has failed to bring its measure into conformity with the requirements of that
Agreement. In addition, we address below the question whether the public notice of the SECOFI
redetermination is consistent with the requirements of Articles 12.2 and 12.2.2 of the AD Agreement.
B. FINDING OF LIKELIHOOD OF INCREASED IMPORTS
6.6 In its original determination, the Panel had concluded that SECOFI failed to adequately
address the likelihood of substantially increased imports by failing to properly evaluate the facts
concerning, and provide a reasoned explanation of its conclusions regarding, the potential effects of
the alleged restraint agreement.67 Consequently, the Panel found that SECOFI's conclusion that there
was a "likelihood of substantially increased importation" was inconsistent with the requirements of
Article 3.7(i) of the AD Agreement. In addressing this issue, the Panel noted that the question was
not whether such an agreement actually existed, but "whether there was evidence of and arguments
concerning the effect of the alleged restraint agreement, which, if it existed, would be relevant to the
analysis of the likelihood of increased dumped imports in the near future." 68 The Pan el posed th e
relevant question as "whether SECOFI's analysis provides a reasoned explanation for its conclusion

65 Id. at para 11.
66 We note that neither party made any argument s concerning the interpretation of the applicable
provisions of the AD Agreement. Neither did the United States question that a redetermination of the type
undertaken by SECOFI in this case is an appropria te means of implementing the Panel's and the DSB's
recommendation. We therefore have not addressed these matters in resolving the issues between the parties in
this dispute.
67 Mexico - Anti-dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States
WT/DS132/R, adopted 24 February 2000, at paras. 7.173-7.178 (hereinafter "Panel Report, WT/DS132/R")
68 Id. at para. 7.174.

that, assuming such an agreement existed, there was nonetheless a likelihood of substantially
increased importation."69
6.7 The Panel concluded that Mexico had not provided such an explanation, observing:
"7.177 Mexico's contention that users of imported HFCS other than soft-drink
bottlers could have increased their consumption in amounts sufficient to constitute a
substantial increase in imports is in our view questionable.
645 However, even
assuming this to be the case, there is no discussion in the final determination of the
share of imports and domestic production c onsumed by soft-drink bottlers, other
beverage manufacturers, and other industrial users, and the degree of substitutability
of HFCS and sugar in their products. Moreover, the alleged restraint agreement
affected purchasers accounting for 68 per cent of the imports, suggesting that it would
at least slow any further increases in imports. In addition, most other purchasers'
ability to substitute HFCS for sugar wa s limited, suggesting that, if the alleged
restraint agreement existed, any further increases in imports would be less than they
had been in the past. None of these elements is addressed in SECOFI's final
determination. We note, moreover, that the final determination states that the alleged
restraint agreement does not "rule out the possibility" (emphasis added) that bottlers
and other users would continue their purchases of imported HFCS. However, not
ruling out the possibility that imports would continue does not support the conclusion
that there is a "likelihood of substantially increased importation" (emphasis added), as
provided for in Article 3.7(i).
7.178 We conclude that SECOFI's consideration of the potential effects of the
alleged restraint agreement was inadequate. Therefore, we determine that SECOFI's
conclusion that there was a "likelihood of substantially increased importation" is
inconsistent with the requirements of Article 3.7(i) of the AD Agreement.
However, SECOFI also considered import information for the period January to
September 1997, which showed that imports of HFCS rose 75 per cent over the same
period in 1996, 639 further demonstrating a likelihood of a substantial increase in
imports,

