|IN THE MATTER OF:
Review of the Final Determination of the Antidumping Investigation in the matter of Rolled
Steel Plate originating in or imported from Canada.
August 3, 1998
|| D. M. M. Goldie
|| W. Roy Hines
|| Lucía Reina Antuña
|| Rodolfo Terrazas Salgado
|| Gustavo Vega Cánovas (Chairman)
This is a courtesy translation and in the event there are any
differences between the Spanish and English texts, the Spanish text governs.
All footnotes references are in the Spanish text.
II. Scope of this Decision
III.Issues outlined by TITAN
1. Normal Value and Reconstructed Value
2. Verification Visits
IV. Issues outlined by the Investigating Authority
1. Normal Value and Reconstructed Value
2. Verification Visits
V. Considerations of the Panel
1. Issues concerning TITAN
A. Implications of the illegality of the new margin of price discrimination fixed for TITAN
2. Issues with respect to other Canadian exporters
3. Issues concerning Injury
1. With respect to TITAN
2. With respect to all other Canadian exporters
3. Time of remand
Panels Decision on the Determination on Remand of the Investigating Authority
related to the Review of the Final Determination
of the Antidumping Investigation of the Rolled Steel Plate Imports originating in and
coming from Canada
1. On December 17, 1997, this Binational Panel issued its Final
Decision in the procedure cited above. In it, the Panel remanded the case to the
Investigating Authority ("IA") and ordered it to comply, within a period not
longer than 60 days, with various requirements related to specific injury and dumping
issues of the Final Determination of December 28, 1995.
2. On January 20, 1998, the IA notified to
the interested parties the methodology employed to calculate the new dumping margin and
the injury analysis, giving them as a deadline January 28, 1998, to present their
comments. On the latter date, Altos Hornos de México, S.A. of C.V. ("AHMSA")
and HYLSA, S.A. of C.V. ("HYLSA") (the "Requestants"), appeared and
claimed to the IA that it should reconsider the methodology to be employed, in order to
establish a reconstructed value based on section II of Article 31 of the the Ley de
Comercio Exterior (Foreign Trade Law, "FTL"), to take into account the
costs and expenses involved in the transportation and introduction of merchandise from
Canada into the United States and the general expenses incurred in that country. They also
requested it to determine a residual antidumping duty for the rest of the
exporting Canadian companies, applying Article 54 of the FTL. HYLSA also requested that
the IA should use financial information that supported and confirmed TITANs reported
3. In a written note presented on January 29, 1998 The Titan
Industrial Corporation ("TITAN", or the "Complainant") stated, among
other things, that the IA had wrongly interpreted Article 31 of the FTL relative to the
calculation of the normal value and further alleged that the IA was obliged to carry out a
verification, visit to obtain acquisition costs by virtue of the mistakes that the IA
recognized it had made with respect to the Complainant. Dofasco Inc., Algoma, Stelco and
Hubbell International Trading Company did not present any comments.
4. On February 16, 1998, the IA issued its Determination on Remand
("DR") and the Modified Determination, which were published on the 20th
of that month in the Diario Oficial de la Federación
(Official Gazette of the Federation, "DOF").
5. On February 23, 1998, the IA provided the Mexican Section of the
Secretariat of the North American Free Trade Agreement (the "Secretariat") the
Complementary Remand File and its corresponding Index. On the same day, TITAN presented an
Incidental Motion requesting this Panel to order the IA to issue a determination that
would eliminate the legal effects of the DR and the Modified Determination published in
6. On March 4, 1998, the IA presented its answer to TITANs
Incidental Motion, arguing its inapplicability since its acts had been strictly based upon
applicable legal dispositions.
7. On March 16, 1998, TITAN, DOFASCO Inc., ALGOMA and STELCO (the
"Complainants") presented a written note challenging the DR and the Modified
8. On April 2, 1998, HYLSA presented its answer to the
Complainants challenge to the IAs DR and Modified Determination.
9. On April 6, 1998, the IA and AHMSA presented their answer to the
Complainants challenge to the DR and to the Modified Determination.
10. On April 13, 1998, without being required by any party or this
Panel, the IA provided the Secretariat with two diskettes containing confidential
information, and two containing public information, corresponding to Annexes 2A and 4A of
TITANs questionnaire, which had not been previously physically found within the
respective Volume XIV (confidential version), even though they appeared in the Index of
the Administrative Record ("AR") .
11. On April 15, 1998, the Panel issued an Order requiring the IA to
provide it with information classified as privileged within 24 hours starting after the
issuance of that Order.
12. On April 16, 1998, the Panel issued an Order to hold an In-camera
Hearing, which took place on the 24th of
the same month at El Colegio de México, A.C., and in which only the counsels of record of
the IA and the Complainants, Lawyers Juan Carlos Arreola and Francisco Fuentes Ostos,
respectively, participated since they had access to confidential information according to
Rule 69 of the Rules of Procedure of Article 1904 of the North American Free Trade
Agreement (the "Rules of Procedure").
13. On April 20, 1998, the Panel issued an Order dismissing the
Incidental Motion presented by TITAN on February 23rd, after deciding that the publication
of the DR and the Modified Determination in the DOF neither caused any prejudice to the
Complainant, nor left it in state of legal defencelessness.
14. On May 15, 1998, the Panel issued an Order that extended the date
of issuance of its Decision on the DR until September 4, 1998. This extension was due to
the fact that the Panel found it necessary to request information that the IA classified
as "privileged" and to order an in camera Hearing to clarify various
doubts regarding the confidential information included in the AR.
