UNITED STATES – ANTI‑DUMPING AND COUNTERVAILING
DUTIES ON RIPE OLIVES FROM SPAIN

Report of the Panel

BCI deleted, as indicated [[***]]

TABLE OF CONTENTS

1   Introduction.. 19

1.1   Complaint by the European Union. 19

1.2   Panel establishment and composition. 19

1.3   Panel proceedings. 19

1.3.1   General 19

1.3.2   Preliminary ruling on the Panel's terms of reference. 21

1.3.3   Request to address certain aspects of the USDOC's Remand Redetermination of 29 May 2020. 21

2   Factual aspects: The measures at issue. 21

3   Parties' requests for findings and recommendations. 22

4   Arguments of the parties. 25

5   Arguments of the third parties. 25

6   Interim review.. 26

7   Findings. 26

7.1   General principles regarding treaty interpretation, the applicable standard of review,
and burden of proof 26

7.1.1   Treaty interpretation. 26

7.1.2   Standard of review. 26

7.1.3   Burden of proof 27

7.2   The European Union's claims concerning the USDOC's de jure specificity findings
in the ripe olives countervailing duty investigation. 27

7.2.1   The European Union's request to address the USDOC's Remand Redetermination
 as it relates to its original de jure specificity findings. 27

7.2.2   The European Union's claims under Articles 2.1, 2.1(a), and 2.4 of the
SCM Agreement 29

7.2.2.1   Introduction. 29

7.2.2.2   Whether the USDOC was entitled under Article 2.1(a) of the SCM Agreement to determine de jure specificity based on rules governing the amount of a subsidy. 30

7.2.2.3   The USDOC's conclusion that the BPS and GP programmes retained the inherent
 de jure specificity of the subsidies provided under the COMOF programme. 33

7.2.2.3.1   The USDOC's reliance on facts pertaining to past subsidy programmes. 33

7.2.2.3.2   The USDOC's alleged finding that the SPS, BPS, and GP subsidies were de jure
 specific to olive growers because they were coupled (or tied) to the production of olives. 36

7.2.2.3.3   Entitlement values under the BPS programme for new farmers, farmers holding transferred entitlements, and farmers no longer growing olives. 42

7.2.2.3.4   The USDOC's rejection of arguments concerning the "convergence" factor 49

7.2.2.3.5   The USDOC's analysis and findings with respect to the "regional rate" 52

7.2.2.3.6   The USDOC's alleged finding concerning differences in BPS payments based
 on "the amount of grant money the different regions received under the SPS" 55

7.2.2.3.7   The USDOC's findings with respect to the SPS programme. 57

7.2.2.3.8   The USDOC's findings with respect to the COMOF programme. 61

7.2.2.3.9   Conclusion regarding the USDOC's findings that the BPS and GP programmes
retained the inherent de jure specificity of the subsidies provided under the
COMOF programme. 64

7.2.3   The European Union's claims under Articles 2.1, 2.1(b), and 2.4 of the
SCM Agreement 66

7.2.4   The European Union's claim under Article 1.2 of the SCM Agreement 68

7.3   The European Union's claims in relation to Section 771B of the Tariff Act of 1930
 and its application in the ripe olives countervailing duty investigation. 69

7.3.1   The European Union's complaint against Section 771B of the Tariff Act of 1930
"as such" 69

7.3.1.1   Legal requirements for conducting a pass‑through analysis. 71

7.3.1.2   Legal characterization of the operation of Section 771B of the Tariff Act of 1930. 74

7.3.1.3   Conclusion. 77

7.3.2   The European Union's challenge concerning the USDOC's application of Section 771B
 in the Spanish ripe olives countervailing duty investigation. 78

7.3.2.1   The USDOC's determination of benefit in the Spanish ripe olives countervailing duty investigation. 78

7.3.2.2   Whether the USDOC's determination of benefit in the Spanish ripe olive
investigation complied with the applicable legal standard. 79

7.3.2.3   Conclusion. 79

7.4   The USITC's affirmative final injury determination. 79

7.4.1   The United States' request for a preliminary ruling that claims under Article 15.4
 of the SCM Agreement and Article 3.4 of the Anti‑Dumping Agreement are outside the Panel's terms of reference. 80

7.4.2   The European Union's request that the Panel make adverse inferences concerning
 the United States' failure to provide certain information requested by the Panel 85

7.4.3   The USITC's analysis of customer groups in its examination of volume and
 price effects under Articles 3.1 and 3.2 of the Anti‑Dumping Agreement and
 Articles 15.1 and 15.2 of the SCM Agreement 86

7.4.3.1   Whether the USITC conducted a "segmented analysis" of volume and
price effects that was inconsistent with Articles 3.1 and 3.2 of the Anti‑Dumping Agreement
 and Articles 15.1 and 15.2 of the SCM Agreement 87

7.4.3.2   Whether the USITC's definition of the domestic industry made it improper
to consider customer groups. 92

7.4.3.3   Conclusion on the USITC's alleged "segmented analysis" of customer groups in its examination of volume and price effects under Articles 3.1 and 3.2 of the Anti‑Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement 94

7.4.4   The USITC's examination of the volume of dumped and subsidized ripe olives
from Spain. 94

7.4.4.1   Whether the USITC failed to consider whether there has been a significant
increase in dumped or subsidized imports as required by the first sentence in Article 3.2
 of the Anti‑Dumping Agreement and Article 15.2 of the SCM Agreement 94