69 Id. at para. 7.175.
70 Id. at paras. 7.177-78.

(c) Other industries, in addition to the soft-drinks industry, use imported HFCS
in their activities and they would not be subject to the restrictions in the alleged
restraint agreement. These industries accounted for approximately 46 per cent of the
industrial sector's total sugar consumption.640
(d) Both the soft-drinks industry and the other industries could purchase the
imported product at low prices as a result of dumping, thereby causing sugar prices to
shift and deteriorate.
United States, and the existence of alternative markets for US HFCS exports. SECOFI concluded that
the available capacity in the United States "indicates a well-founded likelihood of a significant
increase in exports to the Mexican market…" 73
6.10 SECOFI next considered the effect of the alleged restraint agreement, and determined that:
"even if there was an agreement to restrict the use of high fructose corn syrup on
September 1997, between the sugar mills and the soft-drink bottlers, it would not
eliminate the threat of injury to the domesti c sugar industry. This is because even if
Mexican soft-drink bottlers limit their consumption of high fructose corn syrup, it
does not eliminate the likelihood that soft-drink bottlers as well as other sectors of the
beverage industry and other industries that use high fructose corn syrup in multiple
applications will continue to acquire the imported product under conditions of price
discrimination…"
74
6.11 In support of this conclusion, SECOFI noted that users of sugar could use HFCS in varying
degrees, and that consumers of HFCS other than so ft-drink bottlers accounted for almost one-third of
HFCS imports. SECOFI observed that "this does no t mean" that users other than soft-drink bottlers
would not increase their consumption of HFCS in the future, "given the increase in the value of
[dumped] imports". SECOFI also relied on info rmation concerning the substitution of HFCS for
sugar by users other than soft-drink bottlers. SECOFI stated that the degree of substitution should not
be considered a technical limit, but merely the level reached to date.
6.12 SECOFI concluded that, assuming the restraint agreement existed, soft-drink bottlers would,
in 1997, consume the maximum amount of HFCS permitted under the alleged agreement, 350,000
tons, which would equal the entirety of projected domestic production. SECOFI further concluded
that users other than soft-drink bottlers woul d consume 334,000 tons of HFCS in 1997, which would
be supplied by imports.75 Thus, SECOFI projected that dumped imports would increase from 192,906
tons in 1996 to 334,000 tons in 1997 and projected an additional increase to 350,000 tons in 1998.76

71 Id. at para 7.170.
72 Notice of Redetermination, MEXICO-1(a), at para. 61.
73 Id. at para. 78.
74 Id. at para. 56.
75 Mexico argued before us that it was immaterial whether users other than soft-drink bottlers
consumed imports or domestic production. See Answ er to Question 5, Mexico's answers to the Panel's

6.13 Mexico contends that, in the redetermination, SECOFI set out additional facts and analysis
which provide a reasoned explanation for its conclusion that, assuming that the restraint agreement
existed, there was nonetheless a likelihood of substantially increased importation. The United States,
on the other hand, argues that Mexico's explanation and analysis are essentially the same as in the
original determination, and that the redetermination is based on conjecture and projections that have
no basis in the facts that were before SECOFI.
77
6.14 Our task in this proceeding is to consider the factual determination of likelihood of
substantially increased imports made by SECOFI in the redetermination. Pursuant to Article 17.6 (i),
in a dispute under the AD Agreement,
"in its assessment of the facts of the matter, the panel shall determine whether the
authorities' establishment of the facts was proper and whether their evaluation of
those facts was unbiased and objective. If the establishment of the facts was proper
and the evaluation was unbiased and objective, even though the panel might have
reached a different conclusion, the evaluation shall not be overturned."
Thus, in assessing the redetermination, we must judge whether, in light of the explanations given in
the redetermination, an unbiased and objective investigating authority could reach the conclusions
reached by SECOFI on the evidence before it. As stated by the Panel in the original dispute, the
relevant question is "whether SECOFI's analysis provides a reasoned explanation for its conclusion
that, assuming [a restraint] agreement existed, there was nonetheless a likelihood of substantially
increased importation."
78 We note in this regard that Article 3.7 of the AD Agreement specifically
provides that:
"A determination of a threat of material injury shall be based on facts and not merely
on allegation, conjecture or remote possibility. The change in circumstances which
would create a situation in which the dumpi ng would cause injury must be clearly
foreseen and imminent." (footnote omitted)
The reasoned explanation required to satisfy us under the standard of review must respect these
elements of Article 3.7 as well.
6.15 The logic underlying SECOFI's redetermination is, in our view, the same as that in the
original determination. What SECOFI has done is respond to the specific criticisms of the Panel,
concerning the lack of discussion of the share of imports consumed by various users of HFCS, the
degree of substitutability, and the effects of the restraint agreement. However, while the
redetermination discusses these elements, and recites facts concerning them, the basic analysis and
conclusion of the redetermination, that there is a likelihood of substantially increased importation
despite the potential effects of the alleged restraint agreement because users of HFCS other than soft-
drink bottlers would increase their consumption of dumped imports of HFCS, remains the same.
6.16 SECOFI's determination that there was a likelihood of significantly increased imports
depends on the conclusion that demand for HFCS by users other than soft-drink bottlers would

