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

c. Delivery System Details

The Complainant argues that the Tribunal erred in finding that, while “domestic producers generally price product for delivery within a relatively short time frame, rarely exceeding a month, importers, in contrast, sell their product at today’s prices for delivery in up to six months.” It submits that the evidence indicates that domestic producers actually deliver on a nine week time frame.²⁵ It also argues, at paragraph 263 of its Brief, that the Tribunal erred in finding that the largest importers often presold much of its imported plate and that the price quoted for such presold imports became the negotiating base in the market, unless there were subsequent sales at even lower prices. The Complainant submits that this ignores the fact that contracts for presold plate will depend on conditions of delivery and that the product is completely separate from Canadian domestic plate with separate terms and conditions. Specifically, import plate is rusted and its flatness is not up to domestic standards. Moreover, very little bargaining is done on the price since the product is needed immediately and is usually shipped out in 24 hours. Finally, the Complainant takes issue with the finding that such future sales prolong the period that any particular dumped price can influence and exert pressure on market prices. It submits that once a sale is made for future delivery it is gone and that the prices have no impact on Canadian prices in the future. 

The Complainant may be correct that the period for the delivery of domestic steel on occasions was longer than one month. However, the Tribunal was not concerned with the exact period of time during which domestic or for that matter, foreign steel was being delivered. It was concerned with the suppressive effect upon price caused by delays in delivery of imports. The majority finds that the CITT’ determination of fact in this regard was not patently unreasonable. 

Wirth’s policy of pricing imports close to domestic market prices indicates that regardless of the different “conditions of sale”, such imports were competitive with domestic product. Further, the CITT heard experts who attested to the fact that while the price of steel was determined at time of sale, the impact of that price continued until the goods were actually delivered. Purchasers were unwilling to pay more for goods when there were accessible lower price alternatives. Further, evidence through a Wirth witness showed that 30% of goods were not presold and were there available to exert price erosion.²⁶ The Tribunal concluded that this constituted reason to find that imports had a suppressive effect on prices.²⁷ The Tribunal received and considered significant documentary evidence of the connection between import offers, import sales pricing and domestic price suppression.²⁸ Given the high standard of deference owed to it as an expert Tribunal of fact and the presence of evidence in support of its finding, its conclusion is not patently unreasonable. 

d. Further increases in imports and displacements

The Complainant alleges that the Tribunal erred in fact in finding that there were increases in imports from the subject countries. It refers to Exhibit B-7 for evidence of declining imports, particularly from 1995 to 1996.²⁹ It also takes issue with the finding that increasing dumped imports were displacing undumped imports from other countries.³⁰ At page 20 of the Statement of Reasons, the CITT notes: 

In addition, the Tribunal is of the opinion that further increases in the volume of dumped imports could have a negative impact on the domestic industry’s ability to maintain its market share. The industry witnesses testified that, in early 1996, the industry had to lower its prices to avoid losing market share to dumped imports from the named countries. The data in this inquiry show that the industry was successful in maintaining its market share and that increasing dumped imports displaced undumped imports from other countries. Faced with further increases in imports from the named countries, the industry could find itself in a position where it has to reduce its prices further, or where failing to do so, it would risk losing sales to dumped imports. In such a situation, the effects of price erosion and price suppression could be exacerbated by higher costs because of reduced production volumes.

Evidence of increased dumped imports was available to the Tribunal, as noted in Tables 14 and Table 2 in the Statement of Reasons. Table 2 post-dates Exhibit B-7 and only deals with subject goods, which B-7, as noted, does not. The evidence indicates that dumped imports from the subject countries increased from 5 to 8% of market share from 1994 to 1997.³¹ From the first quarter of 1996 to the first quarter of 1997 there was an 11% increase in imports. Table 14 also indicates that imports from non-subject countries decreased correspondingly. They went from 8% in 1994 to 5% in 1997.³² Therefore, the CITT’s findings were, again, not patently unreasonable. 

e. Price Erosion and Suppression

The Complainant alleges a number of errors with respect to the Tribunal’s findings regarding the cause of price erosion in the industry. It alleges that the finding that imports caused price erosion was an error. It, instead, attributes price erosion to the following factors. First, it points to Stelco’ price decrease to increase its market share in 1996 as the real cause of suppression and erosion. It alleges that this had a significant negative impact on the market when the domestic steel industry followed suit.³³ Second, the Complainant maintains that this was compounded by imports of steel from the United States and by the sale of Cut-To-Length Plate in Canada. It argues that the Tribunal’s findings that imports from the United States were unlikely to increase and that they were uncompetitive because prices were significantly higher prior to the Preliminary Determination was a “manifestly erroneous finding of fact”.³⁴ With respect to sales of CTL plate, it alleges, that the Tribunal also erred in finding that it was uncompetitive.

