Docket: A-178-15
Citation:
2017 FCA 172
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CORAM:
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WEBB J.A.
DE MONTIGNY J.A.
WOODS J.A.
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BETWEEN:
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SEAH STEEL
CORPORATION
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Applicant
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and
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EVRAZ INC. NA
CANADA, ALGOMA TUBES INC., PRUDENTIAL STEEL ULC, WELDED TUBE OF CANADA
CORPORATION, ENERGEX TUBE and the ATTORNEY GENERAL OF CANADA
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Respondents
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PUBLIC
REASONS FOR JUDGMENT
WEBB J.A.
[1]
SeAH Steel Corporation (SeAH) brought this
application for judicial review under paragraph 96.1(1)(a) of the Special
Import Measures Act, R.S.C. 1985, c. S-15 (SIMA) in relation to the Final
Determinations of Dumping and Subsidizing Respecting Certain Oil Country
Tubular Goods (OCTG) from Chinese Taipei, The Republic of India, The Republic
of Indonesia, The Republic of the Philippines, The Republic of Korea, The
Kingdom of Thailand, The Republic of Turkey, Ukraine, and The Socialist
Republic of Vietnam dated March 3, 2015 (Case number AD/1404 and file number
4214-43) (the Final Determination).
[2]
The President (President) of the Canada Border
Services Agency (CBSA) made a preliminary determination of dumping on December
3, 2014. In doing so, the President used a certain amount as the profit for
SeAH, an exporter from the Republic of Korea, in calculating the normal value
for SeAH. In making the Final Determination, the President used a higher amount
for the profit of SeAH in calculating normal value. This change in the amount
used for profit of SeAH is the basis of this application for judicial review.
[3]
By an Order dated April 13, 2016 this
application was consolidated with the judicial review application of Prudential
Steel ULC and Algoma Tubes Inc. in relation to the Final Determination (A-186-15,
2017 FCA 173). Although these applications were consolidated separate reasons
will be issued for each application as the arguments and the parties are
different with SeAH being the applicant in this application and one of the respondents
in the other application.
I.
Background
[4]
Goods imported into Canada are “dumped” (as defined in subsection 2(1) of SIMA) when
the normal value of the goods exceeds the export price of such goods. The
margin of dumping is defined in subsection 2(1) of SIMA as the difference
between these two amounts. The normal value is determined in accordance with
the provisions of sections 15 to 23.1 and 30 of SIMA and the export price is
determined in accordance with the provisions of sections 24 to 28 and 30 of
SIMA. If the normal value or export price cannot be determined in accordance
with these provisions, such amount is determined in the manner specified by the
Minister of Public Safety and Emergency Preparedness (section 29 of SIMA).
[5]
An investigation with respect to the possible
dumping of goods is initiated under subsection 31(1) of SIMA by the President
on the President’s own initiative or following a complaint that satisfies the
requirements of subsection 31(2) of SIMA. In general there are two stages of a
dumping investigation – a preliminary determination and a final determination –
and two components of each determination. The President is responsible for the
preliminary and final determinations of the margin of dumping and the goods to
which these apply (sections 38 and 41 of SIMA) and the Canadian International
Trade Tribunal is responsible for making the preliminary and final determinations
of whether the dumping has caused injury or is threatening to cause injury and
making any applicable order or finding as provided in sections 37.1, 42 and 43
of SIMA.
[6]
The margin of dumping for the purposes of the
preliminary and the final determinations of dumping in relation to goods of a
particular country (section 30.1 of SIMA), is the weighted average of the
amounts as determined for each exporter in accordance with the provisions of
section 30.2 of SIMA. If it is impractical to determine the margin of dumping
for all goods under consideration, the margin may be determined based on a
sample as provided in section 30.3 of SIMA.
