HOT-ROLLED CARBON STEEL PLATE
Inquiries (Section 42)
Inquiry No.: NQ-97-001 Remand
Ottawa, Monday, June 21, 1999
Inquiry No.: NQ-97-001 Remand
CERTAIN HOT-ROLLED CARBON STEEL PLATE ORIGINATING IN OR EXPORTED FROM MEXICO, THE PEOPLE’S REPUBLIC OF CHINA, THE REPUBLIC OF SOUTH AFRICA AND THE RUSSIAN FEDERATION
REMAND - The Binational Panel in Canadian Secretariat File No. CDA-97-1904-02, acting pursuant to its authority under section 77.015 of the Special Import Measures Act, remanded, in part, the finding of the Canadian International Trade Tribunal in Inquiry No. NQ-97-001. The Binational Panel remanded to the Canadian International Trade Tribunal its finding, under subsection 43(1.01) of the Special Import Measures Act, to determine whether a separate finding is required in respect of Mexico and, further, whether separate reasons are also requisite.
DETERMINATION ON REMAND: The Canadian International Trade Tribunal, pursuant to section 77.016 of the Special Import Measures Act, hereby accepts that it erred by not issuing a separate finding for Mexico. This is being corrected with the issuance of a corrigendum to the finding in Inquiry No. NQ-97-001 (copy enclosed). For the reasons outlined in the accompanying determination on remand, the Canadian International Trade Tribunal is of the view that there is no legislative requirement or persuasive policy rationale to support the need for separate reasons to be issued with respect to the goods from Mexico.
Patricia M. Close
_________________________
Patricia M. Close
Presiding Member
Anita Szlazak
_________________________
Anita Szlazak
Member
Arthur B. Trudeau
_________________________
Arthur B. Trudeau
Member
Michel P. Granger
_________________________
Michel P. Granger
Secretary
Tribunal Members: Patricia M. Close, Presiding Member
Anita Szlazak, Member
Arthur B. Trudeau, Member
Counsel for the Tribunal: Gerry Stobo
DETERMINATION ON REMAND
INTRODUCTION
On May 19, 1999, the Binational Panel (the Panel) remanded to the Canadian International Trade Tribunal (the Tribunal) its finding in Inquiry No. NQ-97-001 [1] to determine whether the Special Import Measures Act [2] (SIMA) requires the Tribunal to issue a separate finding in respect of Mexico and, if so, whether separate reasons are also necessary.
On June 7, 1999, the Chairman of the Tribunal appointed three Members to deal with the remand. [3] Due to the precise nature of the remand, the Tribunal did not believe that it was necessary to collect any new facts or to conduct any new analysis of the facts or law at issue in the Tribunal’s inquiry. Consequently, the Tribunal decided that no hearing and no representations from parties were necessary in order to reply to this remand.
The Tribunal’s analysis in response to the remand is divided into two parts: the first deals with the need to issue a separate finding for Mexico, and the second deals with whether separate reasons are required for Mexico.
SEPARATE ORDER OR FINDING
In issuing its finding [4] in Inquiry No. NQ-97-001, the Tribunal did not make a separate finding with respect to the goods from Mexico. In concluding that the dumping in Canada of the subject goods originating in or exported from Mexico, the People’s Republic of China, the Republic of South Africa and the Russian Federation was threatening to cause material injury to the domestic industry, the Tribunal issued one finding covering all the named countries.
Was the Tribunal required to issue a separate finding in respect of the goods from Mexico? In order to address this question, it is necessary to review subsection 43(1.01) of SIMA, which provides:
(1.01) Where an inquiry referred to in section 42 involves goods of
(a) more than one NAFTA country, or
(b) one or more NAFTA countries and goods of one or more other countries,
the Tribunal shall make a separate order or finding under subsection (1) with respect to the goods of each NAFTA country.