The Tribunal refers to the argument that Stelco and the domestic industry caused price suppression and erosion at page 18 of the Statement of Reasons. It found that while they contributed to price declines, they were not the cause of price erosion. The CITT had evidence that price declines in the first quarter of 1996 were at least in part the consequence of dumped goods and notes that it “is persuaded that this downward price trend was caused by the continued dumping of low-priced carbon steel plate in the marketplace”. Evidence of price declines attributable to dumped imports in the first quarter of 1996 include the Statement of Evidence of R. Dionisi, Protected Exhibit B-1, p. 17-20, Administrative Record, Vol. 14B, p. 20-23 and Algoma Manufacturer’s Questionnaire Response, Protected Exhibit 10.2. Further, the CITT found that while the argument of the Complainant dealt with the issue of price suppression it did not address the fact that prices declined even further. At page 11 of the Statement of Reasons, the CITT states:

It is submitted that Table 2 in the SOR shows that there were further declines in the price from the first quarter of 1996 to the first quarter of 1997 which was more than a year after the period in which the Tribunal concluded that “the industry had contributed to the drop in prices in the first quarter of 1996".

The Tribunal deals with the U.S. factor on pages 20 - 21 of the Statement of Reasons. This issue is raised again under errors of law as being one of the real causes of the threat of injury finding against the subject countries. First, and most importantly, there was no finding that U.S. imports were dumped. The issue before the Tribunal was whether dumped goods caused material injury or threat of material injury. In doing so, the Tribunal does not have to ensure that dumped goods are the only and sole cause of the threat or even the principle cause. In 1983, the Federal Court of Appeal found in Sacilor Acieres et al. v. Anti-dumping Tribunal et al. (1985) 9 C.E.R. 210 at 214 that it is the role of the Tribunal to weigh and balance all the factors: 

Of course there may be other factors which may have contributed to the injury as a matter of common sense, it seems to me that there almost always will be. Such matters as efficiency, quality, cost control, marketing ability, accuracy in forecasting, good luck, and a host of others come to mind. It is the function of a specialized, expert Tribunal such as this one to weigh and balance these factors to decide the importance to be given to each.

In making its determination that U.S. goods were unlikely to contribute to price erosion there was evidence before the Tribunal, in Table 16 in the Public Pre-hearing Staff Report that carbon steel imported from the United States was 1) much higher in price than carbon steel exported from subject countries; 2) that steel from the United States was not dumped in Canada; and 3) that steel from the United States did not compete with subject goods in a manner comparable to that of steel from the subject countries.³⁵ Table 16 indicates that in the first quarter of 1996, U.S. steel plate was sold for $1231 per tonne, while in the first quarter of 1997 it was sold for $672. The evidence for imported steel from the subject countries were $675 and $610 and domestic prices were $663 and $657 respectively. In 1996, the investigation year, the Tribunal noted that the import volumes from the United States of the subject plate were lower than in previous years and were substantially below import volumes of the subject countries. It also noted the evidence that U.S. imports were increasing in the first quarter of 1997 and likely to increase in the second quarter. However, it found that evidence showed that its prices were unlikely to change in the foreseeable future and that in fact prices at that time were close to Stelco book prices in August of 1997 and significantly higher than prices for goods prior to the Preliminary Determination.³⁶ 

The Tribunal, in analyzing this data, concluded that while the domestic steel industry had some impact upon the domestic price of steel, dumped imports had the major impact on domestic prices. Again, this finding is not patently unreasonable based on the evidence adduced before the CITT.

