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

IN THE MATTER OF:

Antidumping Investigation of Mexico into Imports of Flat Coated Steel Products from the United States of America
(Continued)

IV. COMPETENCE OF OFFICIALS INVOLVED IN THE VERIFICATION PHASE

123. In their Complaints, Bethlehem, LTV and USX have presented issues relating to the competence of officials concerning acts that occurred during the verification phase of the anti-dumping investigation, during July and August of 1993. These issues are discussed individually below.

A. COMPETENCE OF OFFICIALS WHO ISSUED THE VERIFICATION ORDERS

124. Bethlehem, LTV and USX claim that verification orders sent to them were invalid because they were signed by officials of entities that were not lawfully created. They claim that this incompetence causes the entire Final Determination to be illegal under Article 238/I of the Federal Fiscal Code.

125. We examine below: (1) the verification orders themselves, (2) the lawful exercise of UPCI’s powers, (3) guidance from previous amparo decisions, and (4) administrative determinations within the Final Determination that were derived from any incompetent acts. The Panel concludes that the verification orders were acts of a lawful entity, Unidad de Prácticas Comerciales Internacionales ("UPCI"); that the officials who signed the orders were employees of UPCI; and that these officials had been delegated authority to issue these orders by a delegation agreement (Acuerdo Delegatorio) that was published in the Diario Oficial on September 12, 1985 and that remained in effect until March 1994. Alternatively, the Panel concludes that the parts of the Final Determination concerning Bethlehem, LTV and USX were based on evidence that these U.S. exporters voluntarily submitted, and not on administrative dispositions in the verification orders or verification visits.

1. The Verification Orders.

126- Three verification orders are involved. The first verification order, dated July 6, 1993, was sent to LTV.⁶¹ It was signed in the absence of Miguel Angel Velazquez Elizarraras, who is identified in the order as "El Director General Adjunto." The verification order was prepared on the stationery of SECOFI and begins by identifying the following entities:

UNIDAD DE PRACTICAS COMERCIALES INTERNACIONALES DIRECCION GENERAL ADJUNTA TECNICA JURIDICA

127. The second verification order, dated July 8, 1993, was issued to USX.⁶² It was signed by Gustavo Uruchurtu, who is identified in the order as "Director De Procedimientos y Proyectos." It was prepared on the stationery of SECOFI and begins by identifying the following entities:

UNIDAD DE PRACTICAS COMERCIALES INTERNACIONALES DIRECCION GENERAL ADJUNTA TECNICA JURIDICA

128. The third verification order, dated July 14, 1993, was sent to Bethlehem.⁶³ It was also signed by Mr. Uruchurtu, who is identified in the order as "El Director." It was prepared on the stationery of SECOFI and begins by identifying the following entities:

UNIDAD DE PRACTICAS COMERCIALES INTERNACIONALES DIRECCION DE PROCEDIMIENTOS Y PROYECTOS

2. The Lawful Exercise of UPCI’s Powers.

129. The parties in their briefs and at the hearing agree that the first entity listed in these verification orders, Unidad de Prácticas Comerciales Internacionales ("UPCI"), was lawfully created by the Internal Regulation of SECOFI published in the Diario Oficial on April 1, 1993. In addition, there is also no disagreement that, at the time of the verification orders, neither the Dirección General Adjunta Técnica Jurídica ("DGATJ") nor the Dirección De Procedimientos Y Proyectos ("DPP") were formally created by the April 1, 1993 Internal Regulation or by any other formal document according to law. Therefore, DGATJ and DPP were not "authorities" that could in their own names issue the verification orders externally.

130. SECOFI, however, claims that UPCI (and not DGATJ and DPP) carried out the anti-dumping proceeding after April 1, 1993. SECOFI also claims that individuals who signed the verification orders were delegated certain powers and authority of UPCI.

131. The Panel agrees that the verification orders were acts of UPCI and that the individuals in whose names the orders were signed were delegated the authority of UPCI to sign these orders. However, the Panel believes that the delegation occurred through an Acuerdo Delegatorio of September 12, 1985, and not by the Internal Regulation of April 1, 1993 cited by SECOFI.⁶⁴

132. First, the verification orders themselves appear to be documents of UPCI. UPCI is the first entity listed on each of these documents. Immediately before the date of each document, there is a code number identifying the verification order as a UPCI document. For example, the verification order of July 6, 1993 to LTV is identified as Document No. UPCI.211.93.2221. Also, as discussed in Part IV/C of this Opinion, the only officials mentioned in the verifications reports (Actas Circunstanciadas) are described as officials of UPCI.

133. Second, the persons who signed the orders were formally appointed as officials of UPCI. The appointment documents, each a Constancia Unica de Movimiento de Personal, dated January 16, 1993 and March 1, 1993, formally appoint Mr. Velázquez and Mr. Uruchurtu respectively as an Adjunct Director and as an Area Director of UPCI. In fact, these documents list UPCI as both the responsible entity (Unidad Responsable) and the actual assignment (Ubicacion Fisica) for both officials.⁶⁵

134. Third, Article 33 of the April 1, 1993 Internal Regulation of SECOFI gives to UPCI the express powers "to investigate, carry out and determine the investigation and administrative procedures on unfair international trade practices. . . ." Article 33 of the April 1, 1993 Internal Regulation gives to UPCI the express power to "order and make verification inspections. . . ."

