RESTRICTED
WORLD TRADE G/ADP/W/67
G/SCM/W/76
10October 1995
ORGANIZATION(95-2999)
Original: Spanish Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
REPLIES TOQUESTIONS POSED BYVENEZUELA1CONCERNING
THE NOTIFICATION OFMEXICAN LAWS AND REGULATIONS2
Thefollowing communication, dated 15September 1995, hasbeenreceived fromthePermanent
Mission ofMexico.
_______________
MEXICAN LEGISLATION ONANTI-DUMPING PRACTICES
AND COUNTERVAILING MEASURES
Questions from Venezuela
Venezuela hasthefollowing questions concerning theMexican legislation onanti-dumping
practices andonsubsidies andcountervailing measures notified on2May1995 under World Trade
Organization Articles 18.5and32.6respectively.
DETERMINATION AND DEFINITION OFSUBSIDY
TheMexican legislation onsubsidies andcountervailing duties saysnothing about the
determination andcalculation oftheamount ofthesubsidy, andlittlethatisspecific asregards
theadjustments totheamount andthedefinition ofsubsidy.
HowdotheMexican authorities determine theamount ofthesubsidy andtheadjustments,
andwhat criteria dotheyusetodetermine whether apractice canberegarded asasubsidy, in
accordance withArticles 1,2and14oftheAgreement onSubsidies andCountervailing Measures?
Reply
Themethod forcalculating thebenefit conferred ontherecipient ofasubsidy hasbeenduly
worked outbytheinvestigating authority andinadministrative practice ithasbeenusedinvarious
proceedings. Basically, thebenefit consists ofatransfer ofresources under conditions different from
market conditions. Consequently, thebenefit ismeasured asthedifference between themarket price
andtheprice actually paid, multiplied bythequantity ofthesubsidized good concerned (water,
electricity, etc.withregard tosubsidies oninputs). See,forexample, thepreliminary resolutions on
1G/ADP/W/38-G/SCM/W/46.
2G/ADP/N/1/MEX/1 andG/SCM/N/1/MEX/1.G/ADP/W/67
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flatrolled steelpublished intheDiario Oficial delaFederación (Official Journal), on14,17and
18April 1995. However, thismethod hasnotyetbeenincorporated inMexican legislation. The
amendments andadditions totheForeign Trade ActandtheRegulations nowbeing prepared include
thismethodology, which must beperfectly consistent withtheprovisions oftheSCM Agreement.
However, itisimportant tonotethatArticles 1,2and14oftheSCM Agreement must be
observed bytheMexican investigating authority. Thiscompulsory requirement isbased onArticle 133
ofthePolitical Constitution oftheUnited Mexican States, which establishes thattheConstitution and
thelawsenacted bytheCongress oftheUnion, together withtreaties inkeeping therewith, concluded
bythePresident oftheRepublic, withtheapproval oftheSenate, willbetheSupreme Lawofthewhole
oftheUnion. InMexico, treaties aredirectly applicable, inother words, theydonotstand inneed
ofalegislative actaftertheyhavebeenpromulgated inorder forthem toapply; theyaredirectly
incorporated inthedomestic legalsystem and,accordingly, theSCM Agreement 1994, infulfilling
therequirements indicated, nowforms partofourlegislation onunfair practices; ithasthesamestatus
astheForeign Trade Act.
Conflicts between bothsystems areresolved bytheActitself, which stipulates inArticle 2
thatitsprovisions areamatter ofpublic policy andapplicable throughout theRepublic, without prejudice
totheprovisions oftreaties towhich Mexico isaparty. Accordingly, intheevent ofanydiscrepancy
between theGATT 1994 Agreements andtheForeign Trade Act,orifthelatter were silent, the
provisions oftheAgreements would prevail. TheRegulations under theForeign Trade Actarelower
instatus thantheGATT 1994 Agreements, forwhich reason theprovisions ofAgreements take
precedence overthose contained intheRegulations.
DETERMINATION OFINJURY AND THREAT OFINJURY
Cumulative assessment ofimports
TheWTO Agreements laydown three conditions forimports ofaproduct subject to
dumping tobecumulatively assessed. Thus, imports willbecumulatively assessed, among other
things, ifthemargin ofdumping ortheamount ofsubsidization foreachcountry ismore than
deminimis ,asdefined inArticle 5.8(ADCode) andArticle 11.9(SCM Code) respectively, and
thevolume ofimports isnotnegligible. Although ittakes intoaccount theother aspects ofthe
cumulative assessment ofimports, theMexican legislation saysnothing about themargin being
more thandeminimis (Article 43oftheActandArticle 67oftheRegulations).
What criterion have theMexican authorities applied forthispurpose?
Reply
Atthepresent time, thecriteria established inArticle 5.8oftheADAgreement andArticle 11.9
oftheSCM Agreement concerning deminimis margins andvolumes thatarenotnegligible must be
observed bytheinvestigating authority forthereasons setoutinthereply toQuestion 1,for
investigations initiated aftertheentry intoforce oftheAgreements. Previously, theinvestigating
authority hadnotfixed anydefinite criterion inthisregard.
