IN THE MATTER OF:

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

CONCURRING OPINION OF PANELIST ROSCH

SEPTEMBER 12, 1996

MUEHLSTEIN INTERNATIONAL, LTD.

Complainant

vs.

SECRETARIA DE COMERCIO y FOMENTO INDUSTRIAL
Respondent

Before:

Clemente Valdes Sanchez, Chairman
Hector Cuadra y Moreno
Miguel Estrada Samano
Jimmie V. Reyna
Maureen Rosch

Appearances:

Juan Francisco Torres Landa, for Muehlstein International, Ltd.
Ruperto Patino Manffer, for Industrias Resistol, S.A. y Poliestireno y Derivados, S.A. de C.V.
Javier Villanueva Iglesias, for Nacional de Resinas, S.A. de C.V.
Gustavo Uruchurtu Chavarin, for SECRETARIA DE COMERCIO y FOMENTO INDUSTRIAL
Gisela Bolivar Villagomez, for SECRETARIA DE COMERCIO y FOMENTO INDUSTRIAL
 

I. INTRODUCTION

II. CRITERIA OF REVIEW

A. Chapter XIX Panels Must Decide Cases in the Same Manner As the Relevant Local Court

B. SECOFI’s Power to Exercise Discretionary Authority

C. Scope of the Tribunal Fiscal’s Review of Discretionary Administrative Acts
 

1. Applicable Law and Limitations

2. Actions of Administrative Authorities Which Can Be Reviewed

3. Binational Panels and the Review of Mexican Constitutional Guarantees— Policy Considerations
 

D. Application of the Constitutional Criteria in This Case

A. Guarantees Contained in Article 14 of the Constitution

B. Did SECOFI Violate the Guarantee of Audiencia in the Case of Muehlstein

I. INTRODUCTION

Although in agreement with the result reached by the majority opinion, this panelist departs from that opinion with respect to the majority’s analysis of whether SECOFI properly exercised its discretionary authority in the application of its representative test. It is this panelist’s opinion that the majority should have examined whether SECOFI’s application of its representative test was in compliance with the basic due process guarantees contained in Articles 14 and 16 of the Mexican Constitution ¹⁶⁵ . By failing to do so, the majority misconstrues the standard of review that should be applied by Chapter XIX binational Panels – a misconstruction that could lead to perverse results if applied by future Panels. With respect to the standard of review, the majority’s approach ignores the basic principle of the NAFTA that Chapter XIX Panels should decide cases in the same manner as the local court which it is replacing would have done – in this case, the Mexican Tribunal Fiscal ¹⁶⁶ . Since that court would have applied constitutional scrutiny to SECOFI’s acts had it heard this case, it is this panelist’s view that this Panel should have done the same.¹⁶⁷

With respect to future cases, a panel’s failure to consider basic constitutional guarantees could lead to a number of perverse consequences. First, binational Panels would likely develop a body of "NAFTA jurisprudence" on Mexican antidumping law different from that decided by the Mexican courts – a result clearly contrary to that envisioned by NAFTA’s drafters. Second, the binational Panels would be unable to rely on the vast bulk of Mexican law interpreting the NAFTA-mandated criteria of review – Article 238 of the Fiscal Code – since the law discusses the Article 238 criteria in constitutional terms. This would inevitably lead to inconsistent results as each Panel adopts its own interpretation of Article 238. Finally, and perhaps most damaging, a Panels’ refusal to consider constitutional guarantees would effectively frustrate the NAFTA scheme of granting parties adversely affected by antidumping or countervailing duties the option of appeal to a binational Panel, since any party who wished to argue that a Mexican duty determination violated its basic constitutional rights would be forced to appeal to the Mexican courts.

Finally, with respect to the issue of whether SECOFI’s actions here rose to the level of a constitutional violation, in particular a violation of the right to audiencia, this panelist believes that the Investigating Authority did not cross that threshold under the very specific facts of this case. Although this panelist in this case affirms the agency’s Definitive Resolution, my opinion could be markedly different under a different set of facts.

II. CRITERIA OF REVIEW

A. Chapter XIX Panels Must Decide Cases in the Same Manner as the Relevant Local Court

NAFTA Article 1904(2) requires a Chapter XIX binational panel ("Chapter XIX Panel" or "Panel") to review quot;an antidumping or countervailing duty determination of a competent investigating authority . . . to determine whether such determination was in accordance with the antidumping or countervailing duty law of the importing Party." The Article further provides that antidumping law "consists of the relevant statutes, legislative history, regulations, administrative practice and judicial precedents to the extent that a court of the importing Party would rely on such materials in reviewing a final determination of the competent investigating authority." ¹⁶⁸ NAFTA Article 1904(3) requires that Panels, in determining whether a Final Determination ¹⁶⁹ was rendered in accordance with an importing Party’s antidumping law, "apply the standard of review set out in Annex 1911 and the general legal principles that a court of the importing Party otherwise would apply to a review of a determination of the competent investigating authority." ¹⁷⁰ The standard of review for Mexico set out in Annex 1911 is Article 238 of the Codigo Fiscal de la Federacion ("Federal Fiscal Code"). "General legal principles" are defined by NAFTA Article 1911 to include "standing, due process, rules of statutory construction, mootness and exhaustion of administrative remedies." Based on the literal wording of the Panel’s treaty mandate, then, Chapter XIX Panels in Mexico are to take the place of the Mexican court which decides appeals against antidumping and countervailing duties—the Tribunal Fiscal de la Federacion ("Tribunal Fiscal" or "TFF"). ¹⁷¹ To meet this mandate, the Panel must apply the same statutes, legislative history, regulations, administrative practice, judicial precedents ¹⁷² and general legal principles that the Tribunal Fiscal would apply, in the same manner as the Tribunal Fiscal would apply them ¹⁷³ .