II. Scope of this Decision
15. To the extent that the parties taking part in the in camera
Hearing made new arguments and provided additional evidence in contravention of the
Panels Order when it called the Hearing, this Decision on Remand dismisses these new
arguments and evidence and relies exclusively on issues specifically raised in
TITANs challenge and in the IAs and the Requestants answer to it.
III. Issues outlined by TITAN
1. Normal Value and Reconstructed Value
16. The Complainant TITAN, in its Response to the IA of January 11,
1994, indicated that, since none of the sales of the investigated product were made in the
country of origin, the criteria to be applied for the calculation of the normal value was
the price for export to a third country, as provided for in Article 43 of the Regulation
of the FTL (the "Regulations"). At the same time, TITAN stated the following
concerning the application of the criteria of the reconstructed value:
"It is very important to recall that the activities of
TITAN consist of trading commodities like those which are object of investigation under
the Resolution. Therefore, their cost is the price paid to acquire the rolled steel plate
from the producers.
In conclusion, to determine the normal value of TITANs operations, according to
the second paragraph of Article 31 of the Law, the Authority must apply, in successive
order, (i) the comparable price of an identical or similar merchandise, exported
from the country of origin to a third country in the course of normal commercial
operations, or (ii) the reconstructed value in the country of origin. In the case of
TITAN, the reconstructed value must be the purchase price of rolled steel plate." 1
2. Verification Visits
17. Since the IA recognized that it made
mistakes during the process with respect to TITANs information and calculations,
including the corporate relationship between TITAN and DOFASCO Inc., 2
the Complainant requested a verification visit be made to its facilities in order to
determine its production cost.
18. In the same response, TITAN argued that the company was profitable
during the period of 1987 to 1991, as shown in paragraph 3.14 of the Questionnaire annexed
to TITANs Response.
19. Based on the foregoing, TITAN argues that
if the IA did not carry out a verification visit, it would not only violate the terms of
the Panels Order, but would also leave the Complainant in a state of legal
defencelessness. It also claimed that it would result in discriminatory treatment since
during the investigations the IA carried out verification visits to other exporters, as
shown in paragraphs 35 and 36 of the Final Determination. 3
20. In its Challenge to the DR of the IA,
TITAN indicated that approximately 3,000 tons of rolled steel plate of Canadian origin
exported to Mexico during the period of investigation were of the type known commercially
as "second-class quality". 4
21. In that same
Challenge, TITAN indicated that, according to the records of the other Canadian companies,
only 3,497 tons of rolled steel plate originating in Canada were exported to Mexico in
1992, in addition to the 3,000 tons exported by TITAN. Furthermore, at paragraph 31 (M) of
the Final Determination it is stated that contracts provided by AHMSA showed that this
company imported 936 tons of steel plate (representing 0.8% of the total) and not 611 tons
(which represent 0.6% of the total), which contradicts the data set out in paragraph 509
of the Final Determination. Also, the Complainant noted that the Sistema de
Información Comercial de México (Commercial Information System of México,
"SIC-M") could have wrongly registered Canadian hot rolled steel sheet imports
in 1992 as rolled plate, since the officers that recorded the numbers were not given an
explanation of the specification of products that TITAN made in handwriting on the
invoices annexed to the Questionnaire that it delivered to the IA. 5
22. Based on the foregoing TITAN requested the
IA to consider whether imports originating in Canada represented less than 3% of the total
of imports during the period of investigation to determine if the de minimus rule was
applicable and whether they caused injury to domestic production, according to Articles
3.3 and 5.8 of the Agreement relative to the Application of Article VI of the General
Agreement on Tariffs and Trade ("GATT") of 1994. 6
IV. Issues Outlined by the Investigating Authority
1. Normal Value and Reconstructed Value
23. The IA stated that the answers of TITAN to the Questionnaire
annexed to its Response of January 11, 1994, showed that TITAN exported to Mexico
merchandise classified in three product codes under tariff items 7208.10.02, 7208.25.99
and 7208.37.01 (which correspond to widths between 4.75 and 10 mm) based on what TITAN had
stated in its accounting for its products under codes HRC2, HRC2PUP and HRC3, as indicated
in the file PL4ABC.XLS of one of the diskettes annexed by TITAN to the above
24. The IA stated in its DR of February 16,
1998, that TITAN did not make any sales in the internal market of the country of origin of
the product exported to Mexico. Therefore the IA could not use the option of normal value
described in Articles 31 (1) of the FTL and GATT Article VI. 7
25. Based on TITANs
export sales to two different markets other than Mexico, the IA selected the market in
which it observed the highest price for one of the product codes, 8
in order to determine the normal value, in accordance with Article 31 (2) (1) of the FTL
and Article 2.4 of the Agreement relative to the Application of GATT Article VI. This
market met the criteria provided for in Article 42 of the Regulations. 9
26. According to Article 32 (2) of the FTL,
the IA stated that it excluded from its calculation all sales at a loss, that is, those
with lower prices than the total production cost. After doing this, the IA found that all
the prices turned out to be lower than the production cost, and therefore it dismissed the
normal value based on the option described in Article 31 (1) of the FTL. 10
27. The IA stated
that, due to the fact that the AR did not have information on production costs
specifically assigned to each one of the product codes exported to Mexico, it determined
an applicable reconstructed value for the three product codes, defined as the sum of the
production cost, general expenses and a profit margin. 11
28. The IA recognized that for a trading company, the acquisition cost
should be substituted for the production cost. Nevertheless, since TITAN did not provide
information related to its acquisition costs, the IA, based on Articles 54 of the FTL and
6.8 of the Agreement relative to the Application of GATT Article VI, took the estimated
reconstructed value as the one which complied with the normal commercial operations
criteria for the investigation in question. The estimate of the reconstructed value came
from the study carried out by a specialized consultancy firm, as indicated in paragraphs
46 to 51 of the Determination of the Initiation of the Investigation. The IA did not consider general expenses in its calculations of the
reconstructed value, even though it did take into account the profit margins presented by
TITAN. Thus, it adjusted a profit margin to the reconstructed value by means of a simple
average of the profits of the company. 12
29. Based on
Article 32 (1) of the Regulations, the IA determined a dumping margin applicable
to the product under investigation by calculating a weighted average of the individual
margins for each of the product codes exported to Mexico. In doing so, the weighting used
reflected the relative participation of the exported volume of each product code in the
total volume exported to Mexico. 13
30. In accordance with the foregoing, the IA determined, based on
Article 40 of the FTL and on the comparison of average normal values for rolled steel
plate exports originating in Canada, a dumping margin of 108% for TITAN. At the
same time based on Articles 54 of the FTL and 6.8 of the Agreement related to the
Application of GATT Article VI, and based on the information contained in the AR of the
case, the IA proceeded to apply the highest dumping margin found in the investigation for
the other Canadian exporters, which was 108%.