Questions, Annex A. Thus, it was apparently the total volume of HFCS consumption by Mexican users
projected for 1997, 684,000 tons (based on 334,000 tons of imports and 350,000 tons of domestic production)
that was relevant.
76 Notice of Redetermination, MEXICO-1(a), at para. 59.
77 Mexico did not respond in detail to the arguments in the US first submission until it filed its second
submission brief. The United States was thus precluded from responding to the more detailed explanation of the
SECOFI redetermination and the underlying evidence provided by Mexico in its second submission in writing,
as its own second submission was filed simultaneously with Mexico's. The United States did respond to
Mexico's second submission orally at the meeting of the Panel with the parties.
78 Panel Report, WT/DS132/R at para. 7.175.

increase by more than 400 per cent in 1997. SECOFI reached this conclusion on the basis of an
analysis of projected demand for HFCS by users ot her than soft-drink bottlers. In its analysis,
SECOFI had before it evidence of the utilisa tion of HFCS and sugar by consuming industries. 79 This
information consisted of three tables, two labelled "Grado de sustituibilidad técnica del azúcar por
JMAF", and the third showing "posibilidades de sustitución entre JMAF y azúcar". SECOFI
considered that this evidence demonstrated the rate at which users other than soft-drink bottlers could
substitute HFCS for sugar in their production operations in 1997. SECOFI then projected the amount
of HFCS that users of sugar other than soft-drink bottlers could consume in 1997, reduced it by 50 per
cent, and determined that the result, 334,000 tons, was the amount of HFCS that users other than soft-
drink bottlers would consume in 1997.
80 SECOFI projected that the amount of HFCS soft-drink
bottlers could consume under the alleged restraint agreement, 350,000 tons, would be supplied by the
domestic industry. Consequently, the entire 334,000 tons of demand projected for producers of
products other than soft-drinks would, SECOFI c oncluded, be supplied by imports, principally
dumped imports from the United States. Thus, SECOFI concluded that the alleged restraint
agreement "would not eliminate the threat of injury to the domestic sugar industry" because it does
not eliminate the likelihood that soft-drink bottlers, as well as industries other than soft-drink bottlers,
would continue to acquire dumped imports.
81
6.17 In our view, an objective and unbiased investigating authority could not have reached the
conclusion that industries other than soft-drink bottlers would increase their consumption of HFCS to
the extent projected by SECOFI on the basis of the evidence that was before SECOFI, in light of the
explanations set out in the redetermination. The evidence in the record concerning the use of HFCS
and sugar in 1996 does not support SECOFI's conclusion as to the rate at which all producers in
industries other than soft-drink bottling would consume HFCS in 1997 and 1998. Absent some
explanation as to why there would be this sudden and massive increase in HFCS consumption by
industries other than soft-drink bottlers, SECOFI's conclusion of a likelihood of significant increase in
imports cannot be sustained.
6.18 Mexico relies on Exhibit Mexico-20 to support the analysis of and conclusions regarding
projected demand for HFCS by industries other than soft-drink bottling. Exhibit Mexico-20 contains
the three tables mentioned above in paragraph 6.16. The rates of substitution set out in the three
tables are different and the sources of information for the three tables are different. As we understand
it, SECOFI relied principally on the information ga thered in a market survey conducted during the
course of the original investigation. However, that market survey reports the relative proportions of
use of sugar and HFCS by a limited sample of producers in the manufacture of specific products.
These companies, which already used both HFCS and sugar in their production operations, simply
reported the relative rates of usage of the two sweeteners for 1996 and 1997. SECOFI considered this
information to represent the degree to which HFCS could be substituted for sugar by the industries
represented by the reporting companies. This information does not, however, address the critical
question of the degree to which companies which had not, to date, used HFCS in their production
operations could, as a technical matter (taking into account production processes and equipment) use
HFCS in place of sugar.
82 Thus, for instance, evidence that some producers of marmalade had used
HFCS as a sweetener in 70 per cent of their production in 1996 does not support the conclusion that
all producers of marmalade will use HFCS in the same proportion in 1997.

79 MEXICO-20.
80 MEXICO-21.
81 Notice of Redetermination, MEXICO-1(a) , at para 56.
82 Mexico appears to acknowledge the importance of technical limits on the ability to substitute HFCS
for sugar, stating:
"The issue of whether the use of HFCS by the new companies entering the market would
match the rate at which other companies use HFCS basically depends on the specific
production operations and products concerned. Conditions can vary substantially from one
sector or one product to another within a given industry".
Answer to Question 8, Mexico's answers to the Panel's Questions, Annex A.

