4.206 Guatemala submits that there is no reason to take the apology to Mexico dated 26 July 1996 into account because it is not included in the administrative file on the investigation. Guatemala sent this letter to Mexico as a gesture of good faith, due to its concern at not having observed the courtesy of notifying before publication of the resolution on initiation of the investigation, but this letter does not in any way include an apology or recognition of violation of Article 5.5 of the Agreement. According to Guatemala, this act of courtesy reflects the fact that Guatemala and Mexico have a very complex bilateral relationship and frequent informal contacts because of their geographical proximity, that they are presently negotiating a Free Trade Agreement and it was hoped that the trade dispute on cement could be resolved through informal contacts without sacrificing Guatemala's interests. Nevertheless, the courtesy of more prompt notification or notification prior to publication of the notice of initiation is not required under the ADP Agreement. Guatemala refers to Article 7.3, where it is stated that 60 days must elapse before the application of provisional measures. Guatemala notes that in the present case the Ministry did not impose provisional measures until almost 200 days had elapsed from the date of initiation. Guatemala argues that the apology therefore does not have any bearing on Guatemala's position concerning its obligations pursuant to the ADP Agreement.

4.207 Mexico rejects Guatemala's argument that there is no reason to take the apology of 26 July 1996 into account because it is not included in the administrative file on the investigation. According to Mexico, the fact that the apology does not form part of the administrative file of the investigation does not mean that it should not be taken into account as part of the documentation submitted to the Panel by Mexico to show that Guatemala had recognized its violation of Article 5.5 of the ADP Agreement even if, in defending itself before the Panel, it claims the contrary. 

4.208 Guatemala notes that Mexico claims that the alleged violation of Article 5.5 impaired its rights because no opportunity was given to settle the dispute before the investigation was initiated. Guatemala suggests that Article 5.5 is a very different rule to Article 13.1 of the Agreement on Subsidies and Countervailing Measures ("SCM Agreement") which applies to the initiation of an investigation for the imposition of countervailing measures. Article 13.1 requires the investigating Member to invite the Members whose products may be subject to investigation for consultations before the initiation of any investigation. Guatemala argues that Article 5.5 of the ADP Agreement, on the other hand, does not give the exporting Member the right to hold consultations before initiation of an investigation. A Member may notify that it has accepted an application and initiate an investigation forthwith, thereby complying with Article 5.5 of the ADP Agreement. In the present case, Guatemala suggests that Mexico and Cruz Azul were not in any way prejudiced by the alleged delay, and consequently that the Panel should reject Mexico's claim. 

4.209 Mexico notes that, according to footnote 1 of the ADP Agreement, "the term �initiated' means the procedural action by which a Member formally commences an investigation as provided in Article 5". Moreover, in the initiating resolution and the preliminary determination of the Guatemalan investigating authority itself it is clearly and expressly indicated that the investigation was initiated on 11 January 1997, the date of publication of the notice. Consequently, Mexico suggests that Guatemala's argument is not only inconsistent with the formal and official statements made by the Ministry itself, but also inconsistent with the requirements of the ADP Agreement concerning the moment of initiation of an anti-dumping investigation. 

4.210 Guatemala submits that its interpretation of Article 5.5 is not inconsistent with footnote 1 of the Agreement, which simply defines the term "initiated". Footnote 1 does not contain any reference to Article 12.1.1 of the ADP Agreement, which regulates public notice of the initiation of an investigation and is therefore not applicable for establishing the time of initiation of an investigation. 

