ARTICLE 1904
BINATIONAL PANEL REVIEW PURSUANT TO THE
NORTH AMERICAN FREE TRADE AGREEMENT

(Continuation)

b. Applying patent unreasonableness

In both their written and oral submissions, counsel for Complainants urged upon the Panel the following statement by Gonthier J. from National Corn Growers, supra, at p. 1370:

In some cases, the unreasonableness of a decision may be apparent without detailed examination of the record. In others, it may be no less unreasonable but this can only be understood upon an in-depth analysis.

This raises the question of the extent to which in this instance it was part of the obligation of this Panel to probe beneath the reasons of the CITT and, in particular, examine the allegations of patent unreasonableness made by the complaining companies in light of the administrative record compiled by the CITT.

After careful reflection, it is our view that the particular grounds of review that the Complainants were urging upon us were not ones that required an in-depth analysis of the record. In general, we were guided in reaching this conclusion by the following statement by Evans J.A. in Stelco Inc. v. British Steel Canada Inc., January 25, 2000, A-365-98 (F.C.A.) [unreported] (at para. 18):

[T]he facts in dispute in this case are manifestly within the expertise of the CITT, and unless the Court exercises a very high degree of restraint and resists the domestic producers’ invitation to subject the findings to close scrutiny through the record, it runs the risk of second guessing the conclusions reached by the specialized Tribunal.

More particularly, however, at no point did the Complainants seek to rely upon arguments that the CITT’s findings of primary fact or inferences from those primary facts lacked support in the administrative record. Rather, their complaints were ones that involved primarily allegations of gaps and inconsistencies within the reasons of the CITT, as well as errors of law and principle in the crafting of those reasons, including the drawing of inferences that were not justified by the facts as found. As a consequence, we have confined our review of the CITT’s decision to an evaluation within the patent unreasonableness standard of the reasons provided by the CITT. We have not gone beyond those reasons to the administrative record itself.

Once again, however, in relation to aspects of that review of the reasons provided by the CITT, we have been aided by the judgment of the Federal Court of Appeal in Stelco Inc. v. British Steel Canada Inc., supra (at paras. 25-26):

Given the discretionary nature of the Tribunal’s decision-making power under subsection 76(4), it is impossible in the abstract to say that any one of the factors typically considered by the Tribunal in these cases is so intrinsically important that it must always be dealt with in the Tribunal’s reasons, whenever it is put in issue by the parties. It is for the Tribunal to determine the significance of any given factor in light of its conclusions on other factors.

The burden is on the applicant to demonstrate that any factor on which the Tribunal did not make a reasoned finding was, on the facts of the case, of such manifest importance that the Tribunal was bound in law to deal with it expressly in its reasons for decision. . . 

c. Breach of the rules of natural justice and procedural unfairness in the conduct of the RFI process

As submitted by counsel for the Complainants, the general position of the Canadian courts has been that the searching standard of correctness is the appropriate one to be applied to allegations of the rules of natural justice or procedural unfairness. Tr. at 13. However, in certain contexts, the courts have conceded considerable autonomy to tribunals and agencies in the making of procedural rulings or determinations. Very recently, in Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817, L’Heureux-Dubé J., speaking for the Court, described (at para. 27) the circumstances under which such a deferential approach should be taken to the procedural rules and rulings of an agency or tribunal:

[T]he analysis of what procedures the duty of fairness requires should also take into account and respect the choices of procedures made by the agency itself, particularly when the statute leaves to the decision-maker the ability to choose its own procedures, or when the agency has an expertise in determining what procedures are appropriate in the circumstances: Brown and Evans [Judicial Review of Administrative Action in Canada (loose-leaf)], at pp. 7-66 to 7-70. While this, of course, is not determinative, important weight must be given to the choice of procedures made by the agency itself and its institutional constraints: IWA. v. Consolidated-Bathurst Packaging Ltd., [1990] 1 S.C.R. 282, per Gonthier J.

