RESTRICTED
WORLD TRADE G/ADP/W/641
G/SCM/W/73
ORGANIZATION 25October 1995
(95-3247)
Original: Spanish Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
REPLIES TOQUESTIONS POSED BYTHE UNITED STATES2CONCERNING
THE NOTIFICATION OFMEXICAN LAWS AND REGULATIONS3
Thefollowing communication, dated 15September 1995, hasbeenreceived fromthePermanent
Mission ofMexico.
________________
REPLIES TOQUESTIONS POSED BYTHE UNITED STATES OFAMERICA
CONCERNING MEXICAN LEGISLATION ONUNFAIR
INTERNATIONAL TRADE PRACTICES
Reply toquestion 1
Article 133ofthePolitical Constitution oftheUnited Mexican States establishes thatthe
Constitution andthelawsenacted bytheCongress oftheUnion, together withtreaties inkeeping
therewith, concluded bythePresident oftheRepublic, withtheapproval oftheSenate, willbethe
Supreme Lawofthewhole oftheUnion.
InMexico, treaties aredirectly applicable, inother words, theydonotstand inneedofa
legislative actaftertheyhavebeenpromulgated inorder forthemtoapply; theyaredirectly incorporated
inthedomestic legalsystem and,accordingly, theA-DAgreement 1994, which fulfils therequirements
indicated intheprevious paragraph, nowforms partofourlegislation onunfair practices; ithasthe
same status astheForeign Trade Act. Intheevent ofacontradiction between thetwo, the
A-DAgreement takes precedence, forArticle 2oftheActstates that"theprovisions ofthisActare
amatter ofpublic policy andapplicable throughout theRepublic, without prejudice totheprovisions
oftheinternational treaties oragreements towhich Mexico isaparty". Accordingly, intheevent of
anydiscrepancy between theGATT 1994Agreements andtheForeign Trade Act,orifthelatter were
silent, theprovisions oftheAgreement would prevail. TheRegulations under theForeign Trade Act
arelower instatus thantheGATT 1994Agreements, forwhich reason theprovisions oftheAgreements
takeprecedence overthose contained intheRegulations.
1Thisdocument cancels andreplaces thedocument dated 25October 1995
2G/ADP/W/2-G/SCM/W/10 andG/ADP/W/2/Suppl.1-G/SCM/W/10/Suppl.1.
3G/ADP/N/1/MEX/1 andG/SCM/N/1/MEX/1.G/ADP/W/64
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Reply toquestion 2
After approval bytheSenate oftheRepublic, theA-DandSCM Agreements form partof
Mexico 'slegal system andMexican lawdoesnotrequire alegislative acttoimplement them. The
Foreign Trade Actitself, inArticle 2,resolves theproblem ofinconsistency between theGATT
Agreements andtheForeign Trade Actbystating thattheprovisions contained ininternational treaties
towhich Mexico isaparty prevail overtheprovisions contained intheAct,andtherefore, nopanel
could require theMexican Government toamend theForeign Trade ActortheRegulations thereto.
Intheevent ofdirect contradictions ofconflicts between theGATT Agreements andtheForeign Trade
Act,apanel ortribunal, forthereasons already explained, willhavetoobserve theterms oftheGATT
Agreements.
Reply toquestion 3
BoththeActandtheRegulations statethattheprofit from imports anddistribution mustbe
deducted. Neither ofthese twoprovisions specifies themethod forcalculating theprofit margins.
However, Article 46.XI setsoutseveral methods forestimating theprofit margin, which would be
applicable inthiscase. Inparticular, inlinewithpastexperience these margins arelikely tobe
calculated, respectively, onthecorporate information oftheimporter andthedistributor, inconformity
withthemethod described inthefourth paragraph ofArticle 46.XI (theaverage profit margin foreach
enterprise).
Reply toquestion 4
Thisisnomore thanseeming discretion anditiscircumscribed bytheRegulations. Under
Article 39oftheRegulations, themargin ofdumping mustbecalculated insuchawaythatthenormal
value andtheexport price areforcomparable goods. Specifically, inthecaseofphysically different
products thisprovision requires themargin ofdumping tobeestimated bythetypeofgoods, which
aredefined byproduct codes. Thisrulemakes surethateachmargin isdetermined onthebasis of
strictly comparable data.
Again, thesecond paragraph ofArticle 56oftheRegulations explicitly indicates that,when
thegoods soldonthedomestic market arenotphysically identical totheexported goods, theprices
oftheformer mustbebrought intolinewiththeprices ofthelatter byadjusting thedifference inthe
variable costs between bothtypes ofgoods.
Reply toquestion 5
Theideabehind thisruleonrepresentativeness isclear: theveryconcept ofnormal value is
tiedinwiththeprices atwhich theexporter normally, commonly orgenerally sells. Bydefinition,
aprice cannot bedescribed astheonenormally charged unless itisforasubstantial amount of
transactions. Inturn, thelatter cannot bedefined interms oftheimporting country 'smarket, butin
linewiththetotalmarket. Thisistruesimply because theexporting country 'smarket maybe,and
frequently is,tiny.