4.211 Guatemala argues that Mexico's position in this respect is entirely different from Mexico's own application of Article 5.5. According to Guatemala, Mexico's practice is relevant in this respect because Article 17.6 of the ADP Agreement stipulates that the Panel shall interpret the ADP Agreement in accordance with customary rules of interpretation of public international law. To that end, it has been GATT practice to apply the rules set forth in the Vienna Convention. According to Article 31 of the Vienna Convention, for the purpose of the interpretation of a treaty there shall be taken into account, together with the context, "any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation". Guatemala notes that on 4 September 1997, the United States requested consultations with Mexico in respect of a Mexican anti-dumping investigation against imports of corn syrup. These consultations were requested, inter alia, because Mexico had allegedly failed to notify the United States before proceeding to initiate the investigation, and according to the United States this procedure violated Article 5.5. Guatemala argues that the record of the corn syrup investigation shows that the Mexican investigating authority issued the resolution of initiation on 17 February 1997, and published it on 27 February 1997. Guatemala asserts that Mexico did not notify the United States until 9.48 p.m. on 27 February, the notice of initiation having been published at 6.00 a.m. on the same day. To support its assertion, Guatemala provided a copy of SECOFI's notification letter to the United States indicating that it was faxed at 9.48 p.m. on 27 February. Thus, Mexico did not notify the Government of the United States before issuing the resolution of initiation on 17 February, or before publishing the notice of initiation. According to Guatemala, this subsequent practice by Mexico in its anti-dumping investigation against the importation of corn syrup shows that Mexico's interpretation of Article 5.5 is exactly the same as the interpretation made by Guatemala. The fact that Mexico did not notify the United States until ten days after it had issued the resolution of initiation is in blatant contradiction with Mexico's position in the present case, in which it claims that every Member has the right to be notified of an investigation before it is initiated, as soon as a properly documented application has been received in accordance with Article 5.2 and the evidence has been found to be adequate and sufficient in accordance with Article 5.3. Furthermore, Guatemala suggests that since Mexico published the notice of initiation before notifying the United States, its own subsequent practice serves to refute its claim that only if the notification is made before the publication of the initiation of the investigation will the exporting country have the opportunity to defend its interests and those of its exporters in good time. In other words, Mexico's subsequent practice supports Guatemala's interpretation of Article 5.5, according to which notification should only take place before proceeding to initiate the investigation, and not before publishing the notice of initiation. 

4.212 Mexico dismisses Guatemala's argument concerning Mexican practice in the corn syrup case. Mexico argues that in that case it notified the United States before the date of initiation, i.e. before the date on which the published notice specified that the initiation would take effect. That is not the situation in the present case. 

4.213 Guatemala argues, without acknowledging any violation of Article 5.5 of the ADP Agreement, that under the generally accepted principles of international law, any alleged delay in notification under Article 5.5 of the Agreement was harmless and without adverse effects on Mexico's rights in the process. Article 17.6(ii) of the Agreement stipulates that "the Panel shall interpret the relevant provisions of the Agreement in accordance with customary rules of interpretation of public international law ...". Guatemala notes that some WTO panels have recognized that "the customary rules of interpretation of public international law" are those embodied in the Vienna Convention. Thus, "the customary rules of interpretation of public international law" under Article 17.6(ii) of the ADP Agreement also refer to the rules embodied in the Vienna Convention. Article 31 of the Vienna Convention, governing the interpretation of treaties, stipulates that "the context ... of a treaty shall comprise, in addition to the text ... any relevant rules of international law applicable in relations between the parties". Thus, according to Guatemala, a WTO panel must apply the relevant rules of international law in reaching its decision. According to Article 38(1) of the Statute of the International Court of Justice ("ICJ"), Guatemala notes that the sources of international law are (1) "international conventions, whether general or particular, establishing rules expressly recognized by the contesting States"; (2) "international custom, as evidence of a general practice accepted as law"; (3) "the general principles of law recognized by civilized nations"; and (4) "... judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law". 

4.214 Guatemala argues that, pursuant to the ICJ definition of the sources of international law, a resolution adopted in a bilateral dispute under the North American Free Trade Agreement ("NAFTA") constitutes a source of international law. Guatemala argues that NAFTA is an international convention that establishes rules that Mexico, as a party to NAFTA, has recognized. In Fresh-Cut Flowers from Mexico, a NAFTA panel applied the principle of "harmless error" to excuse the failure to observe a procedural time-limit. ⁷⁵ The panel, composed of three members from Mexico and two from the United States, recognized that application of the principle of "harmless error" was allowed under the rules of NAFTA. Guatemala also submits that a decision by a NAFTA panel constitutes international custom, and that the decision taken in the aforementioned NAFTA case endorses the international custom of applying the international law principle of "harmless error" to procedural irregularities that do not have any prejudicial effect. Guatemala further alleges that a decision by a NAFTA panel can also demonstrate that a particular legal principle constitutes a "general principle of law recognized by civilized nations". For example, the NAFTA panel's application of the principle of "harmless error" in Fresh-Cut Flowers from Mexico ⁷⁶ and several legal decisions in national courts ⁷⁷ show that it is a principle of international law recognized by nations (and Members of the WTO) all over the world. Guatemala refers to a commentator in this regard: 