2. Verification Visits
31. In the In-camera Hearing of April 24, 1998, the counsel
of record of the IA reiterated to the Panel that a verification visit can only be made to
verify information and evidence that had been presented in the course of an antidumping
investigation. In this instance, TITAN had not provided its acquisition costs.
32. In compliance with the Order in the
Panels Decision of December 17, 1997, the IA proceeded to determine whether TITAN
had been the only exporter to Mexico of rolled steel plate of Canadian origin in 1992, and
to establish the volume of such exports. 14
33. Based on the information
concerning the thickness of the laminates and plates in
TITANs invoices, the IA verified that these included products that were not part of
this procedure. 15 Because of this
and of the response of the company, the IA confirmed that TITAN exported approximately
3000 tons of rolled steel plate of Canadian origin to Mexico. 16
Nevertheless, the SIC-M registered 14,291 tons of plate imports originating in
Canada during 1992. 17
34. The IA stated that, according to
TITANs invoices, this company exported to five Mexican companies, while the
Requesting List by Company of the SIC-M registered nine companies 18
as importers of the investigated product originating in Canada. Based on the above,
the IA concluded that during the investigation period, other companies, in addition to
TITAN, made direct or indirect exports to Mexico of Canadian rolled steel plate.
Therefore, the evidence supported the conclusion that there is no coincidence between the
volume of exports made by TITAN and total imports of this product originating in Canada.
35. Based on the foregoing, the IA concluded
that TITAN was not the only exporter of Canadian rolled steel plate. The IA proceeded to evaluate whether total imports originating in Canada, 19 including those of TITAN, were significant for accumulation
purposes, and concluded that these imports were significant. 20
Accordingly, the Authority proceeded to evaluate cumulatively the effects of imports
of products of Canada with those originating in Brazil, the United States and Venezuela,
to determine if they caused injury to domestic production.
V. Considerations of the Panel
1. Issues concerning TITAN
36. This Panel considers that, in order to adequately solve the issues
outlined with respect to the determination of a specific dumping margin for
TITAN, it is necessary to take into account the following considerations.
37. It is important to emphasize that Chapter XIX of the North
American Free Trade Agreement ("NAFTA") refers to two different procedures to
which different legal rules apply. The first is the administrative procedure carried out
by the IA, which is governed by Mexican law and, in particular, by the antidumping
legislation of Mexico. The second is the review procedure carried out before the Panel to
determine if the IA complied with the antidumping legislation cited. This second
procedure, as well as the powers of the Panel and the decisions that it can issue are
first governed by NAFTA and the Rules of Procedure --which are also part of Mexican
internal law-- and then by other rules of Mexican law to which they make reference or are
applicable by analogy. (Rule 2 of the Rules of Procedure).
38. Consequently, it is important not to confuse the law that the
Panel must apply to judge the legality of the resolutions issued by the IA, with the
jurisdiction rules and the procedure applicable to its acts. However, the Panel must
interpret and harmonize the two which must be done based on the objectives and legal
groundings of the system.
39. In this case, the Panel considers that
TITAN has presented a procedural and substantive defence derived from this review, 21 since the issue is to effectively fulfill the Order of
the Panel contained in its Final Decision of December 17, 1997. This issue is governed by
NAFTA Chapter XIX and its Rules of Procedure. In particular, this Panel finds that Rules
2, 7(b) and 73 (1) (2) (a) (b) (c) are applicable.
40. In this regard, Rule 2 of the Rules of Procedure establishes that
"...the purpose of these Rules is to assure the fair, fast and economic
review of definitive resolutions". (emphasis added).
On the other hand, the jurisdiction of the Panel to review the procedural and
substantive means of defense invoked in the review before it are derived from Rule 7(b) of
the Rules of Procedure.
41. TITAN alleges that the IA, upon
recognizing the mistake of confusing the company with the sales department of DOFASCO
during the investigation, violated Articles 31 section II and 43 of the FTL, and having
been granted by this Panel the opportunity of correcting its mistake, the IA was obliged:
"[...] to carry out an inspection to TITAN's premises in order to determine its
acquisition costs". 22
Otherwise, the Complainant states that it would remain in a
state of "legal defencelessness", and that the IA:
"would not comply with what this Panel ordered with respect to revising those
mistakes in order to assure a fair, speedy and inexpensive review".
