II. ADMINISTRATIVE HISTORY AND PANEL PROCEEDINGS


Pursuant to a written complaint filed by Camco, Inc. (“Camco”), a domestic Canadian producer of the subject goods, alleging injurious dumping of the subject goods by WCI and Whirlpool, the Commissioner commenced an investigation into alleged dumping on November 30, 1999.

On April 3, 2000, the Commissioner made a preliminary determination of dumping (the “Preliminary Determination”) with respect to the subject goods in accordance with subsection 38(1) of the Special Import Measures Act^[1] (the “SIMA”).  On April 7, 2000, Whirlpool and Inglis Limited (“Inglis”) filed an application with the Federal Court of Canada for judicial review of the Preliminary Determination.  On April 28, 2000, Whirlpool and Inglis served a notice of motion seeking an interim order to stay the Preliminary Determination and to direct that no provisional duties be collected, pending the hearing of the judicial review application.  The Federal Court of Canada dismissed this motion on June 20, 2000.  The judicial review itself continued until it was discontinued by Whirlpool and Inglis on consent of the parties on September 1, 2000.

On June 30, 2000 the Commissioner made the Final Determination in accordance with paragraph 41(1)(a) of the SIMA.  On August 11, 2000, Whirlpool and Inglis filed a request for panel review of the Final Determination.  On September 8, 2000, Camco filed a complaint with the Canadian Section of the NAFTA Secretariat pursuant to section 39 of the Rules of Procedure for NAFTA Article 1904 panel reviews (the “Rules of Procedure”), and on September 11, 2000 Whirlpool and Inglis filed a similar complaint with the Canadian Section.

This Panel was constituted to review the complaints filed by each of Camco and Whirlpool and Inglis.  Hearings were held before this Panel on January 15^th and 16^th, 2002 in Ottawa, at which counsel for Camco, Whirlpool and Inglis, WCI Canada Inc. (“WCI Canada”) and WCI, the Commissioner, and Maytag Corporation (“Maytag”) appeared and presented oral argument with respect to both complaints.
 

III. STANDARD OF REVIEW

In reviewing the Final Determination, the Panel is to rely on Canadian statutes, legislative history, regulations, administrative practice and judicial precedents to the extent that a court of Canada would rely on such materials in reviewing a final determination of the Commissioner^[2]. In terms of the standard of review to be applied, each of NAFTA Article 1904(3), NAFTA Annex 1911 and the SIMA subsection 77.011(5) require that this Panel base its review of the Final Determination on the grounds set out in subsection 18.1(4) of the Federal Court Act (Canada)^[3].

In light of the complaints filed by both Camco and Whirlpool and Inglis, the Panel must examine whether the Commissioner:

(i) acted without jurisdiction, acted beyond its jurisdiction or refused to exercise its jurisdiction;

(ii) failed to observe a principle of natural justice, procedural fairness or other procedure that it was required by law to observe;

(iii) erred in law in making a decision or an order, whether or not the error appears on the face of the record;

(iv) based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it;

(v) acted, or failed to act, by reason of fraud or perjured evidence; or

(vi) acted in any other way that was contrary to law.

(a) Issues of Jurisdiction

The purpose of jurisdictional review is to ensure that, in coming to a certain decision, an administrative agency acted within the parameters of its empowering legislation.  The administrative agency has no inherent power and must, instead, rely entirely on legislation as the source for its authority.  Any action or decision of such an agency that exceeds the boundaries of its empowering legislation is action without authority and is a jurisdictional error.  Similarly, the failure of an agency to do something that is required under that agency’s empowering legislation can be a jurisdictional error.

Canadian case law has established that in respect of questions relating to its jurisdiction, an administrative agency’s interpretation must be correct, and as such, this Panel will not defer to an agency’s incorrect interpretation when dealing with questions of jurisdiction.

In determining whether a question is one that goes to jurisdiction, Canadian courts have adopted what has become known as the “pragmatic and functional approach”^[4] Using this approach, courts examine the legislation in question, the purpose of the statute creating the administrative agency, the expertise of the members of the agency and the nature of the problem at issue.  The attempt, through an examination of each of these factors, is to determine the extent of the jurisdiction that the legislature intended to confer upon the administrative agency in question, and thereby determine whether the agency acted within or outside of the four corners of such jurisdiction.