6.19 SECOFI did not rely exclusively on the survey information, but also relied on the information
in the other two tables in Exhibit Mexico-20. 83 SECOFI appears to have selectively relied on the
available information in using the higher figures in most cases. Thus, while two of the tables report a
degree of substitutability of HFCS for sugar in marmalade production of 33 per cent, SECOFI's
calculation of projected demand for HFCS by all marmalade producers for 1997 rested on a
substitution rate of 70 per cent, which is in fact information reported by one company in the SECOFI
market survey.
84 Mexico provided no reasoned explanation, and in some cases, no explanation at all,
of why one source was used in projecting demand for HFCS in some cases, and another in others.85
6.20 Mexico asserts that SECOFI discounted by 50 per cent the projected volume of demand in
order not to overestimate the likelihood of increased imports. The 50 per cent "discount" factor was
calculated by taking a simple average of the rates of utilisation for each product group of users
providing information in the market survey, and calculating an overall average, 52.31 per cent, which
SECOFI rounded to 50 per cent.
86 While this had the effect of reducing the figure projected for
HFCS use by industries other than soft-drink bottlers in 1997, it is not relevant to the important
question of the degree to which these industries were capable, as a technical matter, of making the
change to HFCS use between 1996 and 1997. Assuming that the rates of utilisation for each product
group represented the rate of substitutability, an average of those figures would be an average rate of
substitutability. We cannot see how an average rate of substitutability or an "average rate of
utilisation" can meaningfully operate as a factor to discount the projected demand for HFCS in the
manner described by Mexico.
6.21 We see nothing in SECOFI's redetermination, or even in the explanations provided by Mexico
in this proceeding, which would support the conclusion that industries other than soft-drink bottlers
would switch to HFCS use in 1997 to the extent proj ected by SECOFI, even assuming the technical
capability to do so.
87 Mexico argues that the lower price of HFCS, as compared with sugar prices,
supports the conclusion that producers of products ot her than soft-drinks woul d switch to HFCS use
as overall demand for their products increased. However, during the period of investigation, despite a
similar difference in HFCS and sugar prices, nothing like this projected increase was observed, in any
of the industrial sectors using both sugar and HFCS. Indeed, while the price of HFCS was lower than
the price of sugar in 1996, those margins of underselling were projected by SECOFI to decrease
slightly in 1997.
88 HFCS use by producers other than soft-drink bottlers had not in the past shown
increases of the magnitude predicted by SECOFI for 1997, even in periods of increasing margins of
underselling. SECOFI's determination provides no explanation for the conclusion that, despite the
projection of no significant change in relative prices for 1997, use of HFCS by industries other than
soft-drink bottlers would increase by over 400 per cent, when there had not been increases of this
magnitude in the past.

83 See answer to Question 7, Mexico's answers to the Panel's Questions, Annex A.
84 Id.
85 Id.
86 See answer to Question 11, Mexico's answers to the Panel's Questions, Annex A.
87 In this regard, we note that the SECOFI market survey on use of HFCS and sugar by some industrial
users in MEXICO-20 also reported information for 1997. The 1997 information shows little or no increase in
relative usage by the surveyed companies, some of which continued to report proportionate use below the levels
relied on by SECOFI in its projection of demand for 1997. That is, even companies that had already
demonstrated the ability to use HFCS to some degree di d not increase their usage to the proportions relied on by
SECOFI to project demand for HFCS by industries other than soft-drink bottlers. This further undermines the
conclusion that producers who did not already use HFCS in their production operations would switch to doing
so, in the proportions predicted by SECOFI.
88 We note that SECOFI's redetermination continues to fail to address adequately the "natural
difference" between HFCS and sugar prices. Paragraphs 91 and 92 of the redetermination (MEXICO-1(a))
report that in the US market, while the price difference between sugar and HFCS remained stable from 1991 to
1995, it increased in 1995 and 1996. It is not clear how this relates to the "natural gap" in HFCS and sugar
prices in the Mexican market, which bears on the significance of the margins of underselling.