42. The IA, on the
other hand, alleges that it did not carry out the requested visit, first, because it was
not obliged to do so by the law since verification visits are discretionary; second,
because the IA could not verify the acquisition costs of TITAN:
"[...] since they were not provided by this company in the course of the
investigation and therefore do not form part of the Administrative Record [...]" 24
and, finally, because carrying out that visit would re-open
the case, thus violating the Order of this Panel. To do so would be:
"[...] unfair for the other parties in the investigation to permit it that new
information is presented". 25
43. In this regard, this Panel recognises that the FTL provides that
carrying out inspections during an antidumping investigation is in fact a
discretionary power of the IA. As Article 83 of the FTL provides "the Ministry may
(enphasis added) verify the information and evidence presented in the course of the
investigation. To do so it may (enphasis added) order in writting carrying
out visits (emphasis added) at the fiscal domicile, establishmente or place where
the corresponding information is located..."
44. However, it is important to emphasize that TITAN, from its first
intervention in this antidumping investigation, and specifically in answering the
official questionnaire submitted to it by the IA, always claimed the mistake of being
considered a sales department of DOFASCO, and, consequently, of not determining a specific
dumping margin for it as an independent company.
45. Nonetheless, the IA, during the rest of
the antidumping investigation, did not make any attempt to verify the information
that TITAN delivered to it in its response to the official questionnaire, even though it
verified data provided by other companies in the course of the investigation. This
omission to verify TITANs information was due to the fact that the IA continued to
consider it as a sales department of DOFASCO. 26
46. The result of all of the above was a Final Determination that
established a dumping margin:
"[...] for rolled steel plate imports originating from any exporting company in
Canada of 31.08 percent".
This 31.08% margin was also applied to TITAN, by virtue of the fact that it was not
treated as an independent trading company.
47. Once the review process before this Panel had begun, the IA
admitted that it had made a mistake by not establishing a specific dumping margin
for TITAN, and because of this it requested this Panel to remand the record in order to
amend its mistake, without clearly establishing the nature of the mistake, nor how it
would amend it.
48. It is important to emphasize that this
Panel acceded to the request of the IA, because in its Response to the claims of TITAN, it
stated that it could determine a specific dumping margin for this firm:
"[...] based on the information that is available in the Administrative
Also, during the Public Hearing, the IA reiterated that it had
the elements necessary to make the calculation. 28 In
this connection the FTL and Article 47 of its Regulations are very clear and specific in
the sense that the normal value of imported goods from an independent trading company must
be based on its acquisition costs plus the appropriate adjustments.
49. In the end, the statement of the IA was wrong, since the AR did
not include TITANs acquisition costs, which were indispensable factors in
determining normal value, once it was established that TITAN was an independent trading
company. Consequently, the DR and the Modified Determination of the IA were based on
normal values derived from production cost information that had been provided by the
Requestants, plus a minor modification that incorporated a profit margin.
50. As a result of the foregoing, the DR of
the IA resulted in a margin of 108% for TITAN, which was reached by substituting the
average export price of TITAN in 1992 for the average export price of all Canadian
producers on sales to Mexico in 1992. This margin was determined after the IA verified
that the options of normal value based on domestic market sales and export prices to third
countries were not applicable. 29
51. The fundamental issue for this Panel is
whether the DR and the Modified Determination of the IA are consistent with its Order
contained in the Final Decision of December 17, 1997. The answer, in the Panels
view, is no for the following reasons.
52. It is clear that the IA did not have the necessary elements to
establish a specific margin for Titan because it did not have its acquisition costs.
53. Consequently, the IA,
while not having the acquisition costs of TITAN, proceeded to use the information on
export prices 30 provided by that company and compared
these to the normal value which was based on information on the reconstructed value
provided by the Requestants. It is worth emphasizing that TITANs export price data,
which was available to the IA had been specifically rejected in the Preliminary
Determination as being insufficient. 31 One possible
alternative remaining to the IA in terms of establishing a normal value was to supplement
the AR and obtain TITANs acquisition costs. In fact, TITAN requested the IA to
acquire the costs by means of a verification visit, as can be seen in its Response of
January 28, 1998 to the IAs Memorandum of January 20, concerning the methodology to
be used to calculate the specific dumping margin for TITAN and the other
54. The IA alleges that it decided not to carry out the requested
visit for two fundamental reasons: First, because this Panel clearly ordered the IA to
limit its search to the AR. Second, because the IA can only verify the information and
evidence that has been presented in the course of the antidumping investigation, otherwise
the case would be reopened.
55. Regarding the first argument of the IA, it is clear that the IA
never felt itself restrained by the order of this Panel to limit its search to the AR
since it is a fact that the IA augmented the AR when it provided the Panel with diskettes
a week before the in-camera hearing which it had used in making the DR. These
diskettes should have been included in the AR as part of the response to the
questionnaires that TITAN presented on January 11, 1994, (which were recorded as VC 0178,
Volume XIV, of the Administrative Record Index, in its confidential version).
Nevertheless, they were added to the file one week before the In Camera hearing.