"The response to a breach of a substantive rule is straightforward: the Panel condemns the national measure and calls for its withdrawal. Breaches of procedural rules can also be condemned, but should the Panel also be able to declare that the associated decision is vitiated? Retroactively setting aside administrative decisions can give rise to immense confusion, and to avoid this most national legal systems are prepared to accept that at least minor procedural errors do not invalidate a decision."  ⁷⁸

4.215 Guatemala also suggests that a decision by a NAFTA panel is a "judicial decision" that provides an additional means of identifying legal principles applicable under international law. Guatemala states that, in keeping with an international treaty to which Mexico is a party and with the general principles of international law recognized by civilized nations, the Panel should apply the concept of harmless error to the alleged procedural delay under Article 5.5 of the ADP Agreement, and should reject the claim.  ⁷⁹

4.216 Guatemala states that a panel set up under the Tokyo Anti-Dumping Code recognized the principle of "harmless error", but considered that it did not apply to the facts in that particular dispute. ⁸⁰ That panel found that the investigating authority notified the importers of the initiation of the investigation 22 days after public notice of the initiation and one day before imposing the provisional measure ⁸¹, and that the exporting Government was notified more than two months after publication of the notice and one month after imposition of the provisional measure. ⁸² According to Guatemala, the panel did not accept the argument that these delays in making the notification constituted a "harmless error" because it considered that the delays clearly deprived the interested parties of the opportunity to defend their interests. ⁸³ Guatemala argues that, unlike the circumstances in Brazil - Imposition of Provisional and Definitive Countervailing Duties on Milk Powder and Certain Types of Milk from the European Economic Community ⁸⁴, Guatemala's alleged delay in giving the notification was only 11 days; and that during the period between the initiation and the notification no activity relating to the investigation was carried out, and that all the interested parties had sufficient time and opportunity to take part in the procedures after notification. Consequently, the alleged delay in notifying Mexico of the initiation constituted a "harmless error" because it did not impair Mexico's rights under the ADP Agreement. 

4.217 Guatemala states that Mexico codified the principle of "harmless error" in Article 338 of its Fiscal Code, which stipulates that an administrative decision shall be illegal only if its errors of procedure are harmful to the protection of individuals. Guatemala asserts that it has demonstrated that the principle of "harmless error" is recognized in international law as a principle which applies to all countries and, without admitting that Guatemala has violated any provision, it maintains that the Panel should apply this principle to the alleged violation of Article 5.5. 

4.218 Guatemala considers furthermore that, according to the generally accepted principles of international law, Mexico accepted the alleged delay in notification. Mexico gave cause for estoppel by delaying its Article 5.5 claim regarding the alleged delay in notification. Guatemala points out that Mexico failed to mention the alleged violation of Article 5.5 until 6 June 1996, almost six months after the date of publication of the notice of initiation. It did not even claim the alleged violation when it presented a submission to the Ministry on the procedure in question. Guatemala argues that Mexico only mentioned the alleged violation in the context of informal consultations. By 6 June 1996, Guatemala and the interested parties had invested considerable resources in the investigation. If Mexico had formally objected to the alleged violation of Article 5.5 immediately after the initiation of the investigation, Guatemala suggests that the Ministry would have reinitiated the investigation after providing Mexico with the notification which it claimed was required under Article 5.5. Instead, Guatemala notes that Mexico waited until Guatemala had been investigating for six months, when it was very late to correct the error, and when Guatemala had already expended substantial resources in conducting the investigation and was about to issue its preliminary determination. Thus, Guatemala submits that the Panel should reject Mexico's claim on the basis of the principle of estoppel. 