6.22 Finally, we note that the redetermination states that the alleged restraint agreement "would not
eliminate the threat of injury to the domestic su gar industry" because it does not eliminate the
likelihood that both soft-drink bottlers and other users would continue to acquire dumped imports. 89
As in the original Panel's report, we do not consider that this in itself supports the conclusion that
there is a likelihood of substantially increased importation, as provided for in Article 3.7(i) of the
AD Agreement. A conclusion that the likelihood of further dumped imports is not eliminated does
not demonstrate that there is a likelihood of substantially increased importation and consequent threat
of material injury.
6.23 SECOFI's determination that industries othe r than soft-drink bottlers would undertake a
massive shift from sugar use to HFCS use, resu lting in total consumption of HFCS beyond the
capacity of the domestic industry to supply, and a consequent significant increase in dumped imports,
is not, in our view, one that could be reached by an unbiased and objective investigating authority in
light of the evidence relied upon and the explanations given in the redetermination. While in its
redetermination, SECOFI did set out additional inform ation concerning the points identified by the
Panel as problematic in its original report, SECOFI failed to provide a reasoned explanation of how
that information supports the conclusion that there was a significant likelihood of increased imports.
We therefore determine that SECOFI's conclusion that there was a significant likelihood of increased
importation is not consistent with Article 3.7(i) of the AD Agreement.
C. A
NALYSIS OF LIKELY IMPACT OF IMPORTS ON THE DOMESTIC INDUSTRY
6.24 The second element of error alleged by the United States is the insufficiency of SECOFI's
analysis of the likely impact of imports on the domestic industry. The Panel had originally concluded
that, in a case involving threat of material injury , an investigating authority was required to consider,
among other relevant factors, all the factors set out in Article 3.4 of the AD Agreement The Panel
observed that:
"With respect to the question of threat of material injury, we believe an investigating
authority cannot come to a reasoned conclusion, based on an unbiased and objective
evaluation of the facts, without taking into account the Article 3.4 factors relating to
the impact of imports on the domestic industry. These factors all relate to an
evaluation of the general condition and operations of the domestic industry – sales,
profits, output, market share, productivity, return on investments, utilisation of
capacity, factors affecting domestic prices, cash flow, inventories, employment,
wages, growth, ability to raise capital. Consideration of these factors is, in our view,
necessary in order to establish a background against which the investigating authority
can evaluate whether imminent further dumped imports will affect the industry's
condition in such a manner that material injury would occur in the absence of
protective action, as required by Article 3.7."
90
The Panel went on to consider whether SECOFI had provided an analysis of the impact of the dumped
imports consistently with this obligation, and found it had not. Specifically, the Panel concluded that
the final determination reflected "no meaningful analysis of a number of the Article 3.4 factors". The
Panel also concluded that there was
"no analysis of the condition of the Mexican sugar industry during the period of
investigation, or projected for the near future. It is therefore not possible, by reading
the final determination, to understand the overall condition of the domestic industry
with respect to the Article 3.4 factors. Yet without an understanding of the condition
of the industry, it is not possible, in our view, for SECOFI to have come to a reasoned

89 Notice of Redetermination, MEXICO-1(a), at para. 56.
90 Panel Report, WT/DS132/R at para. 7.132.

conclusion, based on an objective evaluation of the facts, concerning the likely
impact of dumped imports. Such a conclusion must, in our view, reflect the projected
impact of further imports on the particular domestic industry, in light of its condition.
In order to conclude that there is a threat of material injury to a domestic industry that
is apparently not currently injured, despite the effects of dumped imports during the
period of investigation, it is necessary to have an understanding of the current
condition of the industry as a background."
91
6.25 The United States acknowledges that the redetermination contains information on the
Article 3.4 factors that were not discussed in the original determination. However, in the
United States' view, this consists of a mere recitation of facts, and is insufficient to satisfy the
obligation to provide a reasoned analysis of the condition of the industry during the period of
investigation or projected for the near future. The United States argues that SECOFI's
redetermination mischaracterizes information on the condition of the domestic industry, fails to
provide a reasoned explanation why improvements in trends reflecting the industry's condition during
the period of investigation were not probative of the likely future condition of the industry, and relies
on erroneous or unsupported factual findings. The United States points in particular to SECOFI's
projections as to likely price levels and profitability of the industry, which the United States argues
lead to results contrary to those actually occu rring during the period of investigation, without
explanation.
6.26 Mexico asserts that SECOFI's conclusions in the redetermination are well-founded, based on
the evidence and the application of standard economic tests and projections. Mexico maintains that
SECOFI assessed the information concerning the factors set out in Articles 3.4 and 3.7, finding that
during the period of investigation, HFCS imports had had an adverse impact on the Mexican sugar
industry, as seen in declining market share and increased inventories. Moreover, SECOFI reviewed
the trends in prices for sugar and HFCS during th e period of investigation, finding that sugar prices
declined in 1996 as compared with 1994, in a context of increasing imports, and projecting stable
prices for standard sugar and a decline in refined sugar prices for 1997. SECOFI projected the effects
of these projected prices on the domestic industry's profits, concluding that, in light of the industry's
level of debt, and its high sensitivity to price declines, projected price levels would yield declining
revenues and leave the industry unable to service debt . Therefore, SECOFI concluded that there was
a threat of material injury to the domestic industry.
6.27 In evaluating the redetermination in this regard, we are again faced with the question of the
adequacy of SECOFI's factual redeterminati on, in light of the standard of review under
Article 17.6.(i). Thus, in assessing the redetermination, we must judge whether, in light of the
explanations given in the notice of redetermination, an unbiased and objective investigating authority
could reach the conclusions reached by SECOFI on the evidence before it. We continue to keep in
mind the requirements of the first two sentences of Article 3.7 of the AD Agreement, that:
"A determination of a threat of material injury shall be based on facts and not merely
on allegation, conjecture or remote possibility. The change in circumstances which
would create a situation in which the dumpi ng would cause injury must be clearly
foreseen and imminent." (footnote omitted)
As noted above, the reasoned explanation required to satisfy us under the standard of review must
respect these elements of Article 3.7 as well.
6.28 In the original report, the Panel observed that