On the other hand, it is a fact that the Panel in its Order clearly contemplated the
possibility that the IA could supplement the AR which is evident from reading the
paragraph of the Panels Order regarding the Complainants which is as follows:
"3. REGARDING THE COMPLAINANTS
If the Investigating Authority supplements the administrative record(emphasis
added)on remand and the Complainants wish to challenge the Determination on remand
pursuant to Rule 73 (2) (b) of the Rules of Procedure, the Complainants may do so
56. Regarding the second argument of the IA that it could only verify
the information that had been presented during the course of the antidumping
investigation, it is important to note that the recognition of a mistake by the IA which
implied a host of deficiencies in its treatment of TITAN as well as the possiblity of
correcting them, obliged the IA to make all the necessary efforts to correct its mistake,
and, it is clear, in the opinion of this Panel, that the correction could not be achieved
by evaluating the limited information that the IA itself had previously rejected for being
insufficient. Moreover, the evaluation of insufficient information resulted in a new Final
Determination by the IA in which Titan remained in fact and law without the right to
defend itself. In the opinion of the Panel, this clearly violates Rule 2 of the Rules of
Procedure and a fundamental principle of law that requires due process, all of which leads
this Panel to declare the DR of the IA illegal in the section that imposes a new margin of
discrimination of prices for TITAN.
A. Implications of the illegality of
the new margin of price discrimination fixed for TITAN
57. As its Final Decision of December 17, 1997, established, this
Panel does not possess jurisdiction to nullify any part
of the Final Determination, the DR of the IA or the Modified Determination by the IA,
according to NAFTA Article 1904. As NAFTA Article 1904 (8) establishes, this Panel is only
authorised to confirm those resolutions and Determination on Remands, or to remand them to
the IA for it to adopt measures that are not incompatible with the Decision of the Panel.
58. By virtue of what was previously argued, this Panel declares the
part of the DR and the Modified Determination where a 108% dumping margin for
TITAN is determined illegal, based on sections II and IV of
Article 238 of the Código Fiscal de la Federación (Fiscal Code of the
Federation, "CFF"), and orders the IA not to give any legal effect to them. The
Panel considers illegal this part of the DR and the modified Determination by virtue of
the fact that the IA, upon calculating the new margin used information which had been
previously rejected by the IA after considering it insufficient. Further, by denying TITAN
the opportunity to provide its acquisition costs, the IA denied this company due process,
a fundamental principle of law.
59. The Panel is of the view that it would be consistent with the
Panel's decision for the IA, on remand, to offer TITAN the opportunity to provide
additional relevant evidence, including acquisition costs, as an independent trading
company and taking this into account, to make a new decision based on that evidence. The
IA may, in the alternative, take any other action permitted by applicable law.
The Panel is of the view that grouping TITAN with "all other
exporters" (or taking other actions which prejudices TITAN´s right to offer relevant
information and evidence) would not be consistent with this Order of the Panel.
2. Issues with respect to other
60. In its Decision dated December 17, 1997, the Panel remanded the
Final Determination for action by the Investigating Authority so that it might issue a new
Final Determination which, among other things, would reassess the countrywide price
discrimination margin against Canadian exporters other than TITAN. In response to this
Order, the Investigating Authority stated the following in the DR:
"By virtue that it
has been demonstrated in this Determination that there are exports of Canadian origin
which were not identifiable, according to articles 54 of the Law of Foreign Trade and 6.8
of the Agreement relating to the Application of Article VI of the GATT, and based on the
information found in the Administrative Record of the case, in particular the highest
margin of price discrimination found in the present investigation, SECOFI
concluded that the exports made by the other Canadian companies were carried out with a
price discrimination margin of 108%." 33
61. Before stating the Panels
conclusions in this matter, it is important to examine the factors that led the Panel to
order the IA to reconsider the dumping margin that it had established in the Final
Determination for these exporters. In the Final Determination, the injury analysis
provided by the IA as being attributable to the steel plate imports originating in Canada
was based on the assumption that all of these imports, with the exception of those
exported by ALGOMA to AHMSA, were dumped 34 and, when
accumulated with the imports from the other countries involved in the investigation,
caused injury to the domestic industry.
62. The Panels December 17th Decision
was based on its conclusion, after examining the Administrative Record that, except for
the exports by ALGOMA to AHMSA, there was no evidence that the three Canadian primary
steel producers, ALGOMA, STELCO or DOFASCO, had exported rolled steel plate directly to
Mexico in 1992 and that TITAN was the only supplier of steel plate from Canada to Mexico
in that year.
63. As stated in its Order the Panel
concluded that the Investigating Authority "complied with all of the provisions
related to procedures regarding notifications in this investigation". 35 Specifically, the Investigating Authority, in accordance with
Article 53 of the FTL, notified the interested parties of which it had knowledge
(emphasis added) of the initiation of the antidumping investigation and published a notice
to this effect in the DOF. In this particular case, however, it appears that none of the
interested parties that had been notified, other than TITAN, was exporting the product to
Mexico. This may explain to some extent why the Investigating Authority did not receive
any information concerning normal values and export prices in the Canadian market directly
from the exporters. In other words, this may have been a case of ignorance, which of
course is no excuse, rather than a deliberate attempt not to cooperate with the IA. In the
absence of information from the exporters, the Investigating
Authority relied on the "available information", as provided for in Article 54
of the FTL, and based its Final Determination margin of 31.08% on the information
submitted to it by the domestic Requestants and the average prices of all imports from
Canada during 1992. 36
64. The IA, after recognizing its mistake of not establishing a
specific margin for TITAN, requested the Panel to remand the Final Determination in order
to correct this mistake. At the same time, it sought the Panels concurrence with all
other aspects of the Final Determination. That is, the IA requested the Panel, among other
things, to confirm the 31.08% dumping margin that had been established for Canadian
exporters other than TITAN in the Final Determination.
65. The Panel, in authorizing the IA to correct its mistake, decided
that the IA should also review the general margin for all of Canada since it had never
found any precise information and evidence in the AR that enabled it to evaluate the
31.08% margin that had been applied to the other exporters. In this connection, the Panel
found that the AR indicated that the only exporter of Canadian subject goods in 1992 was
TITAN for the reasons set out below.
