Document: WT/DS295/R Page B-1 ANNEX B Parties' and Third Parties' Responses to questions posed in the context of the first substantive meeting of the Panel Content Page Annex B-1 Responses of the United States B-2
Document codes: WT/DS295/R
Complainant: U.S.
Respondent: Mexico
Third parties: China, EU, Turkey
Dispute stage: Appellate Body
Agreements cited: Art. 12.5, 12.7, 19.3, 11.9, 21.1, 21.2, 32.1, 12.1.1  Subsidies and Countervailing Measures (SCM)Art. VI:2  GATT 1994Art. 1, 3.1, 3.2, 3.4, 3.5, 4.1, 5.8, 6.1, 6.2, 6.4, 6.8, 6.9, 6.10, 9.3, 9.4, 9.5, 11.1, 12.1, 12.2, 11.9, 18.1, 19.3, 21.1, 21.2, 32.1  Anti-dumping

ANNEX B

Parties' and Third Parties' Responses to questions
posed in the context of the first substantive meeting of the Panel

Content Page
Annex B-1 Responses of the United States B-2
Annex B-2 Responses of Mexico B-25
Annex B-3 Responses of the European Communities B-37

ANNEX B-1

RESPONSES OF THE UNITED STATES

Questions concerning the period of investigation

1. The United States points (for example, in paragraph 57 of its first submission) to the use
of the present tense in various provisions of the Anti-Dumping Agreement (the
"AD Agreement") to support its claim that the POI mu st be as close to the date of initiation as
practicable.

(a) Could the US elaborate on this view in light of the fact that it is inevitable that an
investigation has to consider events that ha ppened in the past. Does the US argue that
there is any specific length of time beyond which the POI becomes inconsistent with the
AD Agreement?

(b) For example, in view of the US, would a PO I that ended 12 months prior to the initiation
be inconsistent with the AD Agreement?

Answer

1. The United States agrees that an investig ation of dumping and injury must necessarily
consider events that happened in the past. For this reason, we are not arguing that there is a specific
length of time beyond which the POI becomes per se inconsistent with the AD Agreement. However,
the purpose of an anti-dumping investigation is to determine whether a domestic industry is presently

injured (or threatened with injury) by dumping that is presently occurring. 1 Therefore, an
investigating authority must seek to base its dete rminations of dumping and injury on the most recent
available information. If an investigating authority chooses instead to base its analyses on
information that is not the most recent available info rmation, it must be able to justify its approach
and explain why, despite its approach, its dete rminations are objective, unbiased, and based on
positive evidence.

2. In the rice investigation, Economía provided no
 explanation for its decision to base its
determinations on stale data, other than that the PO I it selected was the one the petitioner asked for.
For example, Economía provided no explanation of its decision to base its dumping analysis on data
for March to August 1999, when it did not even initiate its investigation until December 2000.

3. Similarly, Economía provided no explanation for its decision to base its injury determination
on data that was already
 fifteen months to three years old on the date of initiation, in lieu of collecting
the most recent injury information that was avai lable at that time. Economía also provided no
explanation for its failure to update its injury data during the course of its investigation, with the
consequence that the data was three to five years ol d at the time of the final determination. Economía
also failed to explain how its injury analysis ha d any relevance to the situation of the domestic
industry at the time of the final determination (or even at the time of initiation), given that the import
volumes, price effects, and economic factors that it analyzed were for a period of time that was well
before the initiation of the investigation, and years before the final injury determination.

4. The necessity for an investigating authority to consider events that happened in the past does
not give an authority free rein to choose which part of the past to consider. Rather, the authority must

1 As the Panel notes, the United States pointed to numerous provisions in the AD Agreement
supporting this conclusion in its first written submission. See US First Written Submission, para. 57.

evaluate the most recent information that is available. 2 Economía made no effort to collect
information for September 1999 to December 2000, and it ma de no effort to update its data thereafter.
As a consequence of its failure to collect recen t information, Economía had no idea whether dumped
imports were causing injury to the domestic industry as of the date that it initiated its investigation,
much less on the date that it published its final determination.

2. Mexico argues that "there is no provis ion in the AD Agreement which indicates how
remote an anti-dumping period of analysis must be" (para 49 of its first submission).

(a) In Mexico's view, is there no limit in th e AD Agreement on how "old" the data can be on
which the dumping and injury analysis may be based ? If Mexico is of the view that
there are certain limits, please explain what, in Mexico's views, are the criteria for
determining whether a POI is consistent with the AD Agreement or not?

(b) What is the Mexican practice in respect of the POI?

Answer

5. In evaluating Mexico’s response to this qu estion, the Panel may wish to consider the
following information relating to th e anti-dumping investigations that Economía initiated on US
products in 2003-2004:
3

Investigation Initiation Date Length of POI Gap Between End of
POI and Initiation Date
Epoxidized Soybean Oil 17 May 2004 10 months (January to
October 2003)
6.5 months
Crystal Polystyerene 13 January 2004 12 months (July 2002 to
June 2003)
6.5 months
Newsprint 25 November 2003 12 months (January to
December 2002)
11 months
Carbon Steel Line Pipe 29 August 2003 12 months (January to
December 2001)
20 months
Hydrogen Peroxide 17 July 2003 12 months (January to
December 2002)
6.5 months
Triple-Pressed Stearic
Acid
11 June 2003 12 months (August 2001
to July 2002)
10 months
Fatty Acid 6 June 2003 19 months (January 2001
to July 2002)
10 months
Certain Pork Products 7 January 2003 6 months (April to
September 2002)
3 months

6. The POIs that Economía established in these investigations suggests that it has no consistent
approach with respect to the length of the POI it uses, other than that it uses the POI that the
petitioners suggest in their petitions (even when, as in the rice investigation, the exporters object). It
also suggests that Mexico often bases its determinations on stale data. Evidence of Economía’s
willingness to allow the petitioner to craft the POI can be seen in pa rticular in the investigations of

2 Compare Appellate Body Report, European Communities Anti-Dumping Duties on Imports of
Cotton-Type Bed Linen from India, Recourse to Article 21.5 of the DSU by India , WT/DS141/AB/R, adopted
24 April 2003, para. 113 (“ EC – Bed Linen 21.5 AB ”) (stating that the absence of a specified methodology for
calculating the volume of the “dumped imports” does not give an investigating authority unfettered discretion to
“pick and choose whatever methodolog y they see fit . . . ”. Rather, th e methodology must ensure that the
determination is made on the basis of “positive evidence” and involves an “objective examination”.).
3 The United States is attaching the relevant pages of each of the initiation notices as Exhibit US-21.
The notices are in Spanish, as the United States does not have English-language translations.

Triple-Pressed Stearic Acid and Fatty Acid. Although the two investigations were filed by the same
Mexican producer (Quimic S.A. de C.V.) on the sam e day, and initiated within a few days of each
other, the POIs in the two investigations differ substantially.

(c) Are there particular reasons why more recen t data were not used in this case? Is
Mexico of the view that the POI used in this case was the one closest to the initiation as
far as "practicability" is concerned? If so, please elaborate.

Answer

7. The only rationale that Economía provided in its published determinations for its decision to
use stale data in conducting its analyses of dumping and injury was that the petitioner requested the
March to August 1999 time period, and that im ports were concentrated during that period. 4
Economía’s decision to conduct its investigation in accordance with the pe titioner’s wishes, over the
objections of the foreign exporters 5, belies any suggestion that Economía’s choice of POI was
objective or unbiased.

8. Furthermore, it is not factually accurate that the POI that Economía used in its investigation
was the closest practicable to th e date of initiation. By December 2000, dumping and injury data
would have been available for all of 1999 and most of 2000. By the time of the final determination,
injury data would have existed for all of 2000 and 2001 and possibly for 2002 as well.

3. Could Mexico explain the reason why it considered that the March - August 6 month
period was appropriate for the injury analysis, including whether "seasonality" was one of the
reasons.

Answer

9. As the Panel will recall, Mexico clarified during the first panel meeting that “seasonality” was
not a reason for its decision to limit its analysis to the March to August period. Furthermore, although
Mexico argued in paragraph 55 of its first written submission that its choice of POI was designed in
part to eliminate distortions in production levels, it argued in paragraph 60 of that same submission
that production levels were constant throughout the year. Mexico’s shifting rationales further confirm
that Economía’s choice of POI in this investigation was neither objective nor unbiased.

4. Could Mexico clarify whether the Panel is correct to understand that the investigating
authority had the data necessary to perform an injury analysis for the full three year period,
but chose not to use this data as it considered that the period should correspond to the period on
which the analysis for dumping was made? Please elaborate.

4 In particular, in paragraph 111 of the Notice of Initiation, Economía stated that, according to the
petitioners:
[T]he main importing activity of the finished product [milled rice] takes place in the period
that goes from March thorough August in which there are no harvests of paddy rice and that
for this reason such period adequately reflects importing activities.
Rice Initiation Notice, Exhibits US-1&2, para. 111 . Economía repeated this statement in
paragraph 64 of the Preliminary Determination and reached the conclusion that, according to
the information provided by the petitioners:
[I]mports tend to concentrate in the period from March through August of each year, which
corresponds to the period of investigation proposed by the petitioners.
Exhibits US-14&15, para. 65.
5 See, e.g., Preliminary Determination, para. 66 (Exhibits US-14 & 15).

Answer:

10. The United States understands that Economía did in fact collect data for each month between
March 1997 and August 1999, even though it only ex amined the data for the March to August time
periods. However, Economía did not attempt to collect any data for the time period between
September 1999 and December 2000, and it did not attemp t to collect any additional injury data after
it initiated the investigation.

5. Could Mexico explain why it considered that this particular 6 month period was
adequate in terms of a dumping analysis. Was the fact that that was the period which the
petitioners cited the sole reason?

Answer

11. The United States has been able to find only two places in Economía’s published
determinations where it addresses its use of a six month period for the dumping
 analysis (other than
the discussion of the concentration of imports in the March to August time period). First, Economía
stated at paragraph 2 of its initiation notice that “the petitioner stated that during the period that
includes March through August 1999 imports of long-grain milled rice, originating from the
United States, were made at discriminatory pri ces, which caused injury to the domestic industry
producing like goods”. Second, Economía stated in paragraph 150 of the initiation notice that it had
resolved to accept the petition and initiate an anti-dumping investigation on long-grain milled rice
imports from the United States, “setting as the peri od of investigation the period encompassed from
1 March through 31 August 1999”.

6. Is the United States of the view that an in vestigating authority is always precluded from
choosing a POI for the injury analysis other than a full-year (12 months) period? If not, please
explain specifically why the case at issue is not permissible.

Answer

12. In the rice investigation, Economía’s focu s on the March-August time period was neither
objective nor unbiased because at least half of domestic production occurred during the
September-February time frame, and yet Economía focused on the March to August period because
the petitioner argued that imports were concentrated in that period.

13. The problems arising from an examination of only partial year data are particularly acute
when the domestic industry has production during all 12 months of a year. In order to comply with
the requirements of Articles 3.1, 3.4, and 4.1 of the AD Agreement, the investigating authority must
examine the impact of the dumped imports on the do mestic producers as a whole. Therefore, the POI
for injury should include all months of the year in which there is domestic production (assuming the
data is reasonably available).

14. If the product under investigation is truly “seasona l” in character, an investigating authority
might be justified in focusing its analysis on certa in seasonal segments, provided that it does not fail
to consider the other segments in the year. During the first panel meeting, however, Mexico denied
that the production of long-grain milled white rice is seasonal, or that seasonality is relevant to this
dispute.

7. The petitioners appear to have suggested this particular POI (March- August 6 month
period), for reasons relating to the alleged seasonal character of the product, and as this period
was representative of the increased import penetr ation. Precisely that, it seems, is the reason
why the US objects to this period of investigation as it represents only that part of the year
during which imports are at a high. In the US view, what are the facts on the record which

demonstrate that imports of the subject product were concentrated in the March - August
period, other than the petitioner's statement re ferred to in para. 65 of the preliminary
determination? What other basis, if any, does the US have for its view that imports were at a
high during this period?