B. SECOFI’s Power to Exercise Discretionary Authority

As discussed in sections III, IV.E.1 and IV.E.2 of the majority opinion, the Secretaria de Comercio y Fomento Industrial ("SECOFI" or "Investigating Authority") is legally empowered by the Constitution, statute, and regulations of the United Mexican States to conduct antidumping proceedings. To do so, the Investigating Authority has discretionary authority to devise the administrative practices it deems necessary, which would include the authority to devise a test for representativeness ¹⁷⁴ . The jurisprudencia on this point seems clear:

REGULATED AND DISCRETIONARY POWERS. THEIR DISTINCTION. When the authorities or powers which an administrative organ possesses are established by law, not only indicating the competent authority to act, but also its obligation to act and how to do it, in a form which does not leave any margin for the subjective judgment of the functionary about the circumstances of the act, we are in the presence of totally regulated authorities or powers – their exercise being completely tied to the law. In contrast, when the administrative organ is invested with authorities or powers to act when it deems it to be appropriate, or to operate according to its best judgment, seeking the most complete satisfaction of the collective necessities which constitute the purpose of its actions, when the law grants either of these possibilities in an explicit or implicit manner and with a great or lesser margin of action, then we are dealing with the exercise of discretionary powers ¹⁷⁵ .

This discretionary power, while broad, must be properly exercised if the administrative authority is to avoid a desvio de poder, or misuse of authority ¹⁷⁶ . Proper limits on the use of administrative discretionary power are framed by the law granting the power, by the Constitution, and by "reasonableness". As one authority has written:

An administrative act issued by virtue of discretionary powers must be in accordance with the individual guarantees or civil rights contained in the dogmatic part of the Constitution, as is the case with any other act of public power . . . It is pertinent, however, to emphasize for this purpose articles 13, 14 and 16 of the Constitution.

The articles mentioned above contain a series of guarantees or rights in favor of the governed which, of course, must be respected by the [administration’s] discretionary acts if those acts are not to be irregular. Those guarantees or rights are: equality before the law, due process, correct application of the legal order, the legal competence of the issuing organ, a duly empowered public servant, the written form of the act, that the act be well-founded legally and factually. ¹⁷⁷

The Mexican Supreme Court has held in a number of cases that discretionary acts can be struck down when they violate a constitutional right or are patently unreasonable ¹⁷⁸ . It seems clear, therefore, that although SECOFI has the right to exercise limited discretionary powers, it must do so reasonably and in accordance with the basic individual guarantees enshrined in the Constitution.

C. Scope of the Tribunal Fiscal’s Review of Discretionary Administrative Acts

1. Applicable Law and Limitations

Binational Panels are directed by the NAFTA to apply the relevant law of the importing country in the same manner as the local courts would apply such law. This Panel’s ability to consider arguments alleging constitutional violations by SECOFI, an administrative agency, is thus equal to that of the Tribunal Fiscal. The Tribunal Fiscal’s ability is limited in at least two respects:

First, the Tribunal Fiscal may not consider the unconstitutionality of laws, regulations, or decrees, a limitation recognized by jurisprudencia issued in 1986 by the Sala Superior of the Tribunal Fiscal:

COMPETENCE – THE TRIBUNAL FISCAL DE LA FEDERACION LACKS IT TO DECIDE CONTROVERSIES ABOUT THE CONSTITUTIONALITY OF LAWS, REGULATIONS OR DECREES. – In accordance with articles 103 and 107 of the Political Constitution of the United Mexican States, only the Courts of the Federal Judicial Branch may analyze and decide controversies concerning the constitutionality of laws or regulations. Therefore, the Tribunal Fiscal de la Federacion lacks competence [to decide such cases]. ¹⁷⁹

[T]he jurisdiction of the Tribunal Fiscal is of an ordinary nature and has as its fundamental purpose the safeguarding and control of the legality of administrative acts. Given that the legality of administrative acts is elevated in our country to the level of an individual guarantee by means of articles 14 and 16 of the Constitution, the Fiscal Courts have often had the duty to hear cases concerning irregularities claimed to be violations of constitutional principles. However, as is evident from the jurisprudential thesis issued by the Second Chamber of the Supreme Court of Justice of the Nation and published as [jurisprudential thesis] number three hundred twenty-six in the Third Part of the most recent Appendix to the Semanario Judicial de la Federacion under the title of "TRIBUNAL FISCAL DE LA FEDERACION, POWERS OF, TO EXAMINE THE CONSTITUTIONALITY OF AN ADMINISTRATIVE ACT," ¹⁸⁰ and the precedents which created that jurisprudencia, the unconstitutionality of administrative acts that the Tribunal Fiscal can consider is derived from the lack of observance of the essential procedural formalities referred to by Articles 14 and 16 of the Constitution, inasmuch as they are part of the cause of annulment set out in section II of the version of article 238 of the Fiscal Code currently in force. In sum, the Tribunal Fiscal’s jurisdiction in terms of the causes of annulment set out in [article 238] is limited to the issue of legality, although this may be reflected in a violation of the mentioned constitutional guarantees. ¹⁸¹

As noted by the court in the above case, the criteria set out in Article 238 express the core guarantees enshrined in Articles 14 and 16 of the Constitution. Therefore, it follows that the Tribunal Fiscal can consider legal guarantees contained in Articles 14 and 16 because they are also directly expressed in Article 238 ¹⁸² .

Subject to the limitations discussed above, it is clear that the TFF can consider the constitutionality of administrative acts such as the Definitive Resolution at issue in this case – a power which has repeatedly been recognized by the Mexican courts. Although not yet binding as jurisprudencia, the following Circuit Court tesis is illustrative of the Tribunal Fiscal’s authority to consider constitutional violations when judging the exercise of discretionary power:

ABUSE OF DISCRETION AND OTHER CAUSES OF NULLIFICATION OF DISCRETIONARY ACTS OF THE ADMINISTRATION. APPLICATION OF CLAUSE V OF ARTICLE 238 OF THE FISCAL CODE OF THE FEDERATION IN FORCE.