Subsection 43(1.01) was added to SIMA by Part I of the North American Free Trade Agreement Implementation Act (the NAFTA Implementation Act). [5] The Canadian Statement on Implementation for NAFTA, which, among other things, sets out the Government of Canada’s “interpretation of the rights and obligations contained within [NAFTA] and reflected in the NAFTA Implementation Act”, provides, in part, as follows with respect to subsection 43(1.01):
Part I amendments are generally of a technical nature to ensure that the dispute settlement mechanism, the provisions for which are actually contained in Part I.1 of the SIMA can be given effect. Specifically, the amendments to Part I include:
—requirements that the CITT make a separate order or finding with respect to goods of a NAFTA country, when an inquiry involves more than one NAFTA country or countries and other countries, in order to preclude access to panels [i.e. Binational Panels] by those countries which are not party to the dispute. [6]
The significance of making a separate order or finding with respect to the goods of a NAFTA country was, therefore, to clarify that parties, whose goods are not of a NAFTA country, could not have access to the binational panel process established under Chapter Nineteen of NAFTA, nor could they be included in an application for binational panel review initiated by a party whose goods are of a NAFTA country. Instead, these non-NAFTA parties, for whom a separate order or finding should be made, if they wanted to challenge a Tribunal decision, would have to seek judicial review before domestic courts, which, in the case of Canada, is the Federal Court of Appeal.
The Tribunal is of the view that it erred by not making a separate order or finding with respect to goods of a NAFTA country. Although the requirements of subsection 43(1.01) of SIMA have been characterized in the Canadian Statement on Implementation as “technical” in nature and failing to issue a separate order or finding with respect to goods of a NAFTA country was said by one Panel to be a “clerical slip”, [7] the Tribunal is of the view that the finding in Inquiry No. NQ-97-001 should be corrected. Therefore, as part of its determination on remand, the Tribunal is issuing a corrigendum to its finding that includes a separate finding with respect to Mexico.
SEPARATE REASONS FOR EACH ORDER OR FINDING
Consistent with the Tribunal’s long-standing practice, the statement of reasons issued by the Tribunal in Inquiry No. NQ-97-001 encompassed all the subject countries, including Mexico. No separate reasons were issued with respect to Mexico. The complainant alleged in its brief filed with the Panel, as well as in its submissions to the Panel, that separate reasons are required for each order or finding made by the Tribunal. The alleged authority for the complainant’s position is drawn from subsection 43(2) of SIMA, which states:
(2) The Secretary shall forward by registered mail to the Deputy Minister, the importer, the exporter and such other persons as may be specified by the rules of the Tribunal
(a) forthwith after it is made, a copy of each order or finding made by the Tribunal pursuant to this section; and
(b) not later than fifteen days after the making of an order or finding by the Tribunal pursuant to this section, a copy of the reasons for making the order or finding. [Emphasis added]
Counsel for the Tribunal opposed the complainant’s position both in the Tribunal’s own brief filed with the Panel and in counsel’s submissions before the Panel hearing the review. The Tribunal adopts those representations and confirms that, in its view, there is no requirement for separate reasons to be issued for each order or finding made.
While it is clear that both subsection 43(1.01) and paragraph 43(2)(a) of SIMA require that the Tribunal issue a separate order or finding whenever goods of a NAFTA country are concerned, paragraph 43(2)(b) imposes no similar demand on the Tribunal with respect to separate reasons. If Parliament had wanted to impose such a requirement, it could easily have done so by slightly rewording the last phrase within paragraph 43(2)(b) to read: “separate reasons for making each order or finding” or “reasons for making each order or finding”. Such wording would have made the alleged requirement very clear. The reason that there is no such wording in the paragraph is, in the Tribunal’s view, because there was no such intent.
In any event, the Tribunal is of the view that “the reasons for making the order or finding”, as required by paragraph 43(2)(b) of SIMA, were provided to the complainant in Inquiry No. NQ-97-001 when the Tribunal issued its statement of reasons. These reasons explained why the finding was made in respect of all the subject countries, including Mexico.
Following the implementation of the Canada-United States Free Trade Agreement, [8] the Tribunal began issuing a separate order or finding for goods of the United States, but not separate reasons. [9] Had either the United States or Mexico believed that separate reasons were critical to their interests, NAFTA could have been negotiated, and SIMA could have been amended, to expressly provide for this. It was not.
In NAFTA, where the Parties intended to create special rights and obligations in respect of each other, they did so explicitly. For example, in Chapter Eight of NAFTA, “Emergency Action” (i.e. safeguards), the Parties agreed to afford one another certain rights which would not be provided to other trading partners. Article 802(1) of NAFTA provides that “[e]ach Party retains its rights and obligations under Article XIX of the GATT” (safeguards), except that any Party taking an emergency action under that article shall exclude imports of a product from each other Party from the action unless:
(a) imports from a Party, considered individually, account for a substantial share of total imports; and
(b) imports from a Party, considered individually, or in exceptional circumstances imports from Parties considered collectively, contribute importantly to the serious injury, or threat thereof, caused by imports.