In this instance, the particular procedural concern of the Complainants is alleged deficiencies in the rules that the CITT has developed and imposed in this case relating to pre-hearing discovery of material in the possession of the parties opposed in interest. On this particular issue of pre-hearing discovery, the judgment of MacGuigan J.A. for the Federal Court of Appeal in CIBA-Geigy Ltd. v. Canada (Patented Medicine Prices Review Board) (1994), 170 N.R. 360 (F.C.A.), while not directly on point, nonetheless, is very instructive. This case involved an attempt in the context of a price-gouging proceeding before the Board to secure discovery of documents in the possession of the Board itself. Speaking for the Court, MacGuigan J.A. (at para. 5) quoted at length from the judgment of McKeown J. at first instance: [1994] 3 F.C. 425 at pp. 445-46. The following extracts are the most salient for present purposes:

The Board has made a decision refusing disclosure of the documents requested and I should give such a decision curial deference unless fairness or natural justice requires otherwise. Disclosure cannot be decided in the abstract. The Board is supposed to proceed efficiently and to protect the interest of the public. This requires, inter alia, that a hearing shall not be unduly prolonged. Certainly, the subject of the excess price hearing is entitled to know the case against it, but it should not be permitted to obtain all the evidence which has come into the possession of the Board in carrying out its regulatory functions in the public interest on the sole ground that it may be relevant to the matter at hand.....Law and policy require that some leeway be given an administrative tribunal with economic regulatory functions....It is not intended that proceedings before these tribunals be as adversarial as proceedings before a court. To require the Board to disclose all possibly relevant information gathered while fulfilling its regulatory obligations would unduly impede its work from an administrative viewpoint. Fairness is always a matter of balancing diverse interests. 

While we are concerned here with an attempt to secure discovery of material in the possession of parties rather than material in the possession of the tribunal or agency, the considerations referred to by McKeown J. (and specifically endorsed by the Federal Court of Appeal) clearly have relevance. Section 17 of the Canadian International Trade Tribunal Act, R.S.C. 1985, c.47 (4th Supp.) designates the CITT as a court of record with all the powers of a superior court with respect to the “production and inspection of documents.” Section 35 of that Act then goes on to specify that [h]earings before the Tribunal shall be conducted as informally and expeditiously as the circumstances and considerations of fairness permit.

Both these provisions speak to the existence of considerable discretion and latitude on the part of the Board in the crafting of procedures to reflect the imperatives of the particular regulated domains over which the CITT has substantive jurisdiction or authority. Indeed, this would seem to be particularly so in the case of pre-hearing procedures such as discovery of material in the possession of parties. 

As held by the Federal Court of Appeal in CIBA-Geigy, supra, tribunals involved in economic regulation may not be engaged in the kind of administrative process that is sufficiently akin to criminal proceedings to attract the application of the principles enunciated by the Supreme Court of Canada in R. v. Stinchcombe, [1991] 3 S.C.R. 326, under which, in a criminal case, the Crown has a legal duty to make total disclosure to the defense. However, even in the event that the common law of procedural fairness dictates that the parties are entitled to a form of discovery (as in Ontario (Ontario Human Rights Commission) v. Ontario (Board of Inquiry into Northwestern General Hospital) [1993], 115 D.L.R. (4th) 279 (Ont. Div. Ct.)), the precise details of that process are matters over which the tribunal or agency is entitled to a measure of deference or respect from the Panel. This is particularly so here where the Act in section 35 places a value on informality and expedition in the processes of the CITT and where the CITT has responded to that legislative imperative by working diligently towards a discovery process which will meet those ends while at the same time providing a basis for the orderly exchange of information prior to the hearing.

While the Canadian International Trade Tribunal Rules, SOR/DOR/91-499 (as amended), promulgated under section 39(1) of the Canadian International Trade Tribunal Act, make no explicit provision for true discovery, from November 1996 onwards, the CITT has utilized a request for information (RFI) process in order “to facilitate the inquiry by enhancing the timely exchange of information among participants prior to the hearing” (Memo to Counsel and Parties of Record, June 3, 1998). This process was incorporated in guidelines, guidelines which the CITT has kept under review and modified to make the process more efficient and effective. In this instance, the parties were informed that the most recent modification of the guidelines would be applied.