135. Fourth, there is evidence that these powers were delegated to Mr. Velázquez and to Mr. Uruchurtu as officials of UPCI. An Acuerdo Delegatorio of SECOFI published in the Diario Oficial on September 12, 1985 states (in Article 6):

A fin de agilizar el despacho de los asuntos dentro de las unidades administrativas competentes, se faculta a los Directores y Subdirectores de Area, Jefes y Subjefes de Departamento, Jefes de Oficina, Delegados, Subdelegados y Jefes de Departamento de las Delegaciones Federales, para que firmen las formas en que se determinan los derechos que se causen; las órdenes de inspección y visitas domiciliarias; los requerimientos de informes, datos, documentos y, en general, los oficios de trámite relacionados con las actividades que tengan a su cargo.

In order to facilitate matters pertaining to the competent administrative units, powers are bestowed upon Area Directors and Subdirectors, Departmental Chiefs and Subchiefs, Office Chiefs, Delegates, Subdelegates and Departmental Chiefs of Federal Delegations, in order for them to sign the forms that establish any fees to be charged, orders regarding inspections and domiciliary visits, requests for information, data and documents, and in general to issue official administrative documents related to the activities that are under their responsibility.

136. This Acuerdo Delegatorio was preserved by a later Acuerdo Delegatorio of SECOFI published in the Diario Oficial on April 3, 1989. The latter Acuerdo states (in the second transitory provision):

Los Acuerdos publicados en el Diario Oficial de la Federación los días 12 de septiembre de 1985 y 5 de abril de 1988, los que respectivamente delegan facultades en los Subsecretarios, Oficial Mayor, Directores Generales y otros subalternos de la Secretaría de Comercio y Fomento Industrial y determinan la Organización de las Delegaciones Regionales y Federales de la Secretaría de Comercio y Fomento Industrial y establecen sus facultades, seguirán en vigor en lo que no se opongan al Reglamento Interior de esta Secretaría y al presente Acuerdo. . . .

The Agreements published in the Diario Oficial de la Federacion in September 12, 1985 and April 5, 1988, which respectively delegate authority to the Subsecretaries, Major Officials, General Directors and others from the Secretaría de Comercio y Fomento Industrial and determine the organization of the Federal and Regional Delegations of SECOFI and establish their powers, will continue to be in force as long as they do not contravene the Internal Regulation of this Secretariat and the present Agreement. . . .

137. The September 12, 1985 Acuerdo Delegatorio remained in effect until it was abrogated by the second transitory provision of the Acuerdo Delegatorio of SECOFI published in the Diario Oficial on March 29, 1994:

SEGUNDO. Se abroga el Acuerdo que adscribe Unidades Administrativas y delega facultades en los Subsecretarios, Oficial Mayor, Directores Generales y otros Subaltemos de la Secretaría de Comercio y Fomento Industrial, publicado en el Diario Oficial de la Federación el 12 de septiembre de 1985, y sus reformas.

SECOND. This abrogates the Acuerdo that assigned Administrative Units and delegated powers to Subsecretaries, Major Officials, Directors General and other lower ranking officials of the Secretariat of Commerce and Industrial Development, published in the Diario Oficial of the Federation on the 12th September, 1985, and its amendments.

138. Therefore, during the time of the verification orders and verification visits (July and August 1993), the Acuerdo Delegatorio dated September 12, 1985 was still in effect.

139. The language of the September 12, 1985 Acuerdo Delegatorio is important. The text expressly delegates the power to sign "orders regarding inspections and domiciliary visits." In addition, the text does not delegate the authority to other administrative units such as Directorates (Direcciones). Instead, the delegation is made to individuals such as Directors (Directores) and Chiefs (Jefes).

140. It is true that, normally, a Director is the person in charge of a separate administrative unit, such as a Directorate (Direccion) or a Department (Departmento). However, we are not aware of any jurisprudence that requires that a delegation from one lawfully established unit be made only to a second lawfully established entity. Instead, it appears that a proper delegation may also be made by a lawfully established unit to any official who is also within that same administrative unit. The Ley Orgánica de la Administración Pública Federal ("LOAPF") thus provides:

Artículo 14. Al frente de cada Secretaría habrá un Secretario de Estado, quien para el despacho de los asuntos de su competencia se auxiliará por los subsecretarios, oficial mayor, directores, subdirectores, jefes y subjefes de departamento, oficina, sección, mesa, y por los demás funcionarios que establezca el reglamento interior respectivo y otras disposiciones legales. Artículo 16. Corresponde originalmente a los titulares de las Secretarías de Estado y Departamentos Administrativos el trámite, y resolución de los asuntos de su competencia, pero para la mejor organización de trabajo podrán delegar en los funcionarios a que se refieren los articulos 14 y 15, cualesquiera de sus facultades, excepto aquellas que por disposición de la ley o del reglamento interior respectivo, deban ser ejercidas precisamente por dichos titulares. . .

Article 14. At the head of each Ministry, there shall be a Minister of state who will be assisted in matters under his jurisdiction by undersecretaries, a chief of staff, directors, deputy directors, and by directors and subdirectors of areas, offices, sections and subsections, and all other authorized persons mentioned in the appropriate internal regulation and in other legal provisions. Article 16. The Secretaries of State and the heads of the Administrative Departments are responsible for the processing and resolution of matters within the jurisdiction of their respective ministries and agencies. However, in order to better organize their work, they may delegate any of their powers to the officials referred to in Articles 14 and 15, except for those powers that by law or in accordance with the respective internal regulation must be exercised personally by the Secretaries of State and the heads of the Administrative Departments. . .

141. Both Articles 14 and 16 contemplate a delegation to individuals as well as to administrative units. There is no requirement that an official to whom powers are delegated must be in a different administrative unit. Rather, the official may be in the same administrative unit, as is the case here with UPCI.