4.219 Guatemala states that the alleged delay did not nullify or impair Mexico's rights under the ADP Agreement. Under Article 3.8 of the DSU, the presumption of nullification or impairment is rebuttable. Guatemala did not take any action to initiate the investigation until Mexico had been notified. Moreover, Guatemala granted Cruz Azul an extension of two months to reply to its questionnaire. Any alleged delay in notification under Article 5.5 did not adversely affect Mexico's opportunity to defend its interests, nor did it affect Mexico's rights under the ADP Agreement in any other way. Thus, Guatemala submits that the Panel should reject Mexico's claim under Article 5.5 of the ADP Agreement because Guatemala has rebutted any presumption of nullification or impairment.  ⁸⁵

4.220 Mexico suggests that the principle of "harmless error" invoked by Guatemala is not recognized by the WTO. The sources quoted by Guatemala in support of this argument are not applicable to the present dispute. The provisions of the Vienna Convention and the Statute of the ICJ quoted by Guatemala concern rules "applicable in relations between the parties" and "rules expressly recognized by the contesting States". The principle of harmless error has not been recognized by Guatemala and Mexico, either in their bilateral trade relations or through the WTO. Mexico submits that Guatemala's reference to NAFTA has no relevance in the present case. On the one hand, Guatemala is not party to NAFTA and, on the other, NAFTA cannot impose any obligation on Members of the WTO, including Members who are parties to the NAFTA. As regards the "general principles of law recognized by civilized nations", Mexico considers that it is not sufficient to quote a commentator, as Guatemala does, to validate the argument. Furthermore, Guatemala's assertion in its submission that the non-fulfilment of the obligation imposed on it by the ADP Agreement can be excused as a "harmless error" is unacceptable to Mexico because it considers the ADP Agreement to be an agreement with rights and obligations that is the result of years of negotiations. According to Mexico, each Member must fulfil its obligations to other countries, or face the possibility of its trading partners defending their rights when they are infringed, in accordance with the provisions of the ADP Agreement itself. 

4.221 Mexico maintains that there is no place for the concept of "harmless error" in the ADP Agreement, which incorporates principles of public international law that govern the responsibilities of governments. The view of the ICJ and the jurisprudence is that, as a general principle, any act or omission by a State that constitutes the non-fulfilment of an international obligation, whether that obligation derives from a treaty, custom or some other source, carries with it a responsibility under international law, without it being possible to argue that the injury caused is insignificant. ⁸⁶ The ICJ has used the following language to emphasize this point: "It can be said that a legal right or interest is not necessarily related with something material or "tangible" and can be infringed regardless of the injury or material damage suffered". ⁸⁷ According to Mexico, the only excuse which might be accepted for not fulfilling an international legal obligation is contributory negligence on the part of the petitioning country or the impossibility of fulfilling the obligation. ⁸⁸ There is no defence when a country fails to fulfil an obligation which it has the power to fulfil. Mexico submits that a State cannot evade its international responsibilities simply by arguing that its infringement did not result in material injury. 

4.222 According to Mexico, the non-fulfilment of an obligation under a treaty is the non-fulfilment of a legal obligation entailing international responsibility. According to one author:

 "There are certain obligations which merely stipulate that a party should do or abstain from doing certain acts. This is so as regards most treaty obligations as well as most contractual obligations in the municipal sphere. The mere failure to comply with such obligations, unless it is the result of vis major, constitutes a failure to perform an obligation and a fault entailing responsibilities. In such instances, there is no need to consider whether the failure is accompanied by malice or is due to negligence". ⁸⁹

4.223 Mexico denies Guatemala's assertion that the delayed notification, even though a violation of the ADP Agreement, constitutes a "harmless error". Mexico argues that the purpose of Article 5.5 of the ADP Agreement, as far as notifications are concerned, is simple: every Member has the right to be notified of an investigation before it is initiated as soon as a properly documented application has been received in accordance with Article 5.2 of the ADP Agreement and the evidence has been found to be adequate and sufficient in accordance with Article 5.3 of the Agreement. Only if the notification is made before the publication of the initiation of the investigation will the exporting country have the opportunity to defend its interests and those of its exporters in good time. Once the investigation has been initiated, the right of defence will be restricted and, in the worst case, impossible to exercise before the trade flows have been affected. Mexico states, therefore, that Guatemala's delay in notifying Mexico of the initiation is anything but "harmless". 