66. First, the IA, in its Final Determination
as well as in its briefs and at the public hearing, stated that the evidence in the AR
showed that TITAN exported to Mexico approximately 3,000 tons of the subject goods while
the SIC-M indicated that 14,291 tons had been imported from Canada in 1992. The IA also
noted that the Requesting List by Company of the SIC-M showed that TITAN was not the only
Canadian exporter to Mexico in that year. 37 According to
the IA, this list, as well as the SIC-M data, was included in the confidential version of
the ARs Injury Annex. However, the Panel never found this information in the AR nor
did it find any other evidence to support the claim that other Canadian exporters were
shipping steel plate to Mexico.
67. Second, in reviewing the confidential version of the Injury Annex
in the AR the Panel found a paper containing a table in which the SIC-M information was
summarized and confirmed that 1992 exports from Canada amounted to 14,291 metric tons of
rolled plate originating in Canada. This table, however, only indicated the total volume
of imports from Canada and made no reference to the exporting or importing companies
involved. Because of the difficulty encountered by the Panel in trying to identify the
parties involved in these transactions, the Panel on September 17, 1997 attempted to
clarify the matter by requesting access to documents previously classified as privileged
information. This did not yield any data to confirm that exporters other than TITAN were
68. Third, the Panel, on reviewing
TITANs invoices which had been provided with its response to the questionnaire,
discovered that the volume of TITANs rolled steel plate exports to Mexico and the
total of all imports attributed to Canada by the SIC-M was surprisingly similar. In the
circumstances, the Panel could only conclude that TITAN was the sole exporting company of
the subject goods involved.
69. Given the foregoing, the Panel decided to order the IA to review
the general margin that it had established for Canadian exporters other than TITAN and as
the IA did not establish acceptable volume and value calculations for this firm, it
appears to the Panel that all calculations relating to imports of rolled steel plate form
Canada are also suspect. In this regard, it is relevant to clarify that the Panel never
intended to claim powers that did not correspond to it, according to what the IA in its DR
states. In reality, the Panels appreciation derived from incorrect classification of
the information contained in the AR in its confidential version as well as of the
nonfulfillment by the IA of the specific orders of this Panel, which requested it to
identify the location of the evidence which supported its conclusions in the AR. It is worth noting that this Panel decision was a direct result of the
frustration experienced by the Panel in attempting to locate the relevant information in
the AR on which it had to decide the principal issues in litigation and led to the Order
of December 17, 1997 to require the IA to definitively establish the volume of rolled
plate attributable to TITAN in 1992 and to:
"[...] base its conclusions [...] identifying
the relevant parts of the AR and indicating the evidence which supports them."
70. In response to the Panels Order, the IA, in the DR,
confirmed that TITAN had only exported 3,000 tons of the subject goods in 1992 and that
the SIC-M showed that Canadian exports totalled 14,291 tons. Moreover,
the IAs analysis revealed that TITAN exported to only five Mexican companies whereas
the Requesting List by Company of the SIC-M showed nine importers, including AHMSA. This
information led the IA to conclude that
"[...] during the investigation, other
companies in addition to TITAN [...] accomplished direct or indirect exports of rolled
steel plate originating in Canada to Mexico." 39
Consequently, there was no coincidence between the volume of TITANs exports and
total export volumes from all Canadian sources and thus, the Panels presumption in
its Order was groundless. It should be noted that in order for the IA to draw the above
conclusions, once again the IA referred to the evidence found in the Injury Annex.
71. As a result of the foregoing, and taking into account that there
were unidentified exports that originated in Canada, the IA concluded in its DR that a new
dumping margin of 108%, the same rate as it had established for TITAN, should be applied
to all other exporters of the subject goods from Canada.
72. The Panel, in studying the DR and noting that the IA had not
complied with its Order to identify the relevant parts of the AR and indicate the
evidence which supported their conclusions, decided once more to request the IA
to provide certain privileged documents in an effort to establish whether TITAN was the
sole exporter involved. This was not successful and led the Panel to the decision that it
was necessary to carry out an in camera Hearing to clarify its doubts relating to
the confidential information and evidence that supported the conclusions of the IA.
73. In this connection, it should be noted
again that it was precisely only one week before this hearing that the IA finally
submitted to the Panel the diskettes containing crucial information respecting
TITANS export prices and the calculations made by the IA in determining the new
dumping margin for TITAN.
74. As a result of the hearing and specific questions posed by Panel
members, the Panel was finally able to substantiate some of the assertions of the IA and
identify the evidence and information with which the IA arrived at its conclusions in the
DR In particular, it was not until the Panels in camera Hearing that the IA
showed to the Panel SIC-Ms list of requests by firms which had been wrongly
classified in the AR and located in a different volume to which it had been classified in
the corresponding Index. As a result, the Panel was able to understand the evidence on
which the IA arrived at its first 31.08% dumping margin as well as the second margin of
108%. It is important to emphasize that in order to understand the logic for the second
margin of price discrimination, i.e. the 108% margin, it was crucial for the Panel to
review the information that was contained in the diskettes that were added to the AR one
week before the in camera hearing by the IA.