142. It is true that in addition to identifying UPCI, the verification orders also identify either DGATJ and DPP which are not lawfully established entities with the power to act externally. The orders also suggest (but do not state) that Mr. Uruchurtu and Mr. Velazquez may have been directors of DGATJ and DPP. However, this appears to mean that DGATJ and DPP were simply informal divisions within UPCI itself and that Mr. Uruchurtu and Mr. Velázquez were exercising the authority of UPCI. As we have said, the verification orders are identified as documents of UPCI and Mr. Uruchurtu and Mr. Velázquez were employees only of UPCI.

143. Fifth, the verification orders did not recite the legal foundation for the delegation of authority based on Article 6 of the 1985 Acuerdo. This is a problem of a failure to state the legal foundation (fundamentación) under Article 238/II of the Federal Fiscal Code:⁶⁶

DELEGACION DE FACULTADES, ES SUFICIENTE PARA LA LEGALIDAD DEL ACTO DE MOLESTIA MENCIONAR EL ACUERDO DELEGATORIO	DELEGATION OF POWERS. IT IS SUFFICIENT FOR THE LEGALITY OF A GOVERNMENTAL ACT OF DISTURBANCE [MOLESTIA] TO MENTION THE DELEGATION AGREEMENT
Cuando un funcionario jerárquicamente inferior, actúa por delegación de facultades, esto es, por comisión, autorización o encargo del funcionario superior, es suficiente para la legalidad del acto de molestia que se mencione el acuerdo en el que se confirieron dichas facultades que se están utilizando y su fecha de publicación en el Diario Oficial de la Federación.	When a hierarchically inferior public servant acts pursuant to a delegation of powers, that is, by omission, authorization or assignment of a hierarchically superior public servant, it is sufficient for the legality of the governmental act [of molestia] to mention the delegation agreement in which the said powers were conferred and the date of publication in the Diario Oficial de la Federación.

144. However, this particular issue of fundamentación under Article 238/II, was not raised in the Complaints of Bethlehem, LTV or USX. The Panel, thus, lacks jurisdiction to decide this issue under Rule 7 of the NAFTA Panel Rules for Article 1904 Binational Panel Review.

145. In summary, Mr. Velazquez and Mr. Uruchurtu were officials of UPCI who had been delegated the authority of UPCI to sign verification orders. 3. Guidance From Amparo Decisions.

146. The previous amparo decisions cited to us involved the incompetence of an official who issued orders for verification visits, but these were not officials of UPCI. Unlike this case where the actions occurred after April 1, 1993 and were issued in the name of a lawfully created administrative unit (UPCI), the orders for verification visits in the earlier amparo decisions were issued before April 1, 1993 by incompetent administrative units (DGPCI and DCC).⁶⁷

4. Administrative Dispositions From Which Administrative Determinations Were Derived.

147. The Panel also believes that these particular verification orders, and the verification visits that resulted from these orders, did not result in the collection of new evidence or other administrative dispositions from which any part of the Final Determination was derived. As we discussed in Part III/E of this Opinion, we must be very careful in reviewing the Final Determination to distinguish between parts of the Final Determination that derive from evidence the U.S. exporters voluntarily presented (and which helped their case) and those parts of the Final Determination which derive from acts of an incompetent official.

148. The text of the Final Determination discusses the verification visits and its relationship to the evidence presented by Bethlehem, LTV and USX:

22. . . . asimismo, la Secretaría verificó la información presentada como prueba por las empresas Bethlehem Steel Corporation, United States Steel Group, a Unit of USX Corporation, y LTV Steel Corporation, con el objeto de constatar su veracidad y cotejarla con los registros contables correspondientes así como para obtener detalles más completos sobre la información rendida en el curso de la investigación. * * * 26. Los exportadores LTV Steel Company, Bethlehem Steel Corporation y USX Corporation respondieron en forma adecuada y completa tanto el formulario oficial de investigación como la información complementaria o adicional que las requiriera la Secretaría. Por consiguiente, los márgenes de discriminación de precios para estas tres empresas se determinaron conforme a la información aportada en sus comparecencias.

22. . . . In addition, the Department verified the information presented as proof by the companies Bethlehem Steel Corporation, United States Steel Group, a Unit of USX Corporation, and LTV Steel Corporation, in order to confirm its truthfulness and to compare it with the corresponding accounting books, as well as to obtain fuller details regarding the information delivered during the course of the investigation. * * * 26. The exporters LTV Steel Company, Bethlehem Steel Corporation and USX Corporation responded in an adequate and complete manner to the official investigation form as well as to the additional information requested by the Department. As a result, the price discrimination margins for these three companies were determined in accordance with the information they provided at their hearings.68

149. This text suggests that although SECOFI during the verification visits attempted "to obtain fuller details regarding the information delivered during the course of the investigation," the actual decisions regarding price discrimination margins for Bethlehem, LTV and USX "were determined in accordance with the information they provided at their hearings." In other words, it appears that the verification visits did not result in any significant new evidence. In addition, the decision regarding dumping was based not on evidence from the verification visits, but rather on information these U.S. exporters had previously or subsequently submitted. With regard to injury, the text of the Final Determination also indicates that the determinations by SECOFI also did not come from any new evidence obtained during the verification visits:

129. Con arreglo a la valoración de las pruebas aportadas por las empresas denunciantes y las empresas interesadas, así como del resultado de las indagatorias practicadas por la Secretaria a los productores nacionales, se procedió a examinar el volumen de las importaciones objeto de dumping y su efecto en los precios, así como los efectos consiguientes de dichas importaciones sobre la produción nacional . . .