The acts in which the administrative authorities enjoy discretion do not escape the control exercised by the courts. The courts, including the Tribunal Fiscal of the Federation, may invalidate said acts for reasons of illegality, unconstitutionality, or based on the ground for nullification applicable specifically to [discretionary acts] known as abuse of discretion. . . [Discretionary acts] shall be declared unconstitutional when the authority has violated the guarantees enshrined in the Constitution, in favor of the entire population, such as fundamentacion, motivacion, and the right to a hearing, among others. The same shall occur when [the discretionary act] contravenes a general principle of law, because the authority’s decision appears illogical, irrational, or arbitrary, or because it violates the principle of equality before the law. ¹⁸³

This case asserts that constitutional guarantees can be considered by the Tribunal Fiscal not only as guarantees enshrined in the Constitution but also as "general principles of law", the same basis of authority explicitly recognized b|y the NAFTA for binational panels.

Finally, the Tribunal Fiscal’s own case law unequivocally confirms that court’s power to consider cases on constitutional grounds. In a tesis published in 1990, the Tribunal Fiscal held:

TRIBUNAL FISCAL OF THE FEDERATION. MAY BASE DECISION THAT AN ACT IS NULL ON THE CONSTITUTION.

Given that the Constitution is the fundamental norm upon which our legal system rests, we must conclude that when the examination of an administrative act’s legality is called for [in a case], we must first analyze [the act’s] compliance with said norm [the Constitution] and, only after this, determine if [the act] is in accordance with the other legal norms which must necessarily govern it. ¹⁸⁴ Moreover, there are any number of cases in which the Tribunal Fiscal has applied constitutional norms without discussing its recognized right to do so ¹⁸⁵ . It is thus clear that the Tribunal Fiscal not only may but must judge challenged administrative acts based on their conformity with the guarantees contained in Articles 14 and 16 of the Constitution.

2. Actions of Administrative Authorities Which Can be Reviewed

An examination of the Tribunal Fiscal’s precedents reveals that, with respect to the actions of an administrative authority that are subject to review, the TFF can judge not only the administrative act itself (i.e., in this case the Definitive Resolution), but also the propriety of acts that led up to the issuance of a challenged administrative act. ¹⁸⁶ This Panel’s examination of the propriety of the acts leading up to the Definitive Resolution, in this case SECOFI’s use and application of its representative test, is therefore warranted.

3. Binational Panels and the Review of Mexican Constitutional Guarantees—Policy Considerations

There are those who would assert that Chapter XIX Panels lack the authority to reach the issue of the core safeguards enshrined in Mexican constitutional guarantees under any circumstances, because they are not Mexican courts. Such a prohibition would lead to absurd results ¹⁸⁷ . If Panels were precluded from reaching issues regarding basic constitutional guarantees, Panel decisions would be based on different law and legal standards than those applied by the Mexican courts. Such a result would expressly violate NAFTA Article 1904(3), which states that the Panel must "apply the standard of review" set out in Annex 1911 and the "general legal principles that a court of the importing country would apply . . ." ¹⁸⁸ In Mexico, these are the standards of review and general legal principles that the Tribunal Fiscal would apply ¹⁸⁹ , and we must look to decisions of that body for guidance so as to arrive at the same result that the court would have reached had an affected exporter chosen to file suit in that forum. If Panels were to act otherwise, a separate body of "NAFTA" jurisprudence would result, an outcome which contradicts that intended by the agreement’s drafters ¹⁹⁰ . Moreover, since the Tribunal Fiscal cases decided under Article 238 almost always refer to Articles 14 and 16, and since judicial decisions and doctrinal works concerning principles like those expressed in 238 discuss the concepts in Constitutional terms, precluding the Panels from considering violations of the Constitutional guarantees would be akin to prohibiting them from consulting the vast bulk of the law that interprets the Article 238 standard of review. ¹⁹¹ Panels would consequently need to judge any SECOFI act not expressly prohibited by the Foreign Trade Law or regulations based on their own subjective interpretation of the words in Article 238, yielding inconsistent opinions, at best. Finally, if constitutional issues could be raised only at the Tribunal Fiscal, complainants would be essentially deprived of their right to a choice of forum, since the Chapter XIX forum would be rendered useless in any case where constitutional guarantees were at issue. For these reasons, it is clear that binational panels must have the authority to reach constitutional issues raised by the parties in a review of an antidumping or countervailing duty determination.

D. Application of the Constitutional Criteria in This Case

Rule 7 of the NAFTA Rules of Procedure ("Rule 7"), binding on Chapter XIX Panels, and the principles of Congruencia and No Suplencia de la Queja ¹⁹² , binding on the Tribunal Fiscal, require that these bodies analyze and resolve only those issues raised by the parties. They may not consider issues that the parties have chosen not to address, except in the limited number of cases when they are permitted by law to raise an issue sua sponte ¹⁹³ . However, the Tribunal Fiscal may examine issues implicitly raised in the complaint, as established in the following jurisprudencia issued by that court:

SUPLENCIA DE LA QUEJA. WHEN CONCEPTS IMPLICIT IN THE COMPLAINT ARE EXAMINED THIS DOES NOT OCCUR.

The Suplencia de la Queja occurs when arguments that the plaintiff did not make are introduced into the litigation [by the court], but it does not occur when the court makes arguments based on its study of the arguments that were in fact made [by the plaintiff] and on the application and interpretation of the law, even when said arguments were not made expressly [by the plaintiff] but were implicitly contained in the arguments advanced in the Complaint. ¹⁹⁴

This panelist believes that constitutional scrutiny must be applied in this case for several reasons. First, at least two of the five allegations raised in Muehlstein’s original complaint filed on January 9, 1995 ("Complaint"), assert that SECOFI failed to notify Muehlstein of the standards SECOFI would utilize to determine whether Muehlstein’s U.S. sales were representative.