All these factors are strongly suggestive of a particular aspect of the inquiry or hearing process over which the Panel should accord considerable deference to the CITT. In its determination of what should be both the general parameters and the actual details of the RFI procedures, the CITT’s choices are entitled to “important weight.” 

In fact, L’Heureux-Dubé J. in Baker, supra, does not explicitly locate her specification of the need for deference to procedural choices within the framework of the spectrum of standards of review identified by the Supreme Court as applying to substantive determinations. Rather, it is simply proffered as one of a number of factors that a reviewing court must take into account in determining whether or not a tribunal or agency has met the requirements of procedural fairness or natural justice required by the common law. Nonetheless, to the extent that the procedural choices in issue here are ones that the legislature has implicitly placed within the discretionary authority of the CITT, there is sound reason for assimilating the CITT’s choice of discovery process within the general realm of discretionary powers. To this extent, the balance of L’Heureux-Dubé J.’s judgment in Baker assumes direct relevance. There, she goes on to make it clear that review of the exercise of discretionary powers should now be treated as being subject to the “pragmatic and functional” analysis that dictates which of the three standards of review is appropriate.

Indeed, the critical factors in that “pragmatic and functional” analysis are ones that we have already identified in bringing this exercise of procedural discretion within the general parameters of the kinds of procedural decisions or choices to which L’Heureux-Dubé J. referred explicitly in Baker. At the very least, these factors indicate that the Panel should not intervene with the CITT’s choice of and application of its discovery procedures unless its choices or actions in the particular case were unreasonable.

However, to the extent that the discovery guidelines are still obviously in the course of ongoing modification and evolution and to the extent that they have not yet been incorporated in the formal Rules of the CITT, action that requires consultation with the Minister and approval of the Governor in Council, we have determined that the appropriate standard for intervention or review of either the procedures or their application in a particular instance is not that of patent unreasonableness.

[ Return to the Table of Contents ]

III. FAILURE TO EXCLUDE STREAMLINE FROM THE DOMESTIC INDUSTRY

A. The CITT’s Discretion In Determining The Domestic Industry

The Complainants challenge the CITT’s decision to include Streamline, a subsidiary of Mueller, within the domestic industry for purposes of its Section 76(2) review. The Complainants argue that the CITT’s failure to exclude Streamline constitutes an abuse of the discretion provided by Section 2(1) of SIMA (defining domestic industry).

SIMA grants substantial discretion to the CITT to include or exclude a domestic producer that is related to an exporter or importer of dumped goods from the domestic industry. Section 2(1) defines “domestic industry” as:

[T]he domestic producers as a whole of the like goods or those domestic producers whose collective production of the like goods constitutes a major proportion of the total domestic production of the like goods except that, where a domestic producer is related to an exporter or importer of dumped . . . goods, “domestic industry” may be interpreted as meaning the rest of those domestic producers. [emphasis added]

In order to exclude a producer from the domestic industry, the CITT first must find that a particular Canadian producer is related to an exporter or importer of dumped goods.

Section 2(1.2) provides:

For the purposes of the definition “domestic industry” in [Section 2(1)], a domestic producer is related to an exporter or importer of dumped . . . goods where

(a) the producer either directly or indirectly controls, or is controlled by, the exporter or importer,

(b) the producer and the exporter or importer, as the case may be, are directly or indirectly controlled by a third person, or

(c) the producer and the exporter or the importer, as the case may be, directly or indirectly control a third person, and there are grounds to believe that the producer behaves differently towards the exporter or importer than does a non-related producer.

Taken together, sections 2(1) and 2(1.2) operate to grant the CITT considerable discretion to include or exclude a domestic producer based on its relationship with an exporter or importer of dumped goods. Only the final clause of section 2(1.2), which imposes a requirement that there be “grounds to believe that a related producer behaves differently” in order for a domestic producer to be deemed to be related for purposes of the “domestic industry” definition, limits this discretion.

The CITT did conclude that Streamline was related to Mueller, applying section 2(1.2). Statement of Reasons (“SOR”) at 16. The CITT, in exercising its discretion, could have applied Section 2.1 to exclude Streamline from the domestic industry. The Complainants argue that the CITT’s failure to exclude Streamline amounts to an abuse of its discretion.

