ARTICLE 1904

BINATIONAL PANEL REVIEW PURSUANT TO THE

NORTH AMERICAN FREE TRADE AGREEMENT

ON REVIEW OF THE CANADIAN INTERNATIONAL

TRADE TRIBUNAL FINDING

December 15, 1999

VI. THE DECISION OF THE PANEL

A. ERRORS OF JURISDICTION

The Complainant has raised a number of what it terms to be errors of jurisdiction. Having considered all the arguments on a standard of correctness, the Panel dismisses the allegations. In doing so, it notes that many were in fact those of law and fact and not jurisdiction. As such they were reviewed on the standards of patent unreasonableness and considerable deference. The primary issues dealt with herein are first, the failure of the Tribunal to require the production of interrogatories and second, whether the Mexican imports should have been the subject of a separate analysis. Included in this argument are questions concerning whether separate reasons and a separate order should have been provided (which issue has been addressed above in the DOR), whether Complainant’s imports should have been cumulated or whether there was a basis to exclude it.

1. Did the Tribunal commit a reviewable error in permitting the late disclosure or non-disclosure of certain interrogatory material?

The Complainant takes issue with the Tribunal’s alleged failure to require certain parties to respond to interrogatories which it had originally ruled relevant and producable. That is, the CITT initially deemed certain information relevant and requested its production, but subsequently decided to split the point and required only partial disclosure.⁹ The Complainant claims that the CITT lack the authority to do this. The Responding Parties which address this issue contend, in more detail, that any late disclosure of materials arose from the conduct of the Complainant itself.¹⁰

The Complainant argues further that it was prejudiced due to the late and non-disclosure of information.¹¹ However, the Complainant stops short of articulating how the late or non-disclosed information prejudiced it. The Complainant does not mention what specific information it was deprived of, much less which lines of inquiry were precluded. Given the CITT’s broad powers with respect to the conduct of the hearing and the Complainant’s inability to specify the resultant prejudice, the Panel believes that this argument must fail.

2. Did the Tribunal commit a reviewable error in not treating imports from Mexico separately from imports from other countries?

The Complainant argues that the CITT’s failure to subject imports from Mexico to a separate analysis resulted in jurisdictional error. It contends that a separate analysis should have compelled the Tribunal to either not cumulate it or to exclude imports from Mexico in the final result. This Panel will treat the separate analysis arguments of the Complainant as follows: firstly, its argument concerning whether a separate decision and reasons for a determination in respect of AHMSA should have been delivered; second, whether the CITT should have cumulated imports from AHMSA; and thirdly, whether the CITT should have excluded imports from AHMSA. These arguments are in the nature of error of law, error of fact, or mixed error law and fact. 

a) Did the CITT commit reviewable error in failing to give AHMSA a separate decision and reasons?

This Panel reviewed the arguments of the Parties, the SIMA and the SIMA Regulations in the Preliminary Decision and concluded that the failure of the CITT to render a separate decision was an error of law and not jurisdiction. The CITT acknowledged this error in its DOR and subsequently issued a separate decision for Mexico, but held that it need not provide separate reasons. The Complainant argued, in the alternative, that the CITT’s failure to issue separate reasons was a reviewable error of law. As discussed above, in the determination of the Panel with respect to the DOR, this Panel affirms the CITT´s Determination with respect to not issuing separate reasons for AHMSA. 

b) Did the CITT commit reviewable error in cumulating AHMSA?

The decision by the CITT to cumulate imports from Mexico with those from non-NAFTA countries is subject to review as a question of law, not as a question of jurisdiction. The CITT’s decision involves the interpretation and application of SIMA section 42(3), not a legislative provision that limits its power as alleged by the Complainant. Therefore, the applicable standard of review does not reach that of correctness.

In examining the issue of cumulation, it is important to note that the SIMA was amended to accord with obligations assumed by Canada under the WTO Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade 1994. The amended SIMA includes the following provision:

42(3) In making or resuming its inquiry under subsection (1), the Tribunal may make an assessment of the cumulative effect of the dumping if...the margin of dumping is not insignificant and the volumes of goods...is not negligible and an assessment of the cumulative effect would be appropriate...