Reciprocity ofevidence ofinjury
Article 29oftheMexican Actstates thatevidence ofinjury orthreat ofinjury isrequired
whenever thecountry oforigin orsource ofthegoods observes reciprocity. What specifically
doesthisprovision concerning reciprocity mean? Hasthisprovision beenapplied onanyoccasion?G/ADP/W/67
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Ifso,howwasitapplied andagainst which country? Since theCodes saynothing about reciprocity
fordetermining injury orthreat ofinjury, howdoesthisprovision fitinwiththeCodes?
Reply
Reciprocity inthecontext ofthisArticle means thatMexico grants theinjury testtothose
countries which alsogrant itininvestigations ofMexican products.
Aclearexample ofthisistheinvestigations regarding thePeoples Republic ofChina, against
which some investigations wereinitiated inpastyears anditwasnotprovided withthecorresponding
evidence ofinjury.
Finally, asMexico isaWTO Member itisobliged togrant ittoallother Members, forin
conformity withtheADAgreement andtheSCM Agreement, Members grant theinjury testbothfor
anti-dumping andforsubsidies investigations.
Article 40oftheMexican Actprovides fortheentire group ofproducers ofthegoods
produced during theimmediately preceding stage inthelineofproduction ofthelikeproduct
tobetaken asthe"domestic industry" when allthenational producers ofthelikeproduct are
related totheexporters orimporters orarethemselves importers oftheproduct subject todumping.
Since thiscontradicts theprovisions oftheCodes concerning thedefinition ofdomestic
industry (Article 4.1oftheAnti-Dumping Code andArticle 16.1oftheSCM Code), including
theprovisions concerning likegoods (footnote 46oftheSCM Code), howwillMexico ensure that
these provisions arenotinfringed?
Reply
Theexpression "domestic industry" inArticle 40oftheActmust beinterpreted inthelight
oftherequirements bothoftheADAgreement andtheSCM Agreement, including, forexample,
footnote 46oftheSCM Agreement. Accordingly, theinvestigating authority willobserve those
provisions, which require theterm"like product" tobeinterpreted asmeaning aproduct which is
identical, orintheabsence ofsuchaproduct, another product which, although notalikeinallrespects,
hascharacteristics closely resembling those oftheproduct under consideration.
INITIATION OFINVESTIGATION AND INVESTIGATION PROCEDURES
Exofficio initiation
TheMexican legislation doesnotexpressly establish theparameters orcircumstances within
which aninvestigation maybeinitiated exofficio (Article 49oftheActandArticle 135ofthe
Regulations.)
Inwhat circumstances orwithin which parameters maytheMexican authorities initiate
aninvestigation without having received awritten request from thedomestic industry affected?
Would theprovisions ofArticle 5.6(Anti-Dumping Code) andArticle 11.6(SCM Code) betaken
intoaccount?G/ADP/W/67
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Reply
FortheMinistry toinitiate aninvestigation without having received awritten request from
aninterested party, special circumstances must existandtheinvestigating authority must obtain the
requisite information todemonstrate thatthere aregrounds topresume theexistence ofprice
discrimination orsubsidies, injury tothedomestic industry producing theproduct tobeinvestigated,
andacausal link.
Since application oftheWTO Agreements ismandatory inourcountry forthereasons explained
earlier, theinvestigating authority willhavetotakeaccount oftheterms oftheAgreements ininitiating
aninvestigation exofficio .
Degree ofsupport fororopposition totheapplication
SincetheMexicanlegislationsaysnothingaboutthesituationinwhichmorethan50percent
ofthedomesticindustryisopposedtotheapplication,inaccordancewithArticle5.4(Anti-Dumping
Code) andArticle 11.4(SCM Code), please explain whether Mexico would takethese provisions
intoaccount anddecide nottoinitiate aninvestigation ifmore than50percentofthedomestic
industry were opposed totheapplication.
Reply
Theinvestigating authority would abide bytheterms ofthearticles mentioned inthequestion
because, asalready stated, theprovisions contained intheADAgreement andSCM Agreement take
precedence overMexican legislation intheevent ofinconsistencies. If,inexamining thesupport for
oropposition totheapplication itisfound thattheapplication isnotsupported bymore than50percent
ofthedomestic industry, theinvestigation willnotbeinitiated, unless theenterprise orenterprises
supporting theapplication account foratleast25percentofthetotaldomestic production.
Notification oftheexporting government
TheMexican legislation (Article 53oftheAct)saysnothing about theobligation under
Article 5.5(Anti-Dumping Code) tonotify thegovernment oftheexporting member thatan
application hasbeen received, before proceeding toinitiate aninvestigation.
How have theMexican authorities fulfilled thisobligation?
Reply
TheForeign Trade Actdoesnotinclude anobligation tonotify theexporter 'sgovernment that
anapplication foraninvestigation hasbeensubmitted before proceeding toinitiate investigations.