Article 802 of NAFTA has been expressly implemented in subsection 20.01(2) of the Canadian International Trade Tribunal Act [10] (the CITT Act). [11]
The absence of express wording in subsection 43(2) of SIMA, which deals with dumping and subsidizing inquiries, stands in marked contrast to both Article 802 of NAFTA and subsection 20.01(2) of the CITT Act, which require that imports from a NAFTA country be considered individually in a safeguard action. Unlike the specific wording in Article 802, Article 1902(1) of NAFTA provides:
Each Party reserves the right to apply its antidumping law and countervailing duty law to goods imported from the territory of any other Party. Antidumping law and countervailing duty law include, as appropriate for each Party, relevant statutes, legislative history, regulations, administrative practice and judicial precedents.
Subsection 43(1.01) and subparagraph 43(2)(b) of SIMA must be interpreted in the overall legislative context of sections 42 to 47 dealing with dumping and subsidizing inquiries. Once a determination of dumping is made by the Deputy Minister of National Revenue, section 42 requires the Tribunal to inquire into whether the dumping has caused or is threatening to cause material injury to the production of like goods in Canada. In assessing whether material injury has occurred, the Tribunal and its predecessors have had a long-standing practice of cumulating the impact of imports from all countries referred to in the preliminary determination of dumping. This practice of cumulation is now enshrined in subsection 42(3) of SIMA, which provides:
(3) In making or resuming its inquiry under subsection (1), the Tribunal may make an assessment of the cumulative effect of the dumping or subsidizing of goods to which the preliminary determination applies that are imported into Canada from more than one country if
(a) the margin of dumping or the amount of the subsidy in relation to the goods from each of those countries is not insignificant and the volume of the goods from each of those countries is not negligible; and
(b) an assessment of the cumulative effect would be appropriate taking into account the conditions of competition between goods to which the preliminary determination applies that are imported into Canada from any of those countries and
(i) goods to which the preliminary determination applies that are imported into Canada from any other of those countries, or
(ii) like goods of domestic producers.
The evidence in Inquiry No. NQ-97-001 demonstrated that the margin of dumping of the subject goods from Mexico was 26.2 percent, [12] and therefore not insignificant, and that the volume of goods from Mexico was not negligible. [13] Consequently, in the Tribunal’s view, it was appropriate to cumulate the effects of the dumping in Canada of the goods from Mexico along with those of the other subject countries.
If the Tribunal were to initiate a practice of providing separate reasons for NAFTA countries to accompany the separate finding required under subsection 43(1.01) of SIMA, this either would involve a parroting of the same reasons provided for non-NAFTA countries or would require a separate analysis of the injury caused by the dumped goods from the NAFTA country. The former would be redundant; the latter would mean that the origin of goods would dictate the level of protection available to domestic producers. Separate reasons stemming from a separate analysis would prevent the Tribunal from cumulating goods from NAFTA and non-NAFTA countries. This could have the consequence of excluding goods from NAFTA countries from the effect of our trade laws unless, in and of themselves, they were to be the cause of the material injury. It is quite conceivable that the Tribunal might find that the dumping from two countries, in the aggregate, was causing, or threatening to cause, material injury to the domestic industry, but, if considered individually, the Tribunal might find the injury not to be material. Separate reasons stemming from a separate analysis for NAFTA countries could, therefore, also lessen the protection afforded the domestic industry against other foreign goods dumped in conjunction with goods of NAFTA origin.
The reasoning put forward here follows that of Inquiry No. CIT-5-88, [14] a case decided prior to NAFTA, but which dealt with subsection 43(1.1) of SIMA, a provision very similar to current subsection 43(1.01). It had been suggested in argument before the Tribunal that it was required to conduct a separate analysis for goods from the United States and to provide a separate explanation for its conclusions. In its statement of reasons in that case, the Tribunal stated, in part:
Because the meaning of section 43(1.1) of the Act was the subject of much discussion in the course of the hearing, the Tribunal thought it useful to set out its interpretation of that section.