129. Based on the evaluation of the proof provided by the claimant company and the other interested parties, as well as the results of the investigation carried out by the Department vis-à-vis domestic manufacturers, the volume of imports which were the subject of dumping and the effect of the same on prices were examined, as well as the subsequent effects of said imports on domestic production.69

150. We note that the above determinations differ from the typical situation in a fiscal proceeding in which an administrative determination is derived from a domiciliary visit. During a domiciliary visit in a fiscal proceeding, much of the evidence will come from the papers and records demanded and obtained during the visit. That is not the case here. Significantly, the U.S. exporters do not claim that the verification orders or visits generated information or evidence different from what these exporters chose to submit before the verification orders were issued.

151. We realize that there is another viewpoint. The administrative determinations on dumping and injury in the Final Determination that concern Bethlehem, LTV and USX would not have occurred, unless the information submitted by these U.S. exporters had been verified. However, the simple act of verification of information that individuals have voluntarily submitted does not appear to have the same legal effect in an administrative proceeding as does new evidence obtained during a verification visit. The following two precedents support this view:

FACULTADES DE COMPROBACION E INVESTIGACION DE LA AUTORIDAD FISCAL. CUANDO SE INICIA ACTO DE MOLESTIA. ..

POWERS OF THE FISCAL AUTHORITY TO CORROBORATE AND INVESTIGATE. INITIATION.

De la lectura de los artículos 42, último párrafo, del Código Fiscal de la Federación vigente, 11, fracción I, y 12 del Reglamento del Artículo 85 del Código Fiscal de 1996.de 1966 se desprende que las facultades de comprobación de la autoridad fiscal se inician con el primer acto de investigación que se notifique legalmente al quejoso y no con la solicitud de documentos e informes en relación con la revisión de dictámenes de estados financieros formulados por un contador público, pues constituye el acto mediante el cual una autoridad requiere documentación a un particular con la finalidad de acordar una solicitud formulada por este último, si el requerimiento tiene como finalidad resolver el procedimiento iniciado por el propio particular, situación que, lejos de causarle un perjuicio, le beneficia es un acto de molestia cuando la autoridad le ordena a un particular presentar información con el propósito de resolver sobre una solicitud presentada por el individuo si la orden persigue decidir sobre la cuestión presentada por el particular, una situación que lejos de perjudicarle, le beneficia.

It follows from a reading of the last paragraph of Article 42 of the Codigo Fiscal de la Federacion of 1966, that the verifying powers of the authority are initially exercised with the first investigation act notified to the complainant but not with the request of documents and reports related to the examination of financial reports made by a Public Accountant, because this is not an acto de molestia in terms of article 16 of the Constitution. Instead, it is made * * * for the benefit of the taxpayers through which they are given the opportunity to express their point of view and present evidence regarding said reports so they can avoid the full exercise of verification powers.70 * * * ACTO DE MOLESTIA. It is not an acto de molestia when the authority orders an individual to submit information in order to make a determination regarding an application submitted by the individual if the order seeks to decide the issue brought up by the individual, a situation which far from harming him, works to his benefit.71

152. For these reasons, the Panel believes that the administrative determinations in the Final Determination concerning Bethlehem, LTV and USX derive from the evidence these exporters voluntarily submitted. For purposes of Article 238/I of the Federal Fiscal Code, these administrative determinations do not derive from new evidence or administrative dispositions generated from verification orders and visits of an incompetent official.

B. THE "P.A." SIGNATURE ON THE LTV VERIFICATION ORDER

153. LTV claims that its verification order was not signed by a competent official because the person in whose name the order was purportedly issued, Mr. Velázquez, did not actually sign the verification order. Instead, the LTV verification order was signed in his absence ("P.A.") by a Mr. Avila. LTV claims that this order was not signed by a competent official, and that the Final Determination is illegal under Article 238/I.

154. scussed above, UPCI had the power to issue the verification order, and this power was delegated to Mr. Velazquez as an official of UPCI. SECOFI also argues that Mr. Avila was delegated the power to sign the order in the absence of Mr. Velazquez under SECOFI’s Internal Regulation of April 1, 1993.

155. Article 39 of the April 1, 1993 Internal Regulation of SECOFI states:

Articulo 39.—Los Directores Generales serán suplidos en sus ausencias temporales por el director de área respectivo. Las ausencias temporales de los directores serán suplidas por el subdirector al cual corresponda el asunto, salvo que sea único en la dirección o unidad respectiva, caso en el cual será suplido por el servidor público de jerarquía inmediata inferior que designe el Director General . . .

Article 39.—Directors General shall be replaced during their temporary absences by their respective area director. The area directors shall be replaced during their temporary absences by the sub-director to whom the matter relates. In the event that there is no relevant sub-director, the area directors shall be replaced during their temporary absence by the public servant, immediately following in the order designated by the Director General . . .

156. As part of its defense before the Panel, SECOFI represented that Mr. Velazquez was absent, and that Mr. Avila was an area director reporting to Mr. Velazquez and that he also was the immediately lower-in-hierarchy public servant within the meaning of Article 39. ⁷² No evidence was presented that contradicted this representation. For this reason, Mr. Avila appears to have been a competent official.

157. It is true that the verification order did not recite the legal foundation for Mr. Avila’s substitution. This was a possible problem of a lack of fundamentación under Article 238/II of the Federal Fiscal Code.⁷³

FIRMA "P.A." EN LA RESOLUCIÓN RECLAMADA, OCASIONA INDEFENSIÓN A LA QUEJOSA.

SIGNATURES "P.A." IN THE CONTESTED RESOLUTION. DEPRIVES THE COMPLAINANT OF A DEFENSE.

