BINATIONAL PANEL REVIEW
UNDER
THE NORTH AMERICAN FREE TRADE AGREEMENT
Article 1904

IN THE MATTER OF:

Polystyrene and impact crystal from the United States of America and Germany

TABLE OF CONTENTS

I. INTRODUCTION

II. STATEMENT OF PROCEEDINGS

PANEL DECISION

I. INTRODUCTION.

In accordance with the provisions of Chapter XIX of the North American Free Trade Agreement (hereafter "NAFTA"), ¹ this Panel was established to review the final determination issued by the Secretaría de Comercio y Fomento Industrial (hereafter "Investigating Authority" or "SECOFI") in the antidumping administrative investigation on imports of cristal and solid polystyrene from Germany and the United States of America. ² Upon full consideration of the Complaint, the briefs and all other written submissions, oral arguments presented by the parties, and on the basis of the standard of review contained in Article 238 of the Federal Tax Code (hereafter the "CFF"), ³ the Panel affirms the Final Determination.

II. STATEMENT OF PROCEEDINGS

A. Proceedings of the Administrative Investigation

On January 4, 1993, Industrias Resistol, S.A. y Poliestireno y Derivados, S.A. de C.V. (hereafter "Resistol"), through their counsel, filed with SECOFI an antidumping complaint concerning imports of crystal and solid polystyrene from Germany and the United States of America. ⁴ On March 5, 1993, a Notice of Initiation ⁵ of the administrative antidumping investigation (hereafter "antidumping investigation"), was published in the DOF without the establishment of provisional antidumping duties. ⁶

On March 25, 1993, the Provisional Resolution was published in the DOF, in which provisional antidumping duties were established with respect to imports of crystal polystyrene from the United States of America. Provisional antidumping duties were not established with respect to imports of solid polystyrene from Germany, from either country, because of insufficient proof of injury to the domestic industry. ⁷ On January 17, 1994, Muehlstein International. Ltd. (hereafter "Muehlstein") entered an appearance in the second stage of the antidumping investigation and filed a response to the official questionnaire. ⁸ On November 11, 1994, a Final Determination was published in the DOF, which affirmed the Provisional Determination. ⁹ With respect to Muehlstein, SECOFI established an antidumping duty margin rate of 44.32% in connection with Muehlstein’s imports of crystal polystyrene, as a result of the application of best information available. SECOFI determined that Muehlstein’s response to the official questionnaire was incomplete, because Muehlstein’s domestic sales were not representative of its total sales, and because Muehlstein failed to provide other information as a basis for normal value. ¹⁰

B. Panel Proceedings

1. Chronology of Proceedings

On December 9, 1994, Muehlstein requested a binational Panel review of the Final Determination, ¹¹ in pursuant to Article 1904 of the NAFTA, and the article 1904 Rules of Procedure (hereafter "Rules of Procedure"). ¹² Notice of the request was published in the DOF, ¹³ and the Federal Register, ¹⁴ on December 19, 1994, and January 12, 1995, respectively. On January 9, 1995, Muehlstein filed its Complaint. ¹⁵ Generally, Muehlstein alleges that SECOFI: a) incorrectly applied legal provisions, b) acted contrary to the objectives of the Foreign Trade Law when it determined that domestic sales were required to be representative in order to provide a basis for normal value, c) incorrectly determined that the Complainant´s questionnaire response was incomplete, d) erred by not inform Muehlstein that the questionnaire response was incomplete; and, e) erred in it calculation that Muehlstein internal sales represented 1.5 % of total sales. ¹⁶ On January 23, 1995, the Investigating Authority, Resistol and Nacional de Resinas, S.A. de C.V. (hereafter "Resinas") ¹⁷ entered their appearance. On April 10, 1995, Muehlstein filed its Brief in Support of its Complaint (hereafter "Muehlstein’s Brief"). ¹⁸ On April 28, 1995, the review was suspended ¹⁹ due to the resignation of a panelist. ²⁰ On October 23, 1995, the review resumed upon the appointment of a substitute panelist. ²¹