Section 43(1.1) of the Act reads:
Where an inquiry referred to in section 42 involves goods of the United States as well as goods of other countries, the Tribunal shall make a separate order or finding under subsection (1) with respect to the goods of the United States.
It has been argued by at least one party at the hearing that the section obligating the Tribunal to make a separate finding for goods of the United States must be a separately arrived at conclusion incorporating the relevant facts, law and reasoning necessary to reach that conclusion and that the two findings must be separate in substance. If the non-cumulation argument is accepted, it would mean that U.S. imports must be shown per se to have caused material injury to the production in Canada of like goods. In essence, this would mean that while the practice of cumulation would continue to apply to the determination of injury from dumped or subsidized imports from other countries, it would not apply to those from the United States. The Tribunal does not believe that this could have been the effect of adding section 43(1.1) to the Act.
One of the principles of interpretation of statutes is based on the assumption that the legislator is rational: the law is deemed to be a reflection of coherent and logical thought. This rationality first manifests itself within a particular enactment: the statute is to be read as a whole, and each of its components should fit logically into its scheme. This coherence should extend to other legislation, particularly in the same subject area.
Section 43(1.1) must be interpreted as part of its context, the Act. As a component of the Act, section 43(1.1) must be inserted in the scheme of the inquiry mentioned in section 42 of that Act.
Once a determination of dumping is made, section 42 of the Act requires that the Tribunal inquire as to whether the dumping or subsidizing has caused, is causing or is likely to cause material injury, or has caused or is causing retardation. Material injury means material injury to the production in Canada of like goods.
In assessing whether material injury has occurred in dumping and subsidy cases, the Canadian Import Tribunal and the Anti-dumping Tribunal, both predecessors of the Canadian International Trade Tribunal, have had a long-standing and uncontested tradition of analysing globally the impact of imports from all sources referred to in the Deputy Minister’s preliminary determination. The Canadian International Trade Tribunal has continued this practice.
This practice is consistent with the international trade agreements which are implemented by Canada through the Act. The Anti-Dumping Code and the Code on Subsidies and Countervailing Duties implicitly recognize the potential for an aggregate analysis of the effects of dumped or subsidized imports from more than one country on a domestic industry; the Codes do not require country-by-country findings on injury and causation for each country under investigation, and simply refer to a causal relation between dumped or subsidized imports and injury, without specifying that such imports be from a single country.
The principle of cumulation is a well known principle, generally recognized and applied in the administration of anti-dumping and countervailing legislations by the nations actively applying the Codes in international trade. Indeed, one of these countries has specifically incorporated this principle in its trade legislation.
When Parliament adopted the legislation to give effect to the Free Trade Agreement, which amended the Special Import Measures Act, it is presumed to have acted in the knowledge of the domestic application of the principle of cumulation and of its widespread acceptance by Canada’s major trading partners. At Article 1902, the Canada-U.S. Free Trade Agreement specifically states that “Each Party reserves the right to apply its anti-dumping law and countervailing duty law to goods imported from the territory of the other party.” While the Canada-U.S. Free Trade Agreement changed the trade laws in both countries, it was only to set up new review mechanisms. Section 43(1.1) of the Act was part of the changes Canada introduced to give effect to these new review mechanisms.
It is not the view of the Tribunal that the Canada-U.S. Free Trade Agreement changed the analytical methodology and standards for injury determination in either country. If the Tribunal were to agree to the request that a separate inquiry is required when goods of the United States are involved, it would mean that the origin of the goods dictate the level of protection available to domestic producers against unfairly traded goods. One could envisage an inquiry where two exporting countries are found to have caused material injury to a domestic industry when their imports are cumulated, but where the injury caused by imports from each country, considered individually, might not have been material. Were such cases to involve the United States, the Tribunal would arrive at a negative finding because it conducted two inquiries; on the other hand, were countries other than the United States to be involved, a positive finding would be issued. This makes no practical sense because it would be tantamount to excluding U.S. goods from the effect of our trade laws unless their imports, by themselves, were a cause of material injury, or the goods originated exclusively from the United States, in which case country cumulation is not an issue. It would also de facto exclude foreign goods when they are not, by themselves, a cause of material injury, and are imported in conjunction with goods of U.S. origin.