There appears to be little dispute that an administrative agency’s interpretation with respect to purely jurisdictional questions must be correct.  Accordingly, this Panel adopts the correctness standard for any jurisdictional questions.

(b) Issues of Law

The bounds of an administrative agency’s jurisdiction are carefully determined by the legislature when implementing such agency’s empowering legislation.  In light of such careful determination by the legislature, a court, and this Panel, is required to show some degree of deference to a decision of an administrative agency on a question of law if, following an analysis using the pragmatic and functional approach, it is found that the question falls squarely within the jurisdiction conferred upon such agency.

The level of deference to be shown to an administrative agency on questions of law within its jurisdiction has been the subject of much discussion both in Canadian courts and in the briefs filed in respect of this review.  The Supreme Court of Canada has described the range of standards as follows:

Having regard to the large number of factors in determining the applicable standard of review, the courts have developed a spectrum that ranges from the standard of reasonableness to that of correctness.  Courts have also enunciated a principle of deference that applies not just to the facts as found by the tribunal, but also to the legal questions before the tribunal in light of its role and expertise.  At the reasonableness end of the spectrum, where deference is at its highest, are those cases where a tribunal is protected by a true privative clause in deciding a matter within its jurisdiction and where there is no statutory right of appeal…

At the correctness end of the spectrum, where deference in terms of legal questions is at its lowest, are those cases where the issues concern the interpretation of a provision limiting the tribunal’s jurisdiction (jurisdictional error) or where there is a statutory right of appeal which allows the reviewing court to substitute its opinion for that of the tribunal and where the tribunal has no greater expertise than the court on the issue in question…^[5]

Each of the parties to this panel review agree that some deference should be shown to the decisions of the Commissioner in respect of questions of law within its jurisdiction.  The parties do not, however, agree on the level of deference that should be shown. 

Following a careful examination of the authorities, this Panel concludes that if a question falls directly within the Commissioner’s jurisdiction, a standard of review which is more deferential than “correctness” is appropriate.  Looking to the other end of the spectrum, the absence of a privative clause protecting the decision of the Commissioner in this circumstance suggests a level of deference that is not as deferential as “patent unreasonableness”^[6]. This Panel is left to apply a standard of review for questions of law that lies somewhere between the two extremes of “correctness” and “patent unreasonableness”.

As was found In the Matter of the Final Determination of Dumping made by the Deputy Minister of National Revenue, Customs and Excise, Regarding Gypsum Board originating in or exported from the United States of America^[7], this Panel finds that the officials of the Canada Customs and Revenue Agency perform a highly specialized function, have a developed expertise and are intended by Parliament to be primarily responsible for applying the SIMA and the regulations thereunder in dumping cases.  As such, this Panel will show a considerable degree of deference to the decisions of the Commissioner on questions of law within its jurisdiction and will interfere only if it finds that the Commissioner’s decision cannot be sustained on any reasonable interpretation of the law.

(c) Issues of Fact
 

In general, deference is given on questions of fact because of the “signal advantage” enjoyed by the primary finder of fact.  Less deference is warranted on questions of law, in part because the finder of fact may not have developed any particular familiarity with issues of law.  While there is merit in the distinction between fact and law, the distinction is not always so clear.  Specialized boards are often called upon to make difficult findings of both fact and law.  In some circumstances, the two are inextricably linked.  Further, the “correct” interpretation of a term may be dictated by the mandate of the board and by the coherent body of jurisprudence it has developed.  In some cases, even where courts might not agree with a given interpretation, the integrity of certain administrative processes may demand that deference be shown to that interpretation of law.^[11]

In respect of administrative decision making, there exists a spectrum that lies between those actions that are purely administrative and those that are seen to be “quasi-judicial”.  The evolution of Canadian jurisprudence would indicate that, while administrative actions that are at the purely administrative end of the spectrum remain subject to a fairness test, the blurring of the distinction between purely administrative actions and those that are quasi-judicial means that distinction is now more relevant in considering the level of deference that will be shown in a review of an action of an administrative agency that is within its authority.  Much of the Commissioner’s role in an anti-dumping investigation is to investigate the facts related to the allegations of dumping.  Given the level of expertise of the Commissioner in this regard, the fact finding role of the Commissioner tends to be positioned more toward the administrative end of the spectrum and, thus, is afforded more deference by virtue of the Commissioner’s expertise.