Moreover, in addressing the effect of CTL Plate on price on page 20 of the Statement of Reasons, the Tribunal found that CTL while lower in price than discrete plate, was sold within a narrow segment of the steel market, that the prices of CTL were different and stable and that such sales did not compete with the subject goods to a substantial extent. Evidence was established at the Tribunal’s hearing³⁷ that the price differential was based on the fact that plate cut from coiled plate steel was primarily in narrower widths (72 inches and below) than discrete plate; while the standard width of both domestic and imported discrete steel plate was 96 inches.³⁸ In addition, there was testimony from witnesses that producers, specifically Algoma and IPSCO, sold coiled plate at levels that would not permit an undercutting or erosion of the prices of discrete plate.

f. Causation

The Tribunal found that there was no material injury and held further that imports from the subject countries threatened to injure the domestic hot-rolled steel industry. In so doing, the Tribunal found that there was a causal connection between the dumped imports and the threat of material injury. 

The Tribunal articulated its methodology, in part, as follows:

Paragraph 37.1(3) (a) of the Regulations prescribes additional factors for determining whether there is a causal relationship between the dumping of any goods and the threat of injury. These factors include the following:

(i) the volumes and the prices of undumped goods;
(ii) contraction in demand;
(iii) changes in patterns of consumption;
(iv) trade restrictive practices of, and competition between, foreign and domestic producers;
(v) developments in technology; and
(vi) expert performance and productivity of the domestic industry. 

In addition, paragraph 37.1(3)(b) prescribes the following: whether any factors other than the dumping of the goods has caused injury or retardation or is threatening to cause injury. The Tribunal must determine whether there is a causal relationship between the dumping of the goods and the threat of material injury and must ensure that injury caused by other factors is not attributed to the dumped imports. 

Finally, the Tribunal notes that, in making a finding of threat of material injury to the domestic industry, subsection 2(1.5) of SIMA requires that the "circumstances in which the dumping or subsidizing of [the subject] goods would cause injury [must be] clearly foreseen and imminent".³⁹ 

The Tribunal further stated that it had examined the evidence on the record with respect to the following issues; inter alia:

1. the growth of imports;

2. the capacity of the named countries to continue to export to Canada;

3. price suppression and erosion;

4. Stelco's influence and the domestic steel industry's influence upon market prices;

5. whether the small volume of imports directly competed in the market;

6. the substitutionability of CTL Plate;

7. the influence of imports from the United States upon the domestic market; and 

8. the impact of increasing capacity in the domestic market.

The Panel is obliged to refer back to the Tribunal's Statement of Reasons in order to review its findings that there was a causal connection between imports from subject countries and a threat of material injury. The Tribunal sets out those reasons on pages 13 to 22 of its Statement of Reasons. It is apparent, from those reasons, that the Tribunal did consider some evidence in arriving at its determination that there was a threat of injury, and further that there is evidence on the record in support of the Tribunal's findings.


The Complainant, in arguing against the Tribunal's causation finding, takes issue with whether the Tribunal was correct in establishing a causal nexus between dumped goods and the threat of injury. The panel has carefully considered all of the Complainant's arguments with respect to whether the correct causation test was applied by the Tribunal, and whether there existed evidence in support of the causation finding and finds as follows:

There is clearly evidence on the record in support of the Tribunal's finding of causation.

The Complainant has failed to demonstrate any reviewable error on the part of the Tribunal. No cogent argument or evidence was presented to support the position that the Tribunal’s methodology and/or findings were patently unreasonable.

The panel is mindful that the Tribunal is statutorily required to consider whether there is a threat of injury and, if so, whether there is a causal link between the dumped imports and any threat of injury. In considering these questions, the Tribunal stated that it was guided by subsection 37.1(2) of the Regulations, which prescribes factors for the purpose of determining whether the dumping of goods is threatening to cause injury. The Tribunal is therefore charged with using the evidence available at the time of the investigation to make an informed prediction as to whether there is a causal connection between a forward-looking event, namely the threat of material injury, and the established fact of dumped imports. Such a predictive exercise will necessarily be speculative in nature, and subject to attack on the basis of the uncertainty which is inherent in the process of finding of a causal relationship between a known fact and a predicted future event.

