A-124-87
National Corn Growers Association (Applicant)
v.
Canadian Import Tribunal (Respondent)
A-127-87
St. Lawrence Starch Company Limited and Casco
Company and Nacon Products Limited and King
Grain (1985) Limited (Applicants)
v.
Canadian Import Tribunal (Respondent)
A-549-87
American Farm Bureau Federation (Applicant)
v.
Canadian Import Tribunal (Respondent)
INDEXED AS: NATIONAL CORN GROWERS ASSN. V. CANADA
(IMPORT TRIBUNAL)
Court of Appeal, Iacobucci C.J., Mahoney and
MacGuigan JJ.—Ottawa, November 29, 30 and
December 22, 1988.
Foreign trade — Subsidization of grain corn in U.S.A. —
Countervailing duty justified as subsidies causing or likely to
cause material injury to Canadian production — Regardless
of whether any grain corn imported, American domination of
world corn markets means Canadian prices must be lowered to
compete with United States subsidized prices — Although
Special Import Measures Act passed to implement GATT obli
gations, clear contrary provision (s. 42) of domestic legislation
must prevail.
International law — GATT related treaties — Sovereign
nation having right to change policy even if means breaking
international convention Unambiguous contrary provisions
of domestic legislation must prevail over treaty obligations.
In November 1986 and February 1987, the Deputy Minister
of National Revenue for Customs and Excise made, a prelim
inary and then a final determination of subsidizing with respect
to the importation into Canada of grain corn originating in or
exported from the United States of America. In March 1987,
the Canadian Import Tribunal found, in a majority decision,
pursuant to subsection 43(1) of the Special Import Measures
Act, that the subsidizing of importations of grain corn had
caused, was causing and was likely to cause material injury to
the production in Canada of like goods.
These are section 28 applications to review and set aside the
decision of the Tribunal in that it erred in finding that it is
sufficient, for the purposes of section 42 of the Act, to show
that the material injury to Canadian corn producers was caused
by the American corn subsidy programme. The applicants
argue, essentially, that this interpretation is not in conformity
with Canada's international obligations under the GATT and
related treaties. They submit that to fulfill Canada's interna
tional obligations, section 42 must be interpreted as requiring
that it be shown that the material injury is caused by subsidized
imports of corn from the U.S.A. into Canada.
Held (MacGuigan J.A. dissenting), the applications should
be dismissed.
Per lacobucci C.J. Even though the Act may have been
intended to implement treaty obligations, this does not mean
that the treaty provisions should be substituted for the words
and meaning of section 42. Canada is a sovereign nation and, as
such, it has the right to change its policy, even if that involves
breaking an international convention. In this case, section 42 is
clear and unambiguous: it refers only to subsidizing of goods or
subsidizing and makes no reference to subsidized imports as
being the cause of material injury to producers. It is not proper
to incorporate terms or concepts from the underlying interna
tional agreements or treaties when clear language has been
used by Parliament and when it has not expressly directed
reference to the underlying international agreements.
Even if section 42 were interpreted as requiring that it be
shown that subsidized imports were the cause of material injury
to Canadian corn producers, there was evidence before the
Tribunal to allow it to conclude that there was indeed a causal
relationship. Given the domination of world corn markets by
the U.S.A., the Tribunal could reasonably find that lower
American subsidized prices had forced Canadian prices to be
adjusted accordingly and that failure to do so would have
meant a much higher level of imports. These were largely
determinations of facts or inferences from facts and this Court
has, upon section 28 applications, generally been loath to
interfere with such findings by tribunals.
Per MacGuigan J. (dissenting): The Code on Subsidies and
Countervailing Duties, to which Canada is a party, makes it
clear that any injury found by a signatory has to arise from the
effect of a subsidized import and not from subsidization in
itself. Otherwise, no countervailing duty can be imposed.
The Act is so enmeshed with the Code that it must be taken
to be an implementation and reflection of it. It must therefore
be presumed that Parliament intended that the Act should be
interpreted in accordance with the Code. Taken in its total
context, subsection 42(1) cannot be said to establish clearly and
unambiguously that the injury does not have to be caused by
subsidized imports. Consequently, to the extent that the majori-
ty decision of the Tribunal depended upon an interpretation of
the Act contrary to the Code, it was vitiated by error of law.
Nor could it be said that the majority decision might be
upheld on the basis of a rationale consistent with Canada's
international obligations. The Code clearly requires a direct
link between subsidized imports and material injury and there
had been no substantial increase in imports. As for the future,
the Tribunal majority's analysis (that much higher levels of
imports would have been a certainty) did not meet the test of
reasonable speculation, grounded on facts and probable projec
tions. It was no more than a bold assertion.
The majority had rejected arguments tending to prove that
the plight of Canadian producers was the result of depressed
world conditions rather than of subsidized imports. It found
that the proponents of those arguments had not met the burden
of proof. This means that the onus of proof had been trans
ferred from those supporting the likelihood of injury to those
opposing it. This was contrary to subsection 42(1), which puts
the onus of proof on those alleging material injury.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Agreement on Interpretation and Application of Articles
VI, XVI and XXIII of the GATT, [1980] Can. T.S. No.
42, Art. 1, 2, 4, 6, 9, II, 16, 19.
Anti-dumping Act, R.S.C. 1970, c. A-15 (rep. by S.C.
1984, c. 25, s. 110).
Canada-United States Tax Convention Act, 1984, S.C.
1984, c. 20, s. 3(2).
Customs Tariff, R.S.C. 1970, c. C-41.
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 28.
Food Security Act of 1985, Pub. L. No. 99-198, Stat. 99
(1985).
General Agreement on Tariffs and Trade, October 30,
1947, [1948] Can. T.S. No. 31, Art. VI, XVI, XXIII.
Immigration Act, 1976, S.C. 1976-77, c. 52, ss. 2(2),
3(g).
Income Tax Conventions, 1980, S.C. 1980-81-82-83, c.
44.
Special Import Measures Act, S.C. 1984, c. 25, ss.
2(1),(5), 3, 4, 5, 6, 7, 42, 43.
CASES JUDICIALLY CONSIDERED
APPLIED:
Salomon v. Comrs. of Customs and Excise, [1966] 3 All
E.R. 871 (C.A.); Post Office v. Estuary Radio Ltd.,
[1968] 2 Q.B. 740 (C.A.); Regina v. Secretary of State
for the Home Department, [1976] 1 Q.B. 198 (C.A.);
Schavernoch v. Foreign Claims Commission et al.,
[1982] 1 S.C.R. 1092; Sarco Canada Limited v. Anti-
dumping Tribunal, [ 1979] 1 F.C. 247 (C.A.); Japan
Electrical Manufacturers Association v. Anti-dumping
Tribunal, [1982] 2 F.C. 816 (C.A.).
REFERRED TO:
Singh et al. v. Minister of Employment and Immigra
tion, [1985] 1 S.C.R. 177; Lor-Wes Contracting Ltd. v.
The Queen, [1986] 1 F.C. 346; (1985), 60 N.R. 321
(C.A.); Cashin v. Canadian Broadcasting Corporation,
[ 1988] 3 F.C. 494 (C.A.); Canada Packers Inc. v.