[7]
SIMA sets out strict time limits within which
the amounts must be determined by the President. Under subsection 38(1) of SIMA,
the President must make a preliminary determination of dumping within the 30
day period that commences 60 days after the initiation of an investigation
under section 31 of SIMA (therefore within 90 days of the commencement of the
investigation, unless the President extends the time by 45 days as provided in
subsection 39(1) of SIMA for the reasons as set out in that subsection). Within
90 days after the preliminary determination of dumping is made under subsection
38(1) of SIMA, the President must make the final determination of dumping under
section 41 of SIMA. Since the President has strict deadlines to meet, the
President must be given considerable discretion to determine how best to obtain
the necessary information within these relatively short time limits.
[8]
The normal value of goods is to be determined
based on the price of like goods that are sold to the persons and in the
circumstances as set out in section 15 of SIMA. If there are insufficient
qualifying sales of like goods, the normal value, subject to section 20 of
SIMA, is determined either by using the price at which like goods are sold to
other countries or by using the cost of production and adding a reasonable
amount for administrative, selling and all other costs and a reasonable amount for
profits (section 19 of SIMA).
[9]
In this case, as noted above, the President
calculated the normal value for SeAH under paragraph 19(b) of SIMA by
adding to the cost of production for SeAH, certain amounts including a
reasonable amount for profit. The amount used for profit in making the final
determination of dumping was greater than the amount used in making the
preliminary determination of dumping.
[10]
The only dispute in this application for
judicial review is the amount used for profit for SeAH in the Final
Determination. The dispute arises because the President determined that a
higher amount should be used for profit for certain oil country tubular goods
(OCTG) with “Premium or Proprietary connections”.
These are “higher-end threading and coupling of the pipes”
(paragraph 37 of the Reasons).
II.
Issues
[11]
The issues are:
a)
did the President breach the duty of procedural
fairness; and
b)
has SeAH satisfied its onus of establishing that
the Final Determination should be set aside?
III.
Standard of Review
[12]
The standard of review for questions of
procedural fairness is correctness and the standard of review for the
President’s Final Determination is reasonableness (Uniboard Surfaces Inc. v.
Kronotex Fussboden GmbH and Co. KG, et al., 2006 FCA 398 at paras. 6,
58-60, 359 N.R. 84).
IV.
Analysis
[13]
SeAH submitted an affidavit of Véronique Leroux with various exhibits. SeAH
argued that it was submitting this affidavit and the exhibits in support of its
argument related to procedural fairness. The portion of the affidavit and
exhibits to which the Attorney General objects are the portions dealing with
the re-investigation by the President which was conducted after the Final
Determination. The only issue raised by the Attorney General was the
admissibility of the references to the re-investigation and the admissibility
of the related documents.
[14]
Following the final determination of dumping,
the President initiated a re-investigation of the normal values and export
prices for at least some of the goods under consideration. Following the
re-investigation, the amount used for profit for SeAH was closer to the amount
used in the preliminary determination of dumping (although still slightly
more). In its memorandum of fact and law, SeAH notes that “there was no dispute following the CBSA’s conclusion of the
Re-investigation”.
[15]
I agree with the Attorney General that the
portion of the affidavit and the exhibits in dispute do not go to the issue of
whether there was any breach of procedural fairness. The conclusions reached by
the President following any subsequent re-investigation do not assist in
determining whether there was any breach of procedural fairness by the
President in relation to the Final Determination. As a result these documents
are not admissible in this application for judicial review in relation to the
procedural fairness issue.
[16]
With respect to the issue of procedural
fairness, Evraz Inc. NA Canada made submissions to the President prior to the
Final Determination that not all line pipe was the same and that premium
connection OCTG should not necessarily result in the same amount of profit as
non-premium OCTG. SeAH had the opportunity to respond to this submission and,
therefore, there was no breach of procedural fairness. Simply being able, with
more detailed submissions, to later demonstrate that there is not a profit
differential, does not mean that SeAH was denied procedural fairness. There was
nothing to indicate that SeAH could not have made the more detailed submissions
in response to the submissions of Evraz Inc. NA Canada.