Ininvestigations initiated aftertheadoption oftheAgreement, representativeness hastobe
evaluated according totheruleinfootnote 2ofArticle 2.2oftheA-DAgreement. Thisisbecause
alltheprovisions oftheAgreement formpartofourlegislation. However, thetextoftheruleinquestion
doespermit exceptions byacknowledging thatthefigure of5percentofsalestotheimporting country
shallonlybeapplied normally. Consequently, inkeeping withfootnote 2itisclearthat,inspecial
situations, therepresentative percentage maybefixed atafigure different from 5percent.G/ADP/W/64
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Reply toquestion 6
Article 36oftheForeign Trade Actspecifies thatprice adjustments shallbe"thenecessary"
adjustments. Foritspart,Article 2.4oftheCode states that"dueallowance shallbemade ineach
case,onitsmerits, fordifferences which affect price comparability". Itwillbeseenthatbothphrases
aresimilar. Furthermore, therulestopermit adjustments aresetoutindetail inArticles 54(adjustments
fordifferences inconditions ofsale), 55(differences inquantity), 56(differences inphysical
characteristics) and57(differences intaxcharges).
Reply toquestion 7
TheRegulations andtheA-DAgreement areconsistent, since theterms ofArticle 2.4.1 of
theA-DAgreement complement theprovisions ofArticle 58oftheRegulations. Thetwoofthem
areconsistent inregard tothegeneral rulethattherateofexchange tobeusedistherateonthedate
ofthetransaction. However, Article 58oftheRegulations doesnotinclude theotherprovisions relating
totherateofexchange contained inArticle 2.4.1 oftheA-DAgreement. Forthereason setoutin
thereplies toquestions 1and2,theSCM Agreement ispartofourlegislation and,therefore, its
provisions willbeobserved bytheinvestigating authority.
Reply toquestion 8
Under Article 40oftheRegulations, generally speaking boththenormal value andtheexport
price must becalculated withweighted average figures. Thisprovision applies bothtoordinary
investigations andtoadministrative reviews.
Reply toquestion 9
Thispercentage issimilar tothe"second 10"ofthe"10/90/10" United States practice before
theUruguay Round A-DAgreement. Infact,theMexican rulemight becalled "0/70/30"; inother
words, intheevent ofanargument ofabove-costs sales, allsalesmade under thiscondition -notonly
those from acertain baselevel-areexcluded andtheexclusions (ofsalesataloss)mustaccount for
lessthan70percentoftotalvolume ifthenormal value istocontinue tobedetermined onthebasis
ofprices. Nevertheless, forthereasons explained inparagraph 1,inanti-dumping cases initiated after
Mexico 'sadoption oftheUruguay Round instruments, theadministrative authority hastobring its
practice intolinewithfootnote 2ofArticle 2.2oftheADAgreement.
Reply toquestion 10
There isnoinconsistency whatsoever between Article 2.2.2 oftheA-DAgreement and
Article 46.XI oftheRegulations. Allmethods toestimate profit established inArticle 46ofthe
Regulations relate totheactual dataoftheexporter himself. Anyofthemethods usedbytheMinistry
isconsistent withArticle 2.2.2 oftheAgreement.
Reply toquestion 11
Firstofall,thereference toArticle 47oftheRegulations isincorrect. Therulecontained
inthatArticle isthatthe"costo deadquisición "(inEnglish "purchase cost" andnot"buying cost")
oftrading enterprises istheprice intheordinary course oftrade, provided itishigher thanthesum
oftheproduction costplustheoverheads (selling, administrative, financial andother costs) ofthe
suppliers.G/ADP/W/64
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Trading enterprises, generally speaking, sellnotonthedomestic market butonlyonexport
markets. Ifatrading enterprise onlybuys products below cost(clearance sales, forexample or
remainders) itsresale prices toforeign markets would tendtobethesame; otherwise thedifference
between oneexport price andanother would benegligible. Thismeans that,ifthenormal value of
suchenterprises isfixed according toanexport price toathirdcountry, thisnormal value would tend
tobeverysimilar totheexport price totheMexican market, which would make thedumping margins
veryclose tozeroorevennegative. Thisresult, however, would beillogical, because allthegoods
inquestion would havebeensoldoriginally under lossconditions.
Under theruledescribed above, thenormal value cannot befixed onthebasis oftheresale
prices ofproducts purchased below cost. Thisposition isperfectly consistent withArticle 2.2.1.1
oftheA-DAgreement, which states thatthecosts involved indetermining thenormal value "shall
normally becalculated onthebasisofrecords keptbytheexporter ...provided thatsuchrecords ...
reasonably reflect thecostsassociated withtheproduction andsaleoftheproduct under consideration".