B. Abuse Of Discretion

In arguing abuse of discretion, the Complainants assert that the CITT failed to properly consider (a) the goals of SIMA and (b) the control of Streamline by Mueller in making its determination. Further, the Complainants contend that the CITT failed to consider (c) the effect of Streamline’s opposition to continuing the finding and the alleged resultant use of SIMA as a “sword against other Canadian producers.” These failures, argue the Complainants, constitute legal error. In effect, the Complainants are asserting that consideration of these various arguments is mandatory.

SIMA does not, however, mandate the consideration of any particular factor. Rather, as discussed above, the CITT enjoys a broad grant of discretion under the statute. This discretion operates, when coupled with the deferential patent unreasonableness standard of review appropriate to these proceedings, to make it extremely difficult to displace the CITT’s decision not to exclude Streamline. Moreover, a reading of the Statement of Reasons satisfies us that the CITT more than adequately considered the factors cited by the Complainants.

1. Goals of SIMA

The Complainants first urge consideration of the goals of SIMA as a necessary element in the proper exercise of discretion and then assert that the dominant goal of SIMA is the protection of Canadian producers. The chief goal of SIMA, according to the Complainants, is the protection of domestic producers from unfairly traded imports. Complainants’ Brief at 28. While SIMA does appropriately protect Canadian producers from unfairly traded imports, it also operates to advance the interest of Canadian consumers of dumped goods by limiting antidumping orders to cases where there is injury to a domestic industry. SIMA also incorporates into domestic law the elaborate bargains made by Canada in a variety of international trade agreements and thus protects the interests of exporters and importers of foreign goods as well. 

Even if the protection of domestic producers is the primary goal of SIMA, it does not follow that Streamline, a Canadian producer, is not within the statute’s protection. The Complainants’ argument would convert the determination to exclude a related producer from the domestic industry from a matter of discretion into a mandated result. This is inconsistent with the nature of the statutory design.

2. Control by Mueller

The CITT acknowledges that Mueller controls Streamline. The Complainants assert that the finding of such control should have compelled the CITT to exclude Streamline from the domestic industry. Here again the Complainants’ argument seems to deny the existence of discretion.

Section 2(1.2) does compel the CITT to consider the control exercised between an exporter or importer and a related producer but by its own terms it does not mandate exclusion.

Indeed, were the CITT to conclude in a particular case that no grounds existed “to believe that the producer behaves differently towards the exporter or importer than does a non-related producer,” it could not find that the producer and the exporter or importer were related for purposes of section 2(1). In this instance the CITT would have no clear authority to exclude that particular producer from the domestic industry. To the extent that SIMA has any mandatory provisions with respect to domestic industry, it seems to mandate, in a particular circumstance, that the CITT include a producer.

The Complainants seem to confound the control that triggers the “related” test of section 2(1.2) of SIMA with operational control. Operational control may be independently exercised by a related firm and, where present, may be appropriately considered by the CITT in exercising its discretion not to exclude that firm from the domestic industry. The CITT finds that “Streamline manages its day-to-day operations in a manner which is independent of Mueller . . .” SOR at 16. The CITT also finds that “[Streamline’s] sales in Canada over the period of review were predominantly from domestic production.” SOR at 16. The CITT further notes that it is satisfied that this strategy for serving the Canadian market from Streamline’s domestic production will not change in the near or medium term. These factors support Streamline’s inclusion in the domestic industry notwithstanding its relationship to Mueller.

The CITT thus determines (1) that Mueller controls Streamline so as to satisfy section 2(1.2)(a) of SIMA and (2) that Streamline exercises sufficient independent “day-to-day” operational control to justify its inclusion in the domestic industry. These two findings are not inconsistent.

It is clear that the CITT did consider the existence and the effect of the control of Streamline by Mueller in exercising its discretion to include Streamline within the domestic industry. The Statement of Reasons contains a discussion of the analysis the CITT undertook in evaluating the effects of the control by Mueller of Streamline. The Complainants cannot maintain that the element of control was not appraised by the CITT. 