Answer

15. To be clear, the United States does not contest Economía’s findings that imports were
concentrated in the March to August time period. At least five paragraphs in Economía’s published
determinations, in addition to pa ragraph 65 of the preliminary determination, indicate that imports
were in fact concentrated in this way:

• Paragraph 112 of the initiation notice states that “the petitioner indicated that major import
activity in the finished product occurs in the period from March to August when there are no
harvests of paddy rice and thus the period adequately reflects import activity.”

• Paragraph 113 of the same notice states that “[ f]or its part, the Secretariat noted that
according to the information provided by th e petitioner, the production of paddy rice is
concentrated in early October and early Februa ry of each year and that imports tend to be
concentrated in the period between March and August of each year, which corresponds to the
period proposed for investigation by the petitioner.”

• Paragraph 43(D) of the preliminary determina tion cites the petitioner’s argument that “the
main importing activity of white rice is carried out in the period in which there are not crops
of “paddy” rice, therefore the period from March to August of each year reflects such activity
. . . .”

• Paragraph 64 of the preliminary determin ation repeats the discussion contained in
paragraph 112 of the initiation notice.

• Paragraph 67 of the preliminary determination cites the petitioner’s argument that “the chosen
period is the one in which the paddy rice harvests are not performed and therefore it is the one
that reflects the import activity.”

16. In any event, the United States is objecting per se to Economía’s decision to limit its injury
analysis to only half of the POI, and not only to the fact that Economía limited its analysis to the
period when imports were concentrated. Mexico has conceded that seasonality was not relevant in
this investigation, and it is indisputable that Economía failed to examine at least half of the domestic
industry’s production over the course of the entire POI. Thus, Economía’s injury analysis would
have been inconsistent with WTO rules even if imports had not
 been concentrated in the March to
August time period.

17. First , Article 3.2 of the AD Agreement requires an investigating authority to consider whether
there has been a significant increase in dumped impor ts or significant price effects. Nothing in
Article 3.2 suggests that it is permissible for an in vestigating authority to conduct this analysis by
considering evidence for only half of the three-year POI.

18. Second
, Article 3.4 of the AD Agreement requires an investigating authority to evaluate all
relevant economic factors and indices having a bearing on the state of the industry, and Article 3.5 of
the AD Agreement requires an invest igating authority to examine all relevant evidence before it.
Neither provision permits an investigating authority to establish a three-year POI and then ignore the
evidence for half of that period.

19. Third , Article 4.1 of the AD Agreement normall y requires an investigating authority to
examine the domestic producers “as a whole”, or those producers whose collective output constitutes
a “major proportion of total domestic production.” In the rice investigation, domestic production of
milled long-grain white rice spanned the entire year, yet Economía only examined the production for
half of that period. If a Member only examines the ev idence for half of the POI, there is no way to be
certain that it is, in fact, meeting its obligations under Article 4.1.

20. Finally
, Article 3.1 of the AD Agreement requires a determination of injury to be based on
“positive evidence” and involve an “objective examina tion” of volume, price effects, and the impact
of the dumped imports on the domestic producers of th e like product. If an investigating authority
only considers the evidence for half of the POI, th ere is simply no way for the authority to determine
the true state of the domestic industry over the course of the entire POI, and thus no way to conclude
that the authority’s examination is consistent with Article 3.1.

Questions concerning the injury analysis

8. What, according to the parties, is the definition of the domestic industry allegedly
injured by the dumped imports? Does the domest ic industry considered in the injury analysis
include producers of paddy rice or only of milled rice?

Answer

21. The product under investigation was defined as long-grain milled rice. Therefore, the
domestic industry should have been comprised of the “domestic producers as a whole” of long-grain
milled rice (that is, the Mexican millers of padd y rice) or the domestic producers whose collective
output of long-grain milled rice constituted a major proportion of the total domestic production of that
product.6

22. In actuality, however, Economía failed to examine a consistent set of producers of long-grain
milled rice when it conducted its injury analysis. To the contrary, Economía repeatedly shifted its
analysis from one subset of producers to another, as it examined various factors. For example:

• Economía based its analysis of the effect of the imports on domestic prices on seven
producers’ data: IPACPA, Schettino, GEVSA, Mexicana de Arroz, Arrocera de Occidente,
7

• Economía based its analysis of production volumes on eight producers’ data: IPACPA,
Schettino, GEVSA, Mexicana de Arroz, Arrocera de Occidente, Arrocera del Bajio,
Industrias COREREPE, and Molino La Chontalpa.
8

• Economía based its analysis of sales on eleven producers’ data: IPACPA, Schettino,
GEVSA, Mexicana de Arroz, Arrocera de Oc cidente, Arrocera del Bajio, Industrias
COREREPE, Molino La Chontalpa, Champoton, Molino Trapiche de Labra, and Covadonga.9
• Economía based its analysis of inventories on si x producers’ data: IPACPA, Schettino,
GEVSA, Mexicana de Arroz, Arrocera del Bajio, and Champoton.10

• Economía based its analysis of capacity utilizati on on three to five producers’ data:
IPACPA, Schettino, GEVSA, Champoton, and Industrias COREREPE.11

6 AD Agreement, Art. 4.1.
8 Id., para. 303.
9 Id., paras. 305, 307.
10 Id., para. 317.

• Economía based its analysis of employment on seven producers’ data (but not the same seven
used for the analysis of prices): IPACPA, Sc hettino, GEVSA, Mexicana de Arroz, Arrocera
12

• Economía based its analysis of wages on three producers’ data: IPACPA, Schettino, and
GEVSA.13

• Economía based its analysis of financial perform ance (in terms of profitability, return on
investment, cash flow, and capacity to raise capital) on seven producers’ data: IPACPA,
Schettino, GEVSA, Mexicana de Arroz, Arrocera de Occidente, Arrocera del Bajio, and
Covadonga.
14

23. Thus, Economía’s injury analysis did not constitute an “objective examination” of the
domestic industry as defined in Ar ticle 4.1 of the AD Agreement, and its conclusions were not
supported by the positive evidence that Article 3.1 requires.

9. Could Mexico clarify whether the import da ta also include data relating to imports of
paddy rice or is the "rice" referred to in the Final Determination always "milled" rice? Are the
terms "rice", "white rice" and "long grain whit e rice" as they appear throughout the Final
Determination used as synonyms?

Answer

24. Depending upon the issues involve d, the public notices of the inve stigation make reference to
imports of paddy rice, imports of milled rice, and imports of long-grain milled rice (the product under
investigation). Even references to imports of “l ong grain white rice” should more properly refer to
“imports deemed to be long grain white rice”, however, given the absence of record data
distinguishing between subject and non-subject me rchandise. The United States discusses this point
further in response to question 10 below.

10. Could Mexico clarify whether paddy rice also enters the Mexican market under tariff
heading 1006.30.01? More in general, which categories of rice fall under this tariff heading?

Answer:

25. Under the Harmonized System, imports of padd y rice and imports of milled rice are classified
under different tariff headings. At the time of initiation of the rice investigation, imports of paddy rice
were classified under heading 1006.10.01 of the Mexican Tariff Schedule while imports of
semi-milled and milled rice were classified under heading 1006.30.01.

26. Heading 1006.10.01 applies (and applied at th e time) only to imports of paddy rice. In
contrast, heading 1006.30.01 included semi-milled and milled rice, irrespective of the grain length and
irrespective of whether the rice had been polished (“ pulido”), glazed (“ glaseado”), or parboiled
(“precocido”).15 Inasmuch as the Customs classifications did not indicate which white rice imports
were imports of long-grain white rice, the data that Economía used for its determinations of dumping
(prices) and injury (volumes and prices) were based on estimates.

11 Id., paras. 326, 328.
12 Id., para. 333.
13 Id., para. 334.
14 Id., para. 338.
15 See, e.g., Notice of Initiation, para. 19 (Exhibits US-1&2 ); Preliminary Determination, paras. 9, 22
(Exhibits US-14&15).

27. On 18 May 2001, while the investigation was ongoing, heading 1006.30.01 was modified to
apply only to imports of long-grain milled rice. Other imports previously classified under that
heading were shifted to a new heading 1006.30.99.
16 This modification post-dated the August 1999
end of the POI, and the United States is not aware of any evidence suggesting that Economía took
any steps to examine the new, more precise data.

11. Could the parties clarify whether the ri ce imported into Mexico under tariff heading
1006.30.01 covers rice in any or all of the 5 stage s of processing mentioned in para.161 of the
Final Determination and that, therefore, some of the rice imported under this tariff heading will
need to undergo further processing in Mexico before entering the consumer market as a
finished product?

Answer

28. Paragraph 161 of the final determination re ferences paddy rice, husked rice (rice with husk
removed), milled rice, and broken rice. During th e POI, paddy rice, husked rice, milled rice, and
broken rice were classified, respectively, under headings 1006.10.01, 1006.20.01, 1006.30.01, and
1006.40.01 of the Mexican Tariff Schedule.

29. Broken rice is not rice at a particular “stage of processing”, but rather a lower-value type of
milled rice resulting from breakage of grains duri ng the milling process. Product consisting entirely
of broken rice entered under tariff heading 1006 .40.01. The milled rice entered under tariff heading
1006.30.01, however, normally also contains some broken grains.
17 Milled rice containing higher
percentages of broken grains corresponds to lower “grades” of milled rice, and sells for lower prices.18

30. The United States explained in its fi rst written submission that the margin Economía took
from the petition and applied to Producers Rice and the unexamined producers and exporters was
adverse.
19 This “adverseness” was due in part to the f act that the petitioner compared an export price
based on all imports designated as long grain white rice to a normal value based solely on prices for
high grade rice with few broken grains, thus overstating the dumping margin.20

12. If it is correct that both subject and non-subject imports of rice from the United States
entered the Mexican market under the above ment ioned tariff heading, could Mexico explain
the methodology that was used by the investigatin g authority to separate the subject imports of
long grain white rice that came in under this heading from the non-subject imports of other
types of rice (short grain, etc.)?

Answer

31. As the United States explained in response to question 11, imports of paddy rice, husked rice,
and broken rice were classified under headings ot her than 1006.30.01 (to be specific, headings
1006.10.01, 1006.20.01 and 1006.40.01, respectively). However, heading 1006.30.01 applied to both
subject and non-subject imports ( i.e., semi-milled and milled rice, irrespective of the grain length and
irrespective of whether the rice was polished, glazed or parboiled).
21 Therefore, for purposes of its

17 See US First Written Submission, footnotes 167-68.
18 Id.
19 Id., paras. 159-165.
20 See id., paras. 163-64 and footnotes 166-68.
21 The petitioners specifically defined the subject product as “long-grain milled rice.” Initiation Notice,
para. 1 (Exhibits US-1&2). Economía did not modify this definition in any way and it initiated the investigation
with respect to “long-grain milled rice.” Id., para. 150. Moreover, the pe titioners explicitly excluded glazed

injury determination, Economía needed to separate imports of lo ng-grain milled rice from imports of
the other types of rice also classified under heading 1006.30.01.

32. The United States noted in its first written submission that Economía could have separately
identified imports of long-grain milled rice on th e basis of the information provided in the pedimentos
for all the shipments that entered under heading 1006.30.01 during the POI. Instead, Economía relied
on a flawed statistical procedure that focused on is olating imports of short-grain and medium-grain
rice, and that did not even address the question of how to separate out imports of glazed rice and
parboiled rice, which were also not part of the s ubject product. In fact, paragraphs 229-232 of the
final determination, setting out Economía’s methodology, make no reference to any attempt to
separate out glazed rice and parboiled rice.
22

13. Could Mexico clarify whether its statement that the domestic industry kept production
of long grain white rice stable throughout the ye ar by importing rice during the off-season, is a
reference to the imports of paddy rice, or whether such imports are also of semi-processed rice?

Answer:

33. If the Panel is referring to paragraphs 60-62 of Mexico’s first written submission, the
United States notes again that Mexico has provided no citations to the administrative record of the
rice investigation for the referenced table. To the contrary, Mexico’s reference to “common
knowledge” suggests that the table is a non-record document that Mexico prepared for purposes of
this dispute.