Reply toquestion 12
Article 46.IX oftheRegulations relates tocosts suchasrestructuring expenses. These are
recognized inaparticular yearandtherefore, from apurely accounting standpoint, form partofthe
totalproductioncostforthatyear.However,fromapurelyeconomicstandpoint,including"once-for-all"
restructuring expenses incosts produces distortions. Firstly, theresulting costs aresohighthatall
domestic salesseem tobemade ataloss. Secondly, theconstructed values obtained bycumulation
ofsuchcosts aresohighthatallexport operations seem tobedumped. Thefactisthatproducers
cannot setsufficiently highselling prices toabsorb totalrestructuring expenses because, iftheydid
so,theywould bepriced outofthemarket.
Theabove ruleallows restructuring expenses tobeallocated overtime, likedepreciation, so
thatthePOIendsupbyabsorbing onlytheamortization forthatyear. (Forexample, 1/15oftotal
restructuring expenses, when theperiod ofamortization is15years.) However, ifonlytherestructuring
expenses incurred inthePOIaretaken intoaccount, theabove rulewould always benefit theexporter:
therestructuring expenses related tothePOIwould beallocated between thatperiod andthesubsequent
periods, thereby invariably reducing theestimated totalcostofproduction forthePOI.
Tomake surethattheeffects ofapplying theruleinquestion areneutral, restructuring expenses
incurred before thePOIarealsotaken intoconsideration. Forexample, thePOImayendupby
absorbing 1/15oftherecognized restructuring expenses inthatperiod, 1/15oftherestructuring expenses
recognized fiveyears earlier and1/15for10years back. Itwillbeseenthatitisaruleintended to
ensure impartial treatment oftheparties involved intheproceedings.
Thisruleisdefinitely consistent withArticle 2.2.1.1 oftheA-DAgreement which states that
"costs shallbeadjusted appropriately forthose non-recurring items ofcostwhich benefit future and/or
current protection".
Reply toquestion 13
Ininvestigations initiated aftertheentry intoforce oftheADAgreement, theinvestigating
authoritymustacceptinformationthatisinconformitywiththeGAAPintheexportingcountry,provided
theprinciples reasonably reflect thecostsassociated withtheproduction andsaleoftheproduct under
consideration, forthereasons explained inparagraph 1.G/ADP/W/64
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Reply toquestion 14
TherelevantprovisionisArticle48oftheRegulations.UnderthisArticle,thesubstitutecountry
must besimilar totheexporting country andthesimilarity between thetwomust bedefined ina
reasonable manner. TheArticle inquestion explicitly states thatthesubstitute country mustbeselected
onthebasis ofeconomic criteria. Thecriteria arenotlisted, butexamples aregiven bymeans ofthe
criterion offactor intensiveness. Theideabehind thiscriterion isthattheexporting country hasa
comparative advantage withregard totheproduct under investigation andthiscomparative advantage
consists ofthefactthatthatcountry hasrelatively lowcostsforthefactor(s) usedintensively inproducing
theproduct. From thisstandpoint, acountry isanappropriate substitute country totheextent that
itisshown tohavethesame comparative advantage astheexporting country.
Accordingly, theparties involved inaninvestigation ofthistypefindtheyarenormally involved
inaseries oftechnical debates about thetwopoints: (1)What isthefactor intensiveness oftheproduct
under investigation? (assuming thatthefactor intensiveness isthesame, regardless ofwhether itis
theexporting country orthesubstitute country) and(2)Does thesubstitute country haverelatively
lowcostsforthefactor(s) usedintensively inproducing theproduct inquestion? Obviously, thephysical
similarity between theproduct ofthesubstitute country andproduct oftheexporting country isalso
relevant matter ofdiscussion (toresolve thispoint, theinvestigating authority oftenresorts totechnical
expertise). Inanyevent, itshould benoted that,since useofthefactor intensiveness criterion isnot
compulsory, theparties arefreetoadduce theirarguments about similarity onthebasis ofanyother
economic criterion which isreasonable forsuchpurposes.
Reply toquestion 15
Asexplained inthereply toquestion 1,theinvestigating authority willobserve theprovisions
ofArticle 1oftheSCM Agreement.
Reply toquestion 16
Asexplained inthereply toquestion 1,theinvestigating authority willobserve theterms of
Article 2oftheSCM Agreement and,especially theconcept ofspecificity incontained inArticle 2,
which takes precedence overthedefinition ofsubsidy contained inArticle 37oftheAct.
Reply toquestion 17
Pursuant totheexpress provisions ofArticle 62oftheForeign Trade ActandArticle 90of
theRegulations, innocasemaytheauthority decide onduties higher thanthemargin ofsubsidy
determined inthecourse oftheadministrative investigation. Therefore, inimplementing Article 19.4
oftheSCM Agreement inMexico, theauthority itselfwillcontinue tofollow itscustomary practice.
Reply toquestion 18
Themethod forcalculating thebenefit conferred ontherecipient ofasubsidy isbeing worked
outbytheinvestigating authority toinclude itinthechanges being prepared fortheForeign Trade
ActandtheRegulations, which must comply withtheprovisions oftheSCM Agreement.