4.224 Mexico asserts that the lack of timely notification is not Mexico's principal claim, since the violations relating to other aspects of the initiation of the investigation are more than sufficient for the investigation to be declared inconsistent with Guatemala's obligations under the ADP Agreement. However, thinking beyond the present dispute, Mexico considers that one should keep in mind that a ruling which treated the lack of timely notification as a "harmless error" would create an extremely negative precedent for the ADP Agreement by making Article 5.5 practically toothless. If such a decision was taken, any WTO Member could initiate an investigation without notifying the interested parties concerned because, in the end, the failure to notify would simply be a "harmless error". Mexico contends that if that had been the intention, it would have been better to delete the whole of Article 5.5 from the ADP Agreement. 

4.225 Mexico disputes Guatemala's argument concerning estoppel. Mexico considers that the ADP Agreement does not lay down any particular time-limit for submitting a claim against delays in notification. There is no provision in the ADP Agreement obliging the country affected to submit its claim at a particular moment, which is in fact a right and not a duty. Mexico submits that it was GATT practice, and consequently is WTO practice, that the absence of or delay in a claim does not lead to loss of rights. 

4.226 Guatemala notes that applying the principle of "harmless error" means examining the acts of the party and deciding whether the failure to fulfil a particular obligation should be excused on the grounds that the omission did not prejudice the rights of other parties to the dispute. Guatemala maintains that there are other sources of international law applicable to the relations between Mexico and Guatemala, such as customary international law, as evidenced by a general practice accepted as law; the general principles of law recognized by civilized nations; judicial decisions; and the teachings of highly qualified academic experts from different nations. Guatemala has shown that the principle of "harmless error" can be found in many different sources of international law, citing, inter alia, the conclusions of a panel established under NAFTA, judicial rulings made under the laws of Australia and the United States, and a study by a well-known jurist. 

3. Full text of written application 

4.227 Mexico argues that Guatemala violated Article 6.1.3 of the ADP Agreement by failing to provide the full text of the written applications to the exporter, Cruz Azul, and to Mexico, as soon as it initiated the investigation. Mexico submits that it is clear from Article 6.1.3. that the Ministry was under an obligation to send, both to the single Mexican exporter subject of the investigation and to the Mexican Government, the full text of the applications for initiation of the investigation submitted by Cementos Progreso. According to Mexico, this matter acquires particular importance if one bears in mind that the purpose of sending the full text of the application is to allow the exporter subject of the investigation and the exporting government to examine the full text in detail, thus giving them a timely opportunity to defend their interests. Mexico notes that, as of the date of the second submission to the Panel, neither it nor Cruz Azul had officially received the text of the applications from the Ministry. Although Cruz Azul did not complain that it had not received the applications during the investigation and only informed Mexico when the latter sought consultations with Guatemala, the fact that Cruz Azul did not complain earlier does not absolve Guatemala from the obligation under the ADP Agreement. 

4.228 Guatemala submits that Mexico is mistaken as to the facts. Guatemala asserts that the Ministry sent the full text of the applications together with the notice of initiation of the investigation to Mexico on 22 January 1996. The Ministry provided Cruz Azul with the full text of the written application at the same time as it sent Cruz Azul the notice of initiation of the investigation and the questionnaire. Cruz Azul received all of these documents via DHL on 29 January, although DHL's waybill does not indicate the contents of the package. Guatemala suggests that it is clear from the file that Cruz Azul received the application and had sufficient opportunity to defend its interests. For example, in its submission of 13 May 1996, Cruz Azul argued extensively that the Ministry should not have initiated the investigation based on the evidence contained in the applications. Guatemala notes that Cruz Azul did not at any time during the procedure claim that it had not received the full text of the applications. Mexico has not submitted to the Panel any document showing that Cruz Azul had requested Guatemala to provide it with the full text of the applications. Guatemala notes that the communication of the applications to Cruz Azul is confirmed in the Ministry's preliminary determination and again in its final determination. 