However, since theprovisions ofAgreements must beobserved bytheMexican authorities forthe
reasons explained, thisobligation iscomplied with.
Provision oftextofapplication
TheMexican legislation doesnotmention theobligation toprovide thewhole textofthe
application totheauthorities oftheexporting member andtheknown-exporters, inaccordance
withArticle 6.1.3 (Anti-Dumping Code) andArticle 12.1.3 (SCM Code).
Hasthisobligation beenfulfilled? AretheMexican authorities inaposition tofulfil it?G/ADP/W/67
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Reply
TheMexican authority hasbeenfollowing thispractice, forArticle 53ofActsetsoutthatthe
obligation tosendtheinterested parties, together withthecorresponding notification, acopyofthe
application submitted andanyattached documents. Accordingly, itwillcontinue thispractice inthe
future.
MARGIN OFDUMPING, AMOUNT OFSUBSIDY AND NEGLIGIBLE IMPORT VOLUME
TheMexican legislation saysnothing about thedeminimis ruleorthesignificance ofthe
import volume, asmentioned inArticle 5.8(Anti-Dumping Code) andArticle 11.9(SCM Code).
DotheMexican authorities takeintoaccount thisruleorsome percentage fordetermining the
margin ofdumping, amount ofthesubsidy andwhether theimports arenegligible?
Reply
TheForeign Trade Actdoesnotspecify anyparticular percentage todetermine whether the
import volume isnotnegligible, nordoesitcontain anymention ofthedeminimis rule. However,
theprovisions oftheGATT Agreements mustbeobserved bytheinvestigating authority, fortheyare
partofourlegislation, asexplained earlier. Accordingly, theterms ofArticle 5.8oftheAnti-Dumping
Code andArticle 11.9oftheSCM Code willbeobserved.
PROVISIONAL MEASURES
Period after which provisional measures maybeimposed
TheMexican legislation expressly specifies thataperiod ofatleast45daysmust elapse
before provisional measures canbeapplied (Article 57.IoftheAct). Thiscontradicts Article 7.3
(Anti-Dumping Code) andArticle 17.3(SCM Code), which restrict theapplication ofprovisional
measures tonosooner than60daysfrom thedateofinitiation oftheinvestigation.
How dotheMexican authorities ensure thatthisobligation isfulfilled?
Reply
Theseeming contradiction between Article 57oftheForeign Trade ActandArticle 7.3of
theADAgreement andArticle 17.3oftheSCM Agreement doesnotexist, forthefollowing reason:
theForeign Trade Actestablishes inArticle 3thatperiods specified indaysshallbeunderstood as
working days, whereas theperiods established intheCode areincalendar days; therefore, bothperiods
areverysimilar and,infact,theperiod under Mexican legislation islonger thantheoneintheCode,
forwhich reason, thetwolegislations areperfectly compatible.
UNDERTAKINGS
Article 112.3 oftheRegulations mentions thepossibility ofrestricting exports totheproduct
investigated through undertakings, which contradicts theprovisions ofArticle 8.1(Anti-Dumping
Code).
What measures havetheMexican authorities taken toprevent thisarrangement from being
converted intoexport quotas andhowdotheyreconcile thisprovision withtheprovisions ofthe
Code concerning thecessation ofexports?G/ADP/W/67
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Reply
Forthereasons explained inthereply toQuestion 1,intheevent ofinconsistencies between
theADAgreement andtheRegulations under theForeign Trade Act,theinvestigating authority must
observe theterms oftheAgreements. Therefore, inallmatters pertaining toprice undertakings, the
authority must observe theterms ofArticle 8oftheADAgreement.
IMPOSITION AND COLLECTION OFDUTIES
TheMexican Actprovides forthepossibility ofimposing countervailing duties lessthan
themargin ofdumping ortheamount ofthesubsidy (Article 62oftheAct)provided theyare
sufficient todiscourage imports ofgoods incircumstances involving unfair international trade
practices. However, theRegulations (Article 90)mention thesame possibility butstipulate that
thedutymust besufficient toeliminate theinjury orthreat ofinjury.
HowhavetheMexican authorities applied thisprovision, given thatthere isacontradiction
between theActitself andtheRegulations andwiththeprovisions ofArticle 9.1(Anti-Dumping
Code) andArticle 19.2(SCM Code)?
Reply
Article 90oftheRegulations doesnotcontradict Article 62oftheForeign Trade Act,butsimply
supplements it.Thus, itisnotcorrect tostatethatthere isaninconsistency between Article 62of
theForeign Trade ActandArticle 90oftheRegulations andArticles 9.1oftheADAgreement and19.2
oftheSCM Agreement, sincethose Articles cover thesamesituation: theimposition ofacountervailing
dutylower thanthemargin ofdumping ifthedutyisenough toeliminate theharm orthreat ofharm
todomestic production. Anexample ofthisistheresolution oncaustic sodapublished intheDiario
Oficial delaFederación (Official Journal) on12July1995.