Section 42(3) permits the Tribunal to cumulate dumped goods from various countries in determining whether there has been material injury or a threat to the domestic industry. This is a fact specific determination within the discretion of the Tribunal. Particularly, cumulation is permitted where the 1) margin of dumping from each of the countries in question is not insignificant; 2) the volume of the goods from each of those countries is not negligible; and 3) where, in the opinion of the Tribunal, an assessment of dumping margins on a cumulative basis is appropriate taking into account the conditions of competition between the dumped goods from a given country, and (i) the dumped goods from any other country, or (ii) like goods of domestic producers. 

In arriving at its conclusion on this issue, the Panel notes the following. First, with respect to the margin of dumping, the Final Determination of Dumping and Statement of Reasons of the Department of National Revenue shows that the threshold for margin of dumping of subsection 42(3) have been met for each subject country.¹² It indicates that 100% of imports from Mexico were founded to be dumped during the period of investigation (January 1, 1996 to December 31, 1996). 

Second, Table 14 of the Tribunal’s Pre-hearing Staff Report shows that the volume threshold of subsection 42(3) of SIMA has also been met for all of the subject countries. It indicates that imports from Mexico represented 26.2% of imports from all countries. The Complainant, however, submits that the imports from Mexico were in fact negligible. Negligible is defined under the SIMA s. 2. It means:

less than 3% of the total volume of goods that are released into Canada from all countries and that are of the same description as the dumped goods except that where the total volume of dumped goods of three or more countries, each of whose exports of dumped goods into Canada is less than 3% of the total volume of goods referred to in (a) is more than 7% of the total volume of goods referred to in paragraph (a) the volume of dumped goods of any of those countries is not negligible.

The Complainant points to Algoma Steel Inc.’s Public Exhibit B-7¹³ which indicates that imports from Mexico in the second quarter of 1997 were at the de minimus level of 2.9%. However, the time period used by the Complainant in its argument is restricted to the second quarter of 1997 which is outside the period for which the Deputy Minister made the finding of dumping and therefore is not the appropriate period for assessing the extent of negligibility pursuant to the definition. Moreover, Algoma took issue with the validity of relying on Exhibit B-7, an Exhibit that it says includes both subject and non-subject goods. Algoma submits that the Exhibit was prepared before further information such as the public staff report became available to it and therefore predates later data.¹⁴ 

Lastly, Counsel for the CITT submitted that the evidence on the record clearly indicates that Mexican steel plate is competitive with steel plate from the other subject countries and with that in Canada. 

Based on the information before it, the Panel therefore finds that, under either a standard of patent unreasonableness or that of considerable deference, the Tribunal’s decision to exercise its jurisdiction to cumulate is not reviewable. While the Complainant’s arguments that its imports were negligible in the early part of 1997 may have a certain intuitive appeal in the context of threat of injury analysis, it cannot be said that the Tribunal’s decision to cumulate in the circumstances was unreasonable. In the circumstances, this Panel affirms the CITT Determination with respect to cumulation.

c) Did the CITT commit reviewable error in not excluding AHMSA?

AHMSA argues, in the alternative, that if the CITT had the right to cumulate, then imports by AHMSA should have been excluded. The essence of the Complainant’s argument is that AHMSA was not similarly situated to the other countries under investigation, in terms of volumes of imports and prices.¹⁵

Counsel for the CITT argues that the Complainant failed to make an explicit request for exclusion and failed to point to evidence on the Record which would support exclusion. He goes on to argue that even if AHMSA had specifically requested the exclusion and pointed to the necessary evidence, the decision to exclude is fact specific in nature and within the discretion of the CITT. 

As discussed in Polyphase Induction Motors¹⁶, the exclusion analysis involves a two part process. After analyzing the cumulated effect of imported goods, the Tribunal has the discretion to exclude those from a particular subject country or individual producers for limited and specific reasons. Exclusion is permitted where: 1) dumped subject goods from a source country in question constitutes a small proportion of the total subject goods from that country; or 2) the margins of dumping of subject goods from the source country are very low; or 3) the volume of dumped goods from the source country is very small in proportion of total dumped goods. The Tribunal has a great deal of discretion in deciding whether or not to so exclude and its decision, if reached, constitutes a determination of fact.¹⁷ It is a decision within both its mandate and expertise.

