RESTRICTED
WORLD TRADE G/ADP/W/257
G/SCM/W/267
ORGANIZATION16January 1996
(96-0140)
Original: Spanish Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
REPLIES TOORAL QUESTIONS POSED BYTHE UNITED STATES1
CONCERNING THE NOTIFICATION OFLAWS AND
REGULATIONS OFMEXICO2
Thefollowing communication, dated 21December 1995, hasbeenreceived fromthePermanent
Mission ofMexico.
_______________
Inthecontext ofconsidering domestic lawsonanti-dumping andcountervailing duties, the
replies totheadditional questions submitted inwriting bytheUnited States atthejointmeeting ofthe
Committee onAnti-Dumping Practices andtheCommittee onSubsidies andCountervailing Measures
heldon17July1995 isattached.
_______________
General questions
1. Concerning thehierarchy oflawsandtherelationship between theForeign Trade Actandthe
A-DandSCM Agreements, whatguidance willbeprovided totheMexican administrators concerning
areas where theForeign Trade Actisinconsistent withtheAgreements?
Asstated inthereply toquestion 1oftheoriginal questions bytheUnited States, Article 2
oftheForeign Trade Actrecognizes thebinding force oftheWTO Agreements soifthere isany
inconsistency between thelatter andtheAct,theprovisions oftheAgreements willtakeprecedence.
2. Concerning therelationship between theForeign Trade ActandtheA-DandSCM Agreements
andanypossible inconsistency:
(i) Willparties beabletoargue totheAdministrators, Chapter 19binational panel, and
Mexican Courts thattheMexican lawisinconsistent withtheAgreements?
OnlyMexican courts areempowered totrycases relating topossible inconsistencies between
Mexican legislation andinternational treaties. Parties may,however, apply totheinvestigating authority
(administrators)orthebinationalpanelsunderChapter19ofNAFTAastotheproperformofapplication
ofMexican lawsandinternational agreements, inother words, these authorities donotdecide issues
ofinconsistency orincompatibility thatmight exist between thetexts ofadomestic lawandan
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international agreement buttheappropriate forminwhich these rulesmustbeapplied. Accordingly,
theinvestigating authority willdecide uponthecorrect forminwhich alegalprovision mustbeapplied
andbinationalpanelswilldeterminewhetherthelegislationhasbeenappliedcorrectlybytheinvestigating
authority.
(ii) Inthecaseofanargument made totheAdministrators, atwhatstage intheproceeding
canthisargument beraised andwhowillruleonthisquestion?
Theargument mustbeputforward bytheparties during thestages atwhich theymustprovide
evidence andarguments todefend theircase,andtheadministrative authority itselfwilldecide whether
ornotthelegalprovisions onwhich theyarebasing theircaseapply.
(iii) Inthecaseofanargument made totheMexican Courts, willtheCourt require that
theargument hasbeenraised before theAdministrators?
(iv) Inthecaseofanargument made toabinational panel, willtheAdministrators inturn
argue tothepanel thatthepanels cannot consider thetextoftheAgreements?
No,because aspointed outinthereplies totheoriginal questions, astheA-DandSCM
AgreementsformanintegralpartoftherelevantMexicanlegislationandthebinationalpanelsestablished
inaccordance withtherules ofChapter 19oftheNAFTA havetodecide whether decisions bythe
authority areconsistent withthelegalprovisions onanti-dumping andsubsidies intheimporting party,
thepanel musttakeintoaccount thetextsoftheAgreements; however theresponse toquestion 2(i)
above must alsobetaken intoaccount.
(v) Willaruling inaparticular casethatMexican lawisinconsistent withtheAgreements
bebinding ontheAdministrators infuture cases?
No.
3. What willbetherelationship between Mexico 'sexisting Foreign Trade Actandthenewlaw,
onceenacted, thatMexico iscurrently drafting toimplement theWTO A-DandSCM Agreements?
Inthiscase,Mexico willnotadopt anewlawbutwillsimply make thenecessary amendments
tothepresent lawinorder tomake itconsistent inallrespects withtheprovisions oftheA-DandSCM
Agreements.
4. How willtheMexican authorities implement adverse WTO panel reports?
Bymeans ofanewresolution.
Concerning specific articles
5. Concerning Article 36oftheForeign Trade Act("FTA") (pages 3-4,G/ADP/N/1/MEX/1):
what ismeant by"necessary adjustments" andhowdotheadministrators ofthelawdecide ifan
adjustment isnecessary?
Theproblem raised hereisamatter oftranslation: theSpanish textdoesnotreferto"necessary"
adjustments ("ajustes necesarios") buttoanyadjustments thatmaybefitting ("ajustes queprocedan"),
which means thattheparties mustsubmit theirinformation totheinvestigating authority andthelatter
willdecide whether ornottheadjustments requested bytheparties aretobetaken intoaccount; orG/ADP/W/257
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theauthority maydetermine that,evenifanadjustment hasnotbeenrequested byanenterprise, it
should bemade inorder toallow afaircomparison between theexport price andthenormal value.