Noes correcto considerar (como lo hace autoridad responsable en la resolución impugnada) que resulta intrascendente que el oficio reclamado lo haya firmado el subdirector general de aduanas "P.A." considerando que aun cuando se emplearan términos dubitativos, ello no agraviaba a la entonces actora, porque de cualquier forma el funcionario signatario de la orden de visita, ya aludido, posee competencia originaria derivada de la Ley de la materia; pues efectivamente asiste razón a la quejosa, en virtud de que al firmar el funcionario de que se trata en la forma señalada introdujo en perjuicio de aquélla una confusión que le ocasiona indefensión, porque para ello basta afirmar que por una parte la utilización de las iniciales señaladas implica para el visitado no saber a quién atribuir el acto, es decir, si al director o al subdirector de aduanas, ni si éste actuó por acuerdo o por ausencia de aquél, o bien, por sí mismo, dejando a la quejosa en la incertidumbre de cómo defenderse y contra quén hacerlo; puesto que es evidente que la parte afectada tiene derecho a conocer el carácter o la representación con que se ostentan las autoridades al emitir el acto de molestia y mediante el conocimiento de tales circunstancias objetar de la manera que más convenga a sus intereses tanto el acto como la personalidad o la representación citadas.

It is erroneous to hold (as the official in charges does in the contested resolution) that it is inconsequential that the communication being challenged was signed by the General Under-Director of Customs "P.A.", arguing that, even though dubious terminology was used, it did not harm the complainant at the time because, in any case, the official who signed the referenced visit order had competence which derives from the law. The complainant is right, because the signature of the official introduced an element of confusion which did not allow the complainant to defend himself, since, on the one hand, it would be enough to say that the use of initials implies to the individual being visited that the act cannot be attributed. In other words, the complainant was left in the dark as to how to defend his interests and against whom. It is evident that the harmed party has the right to know in what character or on whose behalf the official is acting when issuing an acto de molestia, and that by acquiring that information, the party can challenge both the act as well as the personality or the representation discussed above.

158. This particular issue of fundamentación under Article 238/II, however, was not raised in the Complaint of LTV. The Panel, thus, lacks jurisdiction to decide this issue under Rule 7 of the NAFTA Panel Rules. 159. For the above reasons, a majority of the Panel does not sustain the claim of LTV on this issue.

C. COMPETENCE OF OFFICIALS WHO PARTICIPATED IN THE VERIFICATION VISITS

160. By way of background, each of the verification orders designated five persons to participate in the verification visits to Bethlehem, LTV and USX:

Jorge Miranda Meave

Jose Simón Somohano

Erika Guzmán Soulé

Jorge Santibáñez Fajardo

Francisco Velazquez

161. The verification reports (Actas Circunstanciadas) for the verification visits to Bethlehem LTV and USX identify these same individuals as participating in the verification visits, except for José Simón Somohano who apparently did not participate in any of the visits.⁷⁴ The verification reports for the verification visits to LTV and USX also identify Alberto Lerín Mestas as having participated, and indicate that Jorge Miranda Meave did not participate.

162. U.S. exporters raise four claims relating to the competence of those persons who carried out the verification visits. For each of these claims, U.S. exporters claim that any lack of competence caused the entire Final Determination to be illegal under Article 238/I, of the Federal Fiscal Code.

163. We consider these four issues in order.

1. Claim That Two Of The Units Were Not Legally Established.

164. First, U.S. exporters claim that two of the persons who participated in the visits held positions in administrative units that had not been legally established and, for this reason, they were not competent to participate in the verification procedure. The verification reports identify Erika Guzmán Soulé as subdirector of Investigation of Dumping and Subsidies and Alberto Lerín Mestas as the head of the Directorate of Investigation of Dumping and Subsidies. Neither of these entities was legally established as a separate administrative entity.

165. However, an analysis of this issue requires consideration of whether these two officials were acting for an administrative unit that was lawfully established, and whether they were properly delegated the power to participate in the verification visits. 166. Both of these officials appear to have been acting as officials of UPCI, an administrative unit that was lawfully created by SECOFI’s Internal Regulation of April 1, 1993. Significantly, the verification reports (Actas Circumstanciadas) for each exporter identify these two individuals as follows: el Ingeniero Alberto Lerín Mestas, Director de Investigación de Dumping y Subvenciones y la Lic. Erika Guzmán Soulé, Subdirectora de Investigación de Dumping y Subvenciones, funcionarios de la Unidad de Prácticas Comerciales Internacionales...⁷⁵

167. Thus, both individuals are identified as officials of UPCI (funcionarios de la Unidad de Practicas Comerciales Internacionales), but that, within UPCI itself, Alberto Lerín Mestas had the title of "Director de Investigacion de Dumping y Subvenciones," and Erika Guzmán Soule had the title of "Subdirectora de Investigación de Dumping y Subvenciones. However, once again, Mexican law does not require that a person with the title Director belong to a separate Directorate. Of course, an official must be delegated the power to carry out a verification visit. Erika Guzmán Soulé was expressly delegated the authority to carry out the investigation visits by the verification orders. Thus, as to Ms. Guzmán Soulé, the Panel does not sustain the claim of the U.S. Exporters. The situation of Mr. Lerín Mestas is considered in Part IV/C/3 below.

2. Claim That The Underlying Orders Were Invalid.

168 Second, U.S. exporters claim that none of the individuals who participated in the verification visits were competent because the verification orders which identified these officials were not issued by competent officials. However, the Panel has decided above that the verification orders were issued by competent officials.⁷⁶

3. Claim That No Delegation Was Made To Mr. Lerín Mestas.

169. Third, LTV and USX argue that Mr. Alberto Lerín Mestas was not competent to participate in the verification visits to LTV and USX because he was not named in the verification orders for these companies.