On November 2, 1995, Muehlstein filed a Motion to Amend its Complaint (hereafter "Motion to Amend"). This Motion resulted in series of motions filed by the other parties, and the issuance of various orders by the Panel. ²² On December 4, 1995, Resistol and the Investigating Authority filed their Response Briefs and presented arguments in opposition to Muehlstein’s Brief. ²³ On December 19, 1995, Muehlstein filed a Reply Brief. ²⁴ On January 11, 1996, oral arguments were presented in relation to Muehlstein´s Motion to Amend. ²⁵ On January 26, 1996, the Motion to Amend was denied. ²⁶ On February 1, 1996, the Panel issued an Order notifying the parties its decision to review a sua sponte the competency of the Investigating Authority. ²⁷

On March 25, 1996, the Panel issued an Order concerning the Public Hearing, ²⁸ which took place on April 18 and 19, 1996. ²⁹

2. Motions and Orders

During the review, the parties filed a number of motions which are summarized below:

A. Article 1904 of the NAFTA

The purpose of this Binational Panel Review is to review pursuant to the antidumping laws of the Mexico the Final Determination issued in connection with the antidumping duty investigation on imports of crystal and solid polystyrene from Germany and the United States of America (Article 1904(2) of the NAFTA). ⁴² The antidumping laws of Mexico consist of those laws, ⁴³ legislative histories, Regulations, administrative practice, and relevant judicial precedents, which the Federal Tax Court (TFF) ⁴⁴ would otherwise apply in an antidumping judicial review. ⁴⁵ The standard of review that must be applied in the binational panel review is established under article 1904 (3), and Annex 1911 of NAFTA. Article 1904 (3) provides that a binational panel must apply the standard of review pursuant to Annex 1911, as well as general principles of law that a domestic tribunal would otherwise apply when reviewing a final antidumping determination of the investigating authority. ⁴⁶ General principles of law includes principles of standing of legal interest, due process of law, rules on construction, issues without legal validity, and exhaustion of remedies. ⁴⁷ Annex 1911 provides that the standard of review applicable in the review the Criteria provided in Article 238 of the CFF, as amended.

B. Article 238 of the Federal Tax Code Pursuant to Annex 1911 of Chapter XIX of the NAFTA, in the case of Mexico, the standard of review is expressed in Article 238 of the CFF, as amended.

Article 238 provides that a Final Determination will be declared illegal upon one of the following elements:

I. Incompetence of the official that dictated or conducted the proceeding;

II. Omission of a formal legal requirement, which affects the defenses of the particular, and which affects the substance of the challengy determination, including the absence of findings of fact and conclusions of law;

III. Defects in the proceeding that affected the defenses of the particular, and which affected the substance of the challenged resolution;

IV. If the facts upon which the determination is based did not occur or they were different or were appraised in wrong form, or if was issued in infringement of the applicable provisions or omit to apply the appropriate ones.

V. The administrative determination is based on an exercise of discretionary authority that do not correspond to the proposes of the law which confered such discretionary authority.

On the basis of public interest, the Court may sua sponte, on the basis of public interest, declare an authority incompetent to issue the challenged resolution, and the total absence of findings of fact and conclusions of law. In accordance with NAFTA Article 1904(3) and Annex 1911, this panel must apply the review criteria of the standard of review expressed in Article 238 of the CFF, as amended. Therefore, the paragraph added to Article 238 forms part of standard of review applicable in this case. ⁴⁹

Continue on to Section IV: Review of Antidumping Issues

¹ North American Free Trade Agreement, issued on August 12, 1992, revised on September 6, 1992, signed on December 17, 1992, published in the Diario Oficial of the Federación (hereafter "DOF") on December 20, 1993, went into effect on January 1, 1994, hereafter NAFTA.