The panel finds that, in essence, the Complainant's submissions with respect to causation fall considerably short of meeting the applicable standard of review, namely that the Tribunal's findings had no basis in fact, were entirely unsupported by evidence on the record, or were otherwise patently unreasonable, and, at best, the Complainants may have demonstrated that it would be possible, in certain instances, to arrive at different conclusions on the basis of the evidence before the panel.

There is nothing in the language of paragraph 42(1)(a)(i) of SIMA or any other provision of SIMA which specifies the exact nature of the causal relationship that must be established between the dumped imports and material injury. Accordingly, the issue of causation is a matter that comes squarely within the Tribunal's area of expertise and is further a matter where the Tribunal enjoys a broad discretion. The following extract from the Hot-Rolled Carbon Steel Sheet Panel decision is helpful:

SIMA itself does not specify the required degree of causal relationship between dumping and material injury or exactly what must be considered in a causal analysis. In past decisions, the Tribunal, or its predecessor, found that dumped imports constituted a "significant" or "direct" cause of injury or that a "significant proportion" of material injury was attributable to the effects of dumping. More recently, in Machine-Tufted Carpeting, the Tribunal found that dumped imports must be "a cause" of material injury. There is no single administrative standard against which to judge the Tribunal’s analysis of causality in this case. To a certain extent, this may be inevitable because the Tribunal’s analyses are driven largely by economics and market analyses of various products and industries, which may dictate that different weight must be given to different factors in different cases.⁴⁰ 

It is interesting to note that the primary emphasis of the Complainant on the issue of causation at the within hearing related to whether the Tribunal was obligated, under SIMA, to consider the effect of the dumped imports from Mexico separately from other dumped imports from other countries. For reasons articulated elsewhere in this decision, this argument has no basis in law and is rejected by the panel.

The Complainant also raised issues with respect to virtually each and every factual consideration referenced by the Tribunal in the context of its causation finding. Counsel for Stelco argued that much of this argument was in effect an attempt to have the panel rehear evidentiary matters that were before the Tribunal and to reevaluate and re-weigh that evidence. Counsel's point is well taken. The panel does not propose to deal with each and every factual issue raised by the Complainant as it relates to the issue of causation. As stated above, the panel has carefully reviewed the submissions of the Complainant in this regard, in light of the evidence on the record, and finds that the Complainant has failed to demonstrate any reviewable error under the patently unreasonable standard of review. However, certain key elements of the Tribunal's methodology relating to price suppression and erosion which were the subject of significant discussion at the within hearing will be briefly discussed below.

In its analysis of threat of injury, the Tribunal indicated that:

[a] key question in the Tribunal's analysis was whether dumped imports, or other factors, has caused downward pressures on the industry's prices, and if so, whether dumped imports were likely to continue to impact prices in the absence of antidumping duties.

The Complainant argued that the falling price of steel in the domestic market was caused by Stelco's price leadership and by declining prices in the domestic market itself. Accordingly, the Complainant argued that the Tribunal committed an error of fact in finding a causal connection between the dumped imports and the threat of injury.

The Tribunal examined steel prices from 1994 to 1997. It found that, while between 1994 and 1995 the rate of increase of import prices was less than the rate at which industry prices were rising, by 1997 the rate of increase of import prices was falling at a considerably faster rate. It concluded that this led to an increasing gap between domestic and import product. There was evidence in the record to support this finding.

The Tribunal also considered whether Stelco and the domestic industry were the cause of price erosion in the market for steel from 1995 onward. It conducted a quarter by quarter review of Stelco's selling prices of structural steel plate with those of Wirth and Ferostaal. It noted that all the imports during the crucial period were dumped. It concluded that on "balance taking into account all of the evidence in this matter, the Tribunal is of the opinion that the industry contributed to the drop in prices in the first quarter of 1996. However, they did not rise to 1995 levels despite the domestic industry's subsequent attempts to increase". The Tribunal added: "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 Tribunal noted further that it was only after its preliminary determination that increases in steel prices were possible. 

The Tribunal then considered evidence to determine whether a small volume of imports could compete in the domestic market and have a significant impact on prices. It considered, among other factors, the fact that imports had a wide customer base, that Samuel expected the domestic industry to compete with Wirth's prices, that setting prices at a fixed rate below market with Wirth's prices had a negative effect on market prices and that in continuously pre﷓selling steel Wirth's prices would compound that negative effect upon domestic steel prices and would deplete the market share of the domestic industry.