3. Effect of Streamline’s opposition

The Complainants assert that the CITT was obliged to exclude Streamline from the domestic industry as Streamline, in contrast with the Complainants, supported rescission of the finding. It is hard to see the relevance of the litigation posture of any particular producer, related or non-related, to its inclusion or exclusion in the domestic industry evaluated by the CITT in its section 76(2) review. The Complainants have not been prevented from arguing their support for continuation of the finding through the inclusion of Streamline within the domestic industry. Had the CITT excluded Streamline from the domestic industry, Streamline’s views on rescission of the finding would have been asserted with equal effect through its parent Mueller. There is simply no relationship between the determination to include Streamline in the domestic industry and the ability of any party to advocate its respective position in this case.


C. Adequacy of the Statement of Reasons

The SOR sets out in considerable detail the analysis performed by the CITT in exercising its discretion not to exclude Streamline from the domestic industry. While the standard of review may not compel us to examine the reasonableness of the CITT’s Statement beyond determining the absence of facial error, we note the SOR’s completeness and coherence in accounting for the CITT’s domestic industry determination. Complainants have not identified any inconsistency between the consideration described in the Statement of Reasons and the underlying record.

D. No Abuse of Discretion

SIMA grants broad discretion to the CITT to include or exclude a related producer from the domestic industry examined in a section 76(2) determination. SIMA does not mandate particular factors that the CITT must consider in making its determination. As such, the CITT enjoys discretion both as to identifying the relevant considerations and in its overall determination. We have not identified any abuse of this discretion under the patent unreasonableness standard of review. The broad discretion vested in the CITT, coupled with the deference appropriate to this standard of review, lead this Panel to find no error in the CITT’s decision not to exclude Streamline from the domestic industry.

[ Return to the Table of Contents ]

IV. CAUSATION

Complainants argue that the CITT’s causation analysis failed to meet the requirements of SIMA section 76(4), which states that “on completion of a review . . . of an order or finding, the Tribunal shall make an order rescinding the order or finding or continuing it with or without amendment, as the circumstances require, and give reasons for the decision” (emphasis added). According to Complainants, the CITT’s SOR failed to “give reasons” for its decision that dumping (which the CITT found likely to occur) would not cause material injury to the domestic industry. Specifically, Complainants argue that the CITT’s failure to quantify the degree to which U.S. producers will dump subject goods in the future necessitates a finding by this Panel that the CITT’s SOR was inadequate. However, as discussed below, neither the statute nor the regulations require the CITT to calculate dumping margins in order to conduct its causation analysis. Indeed, in this case, the CITT cited to specific reasons in its SOR for determining that dumping by the U.S. producers would be unlikely to cause material injury to the domestic industry. Therefore, given the deference afforded to the CITT in matters related to causation, this Panel upholds the CITT’s determination. 

A. CITT’s Causation Analysis

Pursuant to sections 76(2) and 76(4) of SIMA, the CITT may review and rescind an order previously issued by the CITT as long as it gives reasons for its decision. Most notably, the statute does not provide the CITT with any guidance concerning how to conduct a section 76(2) review. As a result, the CITT’s practice has been to conduct these reviews by first determining whether there is a likelihood of resumed dumping, and if so, whether such dumping will be likely 
to cause material injury to the domestic industry. Only two requirements are placed upon the CITT: (1) the final determination must not be patently unreasonable; and (2) the CITT must “provide adequate reasons” to explain its final determination. See, Stelco Inc. v. Attorney General of Canada, Docket No. A-365-98, Federal Court of Appeal at 9 (unreported).