Reply toquestion 19
Asexplained previously inthereply toquestion 1,theA-DAgreement ispartofourdomestic
legislation and,therefore, theinvestigating authority mustobserve theexemptions setoutinArticle 8.2.G/ADP/W/64
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Reply toquestion 20
Theexpression "domestic industry" inArticle 40oftheForeign Trade Actshould beconstrued
ascomplying withtherequirements oftheSCM Agreement. Accordingly, theauthorities, mindful
offootnote46oftheAgreement,complywiththisprovision,whichrequirestheexpression"likeproduct"
tobetaken tomean aproduct which isidentical, orintheabsence ofsuchaproduct, another product
which hascharacteristics closely resembling those oftheproduct under consideration. Itispossible
that,intheimmediately preceding stage inthelineofproduction ofcertain products, there areinfact
domestic producers ofgoods with"...characteristics closely resembling those oftheproduct under
consideration", thereby complying withthelikeness standard stipulated intheGATT 1994 Codes.
Thisprovision would apply solely intruecases ofexceptions.
Astosupport bydomestic producers fortheapplication, inthiscase,theinvestigating authority
willobserve theprovisions oftheGATT 1994 Agreements.
Reply toquestion 21
Thecurrent Foreign Trade Actdoesnotinclude anobligation tonotify thegovernment ofthe
exporting country thatanapplication hasbeensubmitted, before proceeding toinitiate theinvestigation.
However, forthereasons setoutinthereply toquestion 1,theinvestigating authority isobliged to
provide suchnotice.
Reply toquestion 22
Article 53oftheForeign Trade Actisconsistent withArticle 6.1oftheA-DAgreement and
Article 12.1oftheSCM Agreement. Mexican legislation would appear togrant alower period for
submitting thereply toquestionnaires, butinreality theperiod islonger, because theForeign Trade
Actstipulates inArticle 3that,forthepurpose ofcalculating suchperiods, thedaysshallbeworking
days, whereas inthecaseoftheA-DAgreement andtheSCM Agreement, theyarecalendar days.
Reply toquestion 23
Admittedly, theRegulations under theForeign Trade Actdonotstatethatonlyinexceptional
circumstances willaninterested party berelieved oftheobligation tosubmit apublic summary ofa
document. However, asstated inthereply toquestion 1,theinvestigating authority willobserve the
provisions ofArticle 6.5.1 oftheA-DAgreement and12.4.1 oftheSCM Agreement.
Reply toquestion 24
Theinvestigating authority, onthebasis ofArticle 6.4oftheA-DAgreement oftheTokyo
Round, hasrejected confidential information which wasunwarranted andwhich thesupplier ofthe
information wasunwilling tomake itpublic ortoauthorize itsdisclosure ingeneralized orsummary
form. Thisobligation isalsofound intheA-DAgreement andtheSCM Agreement ofGATT 1994,
andonthebasis thereof theinvestigating authority isobliged tocomply withtherelevant rules.
Reply toquestion 25
TheForeignTradeActandtheRegulationsprovidefortheimpositionof"countervailingduties",
aterm thatisapplied both toduties imposed inanti-dumping investigations andinsubsidies
investigations. Itisnotaproblem oftranslation butaproblem ofterminology (inreferring to
"countervailing duties" theForeign Trade Actrefers without distinction toanti-dumping andG/ADP/W/64
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countervailing duties). Thetime-limits fortheinvestigations wereexplained inthedocuments notified
andapplybothtoanti-dumpingandtosubsidiesinvestigations.Itisclearfromthemthattheinvestigating
authority fully complies withthemaximum period forcompleting investigations provided forin
Article 5.10oftheA-DAgreement.
Reply toquestion 26
Itisonlyaseeming contradiction between Article 57oftheActandArticle 17.3oftheA-D
Agreement, forthefollowing reason. Itshould beremembered thattheActitself, inArticle 3,stipulates
thatperiods established indaysmustbetaken asworking days, whereas theperiods established inthe
Agreement areincalendar days. Accordingly, these periods areinreality verysimilar and,infact,
theperiod under Mexican legislation islonger thantheperiod established intheAgreement; both
legislations aretherefore perfectly compatible.
Again, although theActandtheRegulations donotestablish anytime-limit fortheduration
ofprovisional countervailing measures, theprovisions oftheAgreement must beobserved.
Reply toquestion 27
Itisonlyaseeming contradiction between Article 57oftheActandArticle 17.3ofthe
A-DAgreement, forthefollowing reasons. Itshould beremembered thattheActitself, inArticle 3,
stipulates thatperiods established indaysmustbetaken asworking days, whereas theperiods established
intheAgreement areincalendar days. Accordingly, these periods areinreality verysimilar and,
infact,theperiod under Mexican legislation islonger thantheperiod established intheAgreement;
bothlegislations aretherefore perfectly compatible.