91 Id. at para. 7.140.

"Merely that dumped imports will increase, and will have adverse price effects, does
not, ipso facto, lead to the conclusion that the domestic industry will be injured – if
the industry is in very good condition, or if there are other factors at play, dumped
imports may not threaten injury. Such a conclusion thus requires the investigating
authority to analyze, based on the informati on before it, the likely impact of further
dumped imports on the domestic industry. SECOFI concluded that imports were
likely to increase, based on the increases during the period of investigation, and the
available capacity of the exporting producers, but there is no meaningful analysis,
based on facts, concerning the likely impact of further dumped imports on the
domestic industry in the final determination, e.g., whether such increased imports are
likely to account for an increased share of the growing Mexican market, have an
effect on production or sales of sugar, or affect the profits of the domestic producers,
etc, in such a manner as to constitute material injury. SECOFI also concluded that
the dumped imports undersold the domestic product during the period of
investigation, and that the dumping margins were responsible for the low prices of the
dumped imports. SECOFI therefore concluded that a jump in demand for dumped
imports could be expected, forcing sugar prices downward. However, there is no
discussion of movements in prices of either Mexican sugar or the dumped imports –
that is, there is no discussion of whether sugar prices had been "forced downward"
during the period of investigation, which in our view leaves the conclusion that
dumped imports in the future would force prices down in the realm of speculation.
Merely that imports are likely to continue to be priced below the domestic product
does not necessarily lead to the conclusion that there is a threat of injury.
611 If the
price level of the domestic product generates sufficient revenues and profits, injury
may be unlikely."92
United States argues that the conclusions reached are not reasonable in light of the information addressed.
94 We note that the notice of redetermination states that the domestic industry "was required to increase
its sugar exports at prices lower than those prevailing on the domestic market". Notice of Redetermination,
MEXICO-1(a), at para. 130.
95 Id. at para. 131.
96 Id.
97 Id. at para. 132.
98 Id. at para. 133.