6. Concerning Article 40ofFTA(page 3,G/ADP/N/1/MEX/1):
(i) Does the25percentthreshold apply todetermining industry support (i.e.forthe
purposes ofinitiation)?
The25percentmentioned inthisArticle isrelated totheminimum levelofrepresentativeness
oftheparty orparties requesting theinitiation oftheinvestigation, orotherwise theauthority will
consider thattheparties donothavetherepresentativeness required torequest aninvestigation.
(ii) Howisthe25percentstandard consistent withArticles 3and4oftheAgreement?
ThisArticle isfullycompatible withtheprovisions ofArticles 3and4oftheAgreement,
considering thatthelastsentence ofArticle 5.4oftheAgreement itselfstates thataninvestigation shall
notbeinitiated when domestic producers expressly supporting theapplication account forlessthan
25percentoftotalproduction ofthelikeproduct produced bythedomestic industry.
(iii) How istheprovision ofArticle 40oftheFTA which allows thedomestic industry
tobedefined as"theentire group ofproducers ofthegoods produced during the
immediately preceding stageinthesamecontinuous lineofproduction" consistent with
Article 4oftheA-DAgreement?
Theexpression "domestic industry" inArticle 40oftheActmustbeinterpreted inthelight
oftheprovisions oftheA-DAgreement, therefore, theauthorities, being aware oftheprovisions of
Article 4.1onthedefinition ofdomestic producers of"likeproducts" andArticle 2.6onthedefinition
oflikeproducts (both articles oftheA-DAgreement) willrespect these provisions, which require the
expression "like product" tobetaken tomean aproduct thatisidentical, orintheabsence ofsuch
aproduct,anotherproductwhich,althoughnotalikeinallrespects,hascharacteristicscloselyresembling
those oftheproduct under consideration. Furthermore, itshould bepointed outthatthisprinciple
isincluded inUnited States 'legislation inArticle 771(4)(E)(i) ofthe1930 Tariff Act.
7. Concerning Article 67oftheRegulations (page 26,G/ADP/N/MEX/1):
(i) What ismeant bytheterm"subject toinvestigation"?
Theterm"subjecttoinvestigation"meansthataproductisbeinginvestigatedbytheinvestigating
authority following anapplication toinitiate aninvestigation ofunfair international trade practices.
(ii) Does Mexican lawallow cumulation across A-DandCVD investigations?
Yes.
8. Concerning Article 59oftheFTA (page 7,G/ADP/N/1/MEX/1): thedelegate ofMexico
indicated thatArticle 59requires anexplanation ofwhyanargument wasaccepted orrejected (consistent
withA-DArticle 12.2.2). What specific provision ofArticle 59requires suchanexplanation?
Even though Article 59oftheForeign Trade Actdoesnotspecifically prescribe theobligation
contained inArticle 12.2.2 oftheA-DAgreement, itshould beborne inmind thattheForeign TradeG/ADP/W/257
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Acthasregulations, Article 83ofwhich specifies theelements tobecontained inthefinalresolution
andthese arefullycompatible withtheprovisions oftheA-DAgreement.
9. Concerning Article 93oftheFTA, paragraphs IIIandIV(page 12,G/ADP/N/1/MEX/1) which
allows theimposition offines:
(i) What provision oftheA-DandSCM Agreements provides abasisfortheimposition
offines?
None, butwherever theGATT 1994 anditsAgreements aresilent astothedetermination of
offences andtherelevant penalties, itislefttothesovereign decision ofMember States topunish conduct
thatconstitutes anoffence under domestic legislation (forexample, breach ofconfidentiality).
(ii) Arefinesimposed onlywhere theinformation isfound tobefraudulent oralsoincases
where factsavailable would beused?
Only where itisproved thattheinformation hasbeenobtained unlawfully.
(iii) Generally, could youexplain howthese finesareimposed? Isthere judicial review
available before oraftertheimposition ofthefines?
When theinvestigating authority isaware thatoneoftheactsqualified asinfringement in
paragraphs IIIandIVofArticle 93oftheForeign Trade Acthasoccurred, itreviews thecaseand,
depending onthecircumstances, decides whether ornottoimpose thepenalty, which isnotified to
theperson concerned bythecorresponding office.
Asprovided forinparagraph XofArticle 94oftheForeign Trade Act,appeals canbelodged
forreversal ofresolutions imposing thepenalties laiddown inthelaw.
(iv) What isthecurrent legalminimum wage inMexico?
Thecurrent legalminimum wage is18.30 newpesos perday.