34. Furthermore, it is also important to reiterate Economía’s finding in the investigation that
Covadonga, one of the major Mexican producers, lo wered its prices by mixing low-priced imports of
milled
 rice from Argentina with its own production. The Argentine imports were priced below the
prices of the US imports. Economía failed to explain in its publis hed determinations how it could
have found any causal relationship between the a llegedly dumped imports from the United States and
Covadonga’s sales prices, given that Covadonga’s sales prices increased when its imports from
Argentina were excluded from the calculation.23

14. In para. 265 of the Final Determinatio n, the Investigating Authority discusses the
ex-factory price difference between Argentinian rice and US rice when exported to Mexico.
Could Mexico indicate how high the Mexican import duty for rice from non-NAFTA countries
like Argentina is? Was all the rice referred to as "rice imported from Argentina" fully
processed long grain white rice ready for domestic consumption?

15. Could Mexico clarify whether the inform ation contained in the "pedimentos" would
have allowed the investigating authority to determine with certainty the precise amount of
imports of the subject product, long grain white rice, from the United States and from other
countries, without any need to apply a methodology to distinguish subject from non-subject
imports?

rice, parboiled rice, short-grain rice, and medium-grain rice from the scope of the investigation, on the grounds
that these types of rice did not compete with domestic long-grain milled rice. Id., paras. 10-15.
22 Paragraph 239 of the final determination indicates that Economía used the methodology described in
paragraphs 229-232 for its analysis of 1999. For 1997 and 1998, Economía simply guessed that imports of
long-grain white rice entered in proportions equal to all imports of white rice from the United States. See id.
23 See Final Determination, paras. 286 and 290 (Exh ibits US-6&7); US First Written Submission,
para. 125.

Answer:

35. The United States explained in its first written submission that the pedimentos provide a
wealth of information for each import shipment.
24 Moreover, Exhibit US-12 reproduces the format
for the pedimentos that was applicable during 1999. As the instruction sheet for that document
indicates (the instruction sheet is also set out in Exhibit US-12), there are 57 specific fields in the
pedimentos, including fields for reporting a full descrip tion of the imported goods (field 32), the unit
price of the goods (field 33), and the quantity of goods involved (field 53), as reported in the invoice.
The instruction sheet also notes that field 32 sh ould contain “the nature and the technical and
commercial characteristics needed and sufficient for determining customs classification”.

36. Therefore, if Economía had so chosen, it could have collected the pedimentos for the
shipments of the subject product during the POI, and thus would have been in a position to separate
the subject imports (imports of long-grain milled rice) from non-subject imports (imports of
short-grain rice, medium-grain rice, glazed rice, and parboiled rice), and calculate precisely the price
and the quantity of the subject imports.

37. The United States notes in its response to question 17 below that Mexico has shown a
willingness to use the pedimentos where doing so will benefit domestic industries seeking the
imposition of anti-dumping measures. It also explains that Mexican petitioners have used pedimentos
released to them by the Mexican government to separate subject products from non-subject products
imported under the same tariff heading.

16. (a) Could the parties comment on the following argument made by China in its oral
statement (page 5):

"Given that both Article 5.2 and Article 6.1.3 use the same wording "known
exporter", the "known exporters" under Article 6.1.3 refer to "each known
exporter" under Article 5.2. Theref ore, the AD Agreement suggests that
investigating authorities shall rely on the petitioners to identify "known"
exporters in their petition(s)".
Answer

38. The United States does not agree with Chin a’s interpretation of Article 6.1.3 of the
AD Agreement. Article 6.1.3 places obliga tions on the investigating authority , not on the petitioner.
There is no textual link to Article 5.2 or any other la nguage in the text of Article 6.1.3 suggesting that
the authority is only required to send a copy of th e petition to the exporters known to the petitioner,
and not to the exporters known to itself. If the draf ters of the AD Agreement had intended to limit the
obligation in Article 6.1.3 in such a manner, they presumably would have said so.

39. The broader context of Article 6.1 supports the conclusion that the reference to “known”
exporters in Article 6.1.3 is to those exporters known to the investigating authority. The first sentence
of Article 6.1 states that “[a]ll interested parties in an anti-dumping investigation shall be given notice
of the information which the authorities require and ample opportunity to present in writing all
evidence which they consider relevant. . . .” Given the requirement to notify “all” interested parties,
there is no logical basis for limiting the obligati on to send the petition to only those exporters known
to the petitioner if the investigating authority knows of other exporters.

40. In addition, Article 6.2 of the AD Agreement st ates that “all” interested parties shall have a
full opportunity for the defence of their interests, and Article 6.4 states that authorities shall provide
opportunities for “all” interested parties to see rele vant information. These provisions illustrate the

24 US First Written Submission, n. 25 and accompanying text.

emphasis that Article 6 places on ensuring that the inte rests of all interested parties involved in an
anti-dumping investigation are protected, and militate against an interpretation of Article 6.1.3 that
would lead to fewer parties receiving the information they need to defend themselves.

41. Finally, China’s interpretation (like Mexico’s interpretation of Article 6.10 and its overall
approach to assigning margins to uninvestigated firms) is illogical, because it would create an
incentive for petitioners to under-report the range of exporters known to them, because doing so
would allow them to manipulate the investigation to the detriment of the investigated parties.

(b) Is it Mexico's view that the term "kno wn" exporters in Article 6.1.3 AD Agreement,
only relates to the exporters that are "made known" to it by the petitioner ?

(c) Could the US explain why it considers that it was so unreasonable of the authority to
assume, given the nature of the industry, that by making its public initiation
notification, by sending the questionnaires to the two known exporters and by notifying
the US authorities in Mexico, all exporters would be informed of the initiation of the
investigation and of the need to provide in formation? Is this not confirmed by the
behaviour of the USA Rice Federation (see also question 18 below)?

Answer

42. The issue before the Panel is whether Economía was under an obligation with respect to the
AD Agreement to take certain steps in the conduct of its investigation, and whether it failed to take
those steps.

43. In order to act consistently with Mexico’s WTO obligations, Economía could have, on one
hand, investigated and made an effort to calcula te an individual margin of dumping for each known
exporter or producer. Taking this approach would have required Economía to send a copy of the
anti-dumping questionnaire to each firm that was include d in the investigation and to ensure that each
firm understood the consequences of not replying before Economía could apply a facts
available-based margin to it.
25 On the other hand, Economía could have limited its investigation to a
subset of exporters and producers. 26 Taking this other approach would have required Economía to
apply a neutral margin, calculated in accordance w ith Article 9.4 of the AD Agreement, to the
unexamined firms.

44. However, Economía chose instead to take a third appro ach that is not consistent with the
AD Agreement: it limited its investigation by onl y sending its anti-dumping questionnaire to the two
firms that the petitioner designated as “known” expor ters in the petition. Then, having made this
decision, it applied an adverse, facts-available b ased margin, instead of a neutral margin, to the
unexamined firms. Economía’s approach served both to minimize the investigative burden on itself
and to maximize the anti-dumping margins applied to the foreign exporters and producers. But under
the AD Agreement, Economía cannot have it both ways.

45. First
, Economía limited its investigation by choosing to only send its questionnaire to the two
exporters specifically identified as “known” exporte rs in the petition, and by failing to send its

25 The Appellate Body noted in United States – Japan Sunset AB that Article 6.1 is one of several
provisions in Article 6 that, either explicitly or by implication, create obligations with respect to each individual
exporter or producer. Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on
Corrosion-Resistant Carbon Steel Flat Products from Japan , DS/244/AB/R, adopted 9 January 2004, para. 152
(“United States – Japan Sunset AB”).
26 Specifically, a reasonable number of interested parties using statistically valid samples, or the largest
percentage of the volume of the exports which could reasonably be investigated. AD Agreement, Art. 6.10,
second sentence.

questionnaire to The Rice Company, a known expor ter mentioned repeatedly in the petition and
described in Annex H of the petition as “one of the largest US exporters as regards paddy rice and
white milled rice”.27 It also limited its investigation by choosing not to consult the pedimentos, which
were in the possession of the Mexican government and identified every exporter of the subject
merchandise to Mexico during the POI, thus making them known to Mexico. Economía also limited
its investigation by taking no steps to review public ly available information that would have provided
names and contact information for every US producer in the United States. 28 T h e n , Economía
increased the difficulty for any firm not identified by the petitioner to participate in the investigation
by requiring it to appear in Mexico City to obtain a copy of the questionnaire.29

46. Second , Economía did not apply a neutral margin calculated in accordance with Article 9.4
of the AD Agreement to the unexamined producers and exporters. Rather, it applied an adverse, facts
available-based margin to them. There are numer ous provisions of the AD Agreement, however, that
place limitations on the ability of a Member to a pply margins based on the facts available. The
United States discussed these provisions at length in its first written submission and in its oral
statement at the first panel meeting.30 Economía failed to comply with any of them.

47. Third
, Article 12.1 of the AD Agreement requires an investigating authority initiating an
anti-dumping investigation to give public notice and notify the interested parties known to the
investigating authorities. Therefore, it is not enough for a Member to simply publish a notice of
initiation of an investigation and thereby meet its ob ligations under Article 12.1. The fact that the
USA Rice Federation (the “Federation”) came forwar d and asked to participate in the investigation
proves only that the Federation subsequently learned of the investigation. It does not prove that any
other firm knew that it had been “deemed” included in the investigation, or that the Federation or any
other firm was aware of Economía’s plan to breach its WTO obligations by applying an adverse, facts
available-based margin to firms that were never even sent a questionnaire. The initiation notice says
nothing of the sort.

48. The Panel’s question suggests that Economía might have taken the approach that it did
because of the “nature of the industry” that it was investigating. The United States is not aware of any
evidence on the record of the rice investigation s upporting this assumption. If anything, the record
evidence suggests instead that Economía’s approach reflected a conscious decision to favour the
interests of the petitioner by ignoring readily ava ilable information, shifting the burden for providing
the requisite notice from itself to the US exporters and producers, as well as to the US government,
and ensuring that a prohibitive facts available-b ased anti-dumping margin would be applied to as
many US exporters and producers as possible.

49. If Economía had not deemed every
 producer and exporter of the subject merchandise in the
country to be “in the investigation” when it only sen t its questionnaire to two of them, and if it had
applied a neutral “all others” margin calculated in accordance with Article 9.4 to the uninvestigated
exporters and producers, then Economía’s failure to provide the unexamined exporters and producers
the notice that Article 6.1 and paragraph 1 of An nex II require would not have been an issue.
Economía did claim that it was investigating every US exporter and producer in the United States,

27 Petition Annex H, at 2. (Exhibit US-10). Economía’s failure to send the questionnaire to The Rice
Company demonstrates that it is not accurate to state that Economía sent its questionnaire to the “known”
exporters.
28 See Exhibits US-18 and 19 (excerpts from the industry publication Rice Journal for 1999 and 2000,
respectively, providing contact information).
29 Initiation Notice, para. 153. (E xhibits US-1&2). The Panel shou ld also recall Mexico’s argument
that it would be “illogical” to provide such firms the full 30 days to respond to the questionnaire that the
AD Agreement requires. See Mexico’s First Written Submission, para. 220-21.
30 See, e.g., US First Written Submission, paras. 142-148, 174-183, 192-195; US oral statement at the
first panel meeting, paras. 45-51.

however, and it applied an adverse, facts availabl e-based margin taken from the petition to all but
three of them. As the United States dem onstrated in its first written submission, Economía’s
approach breached numerous provisions of the AD Agreement and the GATT 1994.

17. The US argues that all the Mexican investigating authority had to do was to look into
the "pedimentos" to find out who the other US exporters were.

(a) Could Mexico indicate whether this assertion is correct, do the "pedimentos" identify all
the exporters?

Answer

50. Exhibit US-12 reproduces the format for the pedimentos that was applicable during 1999. As
the United States noted in its first written submission, field 19 in the pedimentos requests the name of
the foreign supplier involved, together with its business address.
31

(b) Could Mexico clarify whether the investigating authority attempted to obtain the
"pedimentos"? If so, what was the reason why such information was not obtained, or
could not be used?