The Panel finds that this argument does not concern a jurisdictional error. It holds that there does not seem to have been an explicit request by AHMSA that it be excluded. The Panel finds that even if the Complainant had requested such exclusion, there are facts to support the Tribunal’s decision not to exclude. Mexican goods were found to be 100% dumped and imports from Mexico were 26.2% of imports from all subject countries. Therefore, the finding was neither patently unreasonable nor reviewable under the standard of considerable deference. In the circumstances, this Panel affirms the CITT determination with respect to exclusion. 

B. ALLEGED ERRORS OF FACT/ALLEGED ERRORS OF LAW/ ALLEGED ERRORS OF MIXED FACT AND LAW

The Investigating Authority took the position at the hearing that the majority of the Complainant’s allegations in respect of errors of law and or fact are in the nature of argument, are incomplete or inaccurate, are often selective and taken out of context, or are attributable to counsel rather than witnesses and are not supported by the references cited in the Complainant’s brief.¹⁸ It is the Panel’s position that dealing with each issue as raised in the Complainant’s brief is unnecessary on the basis that it has carefully reviewed the Complainant’s allegations and is satisfied that in each instance, the decision of the CITT was supported by evidence on the record and does not reach the level of reviewable error. The issues of substance raised by the Complainant which the Panel finds warrant separate treatment and consideration by the Panel will be dealt with on an issue by issue basis below, by both the majority and minority factions of the Panel. 

1. MAJORITY: PANEL MEMBERS CODE, TRAKMAN AND OGARRIO

The majority of Panel Members has reviewed the decision of the minority and agrees with it in certain respects and disagrees with it in part. The basis of the division is the degree of deference to be owed to the determination of the Tribunal and its findings under Canadian law. The majority will deal with the issue of deference owed to the Tribunal and the standard of patent unreasonability and then examine the specific errors alleged by the Complainant. For the reasons expressed hereafter, this Panel affirms the findings of the Tribunal.

The majority notes that despite the manner in which errors are characterized by the Complainant throughout its brief as either errors of law or jurisdiction, most are factual and as such, are errors to which the Tribunal is owed great deference. With respect to these matters, the Complainant is in essence requesting the Panel to arrive at different conclusions based on the evidence. We find that the evidence in these instances does support the findings of the Tribunal, albeit not always as strongly as the majority might have preferred.

A. Deference to the Tribunal

It is necessary, in subjecting the finding of the Tribunal to judicial review, to determine the extent to which the Panel is authorized to examine and set aside decisions of public agencies, as well as the grounds for such action. The scope of judicial review is generally tempered in Canadian Law by the doctrine of curial deference. That doctrine stipulates that courts ought not to intervene particularly when a lower Tribunal has an applicable statutory authority, expertise in applying that authority in a specific context and particular experience in doing so on the facts. In such cases, Canadian courts hold that the Tribunal is best positioned to arrive at a determination and that a reviewing court ought not to undermine the Tribunal’s authority, expertise and experience.

There is also increasing legal authority in Canadian administrative jurisprudence that, if a matter falls within the areas of a Tribunal’s mandate and expertise, Canadian courts are more likely to defer to that Tribunal’s expertise even in respect of questions of law. 

The role of the court in considering errors of jurisdiction is to interpret the enabling legislation and to determine whether that legislation permits the action taken. However, in exercising this jurisdiction, the reviewing court does not address the merits of the decision made by the public officials or agency and it is inappropriate for courts to intervene in the substance of public decision-making that is otherwise legal.¹⁹ 

With respect to fact-finding functions of administrative Tribunals, the standard of review is an extremely deferential one. Traditionally, administrative fact-finding was subjected to judicial scrutiny only when the Tribunal exceeded its jurisdiction or displayed such serious error that it could be characterized as an error of law. The test is whether a reasonable person in the position of the decision-maker could have reached such a conclusion on the basis of that evidence.²⁰ As a result, Canadian courts are least likely to interfere with determinations of fact. They will do so through judicial review only if there is no evidence whatsoever to support the factual finding, or if the evidence is insufficient given the nature of the power exercised, the body that exercises it, and the scope of the investigation powers available to gather the relevant evidence. 