With respect to questions of fact, this Panel adopts a standard of reasonableness, showing a high level of deference to the Commissioner in light of its expertise and superior ability to weigh and assess the evidence.  Thus, unless a decision of the Commissioner cannot be supported by a reasonable interpretation of the facts before it, or unless it had no facts upon which it could reasonably base its decision, this Panel will show a high level of deference and will not interfere.

IV . THE COMPLAINT OF CAMCO INC.

Camco asked the Panel to review the Final Determination based on the following questions:

(i) Did the Commissioner commit either an error of jurisdiction or an error of law in its calculation of “an amount for profit” as that phrase appears in paragraph 25(1)(c) of the SIMA?
 
(ii) Did the Commissioner commit either an error of jurisdiction or an error of law in calculating normal values for subject goods exported by WCI on the basis of “normal value multipliers”?
 
(iii) Did the Commissioner commit either an error of jurisdiction or an error of law in deducting certain warehousing expenses in the calculation of normal values for exports of subject goods by WCI?
 
(iv) Did the Commissioner commit either an error of jurisdiction or an error of law in calculating normal values applicable to subject goods of WCI by failing to account for differences in conditions of sale as required by paragraph 5(d) of the Special Import Measures Regulations^[12] (the “SIMR”)?
 
(v) Did the Commissioner commit either an error of jurisdiction or an error of law in its application of section 9 of the SIMR by deducting an “amount for profit” in its calculation of normal values applicable to subject goods of Whirlpool?

The Panel will deal with each of the above questions raised by Camco in turn.

(a) Determination of Amount for Profit Under Section 25 of the SIMA

The first issue raised by Camco concerns what it asserts is the erroneous use by the Commissioner of paragraph 25(1)(c) of the SIMA to calculate an “amount for profit by the importer on the sale.” Section 24 of the SIMA requires the Commissioner to calculate the export price of goods sold to an importer in Canada as the lesser of the exporter’s adjusted sale price for the goods and the adjusted price at which the importer has purchased (or agreed to purchase) the goods. However, the SIMA further provides at paragraphs 25(1)(b) and 25(1)(c) that when the Commissioner is of the opinion that the price determined under section 24 is unreliable, the export price is to be that at which the goods were sold in Canada, less certain amounts, including an amount for profit by the importer on the sale.
 
 The phrase “an amount for profit” found in subparagraph 25(1)(c)(ii) of the SIMA is defined in section 20 of the SIMR to mean “the amount of profit that would be made in the ordinary course of trade on the sale of the goods.” That phrase is, in turn, to be determined according to section 22 of the SIMR which reads as follows:
 

22. For the purpose of sections 20 and 21, the amount of profit that would be made in the ordinary course of trade on the sale of the goods is
 
(a) the amount of profit that generally results from sales of like goods in Canada by vendors who are at the same or substantially the same trade level as the importer to purchasers in Canada who are not associated with those vendors;
 
(b) where the amount described in paragraph (a) cannot be determined, the amount of profit that generally results from sales of goods of the same general category in Canada by vendor who are at the same or substantially the same trade level as the importer to purchaser in Canada who are not associated with those vendors; or
 
(c) where the amounts described in paragraphs (a) and (b) cannot be determined, the amount of profit that generally results from sale of goods that are of the group or range of goods that is next largest to the category referred to in paragraph (b); by vendors in Canada who are at the same or substantially the same trade level as the importer, to purchasers in Canada who are not associated with those vendors.

Camco claims that the Commissioner failed to follow the procedure set out in these sections of the SIMR when determining the amount for profit in respect of Whirlpool’s goods imported to Canada. In particular, Camco argues that, while the Commissioner purported to implement section 22(a) of the SIMR in the determination of an amount for profit, its calculations ultimately failed to meet the basic requirements of that paragraph. Camco argues that the Commissioner committed the following errors of jurisdiction or law:

(i) The amount for profit was not an amount that resulted from sales of like goods in Canada to purchasers in Canada, as the sales data upon which the Commissioner relied included sales by Camco outside of Canada;
 
(ii) The Commissioner ignored the requirement that the amount for profit must result from sales by vendors at the same or substantially the same trade level as the importers, that do not manufacture the subject goods in Canada, because the Commissioner included in its calculation profits realized on sales by Canadian producers of the subject goods (Camco, for example);
 
