BI-NATIONAL PANEL REVIEW PURSUANT TO THE
NORTH AMERICAN FREE TRADE AGREEMENT
ARTICLE 1904

(Continuation)

(b) Calculation of Normal Values for Subject Goods Exported by WCI on the Basis of “Multipliers”

Camco alleges that the Commissioner failed to properly apply the SIMA sections 16 to 19 when calculating the “normal values” of the goods exported by WCI to Canada.  In particular, Camco alleges that Commissioner’s use of normal value “multipliers” is contrary to the requirements of the SIMA that normal values of the subject goods be calculated on the basis of “qualifying home market sales.”

Section 15 of the SIMA provides that the “normal value” of the subject goods is determined on the basis of actual sales in the ordinary course of business to unaffiliated purchasers of like goods, in comparable quantities, under competitive conditions, and at substantially the same level of trade as the Canadian importer, which occur in the exporter’s home market during defined time periods surrounding the alleged dumping.
 
Sections 16 to 19 of the SIMA provide a series of rules for making adjustments to approximate the conditions described in section 15 of the SIMA, when data relating to one or more of the circumstances set out in section 15 is not available. The adjustments these provisions envision are further detailed in the SIMR sections 3 to 19.
 
The essence of Camco’s allegation with respect to this issue is that the use of “multipliers” is not specifically endorsed in the provisions of the SIMA or the SIMR.
 
The Commissioner argues that it fully complied with the dictates of the SIMA and the SIMR in calculating the “normal values” for the subject goods sold by WCI. In its briefs, and at the hearing, the Commissioner restated the description of the steps it took in calculating the “normal values” of the subject goods. Those steps were described in the June 30, 2000, statement of reasons for the Final Determination as follows:

Based on the WCI submission, normal values were determined using section 15 of SIMA, where there were profitable sales of like goods and sales to more than one domestic customer. The normal values were based on the weighted average selling price of the like goods sold to larger volume customers in the United States of America.
 
Where sales of like goods were found not to be profitable or where sales of like goods were to only one customer, normal values were determined, using paragraph 19(b) of SIMA, based on the production cost of the subject goods, plus reasonable amounts for administrative, selling and all other costs and an amount for profit pursuant to regulation 11, subparagraph (1)(b)(ii) of the Special Import Measures Regulations (SIMR). Regulation 13 of the SIMR was applied when determining profit of goods of the same general category.
 
Where applicable, the normal values determined under section 15 of the SIMA were adjusted in accordance with the SIMR, as follows:
 
• a regulation 3 quantity adjustment was allowed when quality discounts were generally granted in the domestic market and the importer would have qualified if the sale had occurred in the United States of America;
 
• a regulation 6 adjustment was allowed when cash discounts, rebates, and deferred discounts were generally granted in the domestic market and the importer would have qualified if the sale had occurred in the United States of America;
 
• a regulation 7 freight adjustment was allowed for domestic sales that were sold on a delivered or a freight included basis; and
 
• a regulation 9 trade level adjustment was made to take into account advertising, warehousing and sales’ staff expenses incurred on domestic sales which are at a trade level nearest or subsequent to that of the importer.^[16]

The Commissioner further detailed the process of its calculations in correspondence with WCI on June 30, 2000, which set forth the results of its investigation. In that correspondence, after providing much the same description of the process noted as appearing in its Statement of Reasons above, the Commissioner continued with the following:

In order to simplify the determination of normal values for the final determination, specific normal value multipliers were used.
 
Model specific weighted average net mark up was calculated for models sold to a national distributor (FHP Canada) by comparing the adjusted totaled invoice price (net of all regulation adjustments) with the total Cost of Manufacturing (material, labour, and factory overhead). This is indicative of the amount by which FHP would mark up its Cost of Manufacturing to arrive at the selling price to a domestic national distributor. The net mark-up figure in essence includes the required regulation 5(a) quality adjustment where applicable, a downward adjustment for quantity adjustment (regulation 3), a downward adjustment for cash discounts and rebates (regulation 6), a downward adjustment for delivery costs included in the selling price (regulation 7); and a downward adjustment to reflect the difference in trade level between domestic customers and importers in Canada (regulation 9).
 
The multipliers were then applied to the Cost of Manufacturing of the exported models to arrive at normal values.
 