Answer:

51. In evaluating Mexico’s respon se to the Panel’s questions on the pedimentos, the Panel may
wish to also take into account Mexico’s willingness to use the pedimentos to benefit domestic
industries seeking the imposition of anti-dumping measu res. For example, on 17 May 2004 (the day
of the first panel meeting in this dispute), Economía published an initiation notice in its anti-dumping
investigation of Epoxidized Soybean Oil from the United States .32 The notice indicates that Mexico’s
Ministry of the Treasury released actual pedimentos to the petitioners in that case and that the
petitioners used data taken from the pedimentos to support their allegations of dumping and injury.33

31 US First Written Submission, n. 25 (final sentence).
investigación antidumping sobre las importaciones de aceite epoxidado de soya, mercancía actualmente
Importación y de Exportación, originarias de los Estados Unidos de América, independientemente del país de
procedencia, Diario Oficial de la Federacion (segunda seccion) 11 (17 May 2004) (“ Soybean Oil Initiation
Notice”) (Exhibit US-22). The attached exhibit is the Spanish-language original, because the United States does
not have an English-language translation of the notice.
33 In paragraph 16 of the initiation notice, Economía takes stock of all of the information that the
petitioners submitted in their petition. Economía notes in particular that the petitioners provided:

Customs declarations [ pedimentos] from 2002 through October 2003 accompanied by their
[corresponding] invoices, certificates of analysis and the translation of the latter.
Soybean Oil Initiation Notice, para. 16(C). Economía then notes in paragraph 24 that:
To document the export price, the comp anies EIQSA and RYMSA [the two petitioners]
provided customs declarations [ pedimentos] which establish the price at which epoxidized
soybean oil was exported from the United States of America to Mexico during the period of
investigation. The petitioners obtained this information from the Ministry of the Treasury
through ANIQ.
Id., para. 24 (ANIQ is the acronym for Asociacion Nacional de la Industria Quimica or the
National Association of the Chemical Industry) (emphasis added). Finally, in assessing the
petitioners’ allegations of injury, the initiation notice states that:
The petitioners obtained statistics of definitive imports corresponding to the tariff heading
1518.00.02 of Mexico’s Import Tariff Schedule at the level of customs declarations provided
by the General Customs Administration for the period of investigation.

52. Similarly, in Economía’s anti-dumping investigation of Crystal Polystyrene from the
United States, the petitioners obtained copies of pedimentos from the Mexican government and used
them to support their allegations of dumping and injury. 34 Moreover, the petitioners in the
Crystal Polystyrene investigation used the pedimentos to separate out the imports of the subject
product from other, non-subject merchandise imported under the same tariff heading.35

53. In sum, Mexico’s willingness to allow petitioners to use the pedimentos to support dumping
and injury claims in other investigations illustrates (1) that the pedimentos can be used to obtain value
and volume information for products subject to an ti-dumping investigations; and (2) that Economía’s
failure to use them in the investigation at issue to identify “known” exporters or to use them in its
injury analyses was neither objective nor unbiased.36

(c) Could Mexico explain whether the Mexica n investigating authority in its normal
practice verifies the information provided by the petitioners concerning the exporters
mentioned in the petition? If so, how does the authority go about checking this
information?

. . . The petitioners stated that the customs declarations were obtained through ANIQ and that
the totality of such declarations referred to epoxidized soybean oil.
According to the foregoing, the petitioners presented an import database that refers
exclusively to epoxidized soybean oil originating in the United States of America for the
period under review.
Id., paras. 64(A), 64(C), 64(D).

investigación antidumping sobre las importaciones de po liestireno cristal, mercancía actualmente clasificada
Importación y de Exportación, originarias de los Estados Unidos de América, independientemente del país de
procedencia, Diario Oficial de la Federaci on (primera seccion) 25 (13 January 2004) (“ Crystal Polystyrene
Initiation Notice”) (Exhibit US-23). Th e attached exhibit is the Spanis h-language original, because the
United States does not have an English-language translation of the notice.
35 Economía noted at paragraph 29A of the Initiation Notice that:

[Petitioners] obtained a representative sample of copies of pedimentos from the General
Administration of Customs for the period of investigation and identified the type of product
that each importer buys, the terms of sale
, the means of transportation, and the presentation of
the product (in bags or in bulk), inter-alia. Subsequently, they eliminated the shipments that do
not correspond to crystal polystyrene [the subject product]. The sample of pedimentos
accounts for 73.6 per cent of the total volume imported under tariff headings 3903.19.02 and
3903.19.99 of the TIGIE [Schedule of the General Import Tax, which is the formal name for
Mexico’s Harmonized Tariff Schedule] during the period under investigation.

Id., para. 29A (emphasis added) (Exhibit US-23).
36 In addition, paragraph XXVI of Article 144 of Mexico’s Customs Law provides that Mexico’s
Ministry of the Treasury shall:

[r]elease the information contained in the pedimentos to Industrial Chambers and Industry
Associations grouped in Confederations, as pr ovided in the Law of Business Chambers and
Confederations thereof, that participate with the Tax Administration Service [Mexico's IRS] in
the Program on Customs and Tax Control by Industrial Sector . . . .

This is yet another example of Mexico’s w illingness to allow its domestic industries to use
pedimento data to support their cases in anti-dumping proceedings.

Answer

54. The United States has been una ble to identify any evidence in Economía’s initiation notice
suggesting that Economía took any steps to verify the accuracy and adequacy of the information that
the petitioner submitted with respect to the “known” exporters in the investigation at issue. For
example, Economía did not question the petitioner’s omission of The Rice Company as a known
exporter, notwithstanding that the petitioner used in formation from The Rice Company’s web site to
support the petition.
37

18. Could the United States provide more information on the "USA Rice Federation",
which according to the Final Determination made itself known to the investigating authority.
Which and how many producers does it represent?

Answer:

55. The Federation is a rice industry organiza tion that serves as a national advocate for all
segments of the US rice industry. It conducts activities to influence government programs, develops
and initiates programmes to increase worldwide dema nd for US rice, and provides other services to
increase industry profitability for all industry segme nts. The Federation has three charter members:
the US Rice Producers’ Group, the Rice Millers’ Asso ciation, and the USA Rice Council. Each of
those organizations has a distinct identity and serves its own segment of the US rice industry.

56. The Federation was in existence when the petiti oner filed its petition, and it was one source
among many that the petitioner and Economía could have contacted to obtain publicly available
information on the names and contact information of US producers and exporters of long-grain white
rice. However, neither the petitioner nor Economía contacted the Federation.
38 In the context of this
dispute, the AD Agreement required Economía to calculate a margin for each known exporter and
producer, to send a copy of the anti-dumping questi onnaire to each firm that was included in the
investigation, and to ensure that each such firm understood the consequences of not replying before
Economía could apply a facts availa ble-based margin to it. 39 Mexico therefore cannot cite the fact
that the Federation subsequently came forward on its own and asked to participate in the anti-dumping
investigation as a means of relieving Mexico of its WT O obligations or of “curing” its failure to meet
those obligations.

19. Could the US explain why it considers that the Mexican authority failed to separate the
dumped from the non-dumped imports while the Final Determination on numerous occasions
refers to dumped imports separately and explicitly?

Answer:

57. As the Appellate Body stated in EC Bed Linen 21.5 AB , Article 3.1 of the AD Agreement
requires investigating authorities to ensure that their injury determinations are:

37 See Initiation Notice, para. 28(y) (Exhibits US-1&2).
38 For example, Economía did not send the Federation a copy of the petition or its anti-dumping
questionnaire or otherwise ask it for assistance in identifying members of the US rice industry. The Federation
obtained the questionnaire by coming forward on its own and appearing at Economía’s offices in Mexico City.
39 The Appellate Body noted in United States – Japan Sunset AB that Article 6.1 is one of several
provisions in Article 6 that, either explicitly or by implication, create obligations with respect to each individual
exporter or producer. Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on
Corrosion-Resistant Carbon Steel Flat Products from Japan , DS/244/AB/R, adopted 9 January 2004, para. 152
(“United States – Japan Sunset AB”).

made on the basis of “positive evidence” a nd an “objective examination” of the
volume and effect of imports that are dumped – and to the exclusion of the volume
and effect of imports that are not dumped.40
Thus, an investigating authority must focus its analysis on the dumped imports. Economía, by
contrast, made its determinations on the basis of an examination of the volume and effect of all
imports, including both the dumped and the non-dump ed imports. The US first written submission
lists several examples of this point.41

58. For example, Economía looked at all imports from the United States, and not just dumped
imports, in determining whether import levels ha d increased during the period of investigation.
42
Economía examined the import levels for Riceland and Farmers Rice – two companies that were
found not to be dumping – and based its overall c onclusions on data for the non-dumping Farmers
Rice.43

59. Similarly, Economía compared the fall in domestic prices to the fall in prices of all imports
(including third country imports), and not just the dumped imports.
44 Economía specifically included
in its analysis the prices of Farmers Rice and Riceland, neither of which were dumped, imports of
non-subject merchandise, and imports from Argen tina (which were priced below the dumped
imports).
45

60. Moreover, Economía stated that the “dumped imports” did not register an increase in their
share of domestic consumption, and that they maintained their share of internal consumption.
46 These
statements are only accurate, however, if they were based on data for all of the investigated imports,
and not just the dumped imports. The data for the dumped imports actually showed that:

• The dumped imports’ share of apparent domestic consumption actually fell – from
5.7 per cent in March – August 1997 to 4.8 per cent in March–August 1999.47

• Similarly, the dumped imports’ shar e of internal consumption fell – from 6.9 per cent in
March–August 1997 to 6.5 per cent in March–August 1999.48

• Finally, the share of the dumped imports in comparison with domestic production fell – from
10.2 per cent in March–August 1997 to 10.1 per cent in March–August 1999.49

41 See US First Written Submission, paras. 120-124.
42 See, e.g., Final Determination, para. 217 (Exhibit US-6&7).
43 Id., para. 228.
44 Id., paras. 262-296.
45 Id., paras. 281-82, 291. As the United States noted in its first written submission, Mexico failed to
explain how it could have found any causal relations hip between the allegedly dumped imports from the
United States and Covadonga’s sales price, given that Covadonga’s sales price increased when its sales of its
imports from Argentina were ex cluded from the calculation. See id., paras. 286 and 290; US First Written
Submission, para. 125.
47 Id., para. 248. By comparison, the investigated imports as a whole constituted 6.6 per cent of
apparent consumption in March to August 1997, and 6.5 per cent in March to August 1999. Id., para. 247.
48 Id., para. 254. By comparison, the investigated imports as a whole constituted 8.1 per cent of
internal consumption in March to August 1997, and 8.7 per cent in March to August 1999. Id., para. 247.
49 Id., para. 259. By comparison, the share of the inve stigated imports as a whole was 11.8 per cent in
March to August 1997, and 13.5 per cent in March to August 1999. Id., para. 258.

61. In sum, Articles 3.1., 3.2, and 3.5 of the AD Agreement required Economía to conduct an
objective examination of the volume, price effects, and impact of the dumped imports, and Economía
failed to do so.

Questions concerning Article 5.8 AD Agreement

20. In Mexico's view, does it suffice for one exporter to have been found to be dumping
above de minimis levels for all other exporters to be included in the application of the measure
under Article 5.8 AD Agreement or does Mexico co nsider that some sort of country-wide rate
needs to be established and that, only if that country-wide rate is above de minimis , will all
exporters from that country be covered by the measure? Could Mexico clarify whether an
exporter for which a below de minimis , but more than zero margin of dumping was found,
would receive a 0 per cent duty or would a duty be imposed on such an exporter equal to the
de minimis margin?