Bell Canada v. Canada (C.R.T.C.) [1989] 1 S.C.R. 1722, United Brotherhood of Carpenters and Joiners of America, Local 579 v. Bradco Construction Ltd. [1993] 2 S.C.R. 316 and Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557 all stand for the clear expression of considerable judicial deference given to the decisions of administrative Tribunals on matters of material injury and causation and on matters falling within the expertise of those Tribunals.

B. The Standard of Patent Unreasonability

The majority of Panel Members in the Preliminary Decision adopted a standard of patent unreasonability. The Panel did so in light of the experience of the Tribunal in the matters before it, case law authority before Canadian courts and the absence of a right of appeal from decisions of the CITT. The majority applies the same standard. 

In doing so, it is important to briefly review the nature of the patently unreasonability test and its application to this case. In Director of Investigation and Research v. Southam Inc. et. al. [1997] 1 S.C.R. 748, a patently unreasonable conclusion was considered to be “one that had no basis in the evidence, or was contrary to the overwhelming weight of the evidence.” In Canada (AG) v. PSAC [1993] 1 SCR 941, 963-64, the Supreme Court stated that patently unreasonability involved “clearly a strict test....It is not enough that the decision of the Board is wrong in the eyes of the court; it must, in order to be patently unreasonable, be found by the court to be clearly irrational”. An administrative tribunal, like the CITT has the right to be wrong, so long as it is possible to accord a rational basis to its interpretation and application of the applicable law. Once a reviewing court has determined that curial deference ought to be accorded to the decision of an administrative tribunal, the tribunal whose decision is subject to review has the right to be wrong. The tribunal’s right to be wrong is protected regardless of whether the reviewing judges disagree with the decision reached. The finding of an error is justified only when the decision that is subject to review lacks a rational basis. This reasoning was the basis of the opinion of the Panel majority in applying a patent unreasonability standard in its preliminary determination of May 19, 1999. 

C. Errors of Law and Fact

The Complainant raises many errors of law and fact in its submissions. Most are actually requests that the Panel arrive at a different conclusion than was reached by the Tribunal in view of the applicable evidence. This Panel notes that the Tribunal, being the court of first instance, is best positioned to evaluate the facts and that this Panel should not substitute its own decision on those facts for the decision of the Tribunal.

As noted, the majority will address only particular errors alleged, below. The majority will apply the patent unreasonability standard to determine, in each case, whether there was any evidence upon which the Tribunal could have made the findings that it did. If some evidence in support of such findings does exist, it maintains that the Panel cannot look any further. In issue is not whether the Tribunal could have arrived at a different determination on the facts, or whether the Panel may have preferred some other determination, but rather whether there was a sufficient basis on the facts for the Tribunal to decide as it did. 

a. Downward Trend in Industry Prices

The Complainant alleges that the CITT erred at page 18 of the Statement of Reasons in Finding NQ-97-100 in finding that there was a downward trend in prices caused by imports.²¹ The Tribunal notes at page 18:

However, the Tribunal’s review shows that, although domestic prices did increase somewhat after the first quarter of 1996, they did not reach the levels that had prevailed at the end of 1995. Subsequently, domestic industry prices followed a downward trend into 1997. Contrary to what occurred in the first quarter of 1996, there is no evidence that would lead the Tribunal to conclude that the industry caused this steady erosion of prices. The industry witness testified that, on several occasions in 1996 and early 1997, the industry tried to increase its prices. It was only in August 1997, two months after the preliminary determination of dumping, that the industry was able to increase prices in the market. The Tribunal is persuaded that this downward price trend was caused by the continued dumping of low-priced carbon steel plate in the marketplace.

The Complainant contends however, that Stelco was able to increase prices on March 5, 1997, on June 5, 1997 and that in the second quarter of 1997 Stelco was selling at prices higher those in the first quarter of 1997.²² The factual basis for the Tribunal’s actual finding is found in examining Table 2, entitled the Domestic Carbon Steel Plate Market which is included on page 11 of the Statement of Reasons. Average unit prices for domestic producers show a decline from $717 in 1995 to $683 in 1996 to $666 in the first quarter of 1997. In the row titled Average Domestic Unit Price, the price of subject steel in the first quarter of 1996 is $663 which drops to $657 in the first quarter of 1997. It is important to note two further points with respect to this allegation. First, the focus of the Tribunal’s statement was on industry wide price trends and not those of Stelco alone which was the focus of the Complainant’s argument. Moreover, there was dispute as to whether the price increases actually took effect. Second, the Tribunal statement is reasonably limited to the first quarter of 1997. The antidumping investigation with respect to imports was started in February of 1997 which would reasonably have had an effect on prices. The Tribunal notes later on in the same paragraph that prices did in fact increase in the latter part of 1997 after the determination of dumping. 