The calculations are included in a CD remitted to your Canadian counsel...^[17]

The Commissioner argues that by using “multipliers” it was simply applying arithmetic processes to its computations. Counsel for the Commissioner argued before this Panel that the Commissioner’s use of “multipliers” in the course of calculating the “normal values” for WCI’s products in this case did, in fact, produce the correct mathematical results.
 
WCI supports the Commissioner’s submission that no error was committed in using “multipliers” to compute the “normal values” for the subject goods sold by WCI. WCI asserts that the “multipliers” of which Camco complains are simply arithmetic calculations, which are in fact necessary to make the various adjustments required under sections 15 to 19 of the SIMA and under the applicable provisions of the SIMR.
 
WCI also pointed out to this Panel that Camco did not offer any substitute or alternative methodology as being more appropriate or proper, other than calling for the use of “actual qualifying sales.” WCI further noted that Camco’s complaint on this issue goes more to the description of the processes employed in the Commissioner’s correspondence with WCI, rather than to the actual calculations performed by the Commissioner.
 
The “multipliers” to which Camco objects are simply the mathematical means of making the comparisons and adjustments required under sections 16 to 19 of the SIMA and the applicable sections under the SIMR in order to compute “normal values” for the subject goods. Despite the apparent concession implicit in the reference to “simplifying” the computations in Commissioner’s letter to WCI, it is difficult to conceive of other means of making the adjustments called for under the law and regulations without resort to mathematical tools such as weighted averages and percentages for each of the various computations.
 
Moreover, this Panel was not directed to any evidence on the record showing that the Commissioner’s computations were in error as a result of the use of “multipliers,” nor what other results might have been obtained with the use of some other methodology. The entire thrust of Camco’s complaint, which at its core seems to center on terminology, is the use of what was called a “multiplier.”
 
While the precise term “multiplier” may not be found in the text of the SIMA or the SIMR, the purported alternative suggested by Camco, being “actual qualifying sales”, is also absent. Additionally, there appears to be no dispute over the Commissioner’s use of sales that fit within the requirements of section 15 of the SIMA when that data was available. The issue of “multipliers” only arises when information concerning sales fitting the requirements of section 15 of the SIMA is not available -- when “actual qualifying sales” are lacking as it were -- and adjustments are therefore necessary under other provisions of the SIMA.
 
Not only has Camco failed to provide this Panel with any authority which precludes the process employed by the Commissioner, but to the contrary, the types of comparisons and adjustments called for under sections 16 to 19 of the SIMA and the applicable sections of the SIMR logically and implicitly would seem to envision use of mathematical tools such as percentages or “multipliers” in order for the Commissioner to carry out its obligations. What is important is not the terminology employed as a convenient shorthand description of the mathematical processes to be applied, but whether the Commissioner complied with the law and regulations in actually computing the “normal values” for the subject goods.
 
Accordingly, this Panel is not convinced that there has been an error committed by the Commissioner through the use of the so-called “multipliers” and will not remand on this issue.
 

(c) Deduction of Warehousing Expenses in Calculation of Normal Values for WCI’s Exports and Subject Goods

The third central question raised by Camco is whether the Commissioner erred when it included warehousing expenses incurred by WCI in determining the trade level adjustments under section 9 of the SIMR necessary to compute “normal value” for WCI’s exports pursuant to sections 15 and 16 of the SIMA.

Paragraphs 15(a) and 15(e) of the SIMA stipulate that the normal value of subject goods is the price of like goods when they are sold by the exporter to its home market customers at the same place from which the subject goods were shipped directly to Canada. Paragraph 15(e) of the SIMA reads as follows:

         15. Subject to sections 19 and 20, where goods are sold to an importer in Canada, the normal value of the goods is the price of like goods when they are sold by the exporter of the first mentioned goods

…
 
(e) at the place from which the good were shipped directly to Canada or, if the    goods have not been shipped to Canada, at the place from which the goods would be shipped directly to Canada under normal conditions of trade,

adjusted in the prescribed manner and circumstances to reflect the differences in terms and conditions of sale, in taxation and other differences relating to price comparability between the goods sold to the importer and the like goods sold by the exporter.

Paragraph 16(1)(a) of the SIMA addresses the situation where there is an insufficient number of home market sales made by the exporter at the same place from which the subject goods were shipped directly to Canada, thereby precluding a proper comparison. In such case, if there are home market sales made by the exporter at one or more other places, home market sales in such other place or places should be included in the determination of normal value.
 