Answer

62. In the rice investigation, Economía did find only one company to be dumping. The other
three exporters that Economía examined either had margins of ze ro (Farmers Rice and Riceland) or
did not export to Mexico during the POI (Producers Rice).
50 Nevertheless, Economía applied the
anti-dumping measure to every producer or exporter in the United States, including Farmers Rice and
Riceland. Economía took no steps to examine whether the we ighted average margin of all exporters
was greater than de minimis when it decided to impose the anti-dumping measure.51

63. It is important to note that the consequence of (1) Economía’s refusal to apply Article 5.8 on
a firm-specific basis; (2) its practice of “deemi ng” every exporter and producer in the investigated
country as being included in the investigation; and (3) its application of adverse, facts available-based
margins to the unexamined exporters and producers, is that Economía will almost certainly find at
least one firm to be dumping, and thus never fi nd a basis to terminate an investigation due to
“de minimis” dumping margins. The only case where the language will have meaning for Mexico is
the exceedingly rare one where Economía individually investigates every
 exporter and producer of
the subject product in the country under investigation and calculates a zero or de minimis margin of
dumping for each of them. By effectively reading the de minimis dumping margins language out of
the AD Agreement, Mexico’s interpretation of Artic le 5.8 breaches the principle of effectiveness of
treaty interpretation.

21. Could Mexico clarify whether this is a correct understanding of the way in which the
Mexican system operates: if an exporter wa s not dumping during the POI, but a dumping
margin was found for other exporters of the pr oduct, this non-dumping exporter will be
included in the measure, but a 0% duty will be imposed. If later the review shows that the
exporter had since engaged in dumping, a duty will be imposed on him equivalent to the new
margin of dumping.

(a) Is this a correct understanding of the system?

(b) Will a new injury analysis be required before such duties may be imposed?

22. Could the US please react to the European Communities suggestion (in para. 8 in fine of
its written submission) that the US interpret ation of Article 5.8 AD Agreement raises the
practical problem of the possibility of two para llel proceedings against imports from the same
country?

50 See Final Determination, para. 400 (Exhibits US-6&7).
51 Id., paras. 398-404.

Answer:

64. It is not clear to the United States what the European Communities (EC) means when it
suggests that the US interpretation of Article 5.8 ma y lead to “parallel” proceedings against imports
from the same country, or how such an outcome would differ from the normal situation in an anti-
dumping investigation. In a sense, the “dumping” side of an anti-dumping investigation is always
 a
series of “parallel” investigations, because the inv estigating authority examines the export prices and
normal values of each individual fi rm under investigation, and it dete rmines an individual margin of
dumping for each such firm. It is this very asp ect of the dumping calculation that makes it possible
for an investigating authority to exclude from the anti-dumping measure those individual firms that
are investigated and found not to be dumping.

65. Furthermore, there is no reason to assume that a firm that is found not to be dumping in an
investigation, and excluded from the measure, would s ubsequently begin to dump. Unlike a firm that
is investigated and found to be dumping, a firm that is investigated and found not
 to be dumping has
demonstrated that it is able to sell in the export mark et without engaging in such practices. If the firm
is able to sell without dumping when there is no anti-dumping measure in place, it will presumably be
able to continue doing so thereafter (particularly if its competitors are subject to the measure). Thus,
there is no reason to assume that there would be an y need for an investigating authority to conduct a
new investigation.

66. Finally, the United States has excluded i ndividual firms from anti-dumping measures in the
past without encountering “practical problems” or “parallel proceedings”.

67. In sum, if a firm is investigated during the investigation and found not to be dumping, there is
no basis under the AD Agreement to apply the anti-dumping measure to that firm.

Questions concerning the use of facts available and the all others rate

23. In para. 176 of its submission, and para. 61. (c) of its oral statement, Mexico argues that
para. 6 of Annex II was complied with as the information of the non-shipping exporter,
Producers Rice, was "accepted".

(a) Could Mexico clarify what information th is company provided which was accepted by
the authority?

(b) Is Mexico of the view that para. 6 does not apply to situations in which the information
is not provided, or is not provided within a reasonable period of time, but only to
situations in which information which was provided is rejected?

24. Article 68 of the Foreign Trade Act mentions three categories of exporters to which the
highest margin shall be applied. One of these categories seems to cover the situation provided
for in Article 6.8 AD Agreement.

(a) Does Mexico consider that the two ot her categories (non-appearing exporters and
non-shipping exporters) are not covered by the situation described in Article 6.8
AD Agreement?

(b) What is the view of the US on the relevance, if any, of the fact that Article 68 of the
Foreign Trade Act provides for these three separate categories?

Answer

68. Subparagraph II of Article 64 appears to address the application of the facts available in the
situation set out in Article 6.8 of the AD Agreemen t. The fact that subparagraphs I and III require
Economía to apply the facts available in two additional situations is evidence that Article 64 requires
Economía to apply the facts available when the n ecessary prerequisites for doing so in accordance
with Article 6.8 and Annex II of the AD Agreement are absent.

69. Furthermore, subparagraph II of Article 64 is also inconsistent with WTO rules. The
United States noted this point, for example, in paragraphs 237-329 of its first written submission.

(c) Is Mexico of the view that the AD Agreement does not provide any rules on how to
calculate an all others rate for non-appearin g parties and non-shipping exporters, or is
Mexico arguing that the maximum duty th at can be imposed on such exporters under
the Agreement is a facts available margin?

Answer

70. Even if one were to interpret the AD Agreem ent as not providing rules on how to calculate an
all others rate for non-appearing parties and non-ship ping exporters, the fact remains that Articles 6.1
and 6.8 and Annex II of the AD Agreement do pr ovide rules that Members must follow when
applying margins based on the facts available. For the reasons set out in our first written
submission
52, Economía’s application of the facts available to Producers Rice and the unexamined
exporters and producers breached these rules.

25. In Mexico's view, does para. 7 of Annex II allow for unfavourable results only in case of
non-cooperative parties or in all cases in which the necessary information is not provided?

Questions concerning the challenge of the law as such

26. According to the parties, to what extent is the distinction mandatory / discretionary
legislation still applicable in WTO law after th e Appellate Body statement in para. 93 of its
decision in the US - Corrosion Resistant Steel case (DS 244)?
Answer

71. In paragraph 93 of the relevant report, the A ppellate Body stated that it had not, “as yet, been
required to pronounce generally upon the contin uing relevance or significance of the
mandatory/discretionary distinction. Nor do we consid er that this appeal calls for us to undertake a
comprehensive examination of this distinction.”
53 Therefore, the Appellate Body’s statements do not
provide grounds to conclude that the doctrine is no longer applicable in WTO law.

72. As the United States discusses in greater deta il in responding to question 27, Mexico has
alleged that there is no conflict between its WT O obligations and the ch allenged Mexican legal
provisions. Indeed, Mexico’s enactment of the chal lenged provisions is premised upon its view that
no such conflict exists. Therefore, the issue of whether Mexico has “discr etion” to ignore an FTA
provision that conflicts with the AD Agreement does not arise.

52 US First Written Submission, paras. 174-183, 192-195.
53 Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on
Corrosion-Resistant Carbon Steel Flat Products from Japan , DS/244/AB/R, adopted January 9, 2004, para. 93
(“United States – Japan Sunset AB”) (footnote omitted).

27. Could the US explain to what extent it considers the challenged Mexican legal provisions
to be mandatory in nature in light of the argument by Mexico of the direct effect of the
WTO Agreements in Mexican municipal law?

Answer

73. The so-called “mandatory/discretionary” doctr ine applies when a law is capable of being
applied in both a WTO-consistent a nd a WTO-inconsistent manner. Each of the legal provisions at
issue in this dispute, by contrast, requires Economía to act in a particular manner. For example,
Article 64 of the FTA does not say that Economía may apply the highest facts available to firms that
did not export to Mexico during the POI; it requires Economía to do so. Mexico has not alleged
otherwise. Mexico’s suggestion that it is require d to apply its laws in a WTO-consistent manner
cannot insulate those laws from chal lenge if the laws themselves grant Economía no discretion to
apply them in a WTO-consistent manner.

74. Furthermore, Economía is the administrator of Mexico’s anti-dumping laws, and Economía
views each of the challenged provis ions as in itself consistent with WTO rules, without any need to
somehow override these laws through application of WTO rules under municipal law. Mexico has
made this point repeatedly during this dispute. In other words, as a matter of Mexican municipal law,
Mexico has been interpreting its WTO obligations as not precluding the challenged laws from
requiring actions which are, in fact, WTO-inconsis tent. Mexico has therefore not considered it
necessary to test whether, under Mexican municipal law, the direct effect of the WTO Agreements
could actually override a law which on its face mandat es what is, in fact, WTO-inconsistent action.
Moreover, given Mexico’s view that, as a matte r of Mexican municipal law, WTO rules do not
preclude the challenged laws from operating as provide d in the laws themselves, Mexico does not, as
a matter of municipal law, have discretion to disregard their otherwise mandatory aspects.

75. Thus, the issue of “discretion” might only ar ise with respect to the challenged laws in the
event that this Panel finds the laws to be inconsis tent with Mexico’s WTO obligations. At that point,
it would fall to Mexico to explain in the implemen tation phase of the dispute what steps it would need
to take to reconcile its WTO-inconsistent laws with its WTO obligations, just as it would for any other
Member whose domestic law was found to be inconsistent on its face with WTO rules.

28. Could Mexico explain whether, in case the DSB were to adopt a panel report finding an
inconsistency of a Mexican law with the WTO Agreements, it considers that it would be obliged
to amend the law to bring the law into conformity with the WTO Agreement?

29. Could Mexico clarify whether private parties may be successful when they file a suit
against the administration before the domestic co urts of Mexico in case the administration
failed to comply with a statutory obligation, even if this obligation is inconsistent with the
WTO Agreement, requiring the administration to comply with such obligations?

30. Is it Mexico's view that if a certain provision is somehow found to be inconsistent with
the WTO Agreements, that is, in case a conflic t is found between the Foreign Trade Act and the
WTO Agreements, then the WTO Agreements would prevail by virtue of Article 133 of the
Political Constitution and Article 2 of the Foreign Trade Act?

31. In para. 263 - 266 of its submission, Me xico argues that the "representativeness"
requirement in Article 68 of the Foreign Trade Act is only a tool, and that the US is wrong in
suggesting that it is a condition sine qua non for the initiation of a review.

(a) Could Mexico clarify whether a review may be initiated if the party concerned cannot
demonstrate that its sales volume for the period was representative?

(b) What in the Mexican practice is considered to be a "representative" volume?

Answer

76. The United States has noted previously that the plain language of Article 68 imposes a
condition for exporters seeking reviews to demonstr ate that the volume of exports of the subject
merchandise during the review period was representative. In the event that Mexico contests this fact,
the Panel may wish to refer to the attached initiati on notice for a Mexican “Article 68” review that is
currently ongoing, which demonstrat es that Mexico does in fact require exporters seeking reviews to
make such a demonstration.
54

77. The review in question involves several expor ters. According to the initiation notice, each
exporter stated that “the volume exported in the period under investigation [the review period] was
representative, given that its shipments were made in commercial volumes and in a regular fashion
throughout such period”, and provided supporting data on export sales to Economía.55

78. Furthermore, paragraphs 38-42 of the attached initiation notice are entitled “Legal
Requirements for the Review”. Paragraph 38 stat es that, according to Article 68 of the FTA and
Article 99 of the Regulation, reviews of definitiv e anti-dumping duties are subject to the substantive
and procedural rules set forth in those articles. Therefore, inasmuch as the “representative exports”
requirement is set forth in Article 68, reviews are subject to that requirement.
79. Paragraph 47 of the initiation notice states that Economía applied two tests to determine
whether the exports of the various firms during the review period were representative. First,
Economía compared the export volumes of the firms ag ainst the volumes of their domestic (US)
sales. Second, Economía compared the export volumes of the firms against the average volume of
exports for all of the companies that were involved in the original investigation. At paragraph 48 of
the notice, Economía concludes that six of the firms pass ed both tests and, at paragraph 49, it
concludes that the volume of exports during the revi ew period by such firms was representative, “in
conformity with Article 68 of the Foreign Trade Law” (emphasis added).56

80. Finally, paragraph 92A of the notice states that , “in conformity with Article 68 of the [FTA],
the volume of exports made in the period that goes from January through July 2003 by [the companies
qualifying for the review] was representative.”