Canada (Minister of Agriculture), [1988] 1 F.C. 47
(C.A.); Nova, An Alberta Corporation v. Minister of
National Revenue (1988), 87 N.R. 101; (1988), 20
F.T.R. 240 (F.C.A.).
AUTHORS CITED
Canada, House of Commons Debates, 2nd Sess., 32nd
Parl. 33 Eliz. II, 1984, at page 3968.
Canada, House of Commons, Standing Committee on
Finance, Trade and Economic Affairs, Minutes of
Proceedings, Issue No. 22 (May 29, 1984), at page 6.
Driedger, Elmer A. Construction of Statutes, 2nd ed.
Toronto: Butterworths, 1983.
COUNSEL:
John T. Morin, Q.C. and Robert W. Staley
for American Farm Bureau Federation.
Dianne Nicholas for Canadian Import Tri
bunal.
John D. Richard, Q.C. for National Corn
Growers Association.
Richard S. Gottlieb and Darrel H. Pearson
for St. Lawrence Starch Co. Ltd. et al.
Gordon B. Greenwood for British Columbia
Division Canadian Feed Industry Association.
C. J. Michael Flavell and Geoffrey C.
Kubrick for Ontario Corn Producers Associa
tion.
SOLICITORS:
Campbell, Godfrey & Lewtas, Toronto, for
American Farm Bureau Federation.
Soloway, Wright, Houston, Greenberg,
O'Grady, Morin, Ottawa, for Canadian
Import Tribunal.
Lang Michener Lash Johnston, Ottawa, for
National Corn Growers Association.
Gottlieb, Kaylor & Stocks, Montréal, for St.
Lawrence Starch Co. Ltd. et al.
McMaster, Meighen, Ottawa, for British
Columbia Division Canadian Feed Industry
Association.
Clarkson, Tétrault, Montréal, for Ontario
Corn Producers Association.
The following are the reasons for judgment
rendered in English by
IAcoBuccl C.J.: Before us are three separate
section 28 [Federal Court Act, R.S.C. 1970 (2nd
Supp.), c. 10] applications brought by each of the
following applicants: National Corn Growers
Association, American Farm Bureau Federation
(each organization generally representing corn
producers and farmers in the United States), and a
group of Canadian companies which are users of
grain corn: Casco Company, St. Lawrence Starch
Company Limited, Nacon Products Limited, and
King Grain (1985) Limited. All these applications,
which were heard at the same time,' relate to a
decision of the Canadian Import Tribunal (the
"Tribunal") dealing with subsidized grain corn
from the United States. The complainant before
the Tribunal was the Ontario Corn Producers'
Association, supported by the Manitoba Corn
Growers Association Inc. and the Fédération des
producteurs de cultures commerciales du Québec,
all of whom were jointly represented by counsel
before the Court as interveners.
These applications seek to set aside the decision
of the Tribunal, dated March 6, 1987, with respect
to an inquiry held pursuant to section 42 of the
Special Import Measures Act, S.C. 1984, c. 25
(the "Act"), regarding subsidized grain corn in all
forms, excluding seed corn, sweet corn, and pop
ping corn, originating in or exported from the
United States of America. The British Columbia
Division, Canadian Feed Industry Association, the
British Columbia Turkey Association, and The
B.C. Chicken Growers Association were also joint
ly represented by counsel who argued that, what
ever the disposition made by the Court in this
' By order of Marceau J., dated July 20, 1988, the three
section 28 applications, A-124-87, A-127-87 and A-549-87,
were directed to be heard at the same time since the applica
tions relate to the same decision of the Canadian Import
Tribunal.
matter, the exclusion, from the finding of injury by
the Tribunal, of corn imported into Canada for
consumption in the Province of British Columbia
would be maintained. The majority members of
the panel of the Tribunal concluded that, with
certain exclusions and exceptions, the importations
into Canada of grain corn from the United States
has caused, is causing, and is likely to cause
material injury to the production in Canada of like
goods and therefore a countervailing duty under
the Act ordered by the Deputy Minister of Nation
al Revenue for Customs and Excise was justified.'
The minority of the panel of the Tribunal held that
a countervailing duty was not justified in the
circumstances.
The principal issue in these applications reduces
in its essential parts to a question of interpretation
of section 42 (and related provisions) of the Act,
the relevant portions of which read as follows:
42. (1) The Tribunal, forthwith after receipt by the Secre
tary pursuant to subsection 38(2) of a notice of a preliminary
determination of dumping or subsidizing in respect of goods,
shall make inquiry with respect to such of the following matters
as is appropriate in the circumstances, namely,
(a) in the case of any goods to which the preliminary
determination applies, as to whether the dumping or subsi
dizing of the goods
(i) has caused, is causing or is likely to cause material
injury or has caused or is causing retardation, or
(ii) would have caused material injury or retardation
except for the fact that provisional duty was imposed in
respect of the goods . ....
In applying section 42 the Tribunal panel held
that the U.S. subsidy programme as it related to
corn was the cause of material injury to Canadian
corn producers. The applicants argued that the
Tribunal panel erred in its holding for several
reasons.
The applicants submitted that the decision
appealed from reflects a basic misinterpretation of
2 Pursuant to subsection 38(1) of the Act, a preliminary
determination of subsidizing was made by the Deputy Minister,
see Appeal Book, at p. 1. Under subsection 42(l) of the Act,
the Tribunal is required to conduct an inquiry subsequent to
the preliminary determination made by the Deputy Minister.
section 42 of the Act. Simply put, the applicants
argued that section 42 should be interpreted as
requiring a showing that the material injury to
Canadian corn producers was caused not from the
U.S. corn subsidy programme but from subsidized
imports of corn from the U.S. into Canada. In
support of this argument, the applicants made a
number of submissions, the principal ones of which
may be briefly summarized as follows: 3
(1) The applicants submitted that the Act was
enacted pursuant to Canada's undertaking to pass
legislation consistent with the Tokyo Round
Agreements relating to the General Agreement on
Tariffs and Trade ("GATT"), in particular to pass
legislation consistent with the subsidy and counter-
vail provisions of the Agreement signed by Canada
on December 17, 1979 at Geneva, Switzerland,
known as the Agreement on Interpretation and
Application of Articles VI, XVI and XXIII of the
GATT [[1980] Can. T.S. No. 42] (such Agreement
sometimes hereinafter referred to as the "Subsi-
dies and Countervailing Duties Agreement");
(2) That this was the intention and purpose of
passing the Act is evidenced by statements of the
Minister who introduced the Act in the House of
Commons, and by a senior government official
who gave testimony before the appropriate House
of Commons Committee studying the Act in bill
form; 4 and the Act itself contains numerous refer
ences to the Subsidies and Countervailing Duties
7 For ease of reference, all the submissions of the applicants
have been grouped together. Consequently my referring to
applicants' submissions should not be interpreted as meaning
each of the three applicants expressly agreed to every submis
sion made by the other applicants.