Again, although theActandtheRegulations donotestablish anytime-limit fortheduration
ofprovisional countervailing measures, theprovisions oftheAgreement must beobserved.
Reply toquestion 28
Itwould bethelackofelements constituting anunfair international trade practice, inother
words, noproof oftheexistence ofprice discrimination orofasubsidy, nodemonstration ofinjury
tothedomestic industry ornodemonstration ofacausal link.
Reply toquestion 29
Since, aspointed outinthereply toquestion 1,theA-DandSCM Agreements havebeen
incorporated indomestic legislation onthismatter, application ofAgreements ismandatory forthe
investigating authority, forwhich reason Mexico must comply withtheterms oftheAgreements in
regard toprice undertakings.
Reply toquestion 30
Article72oftheActestablishesthat,inexaminingapriceundertaking,theinvestigatingauthority
mustdetermine whether theundertaking eliminates theinjurious effect oftheunfair practice. From
theinterpretation ofthisArticle itiseasytoseethat,before accepting anundertaking, itmust first
bedetermined whether ornotanunfair practice causing injurious effects tothedomestic industry exists;
otherwise, theundertaking could notbeaccepted, because ithasnoraison d'être.G/ADP/W/64
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Inaddition, itshould notbeforgotten that,atthepresent time, theprovisions oftheA-D
Agreement andtheSCM Agreement ofGATT 1994mustbeobserved bytheinvestigating authority,
asindicated inthereply toquestion 1.
Reply toquestion 31
Theinvestigatingauthority,attherequestoftheinterestedpartyandinapplicationoftherelevant
articlesoftheA-DAgreementortheSCMAgreement,maycontinuewiththeadministrativeinvestigation
and,intheevent ofanegative determination oftheexistence ofanunfair practice, cancel therelevant
price undertaking, because ithasnoraison d'être.
Inaddition, asstated inthereply toquestion 1,theprovisions oftheA-DAgreement andthe
SCM Agreement must beobserved bytheinvestigating authority.
Reply toquestion 32
Theinvestigating authority, onthebasisofArticle 18.2oftheSCM Agreement, cannot accept
anyprice undertaking from anexporter iftheexporter doesnothavetheconsent oftheexporting
Member.
Thisisbased ontheA-DAgreement itself, forasstated inthereplytoquestion 1,theprovisions
ofAgreement must beobserved bytheinvestigating authority.
Reply toquestion 33
Pursuant toArticle 53,theMinistry sends totheinterested parties known toit,ontheday
following publication oftheinitiation resolution, thenotification oftheinitiation ofinvestigation together
withofficial investigation forms (investigation questionnaires) indicating theinformation required for
thecaseinquestion, andtheformat inwhich theinformation istobepresented.
Inthisnotification, theinvestigating authority notifies theparties oftheforminwhich allthe
information theysupply must bepresented andtheperiod forsodoing, withdueclarification ofthe
consequences offailing tofulfil these formalities.
Again,Mexicanlegislationdoesrequiretheinvestigatingauthoritytogivenoticeofthetime-limit
forsubmitting information; infact,anyrequest bytheauthority must, inorder forittobevalid, specify
theperiod granted; otherwise, therequested party would beleftdefenceless.
Inaddition, asindicated inthereply toquestion 1,itshould notbeforgotten that,atthepresent
time,theprovisions oftheGATT 1994A-DandSCM Agreements mustbeobserved bytheinvestigating
authority.
Reply toquestion 34
Forthereasons explained inthereply toquestion 1,theinvestigating authority mustobserve
therules contained inAnnex IIoftheA-DAgreement.
Reply toquestion 35
Forthereasons explained inthereply toquestion 1,theinvestigating authority mustobserve
therules contained inAnnex IIoftheA-DAgreement.G/ADP/W/64
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Reply toquestion 36
Although Mexican legislation doesnotsetoutanyprinciple ontheuseofthebestavailable
information, fromthedateofentry intoforce oftheA-DAgreement ithastobeensured that,whenever
useismade ofthiskindofinformation, alltherequirements ofAnnex II,paragraph 7oftheCode
willbefulfilled, forthereasons explained inthereply toquestion 1.
Reply toquestion 37
Although itisnotnewforMexico tohaverecourse toalternative sources ofinformation, for
itisaroutine practice ofinvestigating authority, itisnewtousealternative sources when having recourse
tothebestavailable information; these sources arenotusually ontheadministrative filebecause they
havenotbeensupplied bytheinterested parties. However, theauthority willhavetofollow Annex II
oftheA-DAgreement, forthereasons explained inthereply toquestion 1.
Reply toquestion 38
Theinvestigating authority, forthereasons explained inthereply toquestion 1,mustobserve
therules contained inAnnex IIoftheA-DAgreement.
Reply toquestion 39
Theinterpretation oftheprovisions ofArticle 100oftheRegulations isnotcorrect. Onthe
onehand, thearticle setting outthesubsidies andprocedural rules applicable toreviews, made both
exofficio andonrequest, isArticle 99oftheRegulations, notArticle 100.