(iii) The Commissioner ignored the requirements that the amount for profit must be based on (a) sales of like goods to each of the subject goods: refrigerators, dishwashers and dryers, and (b) that separate profits must be determined for each of these subject goods; and furthermore, the profit figures included not only the aggregate of profit on all these categories of subject goods, but also profit from other non-subject goods sold by the given companies included in the Commissioner’s calculation and it is not clear that the Commissioner satisfied itself that the sales which generated those profits were made to purchasers who were not associated with one of the five companies; and
 
(iv) The Commissioner ignored the requirement that the group of vendors considered for determining an amount for profit for the importer cannot include the importer itself, given the language of paragraph 22(a) of the SIMR which, according to Camco uses the terms “vendor” and “importer” in a manner meant to be distinct and its inclusion of the profits of Inglis and Frigidaire Canada in determining the profits of Inglis and Frigidaire Canada was, therefore, incorrect.

The parties appearing before this Panel were unable to agree on which of the paragraphs under section 22 of the SIMR was used by the Commissioner in determining “an amount for profit”.
 
Camco has argued that the Commissioner relied upon paragraph 22(a) of the SIMR in determining “an amount for profit”. In support of this argument, Camco cites from a memorandum to file (the “Memorandum”) used by the Commissioner for the determination of profit under section 25 of the SIMA as follows:

To determine the Canadian industry profit, we are advised to use Regulations 22(a) to (c) in sequence. Thus, the first approach (or Regulation sub-section 22(a)) is to use the profit generally realized on the sales of like goods by vendors in Canada as a whole.^[13]

Camco suggests that the Commissioner went on to review the information that it gathered concerning the profit generally realized on the sales of like goods by vendors in Canada as a whole. Camco further notes that the Memorandum then states that:

I think that the foregoing Canadian profit survey recommendation best meets the requirements of Regulation 22 and the guidelines set out in the SIMA Handbook, as the profit established in the first criteria recommended to use.^[14]

Camco argues that it is clear, based on the foregoing, that the Commissioner calculated an amount for profit on the basis of paragraph 22(a) of the SIMR.
 
WCI has suggested that the Commissioner relied on paragraph 22(b) of the SIMR, which contemplates that the amount for profit be that which generally results from sales of goods of the “same general category” in Canada, rather than paragraph 22(a). WCI argues, therefore, that Camco’s arguments regarding the alleged error on the part of the Commissioner in applying paragraph 22(a) of the SIMR are irrelevant.
 
Whirlpool offered this Panel yet another interpretation of the Commissioner’s application of section 22 of the SIMR. According to Whirlpool, the Commissioner could not have applied paragraph 22(a), but instead, employed an approach that appears to be more consistent with the wording of paragraphs 22(b) or 22(c).
 
The Commissioner argued before this Panel that the Memorandum, as cited by Camco, refers to paragraph 22(a) of the SIMR as the first approach to be considered before it then discussed using the profits data of appliance firms. The approach explained in the Memorandum would, according to the Commissioner, be consistent with the approach outlined in paragraph 22(c), which refers to the profit resulting from sales of goods of the group or range of goods in the next largest category.
 
There is no dispute among the parties to this review that the paragraphs under section 22 of the SIMR are to be applied in a consecutive manner -- i.e. only if paragraph 22(a) does not apply can the Commissioner turn to paragraph 22(b), and so on. However, in the present case, although the Commissioner claims that it began its inquiry with paragraph 22(a), as is required, it is unable to state definitively upon which paragraph its investigators relied in conducting their inquiry.
 
This Panel notes that the Commissioner could have easily avoided this dispute had it followed the guidelines provided in its own SIMA Handbook^[15] and clearly stated, in its Memorandum or in the Final Determination, the paragraph under section 22 of the SIMR upon which it made its calculations. Such clear statement is necessary both for ensuring that the Commissioner does not exceed the boundaries of its authority and for allowing affected parties to monitor and challenge the Commissioner’s conduct where they believe the Commissioner has erred. As counsel for the Commissioner agreed in oral argument before this Panel, it would be useful if the Commissioner’s document had a simple statement of the provision applied.
 