° For the statement of the then Minister of State (Finance),
the Hon. Roy MacLaren, see Canada, House of Commons
Debates, 2nd Sess., 32nd Parl. 33 Eliz. Il, 1984, at p. 3968
where the Minister stated the purpose of the proposed legisla
tive changes was to ensure that the Canadian Government had
the necessary authority to take greater advantage of rights
under the GATT and the Subsidies and Countervailing Duties
Agreement. For the comments of Mr. R. J. Martin of the
Department of Finance, see Canada, House of Commons,
Standing Committee on Finance, Trade and Economic Affairs,
Minutes of Proceedings, Issue No. 22, (May 29, 1984), at p. 6.
Agreement as evidence to show it was the purpose
and intention behind the legislation; 5
(3) A court may presume that Parliament in pass
ing treaty implementing legislation intended to
adhere to the obligations contained in the underly
ing treaty to which Canada is a party; 6
(4) In interpreting domestic legislation passed to
implement a treaty, such as the Act, a court is
entitled to resort to the applicable treaty or inter
national agreement for clarification where
ambiguities or unclear language appear in the
implementing legislation and, because the lan
guage of section 42 relating to subsidized goods
was unclear, resort to the related international
agreement provisions was appropriate to clarify
the matter;'
(5) In examining numerous provisions of the GATT
and the Subsidies and Countervailing Duties
Agreement, it was clear that the material injury to
domestic corn producers had to be caused by
subsidized imports of the subject goods 8 so that
references to the "subsidizing of the goods" in
5 See e.g. subsection 2(1) of the Act, definition of "Subsidies
and Countervailing Duties Agreement"; subsection 2(5); para
graph 42(3)(b): discussed below. See also section 7 of the Act
which refers to a Committee of Signatories established under
Article 16 of the Subsidies and Countervailing Duties
Agreement.
6 Salomon v. Comrs. of Customs and Excise, [1986] 3 All
E.R. 871 (C.A.).
' Ibid.
s See e.g., the following provisions of the Subsidies and
Countervailing Duties Agreement (footnotes omitted):
Article I
Application of Article VI of the General Agreement
Signatories shall take all necessary steps to ensure that the
imposition of a countervailing duty on any product of the
territory of any signatory imported into the territory of
another signatory is in accordance with the provisions of
Article VI of the General Agreement and the terms of this
Agreement.
(Continued on next page)
(Continued from previous page)
Article 2
Determination of Dumping
I. Countervailing duties may only be imposed pursuant to
investigations initiated and conducted in accordance with the
provisions of this Article. An investigation to determine the
existence, degree and effect of any alleged subsidy shall
normally be initiated upon a written request by or on behalf
of the industry affected. The request shall include sufficient
evidence of the existence of (a) a subsidy and, if possible, its
amount, (b) injury within the meaning of Article VI of the
General Agreement as interpreted by this Agreement and (c)
a causal link between the subsidized imports and the alleged
injury.
4. Upon initiation of an investigation and thereafter, the
evidence of both a subsidy and injury caused thereby should
be considered simultaneously. In any event the evidence of
both the existence of subsidy and injury shall be considered
simultaneously (a) in the decision whether or not to initiate
an investigation and (b) thereafter during the course of the
investigation, starting on a date not later than the earliest
date on which in accordance with the provisions of this
Agreement provisional measures may be applied.
Article 4
Definition of Industry
4. If, after reasonable efforts have been made to complete
consultations, a signatory makes a final determination of the
existence and amount of the subsidy and that, through the
effects of the subsidy, the subsidized imports are causing
injury, it may impose a countervailing duty in accordance
with the provisions of this section unless the subsidy is
withdrawn.
Article 6
Evidence
I. A determination of injury for purposes of Article VI of
the General Agreement shall involve an objective examina
tion of both (a) the volume of subsidized imports and their
effect on prices in the domestic market for like products and
(b) the consequent impact of these imports on domestic
producers of such products.
2. With regard to volume of subsidized imports the inves
tigating authorities shall consider whether there has been a
significant increase in subsidized imports, either in absolute
terms or relative to production or consumption in the import
ing signatory. With regard to the effect of the subsidized
imports on prices, the investigating authorities shall consider
whether there has been a significant price undercutting by
the subsidized imports as compared with the price of a like
product of the importing signatory, or whether the effect of
such imports is otherwise to depress prices to a significant
degree or prevent price increases, which otherwise would
(Continued on next page)
section 42 must be interpreted as meaning subsi
dized imports, and because the majority panel of
the Tribunal did not so interpret section 42, its
finding is wrong in law and should be set aside. 9
(Continued from previous page)
have occurred, to a significant degree. No one or several of
these factors can necessarily give decisive guidance.
3. The examination of the impact on the domestic industry
concerned shall include an evaluation of all relevant econom
ic factors and indices having a bearing on the state of the
industry such as actual and potential decline in output, sales,
market share, profits, productivity, return on investments, or
utilization of capacity; factors affecting domestic prices;
actual and potential negative effects on cash flow, invento
ries, employment, wages, growth, ability to raise capital or
investment and, in the case of agriculture, whether there has
been an increased burden on Government support pro
grammes. This list is not exhaustive, nor can one or several of
these factors necessarily give decisive guidance.
4. It must be demonstrated that the subsidized imports
are, through the effects of the subsidy, causing injury within
the meaning of this Agreement. There may be other factors
which at the same time are injuring the domestic industry,
and the injuries caused by other factors must not be attribut
ed to the subsidized imports. [Emphasis added.]
See also Article 19, which prevents parties from taking
action against subsidies except in accordance with the GATT
as interpreted by the Subsidies and Countervailing Duties
Agreement.
9 The applicants also pointed to provisions of the United
States and European Economic Community laws which, in
their view, were properly drawn to reflect the international
treaty undertakings relating to subsidies and countervailing
duties. The applicants in addition argued that the decision of
the majority of the Tribunal would lead to a misapplication of
the countervail remedy amounting to an improper retaliation
by Canada against legitimate subsidy programmes established
by the United States in conformity with exceptions for subsi
dies expressly contemplated under the GATT regime. The appli
cants also stated that, if there were some injury to Canadian
interests in the present circumstances, there were remedies
available for Canada to pursue other than levying countervail-
ing duties; for example, by resort to the Customs Tariff
[R.S.C. 1970, e. C-41].
Counsel for the interveners, representing
Canadian corn producers, argued that section 42
of the Act makes no mention of imports but speaks
simply of subsidized goods. As the section's mean
ing is clear on its face there is no need to resort to
the underlying GATT related treaties to interpret
the language in question. Moreover, Parliament
reflecting the sovereign will of Canada can imple
ment treaties as it chooses, and if in so doing it
fails to live up to the underlying international
obligations, other procedures or fori exist for
appropriate recourse. 10 Consequently if the Act
employs terminology and language giving rise to a
meaning different from that found in the treaty, a
court is obliged to apply the words of the statute as
the law of the land. Accordingly, the majority
panel of the Tribunal committed no error in law or
jurisdiction and the applications should be
dismissed.
Counsel for the interveners also advanced, prin
cipally in oral submissions, an alternative argu
ment to the effect that even if section 42 of the Act
were to be interpreted in the way the applicants
advocated, the majority panel, based on the evi
dence it considered and findings it made, conclud
ed that subsidized imports could be viewed as the
cause of material injury to the Canadian corn
producers so again no reviewable error was com
mitted by the Tribunal."