Ontheother hand, withtheentry intoforce oftheUruguay Round Agreements, particularly
theA-DAgreement, theirprinciples willhavetobeobserved, forthereasons explained inthereply
toquestion 1.
Reply toquestion 40
Inbothcases, thestandard, found inArticle 101ofRegulations, isthesame, namely theselling
prices havechanged insuchawayastowarrant areview ofthemargins ofprice discrimination to
bring themintolinewiththecircumstances onthemarket, orachange intheamounts ofthesubsidies
granted toexporters thathaveadirect effect onthepossible amounts oftheduties.
Reply toquestion 41
Theparties aresimply required toshow thattheyhavealegal interest intheinvestigation,
inother words, toshow thattheyhavebeenexporters, importers ordomestic producers during the
period theyasked tobereviewed, andinthecaseofexporters, tosupply information onthenormal
value andexport price, sothattheinvestigating authority canproceed toexamine theinformation
provided bytheenterprise inquestion andmake apreliminary determination astowhether there are
sufficient grounds forconsidering thatthere issome change inthecircumstances thatledtothe
application ofthecountervailing duty.
Reply toquestion 42
Since Article 70oftheActisclearinestablishing thatcountervailing duties lastforaperiod
offiveyears, withnorequirement other thanadeclaration bytheinvestigating authority; ifaftertheG/ADP/W/64
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period haselapsed, theauthority failstonotify theparties andtopublish thecorresponding declaration,
anyinterested party mayrequest theauthority todeclare theelimination oftherespective duties and
sonotify theother parties, inwhich casetheauthority mustrespond aspromptly aspossible, without
anyfurther formalities.
Despitethisreply,itshouldbepointedoutthatinnocircumstancedoestheinvestigatingauthority
haveanobligation toissue thecorresponding notification.
Reply toquestion 43
Since price undertakings aremeasures equivalent totheapplication ofcountervailing duties,
theyaresubject tothesame principles, forwhich reason theprinciples contained inArticle 70ofthe
ActandArticle 107oftheRegulations apply; accordingly, theprinciples contained intheGATT
A-DAgreement andSCM Agreement must alsoapply tothem.
Reply toquestion 44
Thepurpose ofsubsequent reviews istomake surethatunfair trade practices haveactually
disappeared; accordingly, ifnomargins ofprice discrimination arefound inthethird consecutive
annual review, thedutyisannulled. Obviously, since thelegislation draws nodistinction between
anti-dumping andanti-subsidy ("countervailing") duties andrefers solely to"cuotas compensatorias",
thisprinciple applies toboth.
Reply toquestion 45
TheForeign Trade Actestablishes themaximum time-limits forissuing preliminary andfinal
determinations, andthey areinaccord with theprovisions oftheA-D Agreement andthe
SCM Agreement. TheMexican investigating authority isrequired torespect themandtherefore take
special careinspecifying theperiods foranyformality tobecompleted inorder toproceed better (arrive
atthetruth), soasnottoexceed thetime-limits established inthelawandtorespect therightofthe
parties involved toadefence.
Reply toquestion 46
Throughout theoperation oftheanti-dumping system inMexico, theinvestigating authority
hasmade surethatanyinformation supplied bytheparties inthecourse ofanadministrative investigation
isproperly assessed, something which, inthecaseofexporting enterprises, means infactcalculating,
where information sopermits, anindividual margin ofdumping. Consequently, now, withtheentry
intoforceoftheA-DAgreement,aspecificfoundationexistsandtheinvestigatingauthoritywilltherefore
continue withtheadministrative practice ithasfollowed uptonow, except fortheexceptions setout
intheA-DAgreement.
Reply toquestion 47
Theinvestigating authority ispreparing theappropriate reforms initslegislation inorder to
grant newshippers theopportunity forthistypeofreview, asprovided forintheA-DAgreement.
Meanwhile, andsincetheAgreement ismandatory inourcountry, reviews requested byanynewshipper
shallbecarried outinconformity withtheprovisions oftheAgreement, forthereasons setoutinthe
reply toquestion 1.G/ADP/W/64
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Judicial Review :
Reply toquestion 48
Under Article 238oftheFederal TaxCode, thereview standard applicable isthefollowing:
I. Lackofcompetence oftheofficial whohasissued orordered orhandled theproceeding
thatproduced thedetermination.
II. Omission offormal requirements demanded bylaw,affecting thedefences ofthe
individual andexceeding thescope ofthecontested resolution.
III. Procedural defects affecting thedefences oftheindividual andexceeding thescope
ofthecontested resolution.
IV. Iftheactsthatgaverisetotheresolution werenotcarried out,weredifferent orwere
wrongly assessed, oriftheresolution wasissued incontravention oftheprovisions
applied ortheproper provisions were notapplied.