In response to the Commissioner’s assertion that it relied upon paragraph 22(c) of the SIMR to determine “an amount for profit”, Camco argued that even if the Commissioner had based its calculations on paragraph 22(c), such determination was deficient, as, in Camco’s view, the alleged errors enumerated above with regard to the application of paragraph 22(a) also apply with respect to paragraph 22(c). Specifically, in oral argument before the Panel, counsel for Camco emphasized the inclusion of sales made in Canada to purchasers outside of Canada; the inclusion of sales by vendors who were not at the same or substantially the same trade level as the importers, to purchasers who were not all unassociated with the vendors; and the inclusion of the importer itself as one of the vendors.
 
In respect of Camco’s argument that the Commissioner failed to exclude figures relating to sales made by Camco to purchasers outside of Canada, the Commissioner conceded that indeed Camco’s sales outside of Canada were not excluded. However, the Commissioner claimed that it relied on the information provided to it by Camco, and that despite several requests by the Commissioner, Camco failed to provide a separate assessment for goods sold in Canada. The Commissioner also alleged that it made several attempts to obtain separate sales data from outside sources (such as Statistics Canada), but to no avail.
 
At the hearing, counsel for the Commissioner made the uncontradicted assertion that the evidence on the record shows that the impact on the overall calculation of not subtracting the export sales was insignificant. Therefore, although this Panel believes that it was possible for the Commissioner to have made greater efforts in obtaining separate sales data, the Panel has no indication that these greater efforts would have amounted to a significant difference in the ultimate calculations.
 
As to whether the sales that were taken into account were made by vendors at substantially the same trade levels, to purchasers not associated with the companies investigated, the Commissioner explained that it sought to obtain profit information from numerous Canadian sources during the course of the investigation, and that the resulting profit figure used was based on the best information available. In this context, the SIMA Handbook, part 5.10.2.3, stipulates that:

In considering the terms “same” or “substantially the same trade level” a firm should not arbitrarily be dismissed from the data based simply because of its designation, i.e., distributor or manufacturer. Rather, care should be taken to examine the functions performed in that industry, particularly those relating to sales and distribution. In most industries, it would be appropriate to utilize data from both manufacturers and importers in that their sales and distribution functions will likely have significant similarities. It is recognizes that, in some cases, it may be reasonable for firms at different trade levels to anticipate different profit levels... Companies in Canada are generally considered to be at “substantially the same trade level” when they sell to the same customers and compete directly in the marketplace for the same customers. In any case where the above trade level considerations exist, the file should clearly explain the rationality for the decision.

The Commissioner has argued that all the companies investigated sold to the same customers and competed for the same market; consequently, they should be considered of the same trade level. This Panel was not directed to any evidence on the record, and it is the Commissioner’s submission that it had no evidence before it at the investigation stage which would indicate that the sales made were to associated companies. This Panel is not convinced of Camco’s arguments in this matter. If the sales contested by Camco were those made by Camco to associated purchasers, then it should have pointed that fact out to the Commissioner at an earlier stage. Instead, Camco provided the Commissioner with figures, only to complain about the use of those figures following the Final Determination.
 
In response to Camco’s challenge to the inclusion of the importer’s sales, the Commissioner asserted that it is its policy to include the profit of the importer for whom the export price is being determined in this calculation. None of the parties pointed this Panel to any legislative or other authority that would preclude this practice. In addition, neither the SIMA nor the SIMR provide a restrictive and qualified definition of “vendors” that would suggest that this group of sellers should be limited.
 
This Panel also heard an alternative argument from Camco wherein it suggested an alternative methodology to that followed by the Commissioner for the determination of export price which is found under subsection 29(1) of the SIMA:

29. (1) Where, in the opinion of the Commissioner, sufficient information has not been furnished or is not available to enable the determination of normal value or export price as provided in sections 15 to 28, the normal value or export price, as the case may be, shall be determined in such manner as the Minister specifies.

This Panel fails to see how this alternative authority offered by Camco advances its argument; the very broad scope of discretion accorded to the Commissioner by subsection 29(1) of the SIMA is wide enough to include the methodology ultimately employed by the Commissioner in the present case.
 
In light of the above, Camco has failed to convince this Panel of the merit of its objections in respect of the Commissioner’s determination of “an amount for profit” under section 22 of the SIMR and, therefore, this Panel will not remand on this issue.