81. In sum, Mexico did require the exporters se eking the reviews to demonstrate that the volume
of their exports of the subject merchandise during the review period was representative.

32. Is it the view of Mexico that, with regard to new shippers (Article 89 D of the Foreign
Trade Act), the representativeness requirement is not inconsistent with the AD Agreement or
the Subsidies and Countervailing Measures ("SCM") Agreement because it is the only logical
and sensible way of ensuring that the Authorit y can make a proper price comparison for the
establishment of an individual margin (as Mexico seems to be saying in para. 270 of its written
submission) or is Mexico's arguments simply that it is not a condition sine qua non , and is this

impuesta a las importaciones de manzanas de mesa de las variedades Red Delicious y sus mutaciones y Golden
los Impuestos Generales de Importacion y de Exportacion, originarias de los Estados Unidos de America,
independientemente del pais de prodedencia , Diario Oficial de la Federacion (primera seccion) 16
(21 October 2003). (Exhibit US-24).
55 Id. at paras. 11C and 12A (Chelan), 15B and 16A (Dovex), 17C and 18A (Holtzinger), 19D and 20A
(L&M), 21B and 22A (Manson), 23B and 24A (Northern Fruit), 25C and 26A (Nuchief), 27F and 28A
(Oneonta), 29C and 30A (PAC), 31C and 32A (Rainer Fruit), 33D and 34A (Sage), and 35C and 36A (Stemilt)
(Exhibit US-24).
56 Mexico rejected the requests of the other exporters on unrelated grounds.

"requirement" for that reason not inconsis tent with the AD and SCM Agreements (as
paras. 263-266 of the written submission seem to suggest with regard to the similar requirement
in Article 68 of the Foreign Trade Act)?

Answer:

82. The United States has noted previously that the plain language of Article 89D imposes a
condition for exporters seeking reviews to demonstr ate that the volume of exports of the subject
merchandise during the review period was representative. In the event that Mexico contests this fact,
the Panel may wish to refer to the attached initiatio n notice for a Mexican “new shipper” review that
was initiated on the same date as the “Article 68" review discussed in response to question 31.
Paragraph 16 of the initiation notice states as follows:

In accordance with Article 89D of the FTL and Article 9.5 of the Anti-Dumping
Agreement, an expedited review will be undertaken to determine an individual
dumping margin for exporters or producers . . . , provided that such exporters
demonstrate that they have made export sales to Mexico of the subject merchandise,
in representative volumes, subsequent to the period of investigation in the proceeding
that gave rise to the anti-dumping duty at issue . . . .57
83. The document also notes the exporter’s assertion that it had exported a representative volume
of the subject merchandise to Mexico after the imposition of the anti-dumping measure, and that the
firm had provided evidence documenting its assertion.58

84. Thus, Economía did require the exporter seeking the review to demonstrate that the volume
of its exports of the subject merchandise during the review period was representative.

33. In its submission and oral statement, Mexi co does not directly reply to the US argument
in para. 261 of the US submission that Articl e 89 D of the Foreign Trade Act only applies to
producers, but clearly asserts that it will apply its laws in accordance with the Agreement.
Could Mexico clarify whether Article 89 D of the Foreign Trade Act also applies to exporters?

34. Could Mexico clarify whether, pending a judicial review, no definitive duties will be
imposed or collected as it seems to be arguing in paras. 301 - 302 of its written submission?

35. Could Mexico clarify whether the importation of "identical or like goods" on which
fines may be imposed under certain circumstances in Article 93 V of the Foreign Trade Act also

manzanas de mesa de las variedades Red Delicious y sus mutaciones y Golden Delicious, mercancia clasificada
Importacion y de Exportacion, originarias de los Estados Unidos de America, independientemente del pais de
prodedencia, Diario Oficial de la Federacion (primera secci on) 29, at para. 16 (21 October 2003) (emphasis
added). (Exhibit US-25).
58 Id., paras. 13(C), 14(G).

refers to imports of the products from third co untries, i.e. from countries other than the one
investigated in the anti-dumping investigation?

ANNEX B-2

RESPONSES OF MEXICO

Questions concerning the period of investigation

1. UNITED STATES

2. Mexico argues that "there is no provis ion in the AD Agreement which indicates how
remote an anti-dumping period of analysis must be" (para. 49 of its first submission).

 (a) In Mexico's view, is there no limit in the AD Agreement on how "old" the data
can be on which the dumping and injury an alysis may be based? If Mexico is of
the view that there are certain limits, please explain what, in Mexico's views, are
the criteria for determining whether a POI is consistent with the AD Agreement
or not?

Answer

 The AD Agreement establishes no limit rega rding the remoteness of the period of
investigation (POI).

(b) What is the Mexican practice in respect of the POI?
Answer

 The petitioners in an investigation suggest a POI in their application for initiation; the
investigating authority analyses the information and evidence contained in the application and decides
what POI it will use, which is reflected in the determination concerning the initiation of the
investigation.

 (c) Are there particular reasons why more recent data were not used in this case?
Is Mexico of the view that the POI used in this case was the one closest to the
initiation as far as "practicability" is concerned? If so, please elaborate.

Answer

 Mexico considers that an investigating aut hority is not required under the AD Agreement to
gather the data that are most recent in relation to the initiation of the investigation. As regards
agricultural products, Mexico notes that in its practi ce there may be an interval of several months
between the end of the period of investigation and the initiation of the investigation.

3. Could Mexico explain the reason why it considered that the March - August 6 month
period was appropriate for the injury analysis, including whether "seasonality" was one of the
reasons.

Answer

 The basic idea behind the periods of comparison used in the injury analysis in the rice case
was the following:

 The petitioner in the anti-dumping investigati on provided information on the unfair dumping
practice for the period March-August 1999. The inves tigating authority ("IA") conducted an analysis

to determine whether the unfair practice had ha d any effects during the period selected by the
petitioners and hence whether it had had any impact on the economic and financial indicators for the
domestic industry over the period in question. Th at six-month period was therefore defined as the
"period of investigation".

 In order to confirm the initial hypothesis, it w as considered that the period in question should
be distinct from previous periods in which the unfair practice either did not exist or had had no impact
on industry indicators. The IA acco rdingly gathered all the inform ation available over a period of
three years ("period analysed"), including the year c overed by the "period of investigation"; however,
it limited its comparison to strictly comparable periods, i.e. the periods in the preceding two years that
covered exactly the same months as those of the "period of investigation".

 The "period of investigation" over which the adverse effects of the unfair practice were
allegedly observed was thus compared with "comparabl e" periods in which the practice did not occur.
The hypothetical expectation was that the domestic industry would be found to be healthy in the
preceding comparable periods whereas unfavourable indicators would be observed in the "period of
investigation".

 The above approach was adopted to ensure stri ct comparability of the periods analysed; even
if it had been necessary in the long-grain white rice investigation to consider the seasonality factor –
which was not the case – comparing the "period of i nvestigation" with previous comparable periods
would eliminate any possible distortions in the market under analysis.

 The March-August period in this case is not mo re appropriate in the strict sense than any
other period that might have been selected. On th e other hand, as has already been pointed out, it is
the period for which the petitioners had information on the unfair practice and hence that which must
be compared against similar periods.

4. Could Mexico clarify whether the Panel is correct to understand that the investigating
authority had the data necessary to perform an injury analysis for the full three year period,
but chose not to use this data as it considered that the period should correspond to the period on
which the analysis for dumping was made? Please elaborate.

Answer

 Indeed, the IA had before it information c overing the period January 1997 to December 1999
and, for the reasons explained in the preceding reply, the comparison was made between the "period
of investigation" and similar periods over the preceding two years.

5. Could Mexico explain why it considered that this particular 6 month period was
adequate in terms of a dumping analysis. Was the fact that that was the period which the
petitioners cited the sole reason?

Answer

 Generally speaking, the IA considers that in pr inciple the "period of investigation" proposed
by a petitioner is adequate in terms of performing the dumping analysis and that it can serve as a basis
for the injury analysis. However, the IA has author ity to modify the initial "period of investigation"
provided that it receives relevant arguments, accomp anied by pertinent evidence, which lead it to
consider that the period is not adequate. This is why a simple, unsubstantiated allegation cannot serve
as a basis for modifying the period of investigation.

 It is important to note that the AD Agreemen t stipulates in footnote 4 that "[t]he extended
period of time should normally be one year but shall in no case be less than six months". The IA

considered that the period of investigation suggest ed by the petitioner fulfilled that obligation, and
hence accepted it for the purposes of initiating the investigation.

6. UNITED STATES

7. UNITED STATES

Questions concerning the injury analysis

8. What, according to the parties, is the definition of the domestic industry allegedly
injured by the dumped imports? Does the domest ic industry considered in the injury analysis
include producers of paddy rice or only of milled rice?

Answer

 The domestic industry covers only producers of long-grain white rice. It does not include
producers of paddy rice.

9. Could Mexico clarify whether the import da ta also include data relating to imports of
paddy rice or is the "rice" referred to in the Final Determination always "milled" rice? Are the
terms "rice", "white rice" and "long grain whit e rice" as they appear throughout the Final
Determination used as synonyms?

Answer:

 The entire injury analysis refers exclusively to long-grain white rice.

10. Could Mexico clarify whether paddy rice also enters the Mexican market under tariff
heading 1006.30.01? More in general, which categories of rice fall under this tariff heading?

Answer

 No. Only polished white rice enters under tari ff heading 1006.30.01. Paddy rice is imported
under heading 1006.10.01 and husked rice under heading 1006.20.01. Over the period of
investigation, several types of polished white ri ce in addition to long-grain white rice entered under
the first tariff heading, i.e. glutinous short-grain ri ce, parboiled rice, etc.; however, all of these share
the characteristics of white rice.

11. Could the parties clarify whether the ri ce imported into Mexico under tariff heading
1006.30.01 covers rice in any or all of the 5 stage s of processing mentioned in para. 161 of the
Final Determination and that, therefore, some of the rice imported under this tariff heading will
need to undergo further processing in Mexico before entering the consumer market as a
finished product?

Answer

 Rice is generally sold in large quantities and in bulk, and is transported by rail or ship over
vast distances. It is therefore practically impossible to export semi-processed rice from the
United States to Mexico – that is, in any of the five stages of processing – because in view of adverse
climate conditions or possible pest contamination (weevils, insects, fungus, bacteria, etc.), the only
forms in which rice can be imported are paddy rice, with its natural protective husk, and white or
polished rice, which has already undergone all th e stages of processing and from which the husk and
bran (the part most susceptible to pests) have been removed.

12. If it is correct that both subject and non-subject imports of rice from the United States
entered the Mexican market under the above ment ioned tariff heading, could Mexico explain
the methodology that was used by the investigatin g authority to separate the subject imports of
long grain white rice that came in under this heading from the non-subject imports of other
types of rice (short grain, etc.)?

Answer

 It was impossible to make an exact separati on, and various methodologies (volume of imports
from the United States, exporter/importer methodol ogy, methodology based on verifiable exporter
data and Mexican Rice Council (CMA) methodology) were therefore used to estimate the volume of
imports of the product. The methodologies are expl ained in paragraphs 217 to 244 of the Final
Determination.

13. Could Mexico clarify whether its statement that the domestic industry kept production
of long grain white rice stable throughout the ye ar by importing rice during the off-season, is a
reference to the imports of paddy rice, or whether such imports are also of semi-processed rice?

Answer

 The domestic industry is able to keep up production throughout the year by importing paddy
rice from the United States. As explained abov e, the importation of semi-processed rice is
complicated.

14. In para. 265 of the Final Determination, the Investigating Authority discusses the
ex-factory price difference between Argentinean ri ce and US rice when exported to Mexico.
Could Mexico indicate how high the Mexican import duty for rice from non-NAFTA countries
like Argentina is? Was all the rice referred to as "rice imported from Argentina" fully
processed long grain white rice ready for domestic consumption?

Answer

 A 10 per cent duty is paid on white rice im ported from Argentina and other countries with
which Mexico has no trade treaty.