V. When theadministrative resolution issued under discretionary powers isnotinkeeping
withthepurposes forwhich theActconfers suchpowers.
49. Thisquestion wasnotposed: question 48moves ontoquestion 50.
Reply toquestion 50
Yes,evidence ofinjury orthreat ofinjury isregulated bytheForeign Trade Actandthe
Regulations andaninjury testisautomatically granted toanyMember oftheWorld Trade Organization,
thereby fulfilling theterms oftheAct,which grants itinconformity withtherespective Agreements.
Reply toquestion 51
"Material lossorimpairment" means thattherehasbeenadecrease in,harm toordeterioration
ofoneormore oftheassets orrights ofanenterprise affected byunfair international trade practices.
"Deprivation ofanylawful, normal gain" means thattheearnings orprofits anenterprise should
havereceived asaresult ofitslawful commercial activities havebeenaffected because ofimports under
unfair international trade practices.
Thedefinition of"injury" setoutinArticle 39oftheForeign Trade Actisconsistent with
Article 3oftheA-DAgreement andArticle 15oftheSCM Agreement, since theymean thesame
thing.
Reply toquestion 52
Article 40oftheForeign Trade Actissupplemented byArticle 3oftheA-DAgreement and
Article 15oftheSCM Agreement, which, forthereasons explained inthereply toquestion 1,must
beobserved bytheMexican investigating authority.
Article 40oftheForeign Trade ActandArticle 60oftheRegulations define what istobe
considered asrepresentative ofthedomestic industry; theydonotdefine what istobeconsideredG/ADP/W/64
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asthedomestic industry, forwhich reason, intheabsence ofadefinition ofdomestic industry inthe
ActandtheRegulations, thedefinitions intheGATT 1994 Codes necessarily applies.
Reply toquestion 53
Themeaning of"sector" inthecontext ofArticle 41oftheForeign Trade Actrelates tothe
"industry" orthetotality ofdomestic producers ofgoods identical orsimilar tothoseunder investigation.
Thismeaning isconsistent withtheterms ofArticle 3.4oftheA-DAgreement andArticle 15.4of
theSCM Agreement, which speak of"...relevant economic factors ...having abearing onthestate
oftheindustry ...".
Reply toquestion 54
Article 41.IV oftheForeign Trade Actisconsistent withArticle 3.4oftheA-DAgreement
andArticle 15.4oftheSCM Agreement, since themeaning ofthephrase "Any other elements which
theMinistry deems appropriate" isthesame asthemeaning ofthearticles oftheGATT 1994
Agreements, when they state that"The examination oftheimpact ofthedumped imports
(A-D Agreement), orofthesubsidized imports (SCM Agreement), ...shallinclude anevaluation of
allrelevant economic factors andindices ...".
Reply toquestion 55
Article 42.IV oftheForeign Trade Actisconsistent withArticle 3.7(iv) oftheA-DAgreement
andArticle 15.7(v) oftheSCM Agreement, sincethestipulations inparagraph IVareexactly thesame.
Reply toquestion 56
Only onestandard isapplied regarding consideration ofthevolume ofimports. There isno
difference between Article 41.IoftheForeign Trade ActandArticle 64.IoftheRegulations, since
bothspeak ofaconsiderable increase ("aumento considerable").
Article 41.IoftheForeign Trade ActandArticle 64.IoftheRegulations areconsistent with
Article 3.2oftheA-D Agreement andArticle 15.2 oftheSCM Agreement, since theterms
"considerable" and"significant" havethesame meaning.
Reply toquestion 57
The"considerably lower" concept, inthecontext ofArticle 41.II oftheForeign Trade Act
andArticle 64.II.C. oftheRegulations, means when theselling priceoftheimported product, compared
withtheselling price ofthelikedomestic product, islesstoasignificant degree, asestablished in
Article 3.2oftheA-DAgreement andArticle 15.2oftheSCM Agreement. Article 41.IIoftheForeign
Trade ActandArticle 64.II.C oftheRegulations areconsistent withArticle 3.2oftheA-DAgreement
andArticle 15.2oftheSCM Agreement, since theterm"considerable" hasthesame meaning as
"significant".
Reply toquestion 58
Inthefirstplace, Article 64.II.A oftheRegulations onlyrefers to"likeproducts". When the
legislation speaks of"imports under investigation" itrefers toimports thatarethesubject ofthe
application, inother words, imports onwhich evidence ofdumping orsubsidies wasaccepted; again,
inspeaking ofother imports notunder dumping orsubsidization conditions thereference isnecessarilyG/ADP/W/64
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toimports ofproducts similar tothose under investigation butfromsources different fromthesources
being investigated. Thereason formaking acomparison ofprices ofdumped orsubsidized imported
products withtheprices ofnon-subject imports (likegoods) isperfectly consistent withtheterms of
Article 3.5oftheA-DAgreement andArticle 15.5oftheSCM Agreement, bothofthemGATT 1994
agreements, which refertoother factors tobetaken intoaccount inestablishing thecausal linkbetween
thedumping orsubsidy andtheinjury:
...Factors which mayberelevant inthisrespect include thevolume andprices ofimports
notsoldatdumping prices (ornon-subsidized imports oftheproduct inquestion).