REASONS FOR DISMISSING APPLICATIONS
In my view, the majority panel of the Tribunal
did not err in law or in jurisdiction within the
meaning of section 28 of the Federal Court Act
and therefore these applications should be
dismissed.
10 See Diplock L.J., in Salomon v. Comrs. of Customs and
Excise, below, note 15.
n This alternative argument, which was supported by refer
ence to a number of statements and conclusions in the reason
ing of the majority, will be dealt with below.
Although the Act contains no express purpose
clause or preamble to this effect, I accept that the
Act was passed to implement Canada's interna
tional obligations flowing from the Tokyo Round
of GATT agreements, particularly those on dump
ing and subsidies. In so holding I note that courts
are entitled to look at parliamentary proceedings
only to ascertain the "mischief" that the legisla
tion was designed to cure or address. 12 Conse
quently the statements made on introduction by
the Minister and a senior official show that the
"mischief" was for Canada to obtain rules, as
generally outlined in the GATT and the Subsidies
and Countervailing Duties Agreement, to deal
with trade problems. But the numerous references
in various sections of the Act to the relevant
international treaty provisions show clearly, on the
basis of authorities on this point, that the Act was
intended to implement the Tokyo Round Treaty
obligations.
However, intention to implement treaty obliga
tions is different from saying that the treaty provi
sions should in effect be a substitute for the words
and meaning that are employed in the specific
provisions of section 42 of the Act. It should be
remembered that treaties in the Canadian context
require implementing legislation to have any force
and effect under Canadian law and it is the word
ing of the implementing legislation which is of
paramount importance.
I acknowledge that a court should as a general
matter interpret statutes so as to be in conformity
with international obligations. As was said by Lord
Denning M.R. in Salomon v. Comrs. of Customs
and Excise: ' 3
I think that we are entitled to look at [the international
convention] because it is an instrument which is binding in
international law; and we ought always to interpret our statutes
so as to be in conformity with international law. [The statute
12 See e.g. E. A. Driedger, Construction of Statutes (2nd ed.
1983) at pp. 156-58.
" [I 966] 3 All E.R. 871 (C.A.).
under consideration] does not in terms incorporate the conven
tion, nor refer to it; but that does not matter. We can look at
it. 14
In the same case, Diplock L.J., as he then was,
expressed the general principles applicable to the
instant case in this way:
Where by a treaty Her Majesty's Government undertakes
either to introduce domestic legislation to achieve a specified
result in the United Kingdom or to secure a specified result
which can only be achieved by legislation, the treaty, since in
English law it is not self-operating, remains irrelevant to any
issue in the English courts until Her Majesty's Government has
taken steps by way of legislation to fulfil its treaty obligations.
Once the government has legislated, which it may do in antici
pation of the coming into effect of the treaty as it did in this
case, the court must in the first instance construe the legisla
tion, for that is what the court has to apply. If the terms of the
legislation are clear and unambiguous, they must be given
effect to whether or not they carry out Her Majesty's treaty
obligations, for the sovereign power of the Queen in Parliament
extends to breaking treaties..., and any remedy for such a
breach of an international obligation lies in a forum other than
Her Majesty's own courts. If the terms of the legislation are not
clear, however, but are reasonably capable of more than one
meaning, the treaty itself becomes relevant, for there is a prima
facie presumption that Parliament does not intend to act in
breach of international law, including therein specific treaty
obligations; and if one of the meanings which can reasonably be
ascribed to the legislation is consonant with the treaty obliga
tions and another or others are not, the meaning which is
consonant is to be preferred. Thus, in case of lack of clarity in
the words used in the legislation, the terms of the treaty are
relevant to enable the court to make its choice between the
possible meanings of these words by applying this presumption.
If from extrinsic evidence it is plain that the enactment was
intended to fulfil Her Majesty's Government's obligations
under a particular convention, it matters not that there is no
express reference to the convention in the statute. One must not
presume that Parliament intend to break an international con
vention merely because it does not say expressly that it is
intending to observe it. Of course, the court must not merely
guess that the statute was intended to give effect to a particular
international convention. The extrinsic evidence of the connex-
ion must be cogent. Here we have a convention dealing specifi
cally and exclusively with one narrow topic, the method of
valuation of imported goods for the purpose of assessing ad
valorem customs duties. Section 258 of, and Sch. 6 to, the
Customs and Excise Act, 1952, deal specifically and exclusively
with the same narrow topic. The terms of the statute and
14 Id., at p. 874.
convention are nearly identical, save that the statute omits the
"Interpretative Notes to the Definition of Value" which appear
in the convention. The inference that the statute was intended
to embody the convention is irresistible, even without reference
to its legislative history, to which RUSSELL, L.J., will refer. In
my view, we can refer to the convention to resolve ambiguities
or obscurities of language in the section of, and the Schedule to,
the statute. 15
Also to a similar effect are the views of Diplock
L.J., in Post Office v. Estuary Radio Ltd. 16 who,
in construing the wording of an order in council
promulgated to give effect to an international con
vention, said:
Had the Convention stood alone, it would have been binding
upon this court and conclusive as to the area comprised in the
"territorial waters" of the United Kingdom. But on September
25, 1964, it was followed by another declaration by the Crown
in the form of an Order in Council, and this, since it is later in
date, is the document by which we are bound and which we
have to construe. If its meaning is clear, we must give effect to
it, even if it is different from that of the Convention, for the
Crown may have changed its mind in the period which elapsed
between its ratification of the Convention on March 14, 1960,
and the promulgation of the Order in Council, and the Crown
has a sovereign right, which the court cannot question, to
change its policy, even if this involves breaking an international
convention to which it is a party and which has come into force
so recently as fifteen days before." [Emphasis added.]
Applying the foregoing guidelines to the case
before us, the question arises whether in the lan
guage of section 42 there are any ambiguities or
obscurities which would warrant resort to the
related international agreements for clarification.
In my view section 42 is clear and unambiguous:
although other sections of the Act refer to the
GATT and Subsidies and Countervailing Duties
Agreement which in turn use the term subsidized
imports, section 42 refers only to subsidizing of
goods or subsidizing and makes no reference to
15 Id., at pp. 875-876. See also Regina v. Secretary of State
for the Home Department, [1976] I Q.B. 198 (C.A.). In this
case, Denning M.R. admitted he went too far when he said in
an earlier case that, if an act of Parliament did not conform to
an international convention, he would be inclined to hold the
statute was invalid. He then went on to state that if an act of
Parliament contained provisions contrary to a convention, the
act must prevail; id., at p. 207.
16 [1968] 2 Q.B. 740 (C.A.).
17 Id., at pp. 756-757.
subsidized imports as being the cause of material
injury to producers.
As stated the Act contains a number of refer
ences to the GATT and Subsidies and Countervail-
ing Duties Agreement. For example, subsection
2(1) lists the Subsidies and Countervailing Duties
Agreement as a defined term. But there are two
other sections of the Act that warrant further
comment.