In its initial investigation, the Commissioner included in its calculation of normal value certain home market sales that, pursuant to the SIMA, ought not to have been included. The Commissioner recognized this error and rectified it during its review of normal values and export prices for the purposes of finalizing the duty liability for goods released from Customs from the date of the Preliminary Determination. In initially making its determination of the amount for profit for these erroneously included goods, the Commissioner turned to the trade-level adjustments provided in paragraph 9(a) of the SIMR which reads as follows:

9. For the purposes of sections 15 and 19 and subparagraph 20(1)(c)(i) of the Act, where purchasers of like goods who are at the trade level nearest and subsequent to that of the importer in Canada have been substituted for purchasers who are at the same or substantially the same trade level as that of the importer, the price of the like good shall be adjusted by deducting therefrom

(a) the amount of any costs, charges or expenses incurred by the vendor of the like goods in selling to purchasers who are at the trade level and nearest and subsequent to that of the importer that result from activities that would not be performed if the like goods were sold to purchaser who are at the same or substantially the same trade level as that of the importer; …

Pursuant to this authority, the Commissioner made a downward adjustment for warehousing and freight for a number of sales, some of which ought not to have been included at all in determining normal value and others of which ought not to have been adjusted downward.
 
In its complaint, Camco correctly argued that when determining normal value on the basis of home market sales from a place other than the place of direct shipment, neither the SIMA nor the SIMR provide for any deduction for costs incurred in respect of activities performed prior to the arrival of the goods at that other place. Only if the Commissioner is of the opinion that there is an insufficient number of sales of like goods made by the exporter at the place from which the subject goods are shipped directly to Canada so as to permit a proper comparison between the sales, can it then include in its calculation sales made from another place of sale, nearest to the place of shipment.

The Commissioner has conceded that there were, in fact, sufficient sales of like goods by WCI at the place of direct shipment to Canada so as to permit a proper comparison with the sales of goods to the importer in Canada, and therefore it was not necessary to examine additional places from which goods were shipped to Canada. Accordingly, the Commissioner could make its determination of normal value under section 15 of the SIMA, and there was no need to turn to paragraph 16(1)(a) of the SIMA, or perform a trade level adjustment under section 9 of the SIMR.
 
The Commissioner concedes that the trade level adjustment, including the deduction of warehousing expenses, conducted under paragraph 9(a) of the SIMR was indeed erroneous, and stated that the error was rectified during the review of normal values and export prices for the purpose of finalizing the duty liability for goods released from Customs from the date of the Preliminary Determination of dumping.
 
Despite this submission, Camco has argued before this Panel that a remand is still required to amend the Final Determination. As the Commissioner has admitted that an error was made, all evidence referred to by the parties indicates that the error made had only a minor impact upon the Final Determination and the error was later rectified in subsequent review of the final duties imposed, this Panel is not convinced that, in this circumstance, a remand is required.
 

(d) Failure to Account for Differences in Conditions of Sale as Required by Paragraph 5(d) of the SIM

Camco alleges that the Commissioner failed to properly apply paragraph 5(d) of the SIMR when calculating the “normal values” of the goods exported by WCI to Canada pursuant to section 15 of the SIMA. In particular, Camco alleges that a difference in the time which payment was rendered by WCI Canada versus WCI’s customers in the United States should have resulted in an adjustment for differing “conditions of sale” under the SIMR.
 
Section 15 of the SIMA directs that the normal value of the goods should be adjusted in the prescribed manner and circumstances to reflect the differences in terms and conditions of sale, in taxation and other differences relating to price comparability between goods sold to the importer and like goods sold by the exporter. Paragraph 5(d) of the SIMR provides that “where the goods sold to the importer in Canada and the like goods differ… in their conditions of sale… and that difference would be reflected in a difference in the price of like goods and the price at which goods that are identical in all respects, including conditions of sale, to the goods sold to the importer in Canada would be sold in the country of export, the price of like goods shall be adjusted…”
 
The Commissioner determined that there was a difference in the amount of time in which payment was usually rendered by WCI Canada, but did not adjust the normal value of WCI’s goods as a result. Camco asserts that this failure or refusal by the Commissioner to adjust the normal value of WCI’s goods is an error justifying remand because, Camco submits, the difference was not trivial when measured in percentage terms.
 