The Tribunal submitted materials in support of its position at the hearing which provided, in part, as follows:

It is submitted that it is not necessary to defend a dumped imports are "always or even predominantly the lowest priced imports" in order for the causational requirement to be met and that "[all that is required is a showing that dumped imports contribute, at a sufficient level, to price erosion or price suppression or to lost sales.

The panel finds that this interpretation is not patently unreasonable, and that the Tribunal’s interpretation of the appropriate standard of causation is not inconsistent with SIMA and/or the anti-dumping code.

The Tribunal also examined competition in the domestic steel market arising from the market for CTL plate and from exports from mills in the United States to Canada. On reviewing this evidence, it concluded that it was unlikely that CTL sales and exports from the United States would have a substantial effect on the Canadian market.

In assessing the causation issue the Tribunal clearly considered some of the additional factors prescribed under subsection 37.1(3) of SIMA and considered the volumes and prices of like goods that were not dumped as set out in paragraph 37.1(3)(a)(i) of the SIMA Regulations.

Further, the Tribunal considered changes in the patterns of consumption of the goods or the like goods as set out in subparagraph 37.1(3)(a)(iii) of the SIMA Regulations. The Tribunal ultimately concluded that:

Given the evidence of relatively stable prices for domestic plate cut from coil by the steel service centres, combined with the fact that the product competes in a relatively narrow segment of the market. The Tribunal is lead to the conclusion that the prices of plate cut from coil by the steel service centres have had, and are likely to continue to have, little impact on the average prices of carbon steel plate in the market (Statement of Reasons, at 20).

Further, it is clear that the Tribunal also considered developments in technology and the productivity of the domestic industry and specifically, that the Tribunal considered the domestic producer’s plans to expand their capacity and improve production processes. 

In summary, it is clear from the Statement of Reasons that the Tribunal performed a causation analysis and considered a vast array of factual evidence in accordance with SIMA Regulations. Some of that evidence is, on its face, supportive of the causation finding. Some of the evidence is, on its face, potentially antithetical to that finding. The Tribunal looked at all of the evidence and ascribed different weight to different evidence. This panel would exceed it jurisdiction in purporting to challenge the weight ascribed by the Tribunal to particulars elements of the evidence. The Complainant has raised issues with respect to whether certain aspects of that evidence, on its face, supports the Tribunal’s causation findings. With respect, the Complainant has not demonstrated any reviewable error on the part of the Tribunal, nor has it established that the Tribunal failed to consider any relevant evidence on the record or that the Tribunal treated any such evidence in a patently unreasonable manner.

Continue on to Minority Opinion: Panel Members Garcia-Corral and Ortiz

^{25 Brief of the Complainant at para. 261.}

^{26 Algoma brief pg. 93.}

^{27 Statement of Evidence of D. Thompson, Protected Exhibit D-2, para 13, Administrative Record, Vol. 16, p. 9.}

^{28 Statement of Evidence of R. Dionisi, Portected Exhibit B-1, Administrative Record, Vol. 14B, pp 11-33.}

^{29 Brief of the Complainant, at para. 269.}

^{30 Brief of the Complainant, at para. 270.}

^{31 Brief of Algoma, at para. 96.}

^{32 Brief of the CITT, at para. 127.}

^{33 Brief of the Complainant, at para. 273 and 275.}

^{34 Brief of the Complainant at para. 281.}

^{35 Protected Pre-Hearing Staff Report, revised September 20, 1997, Tribunal Exhibit NQ-97-001-7C (protected), Administrative Record, Vol. 2 at 131.21; Transcript of In Camera Hearing, vol 3, September 25, 1997 at 317-18.}

^{36 Statement of Reasons at p. 21.}

^{37 Public Transcript (Vol. 4) Administrative Record Vol. 17A at 689-690 and 783.}

^{38 Transcript of Public Hearing, Vol. 2, p. 343, lines 18-25; p. 344, lines 1-11; p. 345, lines 12-22, Administrative Record, Vol. 17, p. 343-5.}

^{39 Statement of Reasons at p. 13.}

^{40 Hot-Rolled Carbon Steel Sheet, supra, at 34-35.}