Muehlstein was thereby deprived of the opportunity to defend itself against SECOFI’s determination that its U.S. sales were not representative. These allegations, the third and fourth respectively, were included in the following arguments: At no point in the proceedings did SECOFI ever inform Complainant of SECOFI’s unique definition of "representative" in the context of Complainant’s internal market sales. SECOFI in essence kept secret its meaning of "representative", and then unlawfully penalized Complainant for not correctly guessing SECOFI’s interpretation of tha(t) term. ¹⁹⁵

Neither the Regulations, the questionnaire, nor any other communication from SECOFI during the proceedings put Complainant on notice that its internal market sales would be deemed unrepresentative by SECOFI unless the volume of those sales equaled some percent of [Muehlstein’s] sales to all markets ¹⁹⁶ .

. . .

SECOFI’s failure to notify Complainant of its use of a legal standard not in the Regulations, and its unique interpretation of "representative," or of SECOFI’s view that Complainant’s internal market sales were not representative, severely prejudiced Complainant, and thus are in violation of Article 238 (ii), (iii), (iv), and (v) of the Federal Fiscal Code. ¹⁹⁷

Although Muehlstein does not explicitly argue in its complaint that SECOFI’s actions violated the guarantee of audiencia, the language used tracks that of the constitutional guarantees enshrined in Article 14. Further, Muehlstein does explicitly argue that SECOFI’s failure to notify it of the standards of the representative test violates Article 238, which restates the principles of the constitutional guarantees, including that of audiencia. Therefore, Muehlstein’s allegations as raised in its complaint clearly implicate the guarantee of audiencia.

Second, Muehlstein explicitly alleges in its reply brief of December 19, 1995 ("Muehlstein Reply") that SECOFI’s acts violated the Article 14 guarantee of audiencia and the Article 16 guarantee of legality. These arguments are advanced in direct rebuttal ¹⁹⁸ to the defense that SECOFI put forth in its Opposition Brief filed December 4, 1995 ("SECOFI Opposition") – the defense that it acted within its discretionary authority in utilizing its representative test ¹⁹⁹ . One passage from Muehlstein´s Reply effectively summarizes the nature of these alleged violations:

Assuming without granting that SECOFI had the authority to determine that Muehlstein’s sales were not "representative", SECOFI should have so advised my client, as the only way for Muehlstein to have learned of SECOFI’s criterion on the limits of "representativity" (absent an express legal provision) was precisely for SECOFI itself to so notify it . . . [T]he manner in which SECOFI acted, not advising Muehlstein that its internal sales were not "representative", is against all basic elements of procedural equity and even against all the principles set forth in the Guarantee of Legality stated in Article 16 of the Constitution. ²⁰⁰

In its Opposition Brief, for the first time during its investigation of Muehlstein, SECOFI publicly revealed that 15 percent of worldwide sales was the applicable standard by which the agency would determine whether internal market sales were representative. ²⁰¹ In response to this revelation, Muehlstein noted in its Reply:

On page 30 of its Brief, SECOFI states that Muehlstein has argued that its reported sales are "representative". Muehlstein has never proposed such argument. Muehlstein simply indicates that neither the Law nor the Regulations set this requirement of "representativity" and, even if it did, neither the Law nor SECOFI has provided its legal definition or even advised Muehlstein that its internal sales should account for 15 percent of its sales to all markets in order to be "representative". ²⁰²

These passages, among others, show clearly that Muehlstein is arguing that if it were within SECOFI’s discretionary authority to use a representative test, the failure of SECOFI to notify Muehlstein of the standards it would employ in applying that test constituted a misuse of that discretion. Since Rule 7 permits a panel to review not only allegations raised in the complaint, but also any "procedural and substantive defenses raised in the panel review" ²⁰³ , Muehlstein’s brief replying to SECOFI’s constitutional defense can only be seen as part of that review. ²⁰⁴ The alleged violations of Articles 14 and 16 were, therefore, adequately raised in Muehlstein’s briefs.

Finally, this panelist finds persuasive the reasoning of the Steel Panel, which determined that a binational Panel has the authority to decide issues relating to fundamental Mexican constitutional principles that impact the "scope and meaning" of Mexico’s antidumping law and/or Article 238:

[T]he Fiscal Tribunal has the authority under Articles 238(1) and 239 to declare an agency determination to be a "nullity" in situations where fundamental principles are at stake, particularly when basic constitutional provisions, incorporated through Article 238, are deemed to have been violated. In these situations, binational panels need to have a similarly effective remedy for such violations. If Article 1904(8) were read to limit the ability of the binational panel in this regard, a panel might find itself in the unacceptable position, once having determined that fundamental constitutional provisions had been violated by the Investigating Authority, that it had no effective remedy for such violation. ²⁰⁵

Here, the fundamental constitutional principle of due process, or guarantee of audiencia, is articulated in NAFTA Article 1911 as being one of the "general legal principles" that a binational panel should consider. The general legal principle of due process is incorporated in Article 238. Under these circumstances, a Chapter XIX Panel would – and should have the authority to examine whether the fundamental procedural rights to which individuals are entitled under the Mexican Constitution have been observed by the Investigating Authority.

In sum, since constitutional guarantees were implicitly raised by Muehlstein in its initial complaint, and explicitly raised in its reply brief, and since the fundamental constitutional principle of due process or audiencia is articulated in NAFTA Article 1911 as being one of the "general legal principles" that a binational Panel should consider, the Panel may, and indeed, must, examine the Investigating Authority’s acts in terms of constitutional guarantees, without violating Rule 7.

III. THE PROPRIETY OF SECOFI’s USE OF DISCRETION AS APPLIED TO MUEHLSTEIN IN THE INVESTIGATION UNDER REVIEW

A. Guarantees Contained in Article 14 of the Constitution ²⁰⁶

Article 14 of the Mexican Constitution enshrines four individual guarantees in its four paragraphs: the prohibition against the retroactive application of the law, the guarantee of audiencia, the guarantee of legality in criminal cases, and the guarantee of legal security in civil cases. The guarantee relevant in Muehlstein’s case is the guarantee of audiencia, which can be translated into American terms as due process.