and found that in 1996, operating margins were 9 per cent, an increase from 5 per cent in 1995, due in
large part to a decline in operating expenses. 99 The industry's net margin increased from negative 1
per cent in 1995 to 5 per cent in 1996. Return on investment increased 2 percentage points in 1996, to
5 per cent.100
6.30 SECOFI also addressed the movements in pric es for sugar and HFCS. SECOFI noted that
prices of dumped imports of HFCS declined from 1994 to 1995, then increased in 1996, although they
remained below the 1994 levels.101 Similarly, domestic sugar prices declined from 1994 to 1995, then
increased in 1996, although they remained below the 1994 levels. 102 Margins of underselling for
HFCS-42 compared to standard sugar were 39 per cent in 1994, 41 per cent in 1995, and 43 per cent
in 1996. Margins of underselling for HFCS-55 compared to refined sugar were 48 per cent in 1994,
37 per cent in 1995, and 55 per cent in 1996. 103 SECOFI concluded that the declining trend in
Mexican sugar prices was explained by competition from dumped imports, whose lower price and
dynamic growth pressured the domestic industry to adapt, leading to price depression, especially in
sales to the industrial sector. SECOFI concluded that this effect was confirmed by application of the
Granger test.
104
6.31 SECOFI's own analysis indicates that despite increasing levels of imports, and increasing
margins of underselling by HFCS as compared to sugar prices, the domestic industry's performance
improved in 1996 over 1995, with increased operating margins, net margins, and return on
investment, as well as increased production and capacity utilisation. Sugar prices increased from
1995 to 1996, reflecting the general improvement in the Mexican economy. Yet despite the observed
improvements in the indicators of the industry' s performance, SECOFI concluded that imports of
HFCS had had "adverse effects" on the domestic industry during the period of investigation. SECOFI
further concluded that the projected substantially increased dumped HFCS imports would cause
material injury to the domestic industry. We consider that a unbiased and objective investigating
authority could not reasonably have reached these conclusions in light of the evidence and
explanations in the redetermination.
6.32 In its analysis of the likely impact of dumped imports, SECOFI projected price levels for
1997, concluding that the price of HFCS 42 would increase by 2 per cent, while the price of HFCS 55
would decline by 1 per cent, the price of standard sugar would remain stable, and the price of refined
sugar would decline by 10 per cent. SECOFI th en projected margins of underselling for 1997,
concluding that HFCS 42 would undersell standard sugar by 42 per cent, while HFCS 55 would
undersell refined sugar by 52 per cent.
105 SECOFI concluded
"The price adjustment required by domestic industry to address the estimated increase
in imports under price discriminatory conditions would consequently be reflected in a
decline of 9 per cent in the average selling price of sugar on the domestic market. In
other words, both sugar sold to the indust rial sector as well as that intended for
household consumption, combined with the decline in sales, particularly to the
industrial sector, because of direct substitution by high fructose corn syrup, would
result in a negative impact on operating profits and margins."
106

99 Id. at para. 143.
100 Id. at paras. 144-45.
101 Id. at paras. 80-81. SECOFI discusses the price changes in percentage terms, rather than actual
price levels.
102 Id. at para. 83.
103 Id. at para. 87.
104 Id. at para. 89. The Granger causality test is a standard test in economics, which measures the
correlation between variables on a lagged basis.
105 Id. at paras. 98-99.
106 Id. at para. 100.

SECOFI also calculated that, despite an increase in demand for sweeteners, domestic industry sales
would decline 10 per cent in 1997.107
6.33 SECOFI carried out a sensitivity analysis of th e sugar industry's profits to changes in sales
revenue. SECOFI found that the industry would suff er an adverse effect of 7 per cent on operating
profits in response to a decline of one per cent in total revenue. Combining this with the sensitivity of
the industry due to the high degree of financial leveraging, SECOFI calculated that a 1 per cent
change in sales revenue would cause a 27 per cent change in net profits. Based on projected sales and
prices for 1997, SECOFI projected a decline of 15 per cent in industry revenue, causing operating
profits to decline by 118 per cent, which SECOFI concluded would cancel any possibility of operating
profits, result in a decline in the operating margin to negative 2 per cent, and leave the industry
unable to service its debt or attract capital.
6.34 As with the redetermination of likelihood of increased imports, while SECOFI has cited more
information concerning the condition of the domestic industry, the underlying rationale is the same as
in the original determination. SECOFI's conclusi on that the industry is threatened with material
injury depends on a projected decline in industry revenues in 1997 based on declining prices for sugar
caused by increased dumped imports of HFCS. As discussed above, in our view, SECOFI's
conclusions regarding the projected increase in imports are not supported by the evidence. This
undermines the projected decline in revenues for 1997 which is at the core of SECOFI's
redetermination.
6.35 Moreover, SECOFI has failed to provide a reasoned explanation for why the performance of
the industry will suddenly decline significantly in 1997. SECOFI's projections of price levels and
profitability for 1997 are contrary to the trends observed during the period of investigation. Thus, for
instance, SECOFI projected that for 1997, prices for refined sugar would decline, while prices for
standard sugar would remain the same. Yet in 1996, despite significantly increased imports, sugar
prices increased. Similarly, SECOFI projected steep operating losses for the domestic industry,
despite the fact that in 1996, the industry's profitability improved at the same time as imports were
increasing. The projected reduction in income on which SECOFI relies in making this projection
depends on the projected increase in imports, which, as discussed above, is a conclusion we do not
consider could be reached by an unbiased and objective investigating authority on the evidence before
SECOFI in this case.
6.36 We conclude that SECOFI's redetermination with respect to the likely impact of dumped
imports of HFCS from the United States on the domestic industry which underlies the determination
of threat of material injury to the Mexican sugar industry is not consistent with Articles 3.1, 3.4, and
3.7 of the AD Agreement.
6.37 We do not mean to suggest that it would not be possible to make a finding of threat of
material injury in the circumstances of this case. Such a conclusion would be beyond the scope of our
standard of review, as it would involve us in analysing the facts de novo. However, we do conclude
that an unbiased and objective investigating authority could not reach the conclusion that the domestic
sugar industry in Mexico was threatened with material injury on the basis of the evidence and
explanations provided by SECOFI in the notice of redetermination. Part of the difficulty with
SECOFI's redetermination in this case is that wh ile SECOFI apparently undertook to respond to the
specific criticisms set out in the original Panel's report, and has set out additional information relevant
to the specific points made by the Panel in that re port, there does not appear to have been an overall
reconsideration and analysis of the information in light of the requirements of the AD Agreement, as
clarified by the original Panel.