The first is subsection 2(5) of the Act which
requires the Deputy Minister of National Revenue
for Customs and Excise, in considering any ques
tion relating to the interpretation or application of
the definition in the Act of "subsidized goods" or
"subsidy" or "export subsidy", to take fully into
account the provisions of Articles 9 and 11 of the
Subsidies and Countervailing Duties Agreement.
Article 9 requires the signatories not to grant
export subsidies on products other than certain
primary products and refers to an annex contain
ing a list of illustrative export subsidies. Article 11
deals with subsidies other than export subsidies
and lists the objectives of such non-export subsi
dies as well as matters which the signatories
should recognize in the use of non-export subsidies.
But Articles 9 and 11 are directed at the Deputy
Minister under the Act and it is for him to take
those Articles fully into account as provided by
subsection 2(5). I do not read that subsection's
reference to Articles 9 and 11 as authority for
much more than a specific reference made by
Parliament to ensure the full consideration of
those Articles by the Deputy Minister in the cir
cumstances described in subsection 2(5). More
over, it was not contested before us that subsection
2(5) was in issue in the instant case or that the
Deputy Minister had failed to take Articles 9 and
11 fully into account.
The second section of the Act meriting further
comment is paragraph 42(3)(b) which reads as
follows:
42....
(3) The Tribunal, in considering any question relating to the
production in Canada of any goods or the establishment in
Canada of such production, shall take fully into account the
provisions of
(b) in a subsidy case, paragraph 7 of Article 6 of the
Subsidies and Countervailing Duties Agreement.
Article 6, paragraph 7 of the Subsidies and Coun-
tervailing Duties Agreement provides as follows:
Article 6
7. In exceptional circumstances the territory of a signatory
may, for the production in question, be divided into two or
more competitive markets and the producers within each
market may be regarded as a separate industry if (a) the
producers within such market sell all or almost all of their
production of the product in question in that market, and (b)
the demand in that market is not to any substantial degree
supplied by producers of the product in question located else
where in the territory. In such circumstances injury may be
found to exist even where a major portion of the total domestic
industry is not injured provided there is a concentration of
subsidized imports into such an isolated market and provided
further that the subsidized imports are causing injury to the
producers of all or almost all of the production within such
market.
Although there is a reference to "subsidized
imports" and a further reference to "subsidized
imports are causing injury to the producers", these
provisions deal with a very specific purpose,
namely, to prescribe the exceptional circumstances
for permitting the territory of a country to be
divided into more than one domestic market,
rather than one which is the normal rule. As a
result, I view the references to subsidized imports
and causation between such imports and injury to
producers in Article 6 paragraph 7 of the Subsi
dies and Countervailing Duties Agreement of no
consequence as to the clear meaning of the other
provisions of section 42 that are in question.
In my mind these specific references by Parlia
ment to the GATT and Subsidies and Countervail-
ing Duties Agreement show a pattern of Parlia
ment's intention, that is, when it wishes to
incorporate a concept from the GATT or Subsidies
and Countervailing Duties Agreement, it has done
so deliberately and precisely and we should not
therefore incorporate terms or concepts from the
underlying international agreements or treaties
when clear language has been used by Parliament
and when it has not expressly directed reference to
the underlying international agreements. This may
result in an interpretation which is contrary to the
underlying treaty obligations to which Canada is a
party but, as Diplock L.J. noted above, that is up
to Parliament to decide and other fori and proce
dures exist to resolve such issues.
Moreover, the words used in section 42 do not
lead to a perverse or absurd conclusion by the
clear meaning that the majority of the Tribunal
gave them. The majority characterized their read
ing of the section as a wider and, in effect, more
liberal construction saying this was appropriate for
the Act and GATT generally. ' 8 I need not make
any comment on whether that approach is appro
priate or not in matters of this kind because the
language of section 42 has in my view been other
wise correctly interpreted by the Tribunal majori
ty.
To hold that "imports" should be added to
section 42 so that the section is to be interpreted
by the terms of the underlying treaty provisions
puts the court into a role of assuming that Parlia
ment unequivocally intended to abide by specific
provisions of international agreements in spite of
its use of clear language to the contrary. Courts
are not authorized to do this; indeed it is wrong for
them to do so. Intrinsic provisions of the legislation
can be looked at to conclude that Parliament
'$ In this respect, the majority of the panel stated:
Both the Special Import Measures Act and the GATT
Subsidies Code exist for the express purpose of dealing with
unfairly traded goods which cause or threaten injury. Neces
sarily, their provisions must be interpreted, not in the
abstract, but within the context of the environment within
which they apply, namely international trade. Since the
economic and commercial realities of international trade
dictate that price be met or market share lost, the majority of
the panel is persuaded to adopt the broader interpretation of
"subsidized imports", that is that cognizance be taken of
potential or likely imports in the determination of material
injury. To do otherwise, in the view of the majority of the
panel, would be to frustrate the purpose of the system.
Appeal Book, at p. 146.
intended to implement the treaty, but that fact
cannot be used to have the treaty words and
meaning override what is otherwise clear language
in section 42.
In this connection, I find particularly apposite
the words of Mr. Justice Estey in Schavernoch v.
Foreign Claims Commission et al. 19 , which
involved the interpretation of Regulations [Foreign
Claims (Czechoslovakia) Settlement Regulations,
SOR/73-681] promulgated to implement a plan to
compensate Canadian claimants from a fund that
was established under an agreement between
Canada and Czechoslovakia for assets that had
been nationalized by Czechoslovakia. The issue
arose as to whether or not the Regulations could
be interpreted by reference to the international
agreement or the report from negotiators of the
agreement. Mr. Justice Estey, in delivering the
judgment of the Court, said the following:
If one could assert an ambiguity, either patent or latent, in
the Regulations it might be that a court could find support for
making reference to matters external to the Regulations in
order to interpret its terms. Because, however, there is in my
view no ambiguity arising from the above-quoted excerpt from
these Regulations, there is no authority and none was drawn to
our attention in argument entitling a court to take recourse
either to an underlying international agreement or to textbooks
on international law with reference to the negotiation of agree
ments or to take recourse to reports made to the Government of
Canada by persons engaged in the negotiation referred to in the
Regulations. 20
If it wished, Parliament could easily have used
subsidized imports in section 42 and other related
sections. Indeed, in the dumping provisions of sec
tion 42 itself, numerous references are made to
"importation" and "importer" and "imported" so
that the concept of imported goods is already
expressly used in the section. 21
19 [1982] 1 S.C.R. 1092.
20 /d., at p. 1098.