170. In fact, Mr. Lerín Mestas was not named in the verification orders, and yet he did participate in the verification visits to LTV and USX. SECOFI has claimed in defense that because of force majeure, Messrs. Jose Simón Somohano and Jorge Miranda Meave could not participate in these verification visits and that Mr. Lerín Mestas was substituting for them. This substitution is recited in the Certificate of Facts in the verification report for LTV, but not in the verification report for USX. The following precedent suggests that reciting the substitution in the verification report may not be sufficient to confer competence:

VISITAS DOMICILIARIAS. NO LAS PUEDEN DESAHOGAR FUNCIONARIOS DIVERSOS DE LOS VISITADORES AUTORIZADOS, AUN CUANDO TENGAN FACULTADES MAS AMPLIAS QUE ESTOS.

INSPECTIONS OF DOMICILES. CANNOT BE MADE BY FUNCTIONARIES OTHER THAN THE AUTHORIZED INSPECTORS, EVEN THOUGH THEY HAVE BROADER POWERS THAN THE AUTHORIZED INSPECTORS.

La fracción I, inciso b) del articulo 84 del Código Fiscal de la Federación, vigente hasta el 31 de diciembre de 1982 establecía: "Art. 84. En las visitas domiciliarias se observará lo siguiente: 1. Sólo se practicarán por mandamiento escrito de autoridad fiscal competente que expresará el nombre de las personas que deban desahogar la diligencia, las cuales podrán ser sustituidas, aumentadas or reducidas en su número por la autoridad que expidió la orden. En estos casos se comunicará por escrito al visitado estas circunstancias, pero la visita podrá ser válidamente practicada por cualquiera de los visitadores." De lo antes transcrito se desprende que sólo las personas designadas en el mandamiento escrito podrán desahogar diligencias relativas a la visita y el hecho de que otras autoridades fiscales tengan facultades aún más amplias que las de los visitadores designados, no implica que puedan desahogar esas actuaciones legalmente, pues al señalarse en la orden de visita el o los nombres de los visitadores, en cumplimiento de la garantía de seguridad jurídica, son la autoridad competente para practicar las actuaciones relacionadas con dicha visita, pues de interpretar en sentido contrario el precepto citado bastaría con señalar en la orden que la visita podría ser realizada por quien tuviera facultades legales para ello, sin precisar nombres, lo cual alteraría el texto legal.

Paragraph 1, clause b) of Article 84 of the Federal Fiscal Code, in force until December 31, 1982, established: "Art. 84. In inspections of domiciles the following shall be observed: 1. They shall only be undertaken pursuant to written order of the legally authorized tax official that shall state; b) the names of the persons who shall perform the inspection, who may be substituted, added to or reduced in number by the authority which issued the order. In these circumstances, the change(s) shall be communicated to the party being inspected in writing, but the inspection may be validly undertaken by any of these inspectors." from the above it is evident that only the persons designated in the written order may perform the legal proceedings related to the inspection and it does not follow from the fact that other tax officials may have broader powers than those of the designated inspectors that the other officials may legally perform these acts, since in keeping with the guarantee of juridical security, the person or persons named in the inspection order are the competent authorities to undertake the acts related to said inspection. If the cited rule were to be interpreted in a contrary manner, it might be enough to state in the inspection order that the inspection may be carried out by whomever has the legal powers to do so, without specifying names, which would amount to an alteration of the legal text.77

171. The verification report for USX was not signed by Mr. Lerín Mestas, but only by Erika Guzmán Soulé who was clearly appointed in the verification order.⁷⁸ From these facts, it might be argued that Mr. Lerín Mestas was not the official who carried out this part of the anti-dumping proceeding for purposes of Article 238/I of the Fiscal Code.

172. By contrast, Erika Guzmán Soulé and Mr. Lerín Mestas both signed the verification report for LTV. The report also indicates that Mr. Lerín Mestas presided during a part of the visit. SECOFI did not present evidence of any act that delegated to Mr. Lerín Mestas the competence of the persons mentioned in the verification order—or the power to substitute for them.

173. As discussed in Part IV/A of this Opinion, however, the Panel is of the view that the administrative determinations within the Final Determination are not derived from these particular verification visits, since these verification visits did not include new evidence or other administrative dispositions on which any part of the Final Determination was based. 174. The Panel does not sustain the claims of USX and LTV on this issue. 4. Claim That External Consultants Should Not Have Participated.

175. Fourth, U.S. exporters argue that two external consultants who participated in the verification visits were not competent to participate in the verification visit, because they were outside consultants and not officials of SECOFI.

176. Article 21 of the Regulation Against Unfair International Trade Practices states that the Investigating Authority "may hire the services of specialized consulting companies, to support it in the investigation and verification of data . . . ." This is clear authority for SECOFI to hire consultants to assist in the verification of data, and SECOFI has argued that the consultants only assisted. The key words are "assist" and "support." These verification visits were carried out by officials ("funcionarios") of UPCI. The Verification Reports (Actas Circunstanciadas) state that the officials, and not the external consultants, presided at the verification visits. These Verification Reports were signed only by the actual officials, and not by the external consultants.⁷⁹

177. The apparent role of the external consultants was to assist and support the UPCI officials. These consultants were named expressly in the verification orders. The majority of the Panel is aware of no jurisprudence that would preclude SECOFI from using external consultants in this fashion to assist and support the UPCI officials who conduct a verification visit. The U.S. exporters have not cited any precedent in which a verification visit was led by an official of a government agency and in which any external consultant simply assisted that official.⁸⁰ Similarly, in reaching an opposite result on this issue, the earlier panel in Case No. MEX-94-1904-02 did not cite any direct precedent. 178. In these circumstances, we would be creating a substantial new burden on government agencies if we were to rule that an external consultant could not assist an authorized official in a verification visit. An external consultant may be necessary to help an official carry out his duties where the subject matter is highly technical. The assistance of an external consultant may also be necessary to help an official understand the details of a foreign accounting system. Again, Article 21 of the Regulation Against Unfair International Trade Practices specifically authorizes the use of external consultants. These particular consultants were authorized to participate in these verification visits when they were directly named in the verification orders.