107 Id. at para. 138.

D. ADEQUACY OF NOTICE OF REDETERMINATION
6.38 The United States argues that Mexico's notice of redetermination does not satisfy the
requirements of Articles 12.2 and 12.2.2. 108 Mexico, on the other hand, argues that SECOFI's notice
fully explains the decision on redetermination, and is backed by additional information in the record
of the investigation which is referred to or underlies the analysis and conclusions set out in the notice.
Essentially, Mexico argues that the United States has misunderstood the notice, or is reading
Article 12 too strictly.
6.39 Article 12 of the AD Agreement requires, in pertinent part, that public notice of any final
determination shall set forth
"in sufficient detail the findings and conclusions reached on all issues of fact and law
considered material by the investigating authorities. …sufficiently detailed
explanations for the … determinations on dumping and injury and shall refer to the
matters of fact and law which have led to arguments being accepted or rejected. …all
relevant information on the matters of fact and law and reasons which have led to the
imposition of final measures … as well as the reasons for the acceptance or rejection
of relevant arguments or claims made by the exporters and importers…."
6.40 In this case, we have determined that SECOFI's findings and conclusions in the
redetermination were not consistent with Articles 3.1, 3.4, and 3.7 of the AD Agreement. Our
conclusion is based not on a failure to explain the redetermination in the notice, but on the fact that, in
our view, the findings and conclusions set out in th at notice, in light of the evidence in the record
brought to our attention and as argued by Mexico in this proceeding, are not such as could reasonably
be reached by an unbiased and objective investigating authority on the evidence that was before
SECOFI. In light of the substantive violations found, the question of whether the notice of the
ultimate determination is "sufficient" under Article 12.2 is immaterial. It is, in our view, meaningless
to consider whether the notice of a decision that is substantively inconsistent with the requirements of
the AD Agreement is, as a separate matter, insufficient under Article 12.2. We therefore make no
findings with respect to the claim of insufficiency of the notice of redetermination.
VII. CONCLUSIONS AND RECOMMENDATION
7.1 In light of the findings above, we conclude that Mexico's imposition of definitive anti-
dumping duties on imports of HFCS from the United States on the basis of the SECOFI
redetermination is inconsistent with the requirements of the AD Agreement in that Mexico's
inadequate consideration of the impact of dumped imports on the domestic industry, and its
inadequate consideration of the potential effect of the alleged restraint agreement in its determination
of likelihood of substantially increased importation, are not consistent with the provisions of
Articles 3.1, 3.4, 3.7 and 3.7(i) of the AD Agreement. We therefore consider that Mexico has failed
to implement the recommendation of the original Panel and the DSU to bring its measure into
conformity with its obligations under the AD Agreement.
7.2 Under Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed
under a covered agreement, the action is considered prima facie to constitute a case of nullification or
impairment of benefits under that agreement. Accordingly, we conclude that to the extent Mexico has
acted inconsistently with the provisions of the AD Agreement, it has nullified or impaired benefits
accruing to the United States under that Agreement.

108 These provisions govern the contents of notices of final determinations. Mexico does not dispute
that these provisions apply to the notice of redetermination, and therefore we do not address that question.

7.3 We recommend that the Dispute Settlement Body request Mexico to bring its measure into
conformity with its obligations under the AD Agreement.