21 Paragraph 42(1)(b) of the Act provides as follows:
(Continued on next page)
Moreover, if Parliament intended to follow the
detailed provisions of the GATT and the Subsidies
and Countervailing Duties Agreement with no
departure in this respect, it could also have chosen
a clearer way of expressing this intention, as it has
done with respect to the implementation of inter
national tax conventions. In these it has specifical
ly provided an interpretive rule to the effect that,
where there is an inconsistency between the imple
menting statute or underlying convention and
domestic law, the provisions of the implementing
statute and the convention prevail to the extent of
the inconsistency. 22
Alternatively, Parliament could have expressly
provided a more general interpretive guide as it
has done in other legislation that deals with inter
national agreements or conventions to which
Canada is a party. For example, subsection 2(2)
(Continued from previous page)
42. (I) The Tribunal, forthwith after receipt by the
Secretary pursuant to subsection 38(2) of a notice of a
preliminary determination of dumping or subsidizing in
respect of goods shall make inquiry with respect to such of
the following matters as is appropriate in the circumstances,
namely,
(b) in the case of any dumped goods to which the prelim
inary determination applies, as to whether
(i) either
(A) there has occurred a considerable importation of
like goods that were dumped, which dumping has
caused material injury or would have caused material
injury except for the applicable of anti-dumping
measures, or
(B) The importer of the goods was or should have
been aware that the exporter was practicing dumping
and that such dumping would cause material injury,
and
(ii) material injury has been caused by reason of the
fact that the dumped goods
(A) constitute a massive importation into Canada, or
(B) form part of a series of importations into Canada,
which importations in the aggregate are massive and
have occurred within a relatively short period of time
and it appears necessary to the Tribunal that duty be
assessed on the imported goods in order to prevent the
recurrence of such material injury .... [Emphasis
added.]
22 See e.g. subsection 3(2) of the Canada-United States Tax
Convention Act, 1984, S.C. 1984, c. 20. See to a similar effect
the implemeting Income Tax Conventions, 1980 statutes with
the United Kingdom and many other countries: S.C. 1980-8I-
82-83, c. 44.
and paragraph 3(g) of the Immigration Act, 1976
[S.C. 1976-77, c. 52] expressly refer to Canada's
international legal obligations with respect to
refugees as follows:
2....
(2) The term "Convention" in the expression "Convention
refugee" refers to the United Nations Convention Relating to
the Status of Refugees signed at Geneva on the 28th day of
July, 1951 and includes the Protocol thereto signed at New
York on the 31st day of January, 1967.
3. It is hereby declared that Canadian immigration policy
and the rules and regulations made under this Act shall be
designed and administered in such a manner as to promote the
domestic and international interests of Canada recognizing the
need.
(g) to fulfil Canada's international legal obligations with
respect to refugees and to uphold its humanitarian tradition
with respect to the displaced and the persecuted; 23
There is no such general interpretive guide in
the Act. Although there are, as noted, references
in the Act to the GATT and the Subsidies and
Countervailing Duties Agreement, these references
are made for specific purposes only and are not, in
my view, sufficient to convert what is otherwise
the clear meaning of section 42 into an ambiguity
or obscurity for purpose of resort to a different
wording and meaning under the GATT and Subsi
dies and Countervailing Duties Agreement.
To my mind the adoption of the interpretation
advocated by the applicants is tantamount to con
cluding that Canada should and must implement
every aspect of the relevant treaty provisions and I
do not believe it is proper for a court to embrace
such an approach. At all times the question must
be what has been said by Parliament in the lan
guage of the legislation. Accordingly, for the
foregoing reasons, I would dismiss the applica
tions.
Because I am satisfied that the Tribunal did not
err in law or jurisdiction, from a technical point of
view I need not say more. However, the interveners
also argued in the alternative that, even applying
23 Commented on by Madame Justice Wilson in Singh et al.
v. Minister of Employment and Immigration, [1985] 1 S.C.R.
177, at p. 192 et seq.
the text or interpretation of section 42 as advocat
ed by the applicants, the decision of the majority
panel of the Tribunal can be viewed as concluding
that subsidized imports were the cause of material
injury to Canadian corn producers. Under the
circumstances, I feel obliged to comment on this
alternative argument.
My conclusion on this point is that, from a
review of the record and arguments presented to
us, the reasoning and conclusions of the panel of
the Tribunal can be read as holding that there was
a causal relationship between the material injury
of the domestic corn producers and the subsidized
imported corn from the United States, although it
was not necessary for the majority panel to so find
for the reasons I have already discussed. I arrive at
this conclusion by reference to findings and state
ments made by the majority panel of the Tribunal,
but I acknowledge that the majority's language is
not as clear in this respect as it could have been.
By way of elaboration, it is helpful to note that
the majority panel observed that the market for
grain corn trade between Canada and the United
States is essentially unrestricted except for duty
and transportation costs, that because of Canadian
health legislation requirements the United States
is the only viable source for imported grain corn,
and that U.S. corn production "dwarfs" that of
Canada in that Canada's production is less than
4% of U.S. output. 24
The majority then found, and this was not seri
ously disputed:
... given the ready access of buyers in Canada to U.S. supplies,
it follows that domestic prices in Canada are determined in
large measure by prices and events in the United States. The
evidence suggests that, generally, Canadian corn must be
priced competitively with the cost of landing corn from the
United States; in fact buyers look to the Chicago Board of
Trade price in deciding what they will offer for Canadian corn,
and sellers look to the Chicago price in deciding the price they
24 Appeal Book, at p. 139.
are prepared to accept. 25
Moreover, the majority panel also concluded that:
... the policies of no other single political unit can influence the
world market price of corn markets as can the United States.
The domination of world corn markets is so complete that one
might argue that the possible U.S. policy responses to changes
in supply and demand outside the United States are a matter of
greater interest to world traders than are the changes
themselves. 26
The majority also found that in the relevant
period in question there were imports into Canada,
"albeit at modest levels", and went on to conclude:
The issue, therefore, is not whether imports have taken place,
but whether they would have increased substantially in the
absence of a price response by the domestic producers to the
subsidized U.S. corn. Given the openness of the Canadian
market, much higher levels of imports would have been a
certainty. 27 [Emphasis added.]
I regard this conclusion about imports as
extremely important. However, counsel for the
applicants dismiss this statement as in effect being
too speculative, or a finding of fact not based on
the evidence, or an opinion of the majority that
had to be taken in the light of the liberal or wide
approach taken by the majority on the interpreta
tion of the Act and related GATT provisions.
I do not agree with the views put forward by the
applicants. The Tribunal did find there were some
imports into Canada and they concluded that,
because of the nature of the ready and accessible
United States sources of supply, which were the
only viable sources to Canadian buyers, and the
Chicago price representing the price domestic pro
ducers would reasonably expect to receive, imports
would dramatically increase absent a price adjust
ment by Canadian producers. This approach
appears to me to be sensible and reasonable as it
25 Id., at pp. 139-140. In fact the majority were inclined to
view the Chicago Board of Trade price as the world price of
corn.
26 Id., at p. 144.
27 Id., at p. 146.
relates to deciding whether material injury is likely
to be caused to Canadian domestic producers.
Moreover, the points made by the majority
panel in this respect are largely determinations of
fact or inferences from facts and questions of
evidence generally. This Court has on a number of
occasions refrained from second-guessing the find
ing of facts of tribunals for purposes of section 28
proceedings. As was said by Mr. Justice Heald in
Sarco Canada Limited v. Anti-dumping
Tribunal. 28
A determination such as this is one of fact by a statutorily
created body having the legal authority and expertise necessary
to evaluate the evidence and to make such a finding. In these
circumstances, the Court will not interfere with such a finding
unless there was a complete absence of evidence to support it or
a wrong principle was applied in making it. In the case at bar I
am unable to say that either of these circumstances was
present. 29 [Emphasis added.]
And as was stated by Mr. Justice Pratte in
Japan Electrical Manufacturers Association v.