75. It could be argued that it is an obligation on a Panel to make a
detailed and specific search of the AR and the fact that the Panel did not find all the
relevant information was its responsibility. This Panel respectfully disagrees with this
view and takes the position that a Binational Panel cannot be expected to make an
exhaustive search of the AR given the nature of the composition of Panels, the different
mother tongue of Panel members and the time frames within which they are expected to carry
out their reviews. The work of a Panel must be facilitated and assisted by the interested
parties and this was clearly recognized by the NAFTA Parties in negotiating Rule 59 of the
Rules of Procedure which places a responsibility on interested parties to identify
references to evidence in the AR by:
[...] page and, where practicable, by line."
In this context, the lack of citations and references by the IA to evidence in the AR,
in its Briefs and in its presentations in the public hearing, as well as in the DR, were
clearly in violation of this Rule.
76. Based on all of the foregoing the central issue for decision by
the Panel is whether the new margin of 108% established by the IA for Canadian exporters
of the subject goods other than TITAN is consistent with the Order of the Panel of
December 17,1997 and the applicable legislation. The Panel has concluded that the new
margin is not appropriate and that it has no legal effect for the following reasons.
77. In its DR and the Modified Determination, the Investigating
Authority established a price discrimination margin of 108% for imports from TITAN and
extended this decision to apply to imports from all other Canadian companies. In other
words, the Investigating Authority applied the highest margin of price discrimination
found in the investigation even though the margin established in the Final Determination,
which was based on the information available at that time, was set at 31.08% for all
Canadian exporters. At paragraph 39 of the DR the IA referred to Article 54 of the FTL and
Article 6.8 of the GATT Antidumping Code as justification for its treatment of the
Canadian exporters other than TITAN. The Panel notes that these Articles permit the IA to
rely on the available information (emphasis added) in the AR to make its
determination but they do not authorize the application of the "highest price
discrimination margin found in the investigation" to be applied to all exporters.
78. The process followed by the Investigating Authority in this
instance does not appear to the Panel to be either consistent with the requirements of the
Mexican law or the GATT Antidumping Agreement. As indicated in paragraph 50 above, the new
margin for TITAN was established by substituting its average export price for the average
export price of all Canadian exporting firms during 1992 i.e. the figure previously used
by the IA to establish the margin of 31.08%. In this connection, it is relevant to note
that the margin of price discrimination established for TITAN is a direct reflection of
that firms sales prices. These, of course, may be substantially different from the
actual selling prices of the other exporters, i.e. the pricing information that had to
have been available to the IA in order for it to establish the 31.08% margin in the Final
79. The treatment of Canadian exporters other than TITAN is
particularly important in this case since their exports of subject goods (some 11,291
metric tons) constitutes 79% of the total exports involved. Counsel for the IA advised the
Panel that the reason why the TITAN margin was extended to all Canadian firms in the DR
was to ensure that these firms were not rewarded for their lack of participation in the
80. In the Panels view, given our decision relating to this
firm, and according to Article 40 of the Regulations, TITANS volumes and values
should no longer be taken into account in calculating a margin for the "other"
exporters. In other words, lacking specific data from the "Other" Canadian
exporters, the Investigating Authority must rely on the data available to it in the
Administrative Record to determine a rate of price discrimination for the unknown Canadian
exporters. In our opinion, the " available information " should be the data used
to calculate the 31.08% exclusive of any data specific to TITAN. Given the very high
margin found for TITAN, it appears reasonable to conclude that the exclusion of
TITANS figures from the calculations would yield a significantly lower margin for
the other exporters, and in any event the margin should not exceed the 31.08% set in the
3. Issues concerning Injury
81. After some of the explanations of the information contained in the
AR in its confidential version that the IA made available to this Panel during the In-camera
Hearing, and based on the answers to the Questionnaire of TITAN and in the analysis of the
files FICHA.XLS and C_RESUM.XLS that were presented by the IA after a request by this
Panel to submit privileged information, this Panel arrives to the following conclusions:
- TITAN exported 2,970.069 metric tons of rolled steel plate of Canadian origin
to Mexico in 1992,
- 14,291 metric tons of rolled steel plate of Canadian origin entered Mexico in the same
- AHMSA imported from the previous figure 611 metric tons, therefore the total net volume
of the investigating imports originating in Canada ascended to 13,680 metric tons.
- there is no coincidence between the export volume made by TITAN and the total of imports
to Mexico originating in Canada of this product.
82. Based on the foregoing, the Panel
concludes that TITAN was not the only exporter of rolled steel plate from Canada, and that
the total of imports to Mexico originating in Canada, including those of TITAN, 40 were significant for accumulation effects, and therefore the
Injury evaluation that the IA made is valid and sound.
For the reasons stated above and taking into account the requirements of Article 1904,
paragraph 8, of NAFTA, and of Rules 2, 7 (b), 73 (1) (2) (a) (b) (c) of the Rules of
Procedure, the Panel unanimously hereby decides and orders the following:
I. The Panel upholds the Investigating Authoritys Determination
on Remand and the Modified Determination in all respects, except as expressly stated
1. WITH RESPECT TO TITAN:
II. The Panel declares illegal, under Article 238, Sections II and IV
of the Fiscal Code of the Federation the price discrimination margin of 108% that the IA
applied to TITAN within the Determination on Remand and the Modified Determination; orders
the IA not to give it any legal effect, instructs the Investigating Authority
- to give TITAN an opportunity to present the necessary evidence, including
acquisition costs, to be treated as an independent trading company;
- give TITAN an opportunity to comment on the Investigating Authority's analysis of its
- to modify the Final Determination to calculate a new dumping margin for TITAN taking
into account any evidence presented by TITAN under (a) above, and
- to take any other action permitted by applicable law.