² Final Determination of the Antidumping Administrative Investigation Proceeding Covering Imports of Polystyrene Crystal and Iimpact, as contained in tariff numbers 3903.19.02, 3903.19.99, 3903.90.05 y 3903.90.99 of the Harmonized Tariff System, from Germany and the United States of America, published in the DOF, on November 1994. Exp. Adm., Vol. 3, folio s/n (hereafter "Final Determination").

³ Código Fiscal de la Federación (Federal Tax Code), published in the DOF on December 31, 1981.

⁴ Exp. Adm. Públ. Vol. 1, folio 0014. Citations to the administrative record are made in the following manner in accordance with the oficial index: "Exp. Adm." means administrative record, "Publ." means public, "Conf." means confidential; "Vol." means the volume in which the document is contained, and "folio" referes to the number of the document. All the references in this Decision are from public records.

⁵ Pursuant to disposed what is in the Annex 1904.15 of the NAFTA, the Provisional determination that declares the initiation of the administrative investigation will be refered to hereafter as "Initial Resolution" and the "Resolution that revises the Provisional Resolution", will be "Provisional Resolution."

⁶ Resolution that declares the initiation of the investigation covering imports of polystyrene crystal and impact, products included in the tariff numbers 3903.19.02, 3903.19.99, 3903.90.05 y 3903.90.99 of the Harmonized Tariff System from Germany and the United States, published in the DOF on March 5, 1993, at 28-31; Exp. Adm., Vol. 1, folio s/n, (hereafter "Initial Resolution").

⁷ Determination which reviews the provisional determination which declared the initiation of the administrative antidumping investigation covering imports of polystyrene crystal and impact, products contained in tariff numbers 3903.19.02, 3903.19.99, 3903.90.05 y 3903.90.99 of the Harmonize Tariff System, from Germany and the United States of America, published in the DOF, on November 25, 1993, at 29-38. Exp. Adm., Vol. 3, folio s/n. Hereafter "Provisional Resolution" para. 86, p.38.

⁸ Exp. Adm., Vol. 3, folio 0343.

⁹ Final Determination, para. 138, at 21.

¹⁰ Final Determination, para. 28 and 62, at 9 and 12.

¹¹ Rev. Rec. MEX-94-1904-03, Vol. 1, doc. 1. Citations to the record of the proceedings before this Panel, are made in the following manner: "Rev. Rec." means "review record"; "Vol." means volume, "doc." means the number of the document.

¹² Rules of Procedure of Article 1904 and of Extraordinary Challenged Comitte of the NAFTA, published in the DOF on June 20, 1994.

¹³ "Notice to Implement Paragraph (2) of the Rule 35 of the Rules of Procedure of artcle 1904 of the Northe American Free Trade Agreement." Secretaría de Comercio y Fomento Industrial. Published in the DOF, on December 19, 1994, p. 55; Rev. Rec., Vol. 1, doc. 25.

¹⁴ North American Free Trade Agreement (NAFTA) Artcle 1904. Binational Panel Reviews: Request for Panel Review, 60 Fed. Reg. 2.942 (Notice of First Request for Panel Review) (Dept Comm., 1995).

¹⁵ Rev. Rec., Vol. 1, doc. 26.

¹⁶ Idem.

¹⁷ Investigating Authority, Rev. Rec., Vol. 2, doc. 31; Resistol, Rev. Rec., Vol. 2, doc. 32 Nacional de Resinas, Rev. Rec. Vol. 2, doc. 30.

¹⁸ Rev. Rec., Vol. 4, doc. 43.

¹⁹ Rev. Rec., Vol. 5, doc. 38.

²⁰ "Notice of the Suspension of the Panel Review of the Final Determination of the Antidumping Administrative Investigation Proceeding on the imports of polystyrene crustal and impact, from Germany and the United States of America, published in the DOF on May 9, 1995. Rev. Rec., Vol. 5, doc. 84.