The guarantee of audiencia offers two principal procedural protections to people whose rights may be affected by governmental action. The first is the opportunity to mount a defense, which is met if the affected party is notified of the demand against him and granted the opportunity to respond. The second is the opportunity to offer evidence, which is met if the affected party is permitted to offer evidence in his defense during the proceeding ²⁰⁷ . The courts have ruled that the opportunity to offer a defense must be real, not a mere formality ²⁰⁸ , and that the guarantee applies to administrative proceedings ²⁰⁹ , whether the law grants the basic procedural right or not ²¹⁰ . Moreover, the courts have held that authorities may not dispense with the requirements of the guarantee of audiencia on the basis of their discretionary authority. As the First Administrative Court of the Third Circuit held in a tesis:

AUDIENCE, GUARANTEE OF: The guarantee of audience enshrined in article 14 of the Constitution requires that a person be given the opportunity to allege and prove what he wishes before he is deprived of a right. This implies that he must be fully informed of all the facts and elements upon which the act of authority is based, since if this is not done it will be very difficult for him to defend himself in an adequate and congruent manner. [The guarantee of audience] must always be respected by the administrative authorities, even when the law governing the act does not provide or establish legal due process, and even though they consider that they possess discretionary authority to act ²¹¹ .

In sum, it is clear that SECOFI has the duty, in accordance with the guarantee of audiencia, to inform parties of the facts and elements upon which its acts of authority are based.

B. Did SECOFI Violate the Guarantee of Audiencia in the Case of Muehlstein

The question to be resolved is whether SECOFI’s failure to make known to Muehlstein the standard by which it determines the representativeness of an exporter’s home market sales violated Muehlstein’s guarantee of audiencia.

SECOFI, in its Final Determination, disregarded Muehlstein’s submitted domestic sales as the basis for normal value because they were not considered to be "representative" since they comprised only 1.5% of Muehlstein’s total worldwide sales, by volume. ²¹² As a result, an "all other" antidumping duty rate of 44.32% was assigned by SECOFI to future imports of Muehlstein’s product into Mexico ²¹³ , allegedly shutting the company out of the Mexican market.

Muehlstein argues in its complaint that SECOFI erred in failing to inform it of SECOFI’s "unique definition" of the term representative, and that SECOFI should have defined the term in its questionnaire ²¹⁴ . Muehlstein contends that had a definition been provided, additional data would have been submitted by it, its questionnaire response would not have been determined to be incomplete, and it would have avoided the punitive antidumping duty rate ²¹⁵ .

At the outset, this panelist, being in agreement with the majority Opinion, rejects Muehlstein’s contention that it did not and could not have known that SECOFI would employ some test to determine whether Muehlstein’s sales in the United States were sufficient to permit a valid comparison to its sales in the Mexican market. The law empowering SECOFI to conduct antidumping investigations mandates that SECOFI determine whether a "valid comparison" can be made between the prices of an exporter’s domestic market sales and the prices of its sales in Mexico. It seems apparent that SECOFI would need to apply some test to make this determination.

The dispositive question is whether the information available to Muehlstein was sufficient to alert it that its U.S. sales were not "representative," and that it therefore would need to submit either third-country sales data or cost of production information. SECOFI asserts that its questionnaire clearly states in section 3.2 that if "sales are not made in the internal market or when these sales are not representative, list the sales for the three largest export markets comparable in terms of volume to the Mexican market." ²¹⁶ Although SECOFI was not able to provide the Panel with any published notice or explanation that internal market sales needed to equal at least 15 percent of total sales in order to be representative, it defended its actions in the present case on the grounds that the application of its representative test was based on longstanding administrative practice ²¹⁷ . To support its position, SECOFI cites to two cases which were decided prior to Muehlstein’s submission of its questionnaire response on January 17, 1994, and three cases which occurred after Muehlstein’s submission ²¹⁸ .

An antidumping investigation Final Determination published in 1989 made known the fact that submitted sales comprising 9 percent and 12 percent of total sales were not considered by SECOFI to be representative ²¹⁹ . Another Final Determination which might have alerted Muehlstein to the fact that there was a test for representativeness under which it would not pass muster was published in December of 1993, several weeks prior to Muehlstein’s submission ²²⁰ .

In addition, new Regulations of the Foreign Trade Law, published on December 30, 1993, clearly stipulated the use of the 15 percent standard by SECOFI:

[C]omparable prices of identical or similar goods in the internal market, or, as applicable, those of exports to a third country, will be considered as representative when they account for at least 15 percent of the total sales volume of the goods under investigation ²²¹ .

Although these regulations were not retroactive to cases filed before December 1993, and therefore not applicable to Muehlstein’s investigation, they should have alerted Muehlstein that there was a distinct danger that U.S. sales totaling a small percentage of its total worldwide sales would not be considered to be representative by the Investigating Authority ²²² . This panelist believes that the information made available by SECOFI in its questionnaire and its case precedent was sufficient to notify Muehlstein that SECOFI would be applying some standard to determine the representativeness of Muehlstein’s U.S. sales, and that its submission of U.S. sales totaling even 3.72 percent of its worldwide sales would not meet that standard ²²³ . Therefore, this panelist finds that SECOFI’s failure to make known its exact test for representativeness did not violate the general principles contained in Articles 14 and 16 of the Constitution, since there was enough information provided for Muehlstein to defend its interests against the demands of the agency. A different result, however, might have been warranted if Muehlstein’s U.S. sales had totaled more than twelve, but less than fifteen, percent of its worldwide sales.