The Commissioner acknowledges that there is a difference in the time in which payment was usually rendered by WCI Canada, but asserts that no adjustment is required in this case. In its respondent’s brief, the Commissioner asserts that the adjustment it makes under paragraph 5(d) of the SIMR for differences in the time when payment might be rendered in the domestic and export markets depends upon establishing the prevailing interest rate in both markets. The Commissioner states at page 53 of its respondent’s brief that:

The difference in value of the two payment periods, or the amount of time customers take to remit payment, is quantified on this basis. This difference is the adjustment to the price of like goods. This adjustment can either be an addition to or a deduction from the price of the like goods depending upon which party has the longer payment period (i.e. the importer in Canada or the exporter’s domestic customers).

The Commissioner’s policy for making such adjustments under paragraph 5(d) of the SIMR is stated in section 5.7.1.1 of the SIMA Handbook, as follows:

It may not be practicable to adjust for credit in every instance where credit terms are available. Therefore it is Divisional policy that an adjustment under paragraph 5(d) of the [SIMR] will generally be made only in instances where...it is determined that there is more than a 30 day difference in the credit terms available in each market.

The Commissioner, therefore, asserts that as there was less than a 30 day difference between the domestic market and the sales in Canada, no adjustment was warranted under its policy. The Commissioner argued that this policy and its actions are both reasonable and correct.

WCI supports the Commissioner’s contention that no error was committed by failing to adjust the normal value of its products, notwithstanding the existence of a difference in the time in which payment is remitted in the two markets in this case. WCI asserts that under paragraph 5(d) of the SIMR, only differences in conditions of sale which would be reflected in the price of the goods in the two markets should result in an adjustment. In other words, not every difference in the conditions of sale necessarily requires that an adjustment be made to determine normal value. Accordingly, WCI asserts that the Commissioner has some degree of discretion to determine whether a particular difference in credit terms would or would not be reflected in the price of the goods, and that the “Divisional policy” reflected in the SIMA Handbook is a valid exercise of that discretion.
 
Moreover, WCI has argued that the difference in the payment terms in this particular case would have only a de minimis impact on the actual price of the goods in any event. Accordingly, irrespective of the “Divisional policy”, WCI asserts an adjustment is not necessarily required under the terms of paragraph 5(d) of the SIMR. Alternatively, WCI asserts that no reviewable error occurred under any applicable standard of review.
 
The computations regarding the time value of money resulting from different payment practices are not actually included in the Final Determination being challenged in this proceeding, nor can they be found in the Statement of Reasons which accompanies the Final Determination. Rather, they are a small part of the numerous underlying calculations, computations, and judgments entrusted to the Commissioner which eventually result in a decision to issue a final determination of dumping.
 
The Commissioner, logically and under the terms of both section 15 of the SIMA and section 5 of the SIMR, has some degree of discretion in determining how to carry out its responsibilities with regard to these tertiary computations. The regulatory scheme clearly does not require that every difference, however minuscule, be reflected in an adjustment. Only those differences which would influence prices and the ability to compare the prices of relevant goods between the domestic and export markets necessitate adjustments be applied when computing normal value.
 
The differences in the time to remit payment in the two markets in this case are argued, by both the Commissioner and WCI, to be de minimis, and of little impact on the price of the goods in either market. Moreover, the difference involved is well within the Commissioner’s established policy guidelines, which require more than a 30 day differential before an adjustment is applied.
 
Accordingly, in light of the tertiary nature of the computations involved, their de minimis impact, lying well within the scope of established Commissioner policy, and involving the Commissioner’s determination of what is or is not a “qualitative difference” in the “conditions of sale” under paragraph 5(d) of the SIMR 5, this Panel is not convinced that there is a need for a remand on this issue.
 

(e) Deduction of an Amount for Profit in the Calculation of Whirlpool’s Export Prices

Under section 15 and paragraph 16(1)(b) of the SIMA, in the determination of normal value, the Commissioner is permitted to make certain deductions from the exporter’s domestic selling price where purchasers of like goods, who are at a trade level nearest and subsequent to that of the importer in Canada, have been substituted for purchasers who are at the same or substantially the same trade level as the importer.
 