Had section 43(1.1) of the Act intended to modify the substantive provisions found in the Act and described above, the provisions would have specifically so stated. Substantive legal modifications having an impact on the determination of injury in Canada could not have been operated by the mere addition of section 43(1.1) of the Act. Such an interpretation, which has radically changed the operation of anti-dumping and countervailing laws in this country, would mean that Parliament unwittingly changed the application of these trade laws in Canada.
It is the Tribunal’s view that the section in question has merely added a procedural requirement for the Tribunal to issue a separate order or finding with respect to the goods of the United States. This is now required to further the purposes of the Canada-U.S. Free Trade Agreement and to allow the parties to initiate an appeal to a Binational Panel of a finding or decision of the Tribunal, for the portion of the Tribunal determination of injury affecting U.S. goods. Viewed in conjunction with the legislative scheme as a whole, past administrative practices of the Tribunal involving a resort to cumulation in a determination of material injury to the domestic industry could not have been affected by the mere addition of a provision requiring the Tribunal to issue a separate finding or decision for U.S. goods.
For all these reasons, the Tribunal has limited itself to the issuance of two separate findings on the basis of its analysis of the cumulative effect of the importation of dumped or subsidized goods from all sources without attempting a vertical severance of that analysis to isolate the effects of the dumping from the United States. [15]
The Tribunal’s approach to cumulation in that case was noted with approval by the Panel in Certain Hot-rolled Carbon Steel Plate. [16] The Tribunal is of the view that this reasoning is equally persuasive with respect to subsection 43(1.01) of SIMA.
This is not to say that a separate analysis is never appropriate. Occasionally, the facts of a case will dictate the need for one. For example, in Inquiry No. NQ-92-007, [17] the Tribunal did conduct a separate analysis, in its statement of reasons, on the impact of the dumped imports from the United States. The Tribunal had this to say about its alleged “obligation” to undertake a separate injury analysis with respect to the United States in every case:
The Tribunal wishes to make clear that, in proceeding in this manner, it has not interpreted subsection 43(1.1) of SIMA, which requires a separate finding with respect to the United States, to mean that a separate examination of goods originating in the United States must also be undertaken in cases where the class of goods defined by the Deputy Minister includes goods from the United States and other countries. The Tribunal thus reaffirms its statements in the Polyphase Induction Motors case on this matter. The Tribunal notes that, if the evidence relating to any other named exporting country had set it apart distinctly from the others, the Tribunal would have also considered a separate examination and finding on injury with respect to that country. [18] [Footnote omitted]
In the Panel’s review in Certain Flat Hot-rolled Carbon Steel Sheet, the domestic industry argued that the Tribunal had erred by failing to cumulate the effects of the dumping of goods. [19] In its decision, the Panel stated:
The so-called principle of cumulation refers to a common practice of many of the signatories to the Anti-dumping Code whereby dumped imports from all subject countries are considered cumulatively for the purpose of establishing their impact on domestic production. Behind that practice there is a simple and convincing argument: even when dumped imports from certain sources are small and cannot be considered alone to have contributed significantly to the plight of the domestic producers, viewed cumulatively they may have caused material injury. This Panel need not rule here on the consistency of the Tribunal’s practice of cumulation with Canada’s obligations under the Anti-dumping Code. Suffice it to say here that the practice is not imposed by the Anti-dumping Code. Even if it were, there is considerable doubt that it would be applicable to this Panel review. SIMA has only limited references to the Anti-dumping Code, none of which are applicable to cumulation. [20] [Footnote omitted]
The facts in Inquiry No. NQ-97-001, unlike the facts in Certain Hot-rolled Carbon Steel Plate, did not demonstrate the need to analyze the effects on the Canadian industry of the dumped goods from Mexico separately from those of the other subject countries. Because of this, the Tribunal exercised its discretion and cumulated the effects of dumping with respect to imports from all the subject countries. Hence, there was no need to issue separate reasons for the finding that the dumped imports from Mexico were threatening to cause material injury to the domestic industry.
CONCLUSION
The Tribunal accepts that it erred by not issuing a separate finding for Mexico, and this is being corrected with the issuance of a corrigendum to the finding in Inquiry No. NQ-97-001. For the reasons outlined above, the Tribunal is of the view that there is no legislative requirement or persuasive policy rationale supporting the requirement for separate reasons to be issued in this case with respect to the goods from Mexico.