IV. CONCLUSION

For the reasons stated above, this panelist concurs with the result of the majority’s opinion, but departs from it in its failure to analyze Complainant’s allegations of due process violations in the Investigating Authority’s application of a test of representativeness applied to internal market comparison sales. This panelist, therefore, joins in the majority in affirming the Investigating Authority’s Definitive Resolution. Maureen Rosch (Date)

¹⁶⁵ In particular, this panelist’s opinion departs from that of the majority with respect to sections IV.E.4 and IV.E.5, and with respect to sections III and IV.E.3 in that they do not address constitutional issues.

¹⁶⁶ This fundamental principle was expressly recognized by the only Chapter XIX Mexican Panel decision handed down to date. See Memorandum Opinion and Order of the Majority,[("Steel Panel")] In the Matter of the Mexican Antidumping Investigation into Imports of Cut-to-Length Plate Products from the United States, MEX-94-1904-02, issued August 30, 1995 ("Steel Panel Memorandum Opinion") at 11-17.

¹⁶⁷ By the same token, since the Tribunal Fiscal may not consider the constitutionality of Mexican laws or regulations, neither may the binational panels. This means, of course, that neither the Tribunal Fiscal nor the binational panels are "Constitutional Courts".

¹⁶⁸ NAFTA Article 1904(2). (emphasis added).

¹⁶⁹ Note that the terms "Definitive Resolution" and "Final Determination" are used interchangeably in this document.

¹⁷⁰ Article NAFTA 1904(3). (emphasis added).

¹⁷¹ See Organic Law of the Tribunal Fiscal, Article 11 (XI) and Foreign Trade Law, Article 95.

¹⁷² According to articles 192 and 193 of the Law of Amparo, all jurisprudencias issued by the Supreme Court or by the Collegiate Circuit Courts are binding authority for the TFF, as opposed to decisions of the Unitary Circuit Courts, which cannot create jurisprudencia. This opinion will therefore consider relevant case law of the Supreme and Collegiate Circuit Courts, as well as, of course, the case law issued by the Tribunal Fiscal itself.

¹⁷³ It is worth noting that this view is in accord with that taken by the only other Mexican Chapter XIX panel to have issued an opinion to date. See the Steel Panel Memorandum Opinion at 15-16: "[w]hile binational panels are intended to ‘replace’ judicial review of agency determinations, they are not intended to apply a different substantive law than would be applied by the local court, nor are they intended to apply a different standard of review than would be applied by the local court". (emphasis in original).

¹⁷⁴ See, generally, majority opinion of the Panel, Sections III, IV.E.1 and IV.E.2.

¹⁷⁵ Jurisprudencia No. 165 of the Sala Superior of the Tribunal Fiscal Revision No. 363/80. Resuelta en sesion de 20 de mayo de 1982, por mayoria de 6 votos, 1 mas con los resolutivos y 1 en contra. Revision No. 440/82. Resuelta en sesion de 25 de enero de 1983, por unanimidad de 8 votos. (emphases added).

¹⁷⁶ Martinez Morales, Derecho Administrativo (1994), at 303, notes that desvio de poder is distinguished in Mexican doctrine from abuso de poder, which is an act taken in the absence of authority to do so.

¹⁷⁷ Id. at 304. (emphasis added).

¹⁷⁸ See, e.g., Sexta Epoca, Tercera Parte.

Vol. IV, pag. 120. A.R. 6489/55. Fabricas de Papel de San Rafael y Anexas, S.A. 4 votos.

Vol. VIII, pag. 55. A.R. 3294/56. Farmaceuticos Lakeside S.A. 5 votos.

Vol. VIII, pag. 55. A.R. 4249/52. Internacional de Comercio S.A. 4 votos.

Vol. XIX, pag. 57. A.R. 4862/58. Adrian Garcini Navarro. 4 votos.

Vol. XIX, pag. 59. A.R. 136/57. Antonio Mardegain Simeon. 4 votos.

Vol. CXXXVI, pag. 21. A.R. 2282/68. Maria Dolores Aguilar de Becerra. 5 votos.

Quinta Epoca, Vol. LXXIII, pag. 5522. A.R. 4753/42. Bonnet Rodolfo. Unanimidad 4 votos.

¹⁷⁹ Jurisprudencia No. 258

Revision No. 1108/81.– Resuelta en sesion de 21 de febrero de 1985, por unanimidad de 7 votos.

Revision No. 2129/84.– Resuelta en sesion de 12 de marzo de 1986, por unanimidad de 9 votos.

Revision No. 1241/84.– Resuelta en sesion de 20 de marzo de 1986, por unanimidad de 6 votos.

(Texto aprobado en sesion de 22 de agosto de 1986).

R.T.F.F. Ano VIII, No. 81, septiembre 1986, p. 178

This jurisprudencia overruled the jurisprudencia issued by the Tribunal Fiscal in 1939 to the effect that the Tribunal Fiscal could not decide issues related to the constitutionality of laws, but could do so with respect to regulations and administrative acts. See C.S. entre No. 24546/37 y 2089/38 – Resuelta el 30 de octubre de 1939, por 8 contra 6. R.T.F. 1937-48, p. 191.

¹⁸⁰ The jurisprudential thesis referred to states:

TRIBUNAL FISCAL DE LA FEDERACION, POWERS TO EXAMINE THE CONSTITUTIONALITY OF AN ADMINISTRATIVE ACT. In accordance with article 202, paragraph b) of the Fiscal Code, the omission or non-compliance with the formalities which the challenged resolution or proceeding should have afforded are causes of annulment [of the resolution or proceeding]. The Court in this area [i.e., the Tribunal Fiscal] is empowered to annul an act of a governmental authority if [such act] does not fulfill the requirements set out in the norm, as is the case when the essential procedural formalities required by the Constitution have been omitted.

Note: [appears in original] Article 202(b) of the previous Fiscal Code became article 238, section II of the current code.

Sexta Epoca, Tercera Parte:

Vol. XXXIII, Pagina 34. A.R. 2125/59. Antonio Garcia Michel. 5 votos.