[17]
The submission by SeAH that it had no issue
following the redetermination of the normal value for SeAH by the President,
does raise the issue of what remedy SeAH is seeking in this application for
judicial review as there was no indication that adjusting the normal value for
SeAH as part of the re-investigation would or could have had any impact on the
Final Determination that the subject goods of the Republic of Korea were being
dumped.
[18]
The remedies that this Court may grant are
limited by the provisions of SIMA. In particular paragraph 96.1(1)(a)
and subsection 96.1(6) of SIMA provide that:
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96.1 (1) Subject
to section 77.012 or 77.12, an application may be made to the Federal Court
of Appeal to review and set aside
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96.1 (1) Sous réserve des articles 77.012 et 77.12, une demande de
révision et d’annulation peut être présentée à la Cour d’appel fédérale
relativement aux décisions, ordonnances ou conclusions suivantes:
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(a) a final determination of the President under paragraph
41(1)(a);
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a) la décision définitive rendue par le
président au titre de l’alinéa 41(1)a);
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[…]
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[…]
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96.1(6) On an
application under this section, the Federal Court of Appeal may dismiss the
application, set aside the final determination, decision, order or finding,
or set aside the final determination, decision, order or finding and refer
the matter back to the President or the Tribunal, as the case may be, for
determination in accordance with such directions as it considers appropriate.
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96.1(6) La cour
peut soit rejeter la demande, soit annuler la décision, l’ordonnance ou les
conclusions avec ou sans renvoi de l’affaire au président ou au Tribunal,
selon le cas, pour qu’il y donne suite selon les instructions qu’elle juge
indiquées.
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[19]
Therefore, this Court can only dismiss the
application or set aside the final determination made by the President. If the
final determination is set aside, this Court could refer the matter back to the
President for redetermination in accordance with such directions as may be
appropriate but the matter can only be referred back if the final determination
is set aside.
[20]
The final determination in issue is the final determination
made by the President under paragraph 41(1)(a) of SIMA. This paragraph
provides that:
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41(1) Within
ninety days after making a preliminary determination under subsection 38(1)
in respect of goods of a country or countries, the President shall
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41(1) Dans les quatre-vingt-dix jours suivant sa décision rendue
en vertu du paragraphe 38(1) au sujet de marchandises d’un ou de plusieurs
pays, le président, selon le cas :
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(a) if, on the available evidence, the President is
satisfied, in relation to the goods of that country or countries in respect
of which the investigation is made, that
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a) si, au vu des éléments de preuve
disponibles, il est convaincu, au sujet des marchandises visées par
l’enquête, des faits suivants :
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(i) the goods have been dumped or subsidized, and
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(i) les
marchandises ont été sous-évaluées ou subventionnées,
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(ii) the margin of dumping of, or the amount of subsidy on,
the goods of that country or of any of those countries is not
insignificant,
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(ii) la marge
de dumping ou le montant de subvention octroyé, relativement aux
marchandises d’un ou de plusieurs de ces pays, n’est pas minimal,
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make a final determination of dumping
or subsidizing with respect to the goods after specifying, in relation
to each exporter of goods of that country or countries in respect of which
the investigation is made as follows:
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rend une
décision définitive de dumping ou de subventionnement après avoir précisé, pour chacun des
exportateurs — visés par l’enquête — des marchandises d’un ou de plusieurs de
ces pays :
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(iii) in the case of dumped goods, specifying the goods to which
the determination applies and the margin of dumping of the goods, and
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(iii) dans le
cas de marchandises sous-évaluées, les marchandises objet de la décision et
leur marge de dumping,
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(iv) in the case of subsidized goods,
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(iv) dans le cas
de marchandises subventionnées :
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(A) specifying the goods to which the determination applies,
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(A) les
marchandises objet de la décision,
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(B) specifying the amount of subsidy on the goods, and
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(B) le montant
de subvention octroyée pour elles,
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(C) subject to subsection (2), where the whole or any part of the
subsidy on the goods is a prohibited subsidy, specifying the amount of the
prohibited subsidy on the goods; […]
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(C) sous réserve
du paragraphe (2), le montant, s’il y a lieu, de la subvention prohibée
octroyée pour elles; […]
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(emphasis added)
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(soulignement
ajouté)
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[21]
The final determination under this paragraph is
made in relation to goods of a certain country, not goods of a certain company.