 The reference in the Final Determination to imports from Argentina concerns long-grain
white rice. As stated in paragraph 365 of th e document, the product was purchased by a Mexican
producer of white rice and mixed with its own production for marketing purposes.

15. Could Mexico clarify whether the inform ation contained in the "pedimentos" would
have allowed the investigating authority to determine with certainty the precise amount of
imports of the subject product, long grain white rice, from the United States and from other
countries, without any need to apply a methodology to distinguish subject from non-subject
imports?

Answer

 The document known as the pedimento de importación (import declaration) includes various
types of information such as the volume and valu e of the imports, the exporting enterprise, the
importing enterprise, the duties and other taxes paid, the date of the transaction, the customs point of
entry of the goods, the type of transport used to ship them to Mexico, the tariff heading under which
the transaction was conducted, and so forth.

 However, the field for entering the product description does not necessarily contain all the
details of the product covered by the pedimento. Sometimes the imported product is simply described
as "white rice", without any specification as to whether it is long grain, short grain or parboiled. Since
the sole purpose of this field is to ensure that the product corresponds to its description in the tariff
heading and the latter covers many types of white rice, any white rice will come under that heading.

 The type of rice most extensively produced a nd sold in Mexico and the United States and
common to both markets is long-grain white rice, so it may reasonably be assumed that the majority
of imports concern this particular product. On th e other hand, it is not said that even if all the
pedimentos had been available it would have been possi ble to determine with certainty the total
amount of imports of the subject product.

 In addition, the rice trade involves a larg e number of operations. For example,
1,183 transactions were recorded in 1997, 1,088 in 1998 and 1,207 in 1999. It would have been
impractical, therefore, to request access to every single pedimento under tariff heading 1006.30.01 for
the three years covered by the "period analysed" a nd to single out the transactions that concerned
long-grain white rice. Where a pedimento merely stated that white rice was being imported, without
specifying whether it was long grain, short grain or of any other type, the investigation regarding that
particular pedimento would have required referring to additional documents such as the invoices
issued by the exporter, bills of lading, and so fo rth, in the hope that any of these would provide a
precise description of the product.

 This is why in such cases the IA relies on reasonable estimates of import volumes and prices
of the subject product. It also asks the exporters themselves to provide specific data on their exports
to Mexico. Replies from exporters are normally e xpected to cover the ma jor share of estimated
exports, thus ensuring the accuracy of the IA's calculations. In the long-grain white rice case, for
instance, the data for the "period of investigati on" received from the exporters cover 59.8 per cent of
the estimated imports (as indicated in paragraph 207 of the Final Determination). Unfortunately, the
exporters, despite having been requested to supply data covering the entire period analysed, failed to
do so.

16. (a) Could the parties comment on the following argument made by China in its oral
statement (page 5):

"Given that both Article 5.2 and Article 6.1.3 use the same wording "known
exporter", the "known exporters" under Article 6.1.3 refer to "each known
exporter" under Article 5.2. Therefo re, the AD Agreement suggests that
investigating authorities shall rely on the petitioners to identify "known"
exporters in their petition(s)".
Answer

 Mexico agrees with China's interpretation that the investigating authorities should rely on
known exporters identified by the petitioners in an investigation.

(b) Is it Mexico's view that the term "known" exporters in Article 6.1.3
AD Agreement, only relates to the exporters that are "made known" to it by the
petitioner?

Answer

 In the specific case of the notification under Article 6.1.3 of the AD Agreement, only
exporters notified by the petitioner are deemed to be known exporters.

(c) UNITED STATES

17. The US argues that all the Mexican investigating authority had to do was to look into
the "pedimentos" to find out who the other US exporters were.

 (a) Could Mexico indicate whether this assertion is correct, do the "pedimentos"
identify all the exporters ?

Answer

 The IA does not have the pedimentos, which are in the hands of the Ministry of Finance and
Public Credit. To request and await reception of these documents would significantly delay the
initiation of the investigation. Instead, the IA has an electronic list of the documents, which does not
contain all the information set out in the pedimentos.

 (b) Could Mexico clarify whether the invest igating authority attempted to obtain the
"pedimentos"? If so, what was the reason why such information was not
obtained, or could not be used?

Answer:

 For the purposes of initiating an investig ation, Mexico sees no requirement in the
AD Agreement to obtain the pedimentos or to identify all of the expor ters. The IA therefore did not
attempt to obtain them, because it considered that it was under no obligation to do so. To have sought
to obtain them would have considerably delayed th e initiation of the investigation (by approximately
40 days), because as many as 1,183 transactions we re conducted in 1997, 1, 088 in 1998 and 1,207 in
1999. As stated in the preceding reply, the IA relied on the list of pedimentos to initiate the
investigation.

 (c) Could Mexico explain whether the Mexican investigating authority in its normal
practice verifies the information provided by the petitioners concerning the
exporters mentioned in the petition? If so, how does the authority go about
checking this information ?

Answer

 The IA verifies the information provided in the petition using the list of pedimentos to check
the value and volume of exports. It cannot, howe ver, determine the number of exporters that
performed the transactions.

18. UNITED STATES

19. UNITED STATES

Questions concerning Article 5.8 AD Agreement

20. In Mexico's view, does it suffice for one exporter to have been found to be dumping
above de minimis levels for all other exporters to be included in the application of the measure
under Article 5.8 AD Agreement or does Mexico co nsider that some sort of country-wide rate

needs to be established and that, only if that country-wide rate is above de minimis , will all
exporters from that country be covered by th e measure? Could Mexico clarify whether an
exporter for which a below de minimis , but more than zero margin of dumping was found,
would receive a 0 per cent duty or would a duty be imposed on such an exporter equal to the
de minimis margin?

Answer

 Mexico considers that it does suffice for one e xporter to have found to be dumping above the
de minimis level for all exporters to be included in the application of the measure. Each enterprise
will be assigned the anti-dumping duty corresponding to its individual margin, provided that the total
volume of imports from the country in question is above the de minimis level.

 Any exporter for which the IA finds a more than zero and below de minimis margin of
dumping would receive a zero per cent duty.

21. Could Mexico clarify whether this is a correct understanding of the way in which the
Mexican system operates: if an exporter wa s not dumping during the POI, but a dumping
margin was found for other exporters of the pr oduct, this non-dumping exporter will be
included in the measure, but a 0 per cent duty will be imposed. If later the review shows that the
exporter had since engaged in dumping, a duty will be imposed on him equivalent to the new
margin of dumping.

 (a) Is this a correct understanding of the system?

Answer

 Yes. If the IA determines that an exporter has not been engaged in dumping, the exporter will
be assigned a zero per cent duty, which de facto does not constitute an anti-dumping duty. If a later
review shows that the exporter is engaged in dumping and its volume of exports exceeds the
de minimis level, the exporter will indeed be imposed a duty equivalent to the new margin of
dumping.

 (b) Will a new injury analysis be required before such duties may be imposed?

Answer

 Mexico has not conducted any reviews of exporte rs with a zero per cent margin of dumping.
Were it to do so, however, a new injury analysis would probably be carried out before an
anti-dumping duty was imposed.

22. UNITED STATES

Questions concerning the use of facts available and the all others rate

23. In para. 176 of its submission, and para. 61. (c) of its oral statement, Mexico argues that
para. 6 of Annex II was complied with as the information of the non-shipping exporter,
Producers Rice, was "accepted".

 (a) Could Mexico clarify what information this company provided which was
accepted by the authority?

Answer

 Paragraph 176 of Mexico's first written submissi on states that paragraph 6 of Annex II to the
AD Agreement addresses the case where the IA does not accept information or evidence from an
interested party. In the specific case of Producers Rice Mill, Inc. , the circumstances are different
because the IA did accept the information submitted by that company. In its various submissions,
Producers Rice Mill, Inc. explained that it had had no exports of the subject product during the period
of investigation and presented arguments in respect of the injury alleged by the CMA.

 As mentioned earlier, the IA thus took account in its investigation of the company's assertion
that it had had no exports of the subject product duri ng the period of investigation. Moreover, the IA
examined the information and evidence submitted by Producers Rice Mill, Inc. in the light of the
allegations of injury made by the petitioner, as stat ed in paragraphs 62, 138, 157 and 226 of the Final
Determination.

 (b) Is Mexico of the view that para. 6 does not apply to situations in which the
information is not provided, or is not provided within a reasonable period of
time, but only to situation in which information which was provided is rejected?

Answer

 Mexico considers that paragraph 6 of A nnex II to the AD Agreement does not apply to
situations in which information is not provided. On the other hand, it notes that the paragraph does
apply where the information provided has been rejected.

24. Article 68 of the Foreign Trade Act mentions three categories of exporters to which the
highest margin shall be applied. One of these categories seems to cover the situation provided
for in Article 6.8 AD Agreement.

 (a) Does Mexico consider that the two other categories (non-appearing exporters
and non-shipping exporters) are not c overed by the situation described in
Article 6.8 AD Agreement?

Answer

 Mexico considers it necessary to clarify that Article 68 of the Foreign Trade Act (FTA) does
not address the three situations referred to in the qu estion. In any event, the relevant provision is
Article 64 of the FTA.

 The cases covered by Article 64 concern the s ituation where exporters or foreign producers
fail to provide the information needed to determine margins of dumping, if any. This corresponds to
the second situation described in Article 6.8 of the AD Agreement.

 (b) What is the view of the US on the relevance, if any, of the fact that Article 68 of
the Foreign Trade Act provides for these three separate categories?

 (c) Is Mexico of the view that the AD Ag reement does not provide any rules on how
to calculate an all others rate for no n-appearing parties and non-shipping
exporters, or is Mexico arguing that the maximum duty that can be imposed on
such exporters under the Agreement is a facts available margin?

Answer:

 Indeed, Mexico considers that the AD Agreem ent does not regulate how the anti-dumping
duty should be calculated for exporters that did not appear in the investigation and had no exports
during the period of investigation.

25. In Mexico's view, does para. 7 of Annex II allow for unfavourable results only in case of
non-cooperative parties or in all cases in which the necessary information is not provided?

Answer:

 In the case of the long-grain white rice an ti-dumping investigation, the fact that
Producers Rice Mill, Inc. did or did not cooperate bears no relationship to the fact that the Mexican
IA calculated a facts-available dumping margin for that company, since Article 6.8 of the
AD Agreement stipulates – as mentioned earlier – that its provisions apply when an interested party
does not provide the necessary information. The IA therefore did not apply paragraph 7 of Annex II
to the AD Agreement. Instead, it applied paragraph 1 of the Annex, which clearly establishes that if a
party does not provide the information requested by the IA, the authority will be free to make
determinations on the basis of the facts available, including those contained in the application for
initiation.

Questions concerning the challenge of the law as such

26. According to the parties, to what exte nt is the distinction mandatory/discretionary
legislation still applicable in WTO law after th e Appellate Body statement in para. 93 of its
decision in the US – Corrosion Resistant Steel case (DS 244)?

Answer

 We note that in paragraph 93 of its report in US – Corrosion-Resistant Steel Sunset Review
(WT/DS244/AB/R), the Appellate Body recognizes the importance of distinguishing between the
mandatory and the discretionary nature of legislati on. It emphasizes that the distinction varies from
case to case and should not be applied in a mechanisti c fashion. This is why we believe that when a
petitioner and a respondent argue over the mandatory or discretionary nature of challenged provisions,
it is crucial for the Panel to analyse and, if n eed be, distinguish between the mandatory and the
discretionary nature of a law or of its various provi sions in the light of the particular circumstances of
each case.

 Mexico notes that in this dispute all of the United States' complaints concerning the alleged
inconsistency of a number of FTA Articles as such ar e premised on the fact that the provisions are
mandatory. Hence, the United States tacitly recogni zes that if those provisions were not mandatory
there would be no inconsistency whatsoever. In vi ew of the foregoing, Mexico considers it essential
to determine the discretionary or mandatory na ture of the FTA provisions challenged by the
United States. This will have to be done in the lig ht of the particular circumstances of the case, as
explained in Mexico's first written submission and Mexico's oral statement to the Panel.