179. The Panel does not sustain the claims of the U.S. exporters on this issue. 5. Relationship Of The Verification Visits To The Final Determination. 180. As discussed in Part IV/A above, we have concluded that the verification visits did not generate new evidence or other administrative dispositions from which any administrative determination in the Final Determination was derived. The administrative determinations in the Final Determination did not derive from any act during the verification visits.

181. For all of these reasons, the Panel has decided to deny the claims of the U.S. exporters on these issues.

D. COMPETENCE OF OFFICIALS WHO REJECTED INLAND’S QUESTIONNAIRE RESPONSES.

182. Inland’s questionnaire responses were rejected on June 17, 1993 in an acuerdo issued by Mr. Velázquez.⁸¹ This same official rejected subsequent submissions.⁸² It is claimed that Mr. Velázquez was not a competent official on June 17, 1993.

183. As stated in Part III of this Opinion, the Panel unanimously has concluded that earlier acts in the administrative proceeding (before April 1, 1993) were undertaken by an official of an administrative unit (DCC) that was not competent, and that those acts interfered with the legal interests of Inland in the anti-dumping proceeding. In view of the decision in Part III of this Opinion, it is not necessary for the Panel to grant relief on this issue.

V. FORMALITY AND TECHNICAL ISSUES

184. U.S. exporters raise three issues of a technical nature regarding the verification visits. First, they claim that the verification orders fail to specify each of the places where the verification would take place. Second, they claim that the verification orders fail to specify the period covered by the investigation. Third, U.S. exporters claim that SECOFI failed to notify and to obtain an authorization from the government of the United States of America before the verification visits. Apparently, U.S. exporters seek review of these issues under Article 238, Sections II and III of the Federal Fiscal Code.

185. The Panel denies these particular claims. The Panel also denies a fourth technical issue presented by IMSA relating to a claimed improper participation of foreign legal representatives of LTV and Bethlehem in the anti-dumping proceeding.

A. FAILURE TO SPECIFY THE PLACES FOR THE VISITS

186. The verification orders for LTV and Bethlehem mentioned a city for each verification visit, but not the complete address. Also the verification visits took place in cities that were different from the cities mentioned in the verification orders (in each case, the orders mentioned the city in which the headquarters of the particular U.S. exporter was located). U.S. exporters claim that these failures in the verification orders violated the legal protections provided by Article 16 of the Mexican Constitution.

187. These omissions of formal requirements provided by law and procedural errors, however, are reviewed under Sections II and III of Article 238 of the Federal Fiscal Code. These provisions require that such omissions or errors both adversely affect an individual’s defenses (afecte las defensas del particular) and impact the result of the challenged resolution (trascienda al sentido de la resolución impugnada). There is no evidence that these particular omissions and errors regarding the address and city for the verification visits affected either the defenses of any U.S. exporter or the result of the Final Determination. For these reasons, the Panel denies the claims on this issue.

B. FAILURE TO SPECIFY THE PERIOD COVERED BY THE VERIFICATION

188. The verification orders fail to specify the specific time period that was to be verified during the verification visits. U.S. exporters claim that this failure violates the legal protections established in Article 16 of the Constitution.

189. Again, such omissions of the formal requirements provided by law, and such procedural errors, are reviewed under Article 238/II and III and require that the omission or error both adversely affect an individual’s defenses (afecte las defensas del particular) and also impact the result of the challenged resolution (trascienda al sentido de la resolución impugnada). There is no evidence that these particular omissions and errors adversely affected the defenses of U.S. exporters or the result of the Final Determination. For these reasons, the Panel denies the claims on this issue.

C. FAILURE TO NOTIFY THE U.S. GOVERNMENT

190- Article 6, paragraph 5 of the 1979 GATT Anti-dumping Code requires that an investigating authority "notify the representatives of the government of the respective country" in which a verification visit will take place. Article 21 of the Regulation Against Unfair International Trade Practices provides for a verification in the country of origin "if the respective government authorities accept the execution of the same. . . ." Here, there was no notification to the U.S. Government or formal acceptance of the verification visits by the U.S. Government. U.S. exporters claim that these are procedural errors that should be reviewed under Article 238/III.

191. There is an issue of whether these U.S. exporters are the proper parties to raise this particular procedural error, or whether such an error must be raised by the U.S. Government itself. Moreover, there is no evidence that this failure to notify the U.S. Government adversely affected the defenses of the U.S. exporters, or impacted the result of the Final Determination, as required by Article 238/III.

192. For this reason, the Panel denies the claims of the U.S. exporters on this issue.

D. IMPROPER PARTICIPATION OF FOREIGN LEGAL REPRESENTATIVES

193. After the April 21-22 1995 public hearing before the Panel, the Panel ordered the Investigating Authority to grant certain counsel access to confidential documents in the administrative file, without the need to present any bond or other security. Counsel for IMSA was one of the persons to whom access was granted for these confidential documents. IMSA claims that in its review of the confidential documents, it discovered a substantial involvement in the anti-dumping proceeding by foreign attorneys representing LTV and Bethlehem who are not authorized to practice law in Mexico. IMSA appears to claim that the participation by these foreign legal representatives involved a procedural error under Article 238/III of the Fiscal Code.