1. Certain Hot-rolled Carbon Steel Plate Originating in or Exported from Mexico, the People’s Republic of China, the Republic of South Africa and the Russian Federation, Finding, October 27, 1997, Statement of Reasons, November 10, 1997.
2. R.S.C. 1985, c. S-15.
3. The terms of appointment for two of the Members who heard and decided the matter in Inquiry No. NQ-97-001 expired before the remand was issued on May 19, 1999.
4. Although the phrase “order or finding” is used in SIMA to describe a Tribunal decision following an inquiry or review, the Tribunal, historically, has referred to a decision flowing from an inquiry under section 42 as a finding and a decision flowing from a review under section 76 as an order.
5. S.C. 1993, c. 44.
6. North American Free Trade Agreement, Canadian Statement on Implementation, Canada Gazette Part I, January 1, 1994, at 201-202.
7. Certain Flat Hot-rolled Carbon Steel Sheet Products Originating In or Exported From the United States (Injury), Secretariat File No. CDA-93-1904-07, Decision and Reasons of the Panel, May 18, 1994.
8. Canada Treaty Series, 1989, No. 3 (C.T.S.).
9. See, for example, Certain Corrosion-resistant Steel Sheet Products, Originating in or Exported from Australia, Brazil, France, the Federal Republic of Germany, Japan, the Republic of Korea, New Zealand, Spain, Sweden, the United Kingdom and the United States of America, Canadian International Trade Tribunal, Inquiry No. NQ-93-007, Finding, July 29, 1994, Statement of Reasons, August 15, 1994; and The Dumping in Canada of Refined Sugar Originating in or Exported from the United States of America, Denmark, the Federal Republic of Germany, the Netherlands, the United Kingdom and the Republic of Korea, and the Subsidizing of Refined Sugar Originating in or Exported from the European Union, Canadian International Trade Tribunal, Inquiry No. NQ-95-002, Findings, November 6, 1995, Statement of Reasons, November 21, 1995.
10. R.S.C. 1985, c. 47 (4th Supp.).
11. Subsection 20.01(1) of the CITT Act reads: "In this section, 'contribute importantly' has the meaning given those words by Article 805 of the Agreement." Subsection 20.01(2) reads: (2) Where, in an inquiry conducted pursuant to a reference under section 20 into goods imported from a NAFTA country that are specified by the Governor in Council or in an inquiry conducted pursuant to a complaint under subsection 23(1) into goods so imported that are specified by the Tribunal, the Tribunal finds that the specified imported goods and goods of the same kind imported from other countries are being imported in such increased quantities and under such conditions as to be a principal cause of serious injury, or threat thereof, to domestic producers of like or directly competitive goods, the Tribunal shall determine (a) whether the quantity of the specified imported goods accounts for a substantial share of total imports of goods of the same kind; and (b) whether the specified imported goods, alone or, in exceptional circumstances, together with the goods of the same kind imported from each other NAFTA country, contribute importantly to the serious injury or threat thereof.
12. Supra note 1, Statement of Reasons at 3.
13. Ibid. at 15.
14. Polyphase Induction Motors Originating in or Exported from Brazil, France, Japan, Sweden, Taiwan, the United Kingdom and the United States of America, Canadian International Trade Tribunal, Findings, April 28, 1989, Statement of Reasons, May 12, 1989.
15. Ibid. at 12-14.
16. Certain Hot-rolled Carbon Steel Plate and High-strength Low-alloy Plate, Heat-treated or not, Originating in or Exported from the U.S.A., Secretariat File No. CDA-93-1904-06, Memorandum Opinion and Order, December 20, 1994.
17. Certain Hot-rolled Carbon Steel Plate and High-strength Low-alloy Plate, Heat-treated or not, Originating in or Exported from Belgium, Brazil, the Czech Republic, Denmark, the Federal Republic of Germany, Romania, the United Kingdom, the United States of America and the Former Yugoslav Republic of Macedonia, Canadian International Trade Tribunal, Findings, May 6, 1993, Statement of Reasons, May 21, 1993.
18. Ibid. at 19.
19. Supra note 7.
20. Ibid. at 47-48.
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Initial publication: June 22, 1999