The Final Determination was not that SeAH was dumping but rather it was that goods
from certain countries (the Republic of Korea and 8 other countries) were dumped
and the margin of dumping was not insignificant. Although the margin of dumping
calculated for each company was used to determine whether the margin of dumping
for each country was not insignificant, the final determination is only made
with respect to the particular country. This is clear from section 41 of SIMA
and from the wording of the Final Determination which only identifies the
countries. In the Final Determination, after describing the goods under
consideration (including the particular countries of origin or export), the
Vice-President, Programs Branch stated that:
Pursuant to paragraph 41(1)(a) of the
Special Import Measures Act, and as authorized by the President of the Canada
Border Services Agency, I hereby make a final determination of dumping in
respect of certain oil country tubular goods originating in or exported from
Chinese Taipei, the Republic of India, the Republic of Indonesia, the Republic
of the Philippines, the Republic of Korea, the Kingdom of Thailand, the
Republic of Turkey, Ukraine and the Socialist Republic of Vietnam.
[…]
I hereby determine that the above mentioned
goods have been dumped and that the margin of dumping on the goods is not
insignificant.
[22]
The Final Determination addresses the two issues
identified in section 41 of SIMA – whether certain goods of a particular
country have been dumped and whether the margin of dumping is not
insignificant. The Final Determination was made after the margin of dumping for
each exporter was specified. These margins of dumping for the various exporters
form the basis for the Final Determination but the Final Determination is made
in relation to the countries, not the individual exporters. SeAH was not the
only Korean exporter of the subject goods.
[23]
The Final Determination also does not address
the particular duty that would be imposed if the goods of that country are
imported into Canada. The anti-dumping duty imposed by either section 3 or 5 of
SIMA is the actual margin of dumping of the imported goods. This margin of
dumping is determined by the person identified in section 55 or 56 of SIMA,
with the rights to request a re-determination as set out in sections 56 to 59
of SIMA and a further right of appeal to the Canadian International Trade
Tribunal as set out in section 61 of SIMA. There is also a right of appeal to
this Court, on a question of law, from an order of the Canadian International
Trade Tribunal.
[24]
The letter to SeAH dated March 3, 2015 notifying
SeAH of the Final Determination included Appendix 1 which sets out the various
margins of dumping determined for each company. In the Note to this Appendix it
is stated that:
NOTE: The
margins of dumping reported in the table above are the margins determined by
the CBSA for purposes of the final determination of dumping. These margins do
not reflect the amount of anti-dumping duty to be levied on future importations
of dumped goods. In the event of an injury finding by the Tribunal, normal
values and amounts of subsidy have been provided to the exporters which
provided sufficient information for future shipments to Canada and these normal
values and amounts of subsidy would come into effect the day after an injury
finding. Information regarding normal values of the subject goods and amount of
subsidy should be obtained from the exporter.
[…]
[25]
The margins of dumping as determined for the
Final Determination only have a limited role under SIMA – to determine whether
the margin of dumping of goods of a particular country is not insignificant.
Insignificant is defined in section 2 of SIMA as “a
margin of dumping that is less than two per cent of the export price of the
goods”. Therefore, in order to be successful in this application, SeAH
would have to demonstrate that not only was the President’s determination that
a different amount should be used for profit for the sale of different OCTG
unreasonable but also that failing to use the lower amount for profit as
proposed by SeAH would result in the President’s finding that the margin of
dumping for goods exported from the Republic of Korea was not insignificant was
unreasonable. Otherwise, there would be no basis for setting aside the Final
Determination.