Vol. LV, Pagina 54. A.R. 5752/61. Antonio Perez Martin. Unanimidad de 4 votos.

Vol. LV, Pagina 54. R.F. 47/61. Eulalio Salazar Cruz. Unanimidad de 4 votos.

Vol. LXXIV, Pagina 55. R.F. 210/63. Samuel Nieto Enciso. 5 votos.

Vol. CXXX, Pagina 80. R.F. 415/61. Hoteles Nacionales, S.A. 5 votos

¹⁸¹ Gaceta del Semanario Judicial de la Federacion, Octava Epoca, No. 80 (Agosto 1994), tesis numero I.30.A. J/46, p. 35. (emphasis added).

¹⁸² As discussed in section II.D. below, the TFF is also limited to a consideration of legal violations alleged by the parties.

¹⁸³ Amparo directo 297/86, published in the Supreme Court’s 1986 Report, Third Part, Collegiate Courts, p. 102. (emphases added).

¹⁸⁴ Revision No. 1649/87. Resuelta en sesion de 14 de febrero de 1990, por unanimidad de 7 votos. Magistrado Ponente: Jose Antonio Quintero Becerra. Secretario: Lic. Mario Bernal Ladron de Guevara.

¹⁸⁵ See, e.g., Revision No. 310/86. Resuelta en sesion de 6 de abril de 1988, por unanimidad de 7 votos. Magistrado Ponente: Carlos Franco Santibanez. Secretario: Lic. German Canseco de la Fuente. RTFF. Ano I, No. 4, Abril 1988, p. 11. Revision No. 1914/87. Resuelta en sesion de 11 de mayo de 1990, por unanimidad de 8 votos. Magistrado Ponente: Margarita Lomeli Cerezo. Secretario: Lic. Javier Gomez Cortes

RTFF. Ano III, No. 29, Mayo 1990, p. 33. Jurisprudencia No. 303 of Sala Superior of Tribunal Fiscal Juicio Atrayente No. 36/93/14421/92. Resuelto en sesion de 22 de octubre de 1993, por mayoria de 4 votos, 2 con los resolutivos y 1 en contra. Magistrado Ponente: Carlos Franco Santibanez. Secretaria: Lic. Guadalupe Camacho Serrano.

¹⁸⁶ See, e.g., Revision No. 791/87. Resuelta en sesion de 29 de marzo de 1989, por unanimidad de 8 votos. Magistrado Ponente: Alfonso Cortina Gutierrez. Secretario: Lic. Hector Fernando Pineira Sanchez. RTFF. 3a Epoca, Ano II, No. 15, Marzo 1989, p. 28: -- ("TRIBUNAL FISCAL OF THE FEDERATION. POSSESSES THE COMPETENCE TO JUDGE ISSUES RELATED TO THE FORMALITIES OF INSPECTIONS"). Jurisprudencia No. 72 of Sala Superior of Tribunal Fiscal Juicio de Competencia Atrayente No. 74/90. Resuelta en sesion de 5 de diciembre de 1990, por unanimidad de 8 votos. Magistrado Ponente: Armando Diaz Olivares. Secretario: Lic. Adalberto G. Salgado Borrego. RTFF. Ano III, No. 36, 3a Epoca, Diciembre 1990, p. 12. -- ("VISITATION ORDER. ITS FUNDAMENTACION AND MOTIVACION IN ACCORDANCE WITH ARTICLE 16 OF THE CONSTITUTION. In accordance with article 38, section III of the Fiscal Code of the Federation and article 16 of the Constitution, every act of authority issued to an individual must be adequately based [fundado y motivado]").

¹⁸⁷ For example, imagine a case, similar to the case before us, where the Investigating Authority applied a completely unknown and new test for representativeness in an investigation and refused to disclose its standard under repeated, appropriately documented requests from participants. Clearly, such administrative action would violate basic due process principles enshrined in articles 14 and 16 of the Mexican Constitution. Precluding a Panel from addressing these principles would yield the absurd result of affirming a discretionary authority which abuses the most fundamental rights underlying all Mexican law.

¹⁸⁸ NAFTA Article 1904(3). (emphasis added).

¹⁸⁹ Article 238 and Articles 14 and 16 of the Constitution.

¹⁹⁰ Binational panels are obliged to interpret local antidumping law in the same manner as a local court would interpret it, using the same standards and jurisprudence. In the Statement of Administrative Action to the North American Free Trade Agreement Implementation Act, reprinted in H. Doc. 103-159, Vol. 1, 103d Cong., 1 st Sess. At 195, the U.S. Congress clearly acknowledges this obligation: "[T]he participation of panelists with judicial experience would help to ensure that, in accordance with the requirement of Article 1904, panels review determinations of the administering authority precisely as would a court of the importing country, by applying exclusively that country’s AD and CVD law and its standard of review. In addition, the involvement of judges in the process would diminish the possibility that panels and courts will develop distinct bodies of U.S. law." (emphases added).

¹⁹¹ Ironically, the majority opinion implicitly acknowledges this point in section IV.E.(6) opinion, which interprets Article 238(2) based on Constitutional jurisprudence, thus apparently violating the majority’s own standard of review. See footnote 120 of the majority opinion. Nevertheless, the majority analysis does not consider these principles as part of the criteria of review described in section III, nor do they apply them in section IV.E.(3) in the discussion of the application of SECOFI’s discretionary authority.

¹⁹² The distinction between congruencia and no suplencia de la queja is that the former requires the court to render its decision based on the points raised by the parties, while the latter prohibits the court from "adding" arguments to a party’s brief. The practical effect of the two appears to be the same.