Therefore, there was some evidence of a downward trend in prices in support of the Tribunal’s determination of fact. While the evidence as noted may not have been strong or as definitive as the majority may have wished, in applying a patently unreasonable standard, the Tribunal committed no error of fact in reaching the conclusion it did and the Complainant points to no reasonable evidence that it did.

b. Price Gap increasing

The Complainant takes issue with the Tribunal’s finding that there was a widening price gap between domestic subject goods and imports in the first quarter of 1997.²³ The Tribunal says at page 17 of the Statement of Reasons “in 1996, the price of both imported and domestic carbon steel plate declined by about the same amount, but, in the first quarter of 1997, the price of imports fell at a considerably faster rate, thereby widening the gap between the two”. The Complainant submits that this is not possible since there was evidence on the Record which proved that Wirth followed Stelco pricing by a set percentage, a discount of 5%. It refers to Table 2 at page 11 of the Statement of Reasons and reproduces a chart at paragraph 259 of its Brief to support its position that there is no price gap increase.

However, the argument is flawed in two respects. As noted at the oral hearing, this allegation does not take account of the fact that Wirth was not the only importer of steel. Therefore, the fact that Wirth sets its prices with the domestic market is not conclusive. Moreover, the figures provided by the Complainant at paragraph 259 are in fact those for Discrete Plate while the Tribunal was referring to changes in Average Domestic Unit Price . Therefore, in examining the figures set out in Table 2 of the Statement of Reasons, there was some evidence to support the contention that the average import prices were falling at a faster price. The average domestic unit price went from $663 in the first quarter of 1996 to $657 the first quarter of 1997 a difference of $6. The average price of importers went from $675 to $610 during the same period of time, a difference of $65. Stelco notes that Table 16 (dealing with all subject plate) of the Public Staff Report shows that the unit value of subject imports declined by 10% in the first quarter of 1997 over the comparable price in the first quarter of 1996 whereas domestic prices declined by only 1%. It notes that Mexican import plate prices continued to decline in 1997 over the comparable period in 1996.²⁴ Again, it is not patently unreasonable for the Tribunal to have found that there was a widening gap between domestic and importer prices. 

Continue on to Delivery System Details

^{9 Brief of the Complainant, at p. 73.}

^{10 Brief of Stelco at para. 116; Brief of IPSCO at para. 87.}

^{11 Brief of the Complainant, at para. 244.}

^{12 Department of National Revenue, Final Determination of Dumping and Statement of Reasons, September 25, 1997, Tribunal Exhibit NQ-97-001-4, Administrative Record Vol. 1, at 110.1.}

^{13 Public Exhibit B-7, Administrative Record, Vol. 13C, p. 99.}

^{14 Brief of Algoma at para. 97 referring to Pre-Hearing Staff Report, Public Exhibit 6C, Administrative Record, Vol 1, p. 240.}

^{15 Brief of the Complainant at p.175 - 78.}

^{16 Polyphase Induction Motors originating in or exported from Brazil, France, Japan, Sweden, Taiwan, U.K., U.S.A. (April 28, 1989) Inquiry No. CIT-5-88 (C.I.T.T.).}

^{17 Polyphase Induction Motors originating in or exported from Brazil, France, Japan, Sweden, Taiwan, U.K., U.S.A. (April 28, 1989) Inquiry No. CIT-5-88 (C.I.T.T.)}

^{18 Brief of the CITT, at pg. 7.}

^{19 Director of Investigation and Research v. Southam Inc. et. al. [1997] 1 S.C.R. 748.}

^{20 U.E.S. Local 298 v. Bibeault, [1998] 2 S.C.R. 1048.}

^{21 Brief of the Complainant, at para. 251.}

^{22 Brief of the Complainant, at para. 251.}

^{23 Brief of the Complainant, at para. 257.}

^{24 Brief of Stelco, at para 150.}