[26]
It its memorandum of fact and law SeAH submitted
that:
8. The
use of this correct methodology would have resulted in an appreciably lower
margin of dumping applicable to SeAH’s exports than was calculated by the
President in the Final Determination.
[27]
This statement indicates that even with the
revised profit amount, there would still be a margin of dumping for SeAH. If
there would still be a margin of dumping for SeAH, it is far from clear how
this change in the profit amount could result in the Final Determination that
the subject goods of the Republic of Korea were being dumped and that the
margin of dumping was not insignificant being found to be unreasonable.
[28]
The Attorney General, in her memorandum of fact
and law, submitted that even if the margin of dumping for SeAH were zero, the
margin of dumping for the goods from the Republic of Korea would still not be
insignificant. The Attorney General noted that the detailed calculations of the
CBSA related to the determinations of the margins of dumping were not part of
the record that was before this Court.
[29]
The amount to be used for the margin of dumping
for the Final Determination in relation to a particular country is set out in
section 30.1 of SIMA, which provides in part:
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30.1 For the
purposes of […] subparagraph 41(1)(a)(ii) […], the margin of dumping
in relation to goods of a particular country is the weighted average of the
margins of dumping determined in accordance with section 30.2.
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30.1 Pour
l’application […] du sous-alinéa 41(1)a)(ii) […], la marge de dumping
relative à des marchandises d’un pays donné est égale à la moyenne pondérée
des marges de dumping établies conformément à l’article 30.2.
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[30]
Therefore the margin of dumping for the final
determination of dumping under subparagraph 41(1)(a)(ii) of SIMA for
goods of a particular country is the weighted average of the amounts determined
under section 30.2. Subsection 30.2(1) of SIMA provides that:
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30.2(1) Subject
to subsection (2), the margin of dumping in relation to any goods of a
particular exporter is zero or the amount determined by subtracting the
weighted average export price of the goods from the weighted average normal
value of the goods, whichever is greater.
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30.2(1) Sous
réserve du paragraphe (2), la marge de dumping relative à des marchandises
d’un exportateur donné est égale à zéro ou, s’il est positif, au résultat
obtenu en retranchant la moyenne pondérée du prix à l’exportation des
marchandises de la moyenne pondérée de la valeur normale des marchandises.
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[31]
For each particular exporter the margin of
dumping cannot be less than zero. As a result, even if the weighted average
export price exceeds the weighted average normal value for a particular
exporter from a particular country, such negative result cannot be used to
offset a positive amount determined for another exporter from that same country.
[32]
In this case, three companies (including SeAH)
were identified as exporters of the OCTG in question from the Republic of
Korea. All of other exporters of these goods from the Republic of Korea were
pooled together and identified as “Others”.
[33]
The other exporters accounted for approximately ||||||||
of the particular goods that were exported from the Republic of Korea. These
exporters were assigned a margin of dumping of 37.4% (which SeAH did not
challenge). The three companies that were identified could not be assigned a
margin of dumping of less than zero. As a result, it is far from clear on what
basis the President’s Final Determination that the margin of dumping for goods
exported from the Republic of Korea was 2% or more (and hence not
insignificant) was unreasonable regardless of the amounts used as the margin of
dumping for the three identified companies.
[34]
In effect, SeAH is asking this Court to adjust
an amount used for profit for SeAH in the Final Determination without showing
how this revised amount could or would change the Final Determination that
goods exported from the Republic of Korea were being dumped and that the margin
of dumping was 2% or more. This is not a remedy that is contemplated by SIMA.
The only remedies that can be granted are to either dismiss the application or
set aside the Final Determination. Since there is no basis to set aside the
Final Determination made with respect to the Republic of Korea, this
application would have to be dismissed.
[35]
As a result I would dismiss this application for
judicial review, with costs.
“Wyman W. Webb”
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“I agree
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Yves de Montigny J.A.”
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“I agree
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J. Woods J.A.”
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