¹⁹³ See, e.g., Steel Panel Memorandum Opinion at 49-50 ("[t]he court is strictly limited to a study and review of the controverted points"). Juicio No. 13/88 – Sentencia de 19 de abril de 1988, por unanimidad de votos – Magistrado Instructor: A. Guillermo Lopez Velarde H. – Secretaria: Lic. Mygdalia A. Rodriguez A. de Bastidas. R.T.F.F. Tercera Epoca, Ano II, No. 13, enero 1989, p. 64 ("JUDGMENTS OF THE COURT – THEY MAY NOT DECLARE ADMINISTRATIVE ACTS TO BE NULL BASED ON ARGUMENTS NOT MADE IN THE COMPLAINT").

¹⁹⁴ Jurisprudencia No. 293

Revision No. 533/81. Resuelta en sesion de 1 de julio de 1982, por unanimidad de 6 votos, 1 mas con los resolutivos y 1 en contra Revision No. 714/84. Resuelta en sesion de 16 de enero de 1985, por unanimidad de 8 votos.

Revision No. 1418/84. Resuelta en sesion de 31 de enero de 1986, por unanimidad de 7 votos y 1 mas con los resolutivos.

(Texto aprobado en sesion de 7 de abril de 1987). R.T.F.F. Ano VII, No. 88, Abril 1987, p. 804.

¹⁹⁵ Complaint Section C.(3).1. (emphasis added).

¹⁹⁶ Complaint, Section C.(4).7. (emphasis added).

¹⁹⁷ Complaint, Section C.(4).13. (emphasis added).

¹⁹⁸ Rule 57.3 of the NAFTA Rules of Procedure limits the contents of reply briefs to "rebuttal of matters raised in the briefs filed" by participants opposing the allegations of a complaint.

¹⁹⁹ See, generally, SECOFI Opposition at 22-25.

²⁰⁰ Muehlstein Reply at 10.

²⁰¹ SECOFI Opposition at 30.

²⁰² Muehlstein Reply at 9, footnote 3.

²⁰³ NAFTA Rule 7(b) of the Rules of Procedure. (emphasis added).

²⁰⁴ The practice of the TFF does not help us here, since reply briefs are filed by right in a binational panel proceeding, as opposed to before the Tribunal Fiscal, where they are only filed if the court so grants permission.

²⁰⁵ Steel Panel Memorandum Opinion at 23.

²⁰⁶ This panelist will not address whether SECOFI in fact violated the Article 16 Guarantee of Legality because I am in agreement with the majority’s determination that the findings of fact and conclusions of law set out in SECOFI’s Final Determination are legally sufficient. The same reasoning is applicable here, and need not be repeated.

²⁰⁷ Burgoa, Ignacio, Las Garantias Individuales 550-551 (1988).

²⁰⁸ Id. at 551.

²⁰⁹ See, e.g. Tesis jurisprudencial 314 del Apendice 1975, Segunda Sala.

²¹⁰ Sexta Epoca, Tercera Parte: Vol. LXXXVIII, Pag. 30, A.R. 831/64. Mercedes de la Rosa Puenta. 5 votos. Septima Epoca, Tercera Parte: Vol. 26, Pag 122. A.R. 2462/70. Poblado "Villa Rica", Mpio de Actopan Ver. 5 votos. Vol. 26, Pag 122. A.R. 4722/70. Poblado de las Cruces, hoy Francisco I. Madero, Mpio de Lago de Moreno, Jal. 5 votos. Vol. 63, Pag 25. A.R. 3372/73. Carmen Gomez de Mendoza 5 votos. Vol. 63, Pag 25. A.R. 2422/73. Adolfo Cardenas Guerra 5 votos. Published in Apendice al Semanario Judicial de la Federacion 1917-1975, tercera parte, segunda sala, tesis 339, p. 569.

²¹¹ Septima Epoca, Vols. 103-108, sexta parte, p. 36, primer circuito, primero administrativo, Amparo en revision 607/77, Julio Cesar Aguilera Saavedra, 20 de septiembre de 1977, unanimidad de votos. (emphasis added). See also, Septima Epoca, Vol. 8, sexta parte, p. 20, Quinto Circuito, Amparo en revision 322/69, Manuel de Jesus Vazquez Felix, 14 de agosto de 1969, unanimidad de votos.

²¹² Diario Oficial, November 11, 1994 at 11-12, paragraph 62.

²¹³ Id. at 12, paragraph 63.

²¹⁴ Muehlstein Reply at 13.

²¹⁵ Complaint at C.(3)-C.(5).

²¹⁶ SECOFI Opposition at 23. (emphasis added).

²¹⁷ SECOFI Opposition at 34-36 and 55.

²¹⁸ This panelist is not persuaded that the cited decisions which were published after the time of Muehlstein’s filing, and, indeed, even after the Final Resolution was issued in this case, have any bearing on the present review. These resolutions were published on June 23, 1994, August 2, 1994, and April 18, 1995. Muehlstein filed its submission on January 17, 1994. The Final Resolution was issued on November 11, 1994.

²¹⁹ Final Resolution of imports of iron bands or cold rolled steel sheet strips from the Federal Republic of Brazil, Diario Oficial de la Federacion ("D.O.") October 10, 1989, at 4, Section I.b. ("due to lack of representativity on the invoices submitted by the accused exporters, which cover only 9% and 12% of their total sales").

²²⁰ Final Resolution of imports of homopolymer imports originating from the United States of America, D.O. December 23, 1993. Point 68, page 41.

²²¹ Regulation of Foreign Trade Law, Article 42.

²²² It is important to note that all of the allegations raised by Muehlstein would have been rendered moot if SECOFI had simply made known in a clear fashion its standard or test for representativeness. This simple step would have eliminated all of the guesswork without imposing any additional administrative burdens on the Investigating Authority. With the passage of the new regulations in December 1993, which do define the representative test utilized by SECOFI, this issue will not arise again. SECOFI should be complimented for finally setting forth its practices in an unambiguous manner

²²³ Muehlstein contends that its U.S. sales totaled 3.72% of its worldwide sales, not 1.5% as stated by SECOFI in its Final Determination. SECOFI concedes that the 1.5% total was in error.