Anti-dumping Tribunal; 3 °
On a section 28 application, the Court cannot reweight the
evidence and substitute its findings for those of the Tribunal
which made the decision sought to be set aside. In my view
there was at least some evidence to support the various findings
of the Tribunal ... 31 [Emphasis added.]
With respect to the alternative argument made
by the interveners, I accept the finding and reason
ing of the majority, namely, upon it being shown
that there were actual imports from the United
States and considering the underlying findings of
fact about the accessibility, exclusivity and prefer
ence for, pricing, and dominance of the U.S.
market, one could conclude that imports of corn
would have greatly increased had not domestic
producers adjusted their prices to meet the poten
tiality of U.S. imports. Thus the majority could
reasonably decide, and by the terms of its formal
28 [1979] I F.C. 247 (C.A.).
29 Id., at p. 254.
30 [1982] 2 F.C. 816 (C.A.).
31 Id., at p. 818.
conclusion did decide, 32 that there was a causal
link between the subsidized imports and material
injury to domestic producers. 33
Based on the authorities I have noted, 34 to the
extent the majority reasoning and findings on this
point relate to the evidence, or the weight or
inference to be drawn from it, it is not for this
Court to review in detail; it is enough for purposes
of these section 28 applications that there was
some basis for their findings and conclusion, and I
find there was. 35
Therefore for the foregoing reasons these section
28 applications should be dismissed.
MAHONEY J.: I agree.
* * *
32 The formal finding to the Tribunal reads as follows:
Pursuant to subsection 43(1) of the Special Import Measures
Act, the Canadian Import Tribunal hereby finds that the
subsidizing of importations into Canada of grain corn in all
forms, excluding seed corn, sweet corn and popping corn,
originating in or exported from the United States of America,
with the exceptions of: (I) grain corn, as described above, for
consumption in the Province of British Columbia; and (2)
yellow and white dent corn, imported by snack food and tortilla
manufacturers, for use by them in the manufacture of snack
goods and tortillas; has caused, is causing and is likely to cause
material injury to the production in Canada of like goods....
Appeal Book, at p. 129. [Emphasis added.]
33 As noted by the majority, the material injury can be either
borne directly by Canadian producers or indirectly by an
increased burden on Government support programmes for
Canadian producers: see Appeal Book, pp. 140 and 144-45. See
also the definition of "material injury" in subsection 2(1) of the
Act which expressly includes a reference to government support
programmes for agricultural products.
34 Supra, notes 28 and 30.
35 As mentioned above, the decision of the majority panel on
the alternative argument is not as clear as it could have been,
but I see no point in a section 28 proceeding in referring a
matter back to a tribunal simply for clarification purposes.
The following are the reasons for judgment
rendered in English by
MACGUIGAN J. (dissenting): By order of Mr.
Justice Marceau dated July 20, 1988, a common
appeal book was adopted for applications A-124-
87, A-127-87 and A-549-87, and these three sec
tion 28 applications were heard together. Since all
three applications seek review by this Court of the
same decision of the Canadian Import Tribunal
("the Tribunal" or "câ–ºT") dated March 6, 1987, in
relation to Inquiry No. CIT-7-86, held pursuant to
section 42 of the Special Import Measures Act,
S.C. 1984, c. 25 ("the Act" or "sâ–ºMA" ), they will
all henceforth be referred to collectively by refer
ence to A-124-87.
The inquiry and decision of CIT followed a
preliminary determination by a deputy minister
pursuant to subsection 38(1) of sâ–ºMA, of "subsidiz-
ing respecting grain corn in all forms, excluding
seed corn, sweet corn and popping corn, originat
ing in or exported from the United States of
America" (Appeal Book, at page 1). He imposed a
provisional duty of US $1.047990 a bushel. In his
final determination of subsidizing the duty was
reduced to US $0.849 a bushel.
Following a preliminary determination the
Deputy Minister is required both to give public
notice of his preliminary determination and to
cause a written notice of the determination to be
filed with. the Secretary of the Tribunal. The
Tribunal's duties are set out in sections 42 through
44 of the Act, the most relevant portions of which
are as follows:
42. (I) The Tribunal, forthwith after receipt by the Secre
tary pursuant to subsection 38(2) of a notice of a preliminary
determination of dumping or subsidizing in respect of goods,
shall make inquiry with respect to such of the following matters
as is appropriate in the circumstances, namely,
(a) in the case of any goods to which the preliminary
determination applies, as to whether the dumping or subsi
dizing of the goods
(i) has caused, is causing or is likely to cause material
injury or has caused or is causing retardation, or
(ii) would have caused material injury or retardation
except for the fact that provisional duty was imposed in
respect of the goods
(c) in the case of any subsidized goods to which the prelim
inary determination applies where a subsidy on the goods in
an export subsidy, as to whether
(i) material injury has been caused by reason of the fact
that the subsidized goods
(A) constitute a massive importation into Canada, or
(B) form part of a series of importations into Canada,
which importations in the aggregate are massive and
have occurred within a relatively short period of time,
and
(ii) a countervailing duty should be imposed on the subsi
dized goods in order to prevent the recurrence of such
material injury
(3) The Tribunal, in considering any question relating to the
production in Canada of any goods or the establishment in
Canada of such production, shall take fully into account the
provisions of
(b) in a subsidy case, paragraph 7 of Article 6 of the
Subsidies and Countervailing Duties Agreement.
43. (1) In any inquiry referred to in section 42 in respect of
any goods, the Tribunal shall, forthwith after the date of
receipt by the Secretary of notice of a final determination of
dumping or subsidizing with respect to any such goods, but, in
any event, not later than one hundred and twenty days after the
date to receipt by the Secretary of notice of a preliminary
determination with respect to the goods, make such order or
finding with respect to the goods to which the final determina
tion applies as the nature of the matter may require, and shall
declare to what goods, including, where applicable, from what
supplier and from what country of export, the order of finding
applies.
44. (1) Where, pursuant to an application under section 28
of the Federal Court Act, an order or finding of the Tribunal is
set aside or is set aside in relation to particular goods, the
Tribunal Shall
(a) where the matter is referred back to the Tribunal for
determination, forthwith recommence the inquiry made in
respect of the goods to which the order or finding applies or
in respect of the particular goods, as the case may be, and
(b) in any other case, decide, within thirty days after the
final disposition of the application, whether or not to recom
mence the inquiry in respect of the goods to which the order
or finding applies or in respect of the particular goods, as the
case may be, and, if the Tribunal decides that the inquiry
should be recommenced, forthwith recommence the inquiry
The orders or findings which the Tribunal may
make are described in sections 3 to 6 of the Act.
By subsection 45(1), the Tribunal must make a
report as follows:
45. (1) Where, as a result of an inquiry referred to in
section 42 arising out of the dumping or subsidizing of any
goods, the Tribunal makes an order or finding described in any
of sections 3 to 6 with respect to those goods and the Tribunal
is of the opinion that the imposition of an anti-dumping or
countervailing duty, or the imposition of such a duty in the full
amount provided for by any of those sections, in respect of the
goods would not or might not be in the public interest, the
Tribunal shall, forthwith after making the order or finding.