All deductions and adjustments are to be made “in the prescribed manner and circumstances.” The adjustments are prescribed in sections 3 through 10 of the SIMR, and include adjustments for quantity discounts, qualitative differences, discounts, delivery costs, trade level adjustments and taxes and duties.
 
Paragraph 9(a) of the SIMR, which deals with trade level adjustments, provides that in making such adjustments under section 15 of the SIMA, a deduction must be made from the exporter’s home market selling price for the amount of any “costs, charges or expenses” incurred by the vendor of the like goods in selling to purchasers who are at the trade level nearest and subsequent to that of the importer where that amount results from activities that would not be performed if the like goods were sold to purchasers who are at the same or substantially the same level as that of the importer.
 
There was no dispute among the parties to this matter that in calculating the amount of this deduction in its determination of normal values for subject goods exported by Whirlpool, the Commissioner deducted an “amount for profit”. No such adjustment was made with respect to the determination of normal values applicable to exports of subject goods by WCI. The only issue in dispute is whether this deduction was permitted by the legislation.
 
The Commissioner conceded that such deduction in the case of Whirlpool’s exports was erroneous. Whirlpool, on the other hand, offered arguments in support of the Commissioner’s conduct, relying on sections 11 and 13 of the SIMR. Whirlpool argued that the methodology of the Commissioner was to take the normal value, whether determined under section 15 or 19 of the SIMA, and deduct from it the amount of the costs incurred on sales in the United States, but not incurred on sales to Canada, and then gross up the amount of deducted costs (on a product-by-product basis) by the amount of profitability found under Section 11 of the SIMR.
 
In addition, counsel for Whirlpool asked that this Panel interpret the SIMR, and specifically paragraph 9(b) thereof, as not only allowing for a deduction of an amount for profit, but in fact requiring such a deduction. Whirlpool claimed that a deduction of an amount for profit is necessary to allow for “a fair comparison between the export price and the normal value”, as stated in paragraph 2.4 of the WTO Anti-Dumping Agreement. Whirlpool claims that only such methodology would have enabled a “fair comparison” in the special context of a large volume of export sales to a single customer (in the present case, Inglis), as such sales are necessarily made with smaller profit margins.
 
This Panel views Whirlpool’s position as problematic. It not only ignores the Commissioner’s acknowledgement of error, but would have this panel eschew the explicit and specific authority of paragraph 9(a) of the SIMR which clearly applies to the present situation. Sections 11 and 13 of the SIMR, upon which Whirlpool relies, deal with the cost of production and other costs, and not with substitution of trade level. Section 11 of the SIMR applies to paragraph 19(b) and subparagraph 20(1)(c)(ii) of the SIMA and section 13 of the SIMR applies to paragraph 11(1)(b) of the SIMA. Section 9 of the SIMR, on the other hand, specifically deals with the calculations under sections 15 and 19 of the SIMA, which govern the determination of normal values.
 
In addition, paragraph 9(b) of the SIMR very clearly states that it applies only in the absence of information relating to the costs, charges and expenses mentioned in paragraph 9(a). In the present case, there was no lack of information under paragraph 9(a). Accordingly, it was unnecessary to embark on a calculation under paragraph 9(b). Therefore, this Panel is not convinced of Whirlpool’s claims as to what form of calculation “a fair comparison” rule may warrant under paragraph 9(b).
 
 Camco has asked that this Panel remand to the Commissioner to recalculate the trade level adjustments under paragraph 9(a) of the SIMR without a deduction for an amount for profit. This Panel notes, however, that it was asserted during oral hearings, and such assertion was not disputed, that the evidence on the record shows that the Commissioner’s error on this issue had only a “miniscule effect” on the Final Determination. Consequently, being guided by the legal maxim de minimis non curat lex, this Panel will not remand on this issue as the error had only a miniscule effect. This Panel trusts that the Commissioner will take this error, which it has conceded, into account in all future calculations of duties owed.

 
(f) Conclusion
 

This Panel has carefully reviewed the complaint and written briefs filed by Camco in respect of the Final Determination, and has heard oral arguments. Having carefully considered each of the arguments raised by Camco in its complaint with respect to the Final Determination, and having determined that, with respect to each argument, no remand was required, this Panel dismisses the complaint filed by Camco on September 8, 2001.