Clearly, iftheprices ofimported likeproducts notsoldatdumping orsubsidized prices are
lower thanthose ofdumped imports, thisfactwould beafactor, oratleastitwould beasignthat,
ifdomestic prices weredepressed orcontracted, itwasduetootherimports oflikeproducts notimported
under dumping conditions.
Reply toquestion 59
BothArticle 41oftheForeign Trade Act,which relates tothedetermination ofinjury, and
Article 42,which relates tothedetermination ofthethreat ofinjury, specify thefactors tobetaken
intoconsideration insuchdeterminations andstatethattheMinistry musttakeintoaccount "Any other
elements which theMinistry deems appropriate", thereby leaving openthepossibility fortheMinistry
toexamine other elements notspecified intheAct. Fortheirpart,theRegulations, inArticle 64.IV
andArticle 68.VI, alsocover thepossibility oftheMinistry taking intoconsideration other elements
notspecifically indicated intheRegulations.
Article 3.4oftheAgreement includes factors which arenotexpressly mentioned intheForeign
Trade ActortheRegulations, buttheinvestigating authority mustconsider them, forthereasons set
outinthereply toquestion 1.Accordingly, insuchcases, consideration willbegiven tothemagnitude
ofthedumping margins.
Reply toquestion 60
Thefactors mentioned inArticle 3.5oftheA-D Agreement andArticle 15.5 ofthe
SCM Agreement arealsocovered byArticle 69ofRegulations, forwhich reason thereisnoomission
inthisregard noristhere anyconflict withtheGATT Agreements.
Reply toquestion 61
Article 68oftheRegulations under theForeign Trade Actiswholly compatible withArticle 3.7
oftheA-DAgreement.ThefactthatArticle68oftheRegulationsspeaksofa"well-foundedprobability"
isnogreat problem; itsimply means thatthe"probability" mustbedetermined onanobjective basis.
Furthermore, thereisnoinconsistency withArticle 3.7oftheA-DAgreement andArticle 15.7
oftheSCM Agreement.
Reply toquestion 62
When Article 68oftheRegulations speaks of"generally accepted methods" itrefers tothe
accounting, statistical andeconometric techniques andmethods thatareusedingeneral practice.G/ADP/W/64
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Reply toquestion 63
TheForeignTradeActandtheRegulationsdonotexpresslyspecifywhatthedeminimismargins
ornon-negligible volumes tobeobserved bytheinvestigating authority are.However, thecriteria
established intheWTO Agreements mustbefollowed, forthereasons setoutinthereply toquestion 1.
Reply toquestion 64
Inthiscase,theinvestigating authority mustobserve theprovisions oftheGATT 1994Codes,
forthereasons setoutinthereply toquestion 1.
Reply toquestion 65
Intheadministrative procedure, boththeForeign Trade ActandtheRegulations specify certain
time-limits foreachphase. Admittedly, Article 53oftheActdoesspecify aperiod of30working days
tosubmit evidence andpleadings, butthisisforthemtobeconsidered fortheprovisional resolution,
forwhich reason itisnottheonlyopportunity intheprocedure fortheparties topresent theirdefense;
there areother opportunities asprovided forinArticle 164oftheRegulations, which establishes a
period of30working daysfromthepublication oftheprovisional resolution fortheinterested parties
tosubmit thearguments andevidence theyconsider relevant. Accordingly, there isnocontradiction
whatsoever between theterms oftheActandtheterms oftheA-DandSCM Agreements, since the
Agreements statethatduring thewhole oftheinvestigation theparties shallhaveanopportunity to
defend theirinterests.
Reply toquestion 66
Article 70oftheActdoes notcontravene theprovisions oftheA-DAgreement orthe
SCM Agreement, inasmuch astheystatethattheduties shallbeeliminated inaperiod offiveyears
from theirdateofentry intoforce, provided none oftheinterested parties hasrequested areview.
Since theCodes areincorporated inourlegislation, asindicated inthereply toquestion 1,theMexican
authorities mustobserve theprovisions ofArticle 12.3oftheA-DAgreement andArticle 21.3ofthe
SCM Agreement, which supplement Article 70oftheAct. Accordingly, there isnocontradiction
whatsoever between theterms oftheActandtheterms oftheA-DandSCM Agreements.
Reply toquestion 67
Article 80.II oftheRegulations states thatfinalresolutions, aswellasinitiation resolutions
andpreliminary resolutions, shallcontain thegrounds andreasoning justifying thedecisions, andit
istherethatthereasons foraccepting orrejecting thearguments ofexporters orimporters aresetout.
Accordingly, there isnocontradiction whatsoever between theprovisions oftheForeign Trade Act
andtheprovisions oftheA-DandSCM Agreements.