4.229 Mexico states that the references in the previous section to the moment at which the investigation was really initiated (i.e. 11 January 1996) are more than sufficient to show that Guatemala did not send the full text of the applications as soon as the investigation was initiated. In any event, Mexico emphasises that Guatemala's contention is false. For corroboration, it is sufficient to analyze the facts as set out by Guatemala in its submissions to the Panel. Guatemala says that it notified both Mexico and Cruz Azul on 22 and 29 January 1996 respectively and that it attached to these notifications the documents relating to the investigation (official investigation form and published version of the application for initiation), and that this is confirmed by the copy of the delivery note of the courier service which delivered the notification to the Mexican exporter. Mexico notes that the courier service's delivery note does not include a description of the documents delivered and therefore cannot be regarded as evidence. At the same time, Guatemala claims that it is clear from the file that Cruz Azul received the application, giving as the basis for its assertion the fact that in Cruz Azul's submission of 13 May 1996 there is a mention of the application. Mexico suggests that Guatemala's assertions do not properly take into account the fact that: 

(a) Cruz Azul came across the full text of the applications for the initiation of an investigation for the first time by looking up the file itself and not, as Guatemala alleges, as a result of having received it on 29 January 1996; and 

(b) Cruz Azul's action in gaining access to the applications in the file does not relieve Guatemala of its obligation to provide the exporters of which it is aware and the authorities of the exporting country with the full text of a written application submitted in accordance with Article 5.1 of the ADP Agreement, nor does it mean that because the exporter applied to the investigating authority to request access to the administrative file in order to acquaint itself with the allegations against it there are sufficient grounds for considering that Guatemala fulfilled its obligation under Article 6.1.3 of the ADP Agreement. 

D. Violations in Connection with the Provisional Measure 

1. Article 3.7 

4.231 Mexico argues that Guatemala's preliminary affirmative finding of threat of injury is not consistent with Article 3.7 of the ADP Agreement. Pursuant to Article 3.7 of the ADP Agreement, the preliminary determination of threat of material injury must be based on facts and not merely on allegation, conjecture or remote possibility, and in making such a determination, account must be taken, inter alia, of such factors as a significant rate of increase of imports, freely disposable capacity of the exporter (taking into account the availability of other export markets to absorb any additional exports), the effect on domestic prices of exports and inventories of the product. 

Continue on to IV. Main Arguments of the Parties, Section 4.232

Notes:

75. File No. USA-95-1904-05 (16 December 1996) in English.

76. Ibid .

77. Guatemala refers to C.A. Ford v. Comptroller-General of Customs, Fed. No. 854 (D.N.S.W.24 Nov. 1993) (Australia) (which determined that a delay of two weeks was harmless because it was unlikely that it would prejudice the defendants, the Australian industry or the importers); Intercargo Ins. Co. v. United States, 83 F. 3d 391 (Fed. Cir. 1996) (United States) (which states that it has been clearly established that principles of harmless error apply to the examination of an agency's procedures).

78. Edmond McGovern, International Trade Regulation, 1.133 (1995).

79. According to Guatemala, "equity" as a general principle of international law also includes the notion of "harmless error".

80. Brazil - Imposition of Provisional and Definitive Countervailing Duties on Milk Powder and Certain Types of Milk from the European Economic Community, SCM/179, paragraph 271, adopted on 28 April 1994.

81. Ibid, paragraph 240.

82. Ibid, paragraph 228.

83. Ibid, paragraph 271.

84. Ibid.

85. Guatemala emphasizes that notification under Article 5.5 of the ADP Agreement is unique in the WTO context. It is unrelated to the concept of notification of national laws implementing WTO agreements. This notification applies only to an isolated stage in anti-dumping proceedings, and unlike Article 13.1 of the SCM Agreement, it does not establish any obligation to consult following notification. Finally, it is the only notification provision that does not necessarily become a significant prior notice under the ADP Agreement. For example, the investigating authority could provide the representative of an exporting government with a notification under Article 5.5, and immediately provide notification of initiation.

86. Ian Brownlie, Principles of International Law 436 (4th edition 1990); Cheng, General Principles of Law as Applied by International Courts and Tribunals 219 (1987).

87. South West Africa (Eth. vs S. Afr.; Liber. vs S. Afr.), 1996 I.C.J. 6, 32-33 (18 July); Mexico also refers to Brownlie, supra, 473 ("There is no limitation inherent in the concept of legal interest to 'material' interest").

88. Brownlie, supra, 465 ("Tribunals accept defences of assumption of risk of the particular harm and contributory negligence"); Cheng, supra, 223 ("There is no unlawful act if the event takes place independently of his will and in a manner uncontrollable by him, in short if it results from vis major; for the obligation, the violation of which constitutes an unlawful act, ceases when its observance becomes impossible").

89. Cheng, supra, 226.