In its October 16 SOR, the CITT found that the likelihood of resumed dumping would not cause material injury to the domestic industry. SOR at 17-22. In making this determination, the CITT focused on a range of factors, including the change in market conditions since the original injury determination, the likely volume and price of dumped imports and the recent and likely future performance of the domestic industry. Specifically, the CITT made the following findings:

§ Since 1995, domestic market conditions have stabilized and the health of the domestic industry has improved substantially;

§ U.S. imports have declined dramatically with a concomitant rise in market share held by Canadian producers;

§ Between 1995 and 1997, domestic market volumes increased 24 percent while sales from domestic production increased by 30 percent;

§ Sales from domestic production have been consistently made at prices significantly lower than sales made from U.S. imports;

§ U.S. imports have been generally sold at undumped prices;

§ U.S. imports are typically higher-priced, lower-volume items that tend to fill out domestic producers’ product lines rather than compete directly with domestic production;

§ Trends suggest that as domestic producers expand their product range they rely less on imports to fill out their product lines;

§ Any dumping by the three named exporters is likely to be limited to a small volume of products, will be intermittent, and will not be likely to significantly disrupt the Canadian market; and,

§ Other factors, such as intense price competition among domestic producers, rather than any dumping by U.S. producers, are likely to be the major contributing factors affecting the industry’s performance in the near future.

According to the CITT, Streamline and Mueller, these findings are not patently unreasonable and the SOR satisfies section 76(4) by providing an adequate explanation linking these findings to its conclusion that any dumping by the U.S. industry will not cause material injury to the domestic industry. 

B. Quantification of Dumping 

Complainants do not dispute that evidence on the record supports the CITT’s findings. See Tr. at 94. Rather, they argue that the CITT’s SOR is inadequate (and therefore its reasoning is patently unreasonable) because it fails to include a quantification of the likely dumping margin that would exist absent an order. However, Complainants fail to identify any existing legal authority to support the assertion that the CITT must quantify dumping in order to conduct its causation analysis. Complainants cite to Moldex Ltd. v. Beneke Industries Ltd. (1984), 7 C.E.R. 323 (F.C.A.) to support the conclusion that the CITT must quantify dumping. See Tr. at 77. However, that case has no bearing on the issue at bar. In Moldex, complainants argued that injury is “material” if it in any way affects the operation of the domestic producers. See Moldex at 324. The court disagreed, stating that such a definition of “materiality” has no merit. Id. That conclusion provides no support for the belief that the CITT must quantify dumping when conducting a causation analysis.

On the contrary, other courts and panels have held that “there is no single administrative standard against which to judge the tribunal’s analysis of causality.” Certain Concrete Panels at 12. See also Sacilor Acieries, et al. v. Anti-Dumping Tribunal, et al. (1985), 9 C.E.R. 210 (F.C.A.) at 214. It is clear that the CITT has the discretion to conduct a causation analysis in any manner, as long as that analysis is not patently unreasonable and it is adequately explained in the SOR. In this case, the CITT’s analysis is supported by the record (as Complainants concede) and the CITT “explain[ed] its conclusion on those issues that are of central importance” to its decision, as indicated above. See Stelco at 10 (holding that section 76(4) requires the CITT to provide adequate reasons for its decisions and does not have to address every issue raised before it). Therefore, this Panel rejects Complainants’ assertion that satisfaction of section 76(4) requires the CITT to quantify dumping margins. 

C. Contradictory Statements 

Complainants also contend that the CITT failed to satisfy section 76(4) because of some allegedly contradictory comments in the SOR. Specifically, on page 15 of the SOR, the CITT states that “certain items would inevitably be dumped,” while on page 21 the CITT states that “such dumping, if it does occur, will be intermittent and not at volumes and prices which would disrupt the domestic market.” (emphasis added) Complainants assert that these statements are inherently contradictory and therefore this Panel should remand the CITT’s determination in order to seek further clarification. 

However, this Panel does not agree with Complainants’ assertions. First, put into context, these statements are reasonably consistent. The first statement refers to the inevitability that some fittings (whether wrought or cast) will inevitably be dumped in Canada. The second statement refers to the possibility that cast fittings alone may be dumped in Canada. These two statements are not necessarily inconsistent, given that only wrought (and not cast) fittings may inevitably be dumped. Second, even if these statements were inconsistent, this is not the kind of patent error that justified a remand in Canadian Pasta Manufacturers’ Assn. v. Aurora Importing 

& Distributing Ltd, (1997) 208 N.R. 329 (F.C.A.), relied upon by Complainants in this case. Therefore, this Panel rejects Complainants’ assertion that the determination should be remanded.

Continue on to V. THE RFI PROCESS