27. UNITED STATES

28. Could Mexico explain whether, in case the DSB were to adopt a panel report finding an
inconsistency of a Mexican law with the WTO Agreements, it considers that it would be obliged
to amend the law to bring the law into conformity with the WTO Agreement?

Answer

 If the DSB were to adopt a final Panel report finding inconsistencies between the FTA and the
WTO Agreements, Mexico would be obliged to remedy those inconsistencies.

29. Could Mexico clarify whether private parties may be successful when they file a suit
against the administration before the domestic co urts of Mexico in case the administration
failed to comply with a statutory obligation, even if this obligation is inconsistent with the
WTO Agreement, requiring the administration to comply with such obligations?

Answer:

 It is our understanding that this question of th e Panel concerns a hypothetical case which in
no way prejudges the consistency of the FTA provisi ons challenged by the United States. Mexico
therefore requests that its reply be considered in that light.

 No. In proceedings before the domestic c ourts, the Mexican administration would in its
defence argue the application of Mexican law in a manner consistent with th e country's international
commitments, such as the WTO Agreement. C onsequently the Mexican courts, basing their
interpretation on the structure a nd characteristics of the Mexican legal system, would be under the
obligation to rule in favour of the administration. This would be the case if the country investigated
were a WTO Member; if not, domestic legislation prevails.

30. Is it Mexico’s view that if a certain provision is somehow found to be inconsistent with
the WTO Agreements, that is, in case a conflic t is found between the Foreign Trade Act and the
WTO Agreements, then the WTO Agreements would prevail by virtue of Article 133 of the
Political Constitution and Article 2 of the Foreign Trade Act?

Answer:

 Yes.

31. In para. 263 – 266 of its submission, Mexico argues that the "representativeness"
requirement in Article 68 of the Foreign Trade Act is only a tool, and that the US is wrong in
suggesting that it is a condition sine qua non for the initiation of a review.

 (a) Could Mexico clarify whether a review may be initiated if the party concerned
cannot demonstrate that its sales volume for the period was representative?

Answer

 As indicated on previous occasions, a demonstr ation that trade operations were made in
representative volumes is not a sine qua non requirement for initiating a review. Nevertheless, the
interested party will be required in the course of the review to demonstrate such representativeness so
that it can be assigned a margin of dumping.

 (b) What in the Mexican practice is considered to be a "representative" volume ?

Answer

 For the purposes of determining the representativ eness of volumes of exports to Mexico, the
Ministry does not use restrictive criteria but anal yses information provided by the exporters which
demonstrates that their volumes of exports are regular and representative of their sales policies.

 It is important to emphasize that exporters ar e required to demonstrate that their export sales
have not been intermittent during the period of anal ysis and that the volumes involved are consistent
with their trade practices.

 In order that the foregoing should not be not interpreted as the only means for enterprises to
demonstrate the representativeness of their volumes of export sales, the following are cited as further
examples:

• A comparison between the volumes of their export sales to Mexico during the period
of investigation and during the period under review;

• a comparison between the volumes of their domestic sales and export sales to Mexico
during the period under review;

• a comparison between the volumes of their e xport sales to Mexico and sales to other
markets during the period under review.

32. Is it the view of Mexico that, with regard to new shippers (Article 89 D of the Foreign
Trade Act), the representativeness requirement is not inconsistent with the AD Agreement or
the Subsidies and Countervailing Measures ("SCM") Agreement because it is the only logical
and sensible way of ensuring that the Authorit y can make a proper price comparison for the
establishment of an individual margin (as Mexico seems to be saying in para. 270 of its written
submission) or is Mexico's argument simply that it is not a condition sine qua non , and is this
"requirement" for that reason not inconsis tent with the AD and SCM Agreements (as
paras. 263 – 266 of the written submission se em to suggest with regard to the similar
requirement in Article 68 of the Foreign Trade Act)?

Answer

 Mexico supports both arguments cited by the Panel in its question regarding new shippers.

33. In its submission and oral statement, Mexi co does not directly reply to the US argument
in para. 261 of the US submission that Articl e 89 D of the Foreign Trade Act only applies to
producers, but clearly asserts that it will apply its laws in accordance with the Agreement.
Could Mexico clarify whether Article 89 D of the Foreign Trade Act also applies to exporters?

Answer:

 In the case of new shippers, Mexico applies Article 89.D of the FTA concurrently with
Article 47 of the FTA Regulations, as duly notifie d to the WTO and circulated to Members on
18 May 1995 in document G/ADP/N/1/MEX/1, for reviews of exporters or traders that so request.

34. Could Mexico clarify whether, pending a judicial review, no definitive duties will be
imposed or collected as it seems to be arguing in paras. 301 - 302 of its written submission?

Answer

 As stated in paragraph 302 of Mexico's firs t written submission and pursuant to Article 98.III
of the FTA, interested parties are not require d to pay anti-dumping duties and may provide a
guarantee of payment while the challenge procedure is under way.

35. Could Mexico clarify whether the importation of "identical or like goods" on which
fines may be imposed under certain circumstances in Article 93 V of the Foreign Trade Act also

refers to imports of the products from third co untries, i.e. from countries other than the one
investigated in the anti-dumping investigation?

Answer

 The fine provided for in Article 93.V of the FTA would apply, where appropriate, to imports
of identical or like goods from the country under investigation, regardless of the country of
provenance. It would not apply to imports from third countries.

ANNEX B-3

RESPONSES OF THE EUROPEAN COMMUNITIES

2 June 2004

1. Question (a)

 Could the EC provide a detailed reasoning on why it considers that the “investigation”
in Article 5.8 AD Agreement unambiguously refers to a country-wide investigation?

1. A country-wide approach to an anti-dumping investigation can be deduced from a number of
both substantial and procedural provisions of the Anti-Dumping Agreement.

2. Article 2 Anti-Dumping Agreement defines dumping. Article 2.1 Anti-Dumping Agreement
refers to the word “country” three times – and speci fically to the product exported “from one country
to another”. The word “country” is used a fu rther five times in Article 2.2 and footnote 2 Anti-
Dumping Agreement . These provisions reflect the language of Article VI GATT 1994, which also
repeatedly refers to imports from one country to another. They indicate that the concept of dumping
involves a strong connotation of a country-wide assessm ent, which will inevitably have an impact on
the scope of the investigation. Thus, absent particular provisions requiring a company specific
approach, a country-wide approach will reflect a permissible interpretation of the Agreement.

3. Article 5.2(ii) Anti-Dumping Agreement requires the provision of the “names of the country
or countries of origin or export in question”. This is the primary obligation, in the sense that it is
mentioned first in this provision, and is not qualified in any way – a complainant cannot state that it
does not know the country or countries of origin. There is a secondary obligation – to describe known
exporters or producers and impor ters. This obligation is, howe ver, subject to the important
qualification of the word “known” – if the names of the exporters or producers are not known, they do
not need to be indicated in the complaint. It would be a permissible interpretation of the Anti-
Dumping Agreement to initiate an original investigation even in circumstances where only the country
of origin would be known – even if there were no known exporters or producers. Thus, the country-
wide nature of the investigation is also reflected in the complaint, right from the start, that being the
very basis of a possible subsequent investigation.

4. Such an approach is confirmed by Article 12.1.1 Anti-Dumping Agreement , which requires
that the public notice of the initiation of an origin al investigation states the name of the exporting
country or countries. There is no obligation to state the names of known exporters or producers.
Thus, what is clear from both Article 5.2 (ii) and Article 12.1.1. Anti-Dumping Agreement is that the
investigating authority is not obliged to pick-out particular exporters from a given country of origin
for the purposes of the initiation of an investigation. The initiation of an anti-dumping investigation
may thus lawfully be country-specific.

5. In addition to these strong textual argumen ts, one may observe that the country-wide
approach to the initiation of an original investig ation is common sense. The primary objective of an
anti-dumping proceeding is to address the economic problem (injury) caused by dumped imports from
a particular source. The legal structures of expor ters and producers in the exporting country are, in
terms of the scope of the investigation, incidental and may be difficult or impossible to ascertain. If
the investigation were initiated in the first place only in relation to known exporters and producers,
then each time a further exporter or producer b ecame known, it would presumably be necessary to
extend the investigation. An investigating authorit y has no real means of ascertaining with complete
certainty the full list of exporters or pr oducers in the exporting country, and the
Anti-Dumping Agreement imposes no obligation on an investigating authority to actively seek out that
information.

6. The first part of the first sentence of Article 5.8 Anti-Dumping Agreement refers to the
rejection of an application under paragraph 1, an application which, we have just observed, could
lawfully be country-wide only – and indeed is likel y to be so. In order for this sentence to be
interpreted in an internally c onsistent manner, it necessarily follows that the ensuing obligation to
terminate the investigation contained in the sec ond part of the first sentence of Article 5.8 Anti-
Dumping Agreement refers to the same types of investigati on as those referred to in the first part of
the sentence, that is, including an investigation with a country-wide scope. Members may go further,
by considering such matters on a company specific b asis, but they are not obliged to do so by the
terms of Article 5.8 Anti-Dumping Agreement.

2. Question (b)

 What, if any, is the significance of the wording used in the second sentence of Article 5.8
that there shall be immediate termination “in cases” where the authorities determine that the
margin of dumping is de minimis? In the view of the EC, would one not expect the Agreement
to have used the singular “in such a case” in the second sentence of Article 5.8 as well, if, as the
EC argues, the investigation in the first sentence was a reference to a country-wide
investigation?

7. The European Communities understands the fina l words “the case” in the first sentence of
Article 5.8 Anti-Dumping Agreement to refer to the case as reflected in the application – which may
lawfully be country-wide, as explained above. Furthermore, the European Communities understands
the words “the cases” in the second sentence of Article 5.8 Anti-Dumping Agreement to have the same
meaning (except that the plural is used) as the word s “the case” in the first sentence of Article 5.8.
The European Communities agrees th at the text might have read : “in a case”. However, the
European Communities does not attach any significance to the use of the plural in the second sentence
of Article 5.8. It is common when drafting an ab stract and normative piece of legislation to have in
mind its future application in concrete terms to many individual cases (plural), and that may often be
reflected in the drafting.

8. The European Communities would find it unpers uasive to suggest that by using the plural
“the cases” the drafters intended to refer to sever al company specific cases or investigations, as
opposed to “the case” referred to in the first sentence of Article 5.8 Anti-Dumping Agreement – that
being a country-wide case. It seems to the Europ ean Communities that had the drafters wished to
write such a distinction into this provision, they would have done so more clearly – choosing, for
example, a difference abstract noun, rather than re lying on an over-subtle distinction between the
singular and the plural.

9. The European Communities finds further support for this view in the fact that the French
language version of the first sentence of Article 5.8 Anti-Dumping Agreement does not use the word
“cas”. That strongly militates in favour of rejecting the notion that the drafters intended to build on a
distinction between the singular and the plural – had they so intended they would surely have ensured
that the text had the same meaning in all the language versions.

10. Finally, the European Communities would ob serve that the second sentence of Article 5.8
Anti-Dumping Agreement refers both to de minimis dumping margins and to a negligible volume of
imports. Both of these are linked to the words “in cases where”. The import threshold factor is
clearly country-wide, as reflected, for example, in the fourth sentence of Article 5.8. It follows that
the words “in cases where” cannot, in themselves, l ead to the conclusion that the investigating
authority must conduct a company specific assessment.

Question (c)

 Is the EC of the view that its interpretation requires an authority to calculate a country-
wide margin to examine whether th is country-wide margin is above de minimis ? If not, why
not?

11. The European Communities considers that Article 5.8 Anti-Dumping Agreement imposes an
obligation on an investigating authority to calculate a country-wide dumping margin when the
investigating authority has reasons to believe that such a margin could be de minimis and the case
would thus have to be termin ated (even though individual expor ters might have dumping margins
above de minimis). Where it is obvious from the company specific dumping margin calculations that
the country-wide dumping margin is well above de minimis, no precise calculation is required.

Question (d)

 Is it the EC practice to calculate such a country-wide margin?

12. The answer to question (c) reflects th e practice of the European Communities.