(a) report to the Minister of Finance that it is of such
opinion and provide him with a statement of the facts and
reasons that caused it to be of that opinion; and
(b) cause a copy of the report to be published in the Canada
Gazette.
The majority decision of CIT was as follows
(Appeal Book, at page 149):
For the foregoing reasons the majority of the panel of the
Tribunal concludes that the subsidizing of importations into
Canada of grain corn in all forms, excluding seed corn, sweet
corn and popping corn, originating in or exported from the
United States of America, with the exceptions of:
(I) grain corn, as described above, for consumption in the
Province of British Columbia; and
(2) yellow and white dent corn, imported by snack food and
tortilla manufacturers, for use by them in the manufac
ture of snack foods and tortillas;
has caused, is causing and is likely to cause material injury to
the production in Canada of like goods.
In dissent, Member Bissonnette held that there
had been no past, present or future material injury
caused by subsidization of the subject goods
because such injury must be caused by imports of
the subsidized goods and imports of the subject
goods were not the cause of material injury.
The issue between the majority and minority is
most starkly posed by the following excerpts from
the decision of Member Bissonnette (Appeal Book,
at pages 154, 158-159):
Where I part from my colleagues is in finding that, even if
the premise be accepted that the subsidization has contributed
to the depressed world price, no case has been made that U.S.
subsidized imports into Canada are responsible for the harm
being suffered. It follows, in my opinion, that the countervail
claim has no merit. While the harm is real, the remedy lies
elsewhere, perhaps in a political solution domestically, or inter
nationally by GATT consensus.
The position of counsel for the complainant is that there is
nothing in section 42 of SIMA which restricts the scope of the
Tribunal inquiry to subsidized imports. The section simply
speaks of harm stemming from the subsidization of goods. It is
argued that the existence of huge stocks of grain corn in the
United States, accumulated under the circumstances which we
have already described, has depressed the market price for this
commodity. These stocks constitute, as it were, a standing offer
for sale at the low Chicago price, and can be considered on that
basis to have entered the commerce of Canada.
As I have already indicated, I am of the view that under
SIMA and the GATT Code, injury must relate to subsidized
imports.
As slMA is primarily concerned with the statutory implemen
tation of Canada's obligations under GATT, certainly the lan
guage of the GATT Subsidies and Countervailing Duties Code
may be referred to for guidance in the absence of criteria on
causality. The GATT is not an instrument designed to police the
social and economic policies of the signatories. It is concerned
with international trade: with goods crossing frontiers: with
imports. GATT considers it unfair internationally that imports
should benefit from subsidies which give these imports a com
petitive edge over those of the goods of the country whose
frontier has been crossed.
Relevant criteria under the GATT Code follow. I have under
lined the words which assist me in reaching the conclusion I
have drawn.
Article 4, section 4:
If, after reasonable efforts have been made to complete
consultations, a signatory makes a final determination of the
existence and amount of the subsidy and that, through the
effects of the subsidy the subsidized imports are causing
injury, it may impose a countervailing duty in accordance
with the provisions of this section unless the subsidy is
withdrawn.
Article 6, section 1:
A determination of injury for purposes of Article VI of the
General Agreement shall involve an objective examination of
both (a) the volume of subsidized imports and their effect on
prices in the domestic market for like products and (b) the
consequent impact of these imports on domestic producers of
such products.
Article 6, section 2:
With regard to volume of subsidized imports the investigat
ing authorities shall consider whether there has been a
significant increase in subsidized imports, either in absolute
terms or relative to production or consumption in the import
ing signatory. With regard to the effect of the subsidized
imports on prices, the investigating authorities shall consider
whether there has been significant price undercutting by the
subsidized imports as compared with the price of a like
product of the importing signatory, or whether the effect of
such imports is otherwise to depress prices to a significant
degree or prevent price increases, which otherwise would
have occurred, to a significant degree. No one or several of
these factors can necessarily give decisive guidance.
Article 6, section 4:
It must be demonstrated that the subsidized imports are,
through the effects of the subsidy, causing injury within the
meaning of this Agreement. There may be other factors
which at the same time are injuring the domestic industry,
and the injuries caused by other factors must not be attribut
ed to the subsidized imports.
Whille these criteria are not set out in siMn, it is not by
simple coincidence that these criteria were adopted by the
Tribunal as its own in Rule 36 of its General Rules of Practice
and Procedure. The entire emphasis of the Rule is that of the
GATT Code: the relevance of significant increases in Canadian
importations of subsidized goods; whether the prices of subsi
dized goods which enter Canada undercut Canadian prices,
whether market share is being taken by imported goods. There
is even striking similarity in the wording of Rule 36 to the
criteria of the GATT Code.
The most fundamental issue, then, to be decided
in the case at bar, as identified by the Tribunal
itself and as argued before us by the parties, is
whether the Tribunal can make a finding of ma
terial injury only when a causal link has been
established between subsidized imports into
Canada and material injury suffered by the
domestic producers of like goods. This, in turn,
rests upon whether or not section 42 of SIMA is
interpreted in the light of international agreements
to which Canada is a party.
The General Agreement on Tariffs and Trade
("GATT") first came into effect in 1947 and has
been amplified through the years by a number of
more detailed agreements. The Tokyo Round
Agreements concluded in 1979 contained the Code
on Subsidies and Countervailing Duties ("the
Code"). 36
There was no serious dispute in argument that,
if SIMA had to be read in the light of the Code, the
Tribunal would have had to find a causal link
between the subsidized imports and the material
injury. In addition to the articles set out by
Member Bissonnette in the excerpt from his deci
sion, supra, several sections of article 2 are specific
on this point:
36 Articles VI, XVI and XXIII of the GATT, which deal with
anti-dumping and countervailing duties, were expanded by the
Tokyo Round Agreements. The pertinent Tokyo Round Agree
ment is the Agreement on Interpretation and Application of
Articles VI, XVI and XXIII of the General Agreement on
Tariffs and Trade, more commonly called the Code on Subsi
dies and Countervailing Duties.
Article 2
Domestic procedures and related matters
I. Countervailing duties may only be imposed pursuant to
investigations initiated (The term "initiated" as used herein-
after means procedural action by which a signatory formally
commences an investigation as provided in paragraph 3 of this
Article.) and conducted in accordance with the provisions of
this Article. An investigation to determine the existence, degree
and effect of any alleged subsidy shall normally be initiated
upon a written request by or on behalf of the industry affected.
The request shall include sufficient evidence of the existence of
(a) a subsidy and, if possible, its amount, (b) injury within the
meaning of Article VI of the General Agreement as interpreted
by this Agreement (Under this Agreement the term "injury"
shall, unless otherwise specified, be taken to mean material
injury to a domestic industry, threat of material injury to a
domestic industry or material retardation of the establishment
of such an industry and shall be interpreted in accordance with
the provisions of Article 6.) and (c) a causal link between the
subsidized imports and the alleged injury. If in special circum
stances the authorities concerned decide to initiate an investiga
tion without having received such a request, they shall proceed
only if they have sufficient evidence on all points under (a) to
(c) above.
4. Upon initiation of an investigation and thereafter, the evi
dence of both