"We are pleased with today’s report, which confirms our view that Mexico’s determination was inconsistent with its WTO obligations," said Ambassador Rob Portman. "While trade remedy laws are an essential part of the international trading system, they must be used in accordance with the rules. Mexico’s determination breached those rules, and we believe that disadvantaged our rice farmers. We are pleased that the Appellate Body agreed. Today’s report is a great result for U.S. rice farmers, and another example of our continuing efforts to enforce our trade agreements. We are also pleased with the findings against Mexico’s trade law. These findings will help improve access for U.S. exports in general to Mexico’s market."

The Appellate Body upheld the panel’s findings that Mexico improperly based its injury analysis on outdated information and failed to examine half of the injury data it collected. The Appellate Body also agreed that Mexico improperly applied its antidumping measure to two U.S. exporters that were not dumping. In addition, the Appellate Body agreed that Mexico improperly applied an adverse "facts available" margin to a U.S. exporter that had no shipments during the period of investigation, and that Mexico improperly applied "facts available" margins to U.S. exporters and producers that it did not investigate.

Finally, the Appellate Body upheld the panel’s findings that several provisions of Mexico's antidumping and countervailing duty law are inconsistent with the WTO Antidumping Agreement and the WTO Agreement on Subsidies and Countervailing Measures. These findings are important because the provisions would adversely affect U.S. exports to Mexico of any product subject to investigation.

Background

Mexico imposed antidumping duties on U.S. white long grain rice in June 2002. In addition, Mexico passed amendments to its antidumping and countervailing duty laws in December 2002.

The United States requested a WTO dispute settlement panel in September 2003, and the panel was established on November 7, 2003. The panel issued its final report on June 6, 2005. Mexico filed its appeal on July 20, 2005.

The U.S. request challenged numerous apparent violations of Mexico’s obligations under the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Antidumping Agreement), the Agreement on Subsidies and Countervailing Measures (SCM Agreement), and the General Agreement on Tariffs and Trade 1994 (GATT 1994). These violations related to various procedures and methodologies Mexican authorities used in the rice investigation, as well as to the requirements of the Mexican legislation.

In particular, the proceeding addressed such issues as Mexico’s choice of data used in the investigation, its methodology for determining whether the Mexican industries were injured by reason of dumped imports, its failure to terminate the investigation when it found that no dumping or injury was occurring, its calculation of dumping duty rates applicable to imports, and its non-transparent determinations. The challenged provisions of the Mexican law require Mexico to take WTO-inconsistent actions such as automatically applying excessively high antidumping margins on firms and denying firms the right to obtain reviews of the levels of duties assessed on their exports.

Under WTO rules, the Appellate Body report and the panel report, as modified by the Appellate Body report, will be formally adopted by the WTO Dispute Settlement Body within 30 days; i.e., by not later than December 29, 2005.

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