²¹ "Notice of Conclusion of the Suspension of the Panel Review of the Final Determination of the Antidumping Administrative Investigation Proceeding on the imports of polystyrene crustal and impact, from Germany and the United States of America, published in the DOF on October 31, 1995. Rev. Rec., Vol. 5, doc. 130.

²² To see the content of said Motions and Orders, see infra "Motions and Orders".

²³ Resistol, Rev. Rec. Vol. 6, doc. 222; Investigating Authority, Rev. Rec., Vol. 6, doc. 223.

²⁴ Rev. Rec., Vol. 7, 295.

²⁵ Rev. Rec., Vol. 10, doc. 396, Transcript.

²⁶ Rev. Rec., Vol. 11, doc. 403.

²⁷ Rev. Rec., Vol. 11, doc. 414.

²⁸ Rev. Rec., Vol. 15, doc. 587.

²⁹ Rev. Rec., Vol. 16, doc. 676, Transcript.

³⁰ Rev. Rec. Vol. 5, doc. 159.

³¹ Final Determination of the Antidumping Administrative Investigation Proceeding Covering Imports of Products of Steel Plate from United States of America, published in the DOF on September 11, 1995, (hereafter "Steel Plate Decision").

³² Rev. Rec., Vol. 11, doc. 403.

³³ Investigating Authority, Rev. Rec. , Vol. 6, doc. 183 y Rev. Rec., Vol. 6, doc. 214; Resistol, Rev. Rec., Vol. 6, doc. 198; Nacional de Resinas, Rev. Rec., Vol. 6, doc. 206.

³⁴ Resistol, Rev. Rec., Vol. 8, doc. 333, December 28, 1995; Investigating Authority, Rev. Rec. Vol. 8, doc. 325, December 26, 1995.

³⁵ Rev. Rec., Vol. 11, doc. 428; Vol. 12, doc. 506.

³⁶ SECOFI, Rev. Rec., Vol 11, doc. 450; doc. 498; Resistol, Rev. Rec.. Vol. 11, doc. 442.

³⁷ Rev. Rec. Vol. 11, doc. 458 and Vol. 12, doc 514.

³⁸ Rev. Rec.., Vol 13, doc 157, March 11, 1996; Rev. Rec. Vol. 14, doc 563, March 14, 1996; Vol 14, doc. 571: March 25, 1996, Rev. Rec. Vol. 13, soc. 555, March 12, 1996

³⁹ Rev. Rec., Vol. 13, doc. 539.

⁴⁰ Rev. Rec., Vol. 15, doc. 608.

⁴¹ Rev. Rec., Vol. 18, doc. 687.

⁴² North American Free Trade Agreement of América of the North, edited 12 of August of 1992, inspected 6 of September of 1992, signed 17 of December of 1992, published in the DOF 20 of December of 1993, in force from 1 of January of 1994, in thereinafter NAFTA.

⁴³ Ley Reglamentaria del artículo 131 de la Constitución Política de los Estados Unidos Mexicanos en materia de Comercio Exterior, (Regulatory Law of Article 131 of the Political Constitution of the Mexican United States in foreign trade matters), published of the DOF 13 of January of 1986.

⁴⁴ In the Mexican Law the TFF has jurisdiction for reviewing final determinations regarding antidumping matters, Ley Orgánica del Tribunal Fiscal amended on December 15, 1995, see Article 11 section XI.

⁴⁵ NAFTA Article 1904(2)

⁴⁶ NAFTA. Article 1904(3)

⁴⁷ NAFTA, Article 1911

⁴⁸ Decreto por el que se expiden nuevas leyes fiscales y se modifican otras (Decree which contains amendements of outstanding tax laws and regulation and issuance of new tax laws and regulations) hereafter decree, published in the DOF on december 15, 1995, in effect from January 1^st of 1996.

⁴⁹ The reason of the application of this paragraph is discussed in the title V (1) and subsequent of this resolution.