2. WITH RESPECT TO ALL
OTHER CANADIAN EXPORTERS
III. The Panel declares illegal, under Article 238, Sections II and IV
of the Fiscal Code of the Federation , the price discrimination margin of 108% that the IA
applied to all other Canadian exporters within the Determination on Remand and the
Modified Determination and orders the IA not to give it any legal effect and instructs the
Investigating Authority to determine a rate of price discrimination not higher than 31.08%
for Canadian exporters other than TITAN based on the data available in the Administrative
Record relating to the 1992 imports from all firms other than TITAN.
3. TIME OF REMAND
IV. Pursuant to NAFTA article 1904(8), the Panel directs the
Investigating Authority, on remand, to comply with the measures the Panel has directed no
later than October 30, 1998.
Issued the 3rd of August of 1998.
Signed in the original by:
| August 3rd, 1998
|| D.M.M. Goldie
| August 3rd, 1998
|| W. Roy Hines
| August 3rd, 1998
|| Lucía Reina Antuña
| August 3rd, 1998
|| Rodolfo Terrazas Salgado
| August 3rd, 1998
|| Gustavo Vega Cánovas
Chairman of the Panel
1 Answer of TITAN to the
Investigating Authority of January 11, 1998, p. 4, and Challenge of TITAN to the Determination
on Remand of the Investigating Authority of March 13, 1998, p. 8.
The Investigating Authority had considered the independent
trading company TITAN as a sales department of DOFASCO.
Pages 3 and 4 of the Comments of TITAN to the Methodology Employed by the
Investigating Authority, January 28, 1998; and pages 9 and 10 of the Challenge of TITAN to
the Determination on Remand and the Modified determination of the Investigating Authority
of March 13, 1998.
to the Determination on Remand of the Investigating Authority of March 13, 1998, p. 12.
Ibid., pp. 12-14.
See page 4 of the Comments of TITAN to the Methodology Employed by the
Investigating Authority, January 28, 1998; and pages 14 and 15 of the Challenge of TITAN
to the Determination on Remand of the Investigating Authority of March 13, 1998.
Determination on Remand paragraph 25, p. 9.
8 Ibid. paragraph 26, p. 9. The IA points
out that the sales to two different third countries only show one of the three product codes
exported by the company, HRC2, to be specific, according to file PLA2BC.XLS, of the
diskettes annexed to the Questionnaire of the Answer of TITAN of January 11, 1994.
Ibid. paragraph 26, pp. 8 and 9.
10 Ibid. paragraphs 27 and 28, p.10.
Ibid.Paragraph 29 and 30, p. 10.
Ibid. Paragraphs 31 to 35, pp. 11 and 12.
13 Ibid. Paragraph 37, p. 12.
Ibid. Paragraph 40, p. 13.
15 Ibid. Paragraph 40 a), p. 13. The IA
indicates that the investigated product corresponded exclusively to plate thickness between 4.75
and 10 mm, according to the Tariff of the General Import Tax Law (Tarifa de la Ley del Impuesto
General de Importación). The product with a lower thickness to 4.75 mm corresponds to hot
rolled steel sheet, subject of another procedure.
Ibid. Paragraph 40 4), p. 14. Of them, only 6% correspond to products of
Ibid. Paragraph 40 e), p. 14. The Investigating Authority
indicates that of this volume, 4% corresponded to products imported by AHMSA (611 tons),
therefore the total volume of the investigated imports originating in Canada ascended to
13680 metric tons.
Ibid. Paragraph 40 f), p. 14. Including AHMSA.
Ibid. Paragraph 47, p. 16. Including TITAN
Ibid.Paragraph 47, p. 16. For being accomplished in 10
months, registering an increase of 13% per year with respect to the previous one, and
representing 14% of total imports and 4% of the apparent national consumption, in addition
to the fact that a significant undervaluation in the prices of those imports prices was
registered 8% below national prices.
According to Rule 7(b) of the Rules of Procedure.
Challenge of the Complainants to both the Determination on
Remand and the Modified determination of the IA of March 13, 1998, p. 8.
See the Challenge to both the Determination on Remand and
of the Modified Determination of the IA presented by the Complainants, March 13, 1998 p.
See the Response of the IA to the Challenge presented by the Complainants both to
the Determination on Remand and the Modified Determination of April 6, 1998, pp. 16-17
See Final Determination published in the DOF December 28,
1995. page 92
27 See the Brief of the IA, July 26, 1996,
See Transcription of the Public Hearing, Spanish version, p. 79, second
Paragraph 26, 27 and 28 of the IAs DR, pp. 8 - 10.
30 This data was included in the
diskettes that were delivered to the Panel
out of time and a week before the In-camera Hearing and thus had not previously
been available to the Panel. See paragraphs 10 and 55 of this Decision.
See paragraph 119 of the Preliminary Determination,
published in the DOF on April 18, 1995.
Final Decision of the Panel, December 17, 1987, page 88
See paragraph 53 (B) of the Determination on Remand by the
34 Transcript of the Public Hearing, page 68
See first paragraph of page 57 of the Final Decision of the Panel dated December
See Paragraph 114 of the Final Determination published in the DOF on December 28,
This statement was also made by the IA in paragraph 509 of its Final
See Paragraph F) of the Order of this Panel regarding Titan in its Final Decision
of December 17, 1997.
Determination on Remand and the Modified Determination, paragraph 41, page 14
It is important to note that the Investigating Authority may leave aside the
accumulation of total imports of a given origin accomplished in dumping
conditions, concerning countries under investigation, and not concerning each one of the
involved exporting companies, as Article 43 of the Foreign Trade Law establishes in
Article 67 (1) of its Regulation.