194. The Panel concludes that it does not have jurisdiction to review this issue. Under Rule 7 of the NAFTA Panel Rules for Article 1904 Binational Panel Review, this Panel’s review powers are "limited to (a) the allegations of error of fact or law... that are set out in a Complaint . . . and (b) procedural and substantive defenses raised in the panel review."

195. This issue regarding the participation of foreign legal representatives is not a defense. Nor is it a claim presented in any Complaint. It might be said that the full extent of the participation by the foreign legal representatives was only disclosed after IMSA’s counsel received access to confidential documents in the administrative file. However, the non-confidential documents in the administrative file also showed very extensive involvement by these foreign legal representatives.⁸³

196. In summary, there was an opportunity to present this claim in a Complaint. Since it was not presented in a Complaint or as part of a defense, this Panel lacks jurisdiction to review the issue.

Continue on to Section VI: Dumping Issues

⁶¹ See Administrative Record (VC) No. 266.

⁶² Id. No. 268.

⁶³ Id. No. 277.

⁶⁴ This Panel may consider precedents, laws, regulations and other published records which support a participant’s position but which have not been mentioned by that participant. See Semanario Judicial de la Federación. 7a. época, vols. 199-204, p. 65. Amparo directo 151/83. Productos Rubí, S.A. 25 de octubre de 1985. Unanimidad de votos. Ponente: José Antonio Hernández Martínez; also Semanario Judicial de la Federacion. 8a. época, tomo IV, segunda parte 1, tesis 17, p. 565. Amparo directo 347/89. Constructora Vyr, S.A. 9 de agosto de 1989. Unanimidad de votos. Ponente: José Ángel Mandujano Gordillo. Secretaria: Julieta María Elena Anguas Carrasco.

⁶⁵ See Constancias Únicas de Movimiento de Personal dated January 16 and March 1, 1993 in the Annex to the Brief of the Investigating Authority, March 3, 1995.

⁶⁶ Cuarto Tribunal Colegiado en Materia Administrativa del Primer Circuito. Semanario Judicial de la Federación. 8a. época, tomo I, segunda parte 1, p. 233. Amparo directo 1674/86. Rafael González Ordaz. 2 de junio de 1988. Unanimidad de votos. Ponente: David Delgadillo Guerrero. Secretaria: Silvia Gutiérrez Toro.

⁶⁷ Juzgado Cuarto de Distrito en materia administrativa del Primer Circuito, Amparo Decision Nos. 193/93, 194/93 and 195/93 (1994).

⁶⁸ Final Determination, 22, 26.

⁶⁹ Final Determination, 129.

⁷⁰ Segundo Tribunal Colegiado en Materia Administrativa del Primer Circuito. Informe 1986, parte III, p. 77. Amparo directo 382/86. Compañía Sherwin Williams, S.A. 15 de mayo de 1986. Unanimidad de votos. Ponente: Carlos Amado Yáñez. Secretaria: María del Carmen Arroyo Moreno.

⁷¹ Sexto Tribunal Colegiado en Materia Administrativa del Primer Circuito. Semanario Judicial de la Federación. 8a. época, tomo I, segunda parte 1, p. 45. Amparo en revisión 166/88. Termoplásticos de México, S.A. 17 de febrero de 1988. Unanimidad de votos. Ponente: Mario Pérez de León Espinosa. Secretaria Adela Domínguez Salazar.

⁷² See Brief of the Investigating Authority, March 3, 1995, Part IV, Section B/5.

⁷³ Tercer Tribunal Colegiado en Materia Administrativa del Primer Circuit. Semanario Judicial de la Federación. 7a. época, vols. 157-162, p. 82. Amparo directo 1169/81. Carlos de Jesus Castaño Acebo. 19 de abril de 1982. Unanimidad de votos. Ponente: Samuel Hernández Viazcán.

⁷⁴ See Administrative Record (VC) Nos. 301, 314 and 315.

⁷⁵ See Administrative Record (VC) No. 301.

⁷⁶ See Part IV/A above.

⁷⁷ Cuarto Tribunal Colegiado en Materia Administrativa del Primer Circuito. Semanario Judicial de la Federación. 8a época, tomo VI, segunda parte 2, p. 695. Amparo Directo 84/90. Super Tienda El Emporio Mercantil, S.A. 7 de junio de 1990. Unanimidad de votos. Ponente: Hilario Bárcenas Chávez. Secretario: Emiliano Hernández Salazar.

⁷⁸ See Administrative Record (VC) No. 314.

⁷⁹ See Administrative Record (VC) No. 301.

⁸⁰ One precedent cited by the U.S. exporters appears not to be directly relevant. See "Visits Carried Out By A Company Consultant, Are Not Valid As The Basis For A Fiscal Credit." Primer Tribunal Colegiado en Materia Administrativa del Primer Circuito. Semanario Judicial de la Federación. 7a. época, vol. 31, sexta parte, p. 68. DA 201/70. Materiales Aislantes, S.A. 19 de julio de 1971. Unanimidad de votos. Ponente: Jesús Ortega Calderón.

⁸¹ See Administrative Record (VC) No. 243.

⁸² Id. Nos. 256, 322, 351 and 357.

⁸³ See, for example, Administrative Record (VC) Nos. 61, 64, 66, 89, 90, 92, 93, 181, 183, 189, 191, 193, 196, 199, 228, 229, 236, 238, 265, 276, 336, 350, 352, 370, 371, etc.