7.4.4.2   Whether the USITC's volume analysis was not based on an objective examination of positive evidence in violation of Articles 3.1 and 3.2 of the Anti‑Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement 97

7.4.4.2.1   Factual background. 97

7.4.4.2.2   Whether the USITC only analysed the retail customer group and failed
 to consider the industry as a whole. 98

7.4.4.2.3   Whether the USITC improperly drew conclusions about the industry as a whole
 from the retail sector 99

7.4.4.2.4   Whether the USITC failed to consider the distributional and institutional customer groups in like manner as the retail customer group, without satisfactory explanation. 99

7.4.4.2.5   Whether the USITC failed to consider the distributional and institutional/food
 processor customer groups to the extent required for an objective examination based
 on positive evidence. 101

7.4.4.2.6   Whether the USITC's volume analysis failed to provide a meaningful basis
for causation. 102

7.4.4.3   Conclusion on the USITC's volume analysis under Articles 3.1 and 3.2 of the Anti‑Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement 102

7.4.5   The USITC's examination of the price effects of dumped and subsidized ripe olives
 from Spain. 102

7.4.5.1   Whether the USITC's examination of price undercutting constituted a second
volume analysis. 103

7.4.5.2   Whether the USITC's price effects analysis was not based on an objective
examination of positive evidence in violation of Articles 3.1 and 3.2 of the Anti‑Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement 106

7.4.5.2.1   Factual background. 107

7.4.5.2.2   Whether the USITC concluded that underselling resulted in a loss of market share
in the retail sector without adequate supporting evidence. 107

7.4.5.2.3   Whether the USITC only considered price effects in the retail sector and not
 at the level of the domestic industry as a whole. 110

7.4.5.2.4   Whether the USITC improperly extended its conclusions concerning the
 consideration of price effects in the retail sector to the domestic industry as a whole. 111

7.4.5.3   Conclusion on the USITC's price effects analysis under Articles 3.1 and 3.2 of the Anti‑Dumping Agreement and Articles 15.1 and 15.2 of the SCM Agreement 112

7.4.6   The USITC's examination of the consequent impact of dumped and subsidized
 ripe olives from Spain. 112

7.4.6.1   Whether the USITC could have made a finding of consequent impact on the basis
 of its findings concerning volume and price effects. 113

7.4.6.2   Whether the USITC's impact analysis was not based on an objective examination of positive evidence in violation of Articles 3.1 and 3.4 of the Anti‑Dumping Agreement and Articles 15.1 and 15.4 of the SCM Agreement 114

7.4.6.2.1   Factual background. 114

7.4.6.2.2   Whether the USITC's impact analysis only examined the retail sector and not the industry as a whole. 115

7.4.6.2.3   Whether the USITC's impact analysis improperly extended the USITC finding
 of market share losses in the retail sector to the industry as a whole. 116

7.4.6.3   Conclusion on the USITC's impact analysis under Articles 3.1 and 3.4 of the Anti‑Dumping Agreement and Articles 15.1 and 15.4 of the SCM Agreement 117

7.4.7   The USITC's causation analysis of dumped and subsidized ripe olives from Spain. 117

7.4.7.1   Whether the USITC's non‑attribution analysis of the decline in apparent
consumption was not based on an objective examination of positive evidence in violation of Articles 3.1 and 3.5 of the Anti‑Dumping Agreement and Articles 15.1 and 15.5 of the SCM Agreement 118

7.4.7.2   Whether the USITC's non‑attribution analysis of non‑subject imports from Morocco
 was not based on an objective examination of positive evidence in violation of
Articles 3.1 and 3.5 of the Anti‑Dumping Agreement and Articles 15.1 and 15.5 of the SCM Agreement 120

7.4.7.3   Conclusion on the USITC's causation analysis under Articles 3.1 and 3.5 of the Anti‑Dumping Agreement and Articles 15.1 and 15.5 of the SCM Agreement 121

7.4.8   Consequential claims. 121

7.4.9   Conclusion in relation to the USITC's Injury Determination. 121

7.5   The European Union's claims concerning Aceitunas Guadalquivir's final subsidy margin
 and countervailing duty rate calculation. 122

7.5.1   Introduction. 122

7.5.2   The USDOC's calculation of Aceitunas Guadalquivir's final subsidy margin and countervailing duty rate. 123

7.5.2.1   The legal basis of the European Union's claims in relation to the calculation of
Aceitunas Guadalquivir's subsidy margin and countervailing duty rate. 124

7.5.2.2   Whether the USDOC properly determined Aceitunas Guadalquivir's subsidy margin
 and corresponding countervailing duty rate. 125

7.5.2.2.1   The USDOC's initial 4 August 2017 questionnaire. 126

7.5.2.2.2   The USDOC's information requests following the 4 August 2017 questionnaire. 129

7.5.2.2.3   Aceitunas Guadalquivir's verification report 132

7.5.2.2.4   Aceitunas Guadalquivir's submissions on the reported volume of raw olive
purchases after the final determination. 134

7.5.2.2.5   Conclusion. 135

7.5.3   The USDOC's calculation of an "all others" rate. 135

7.5.4   Whether the USDOC properly requested information on purchases of raw olives used
 to produce ripe olives consistently with Article 12.1 of the SCM Agreement 136

7.5.5   Whether the USDOC informed interested parties of the essential facts under
consideration consistent with Article 12.8 of the SCM Agreement 138

7.5.6   Conclusion. 142

8   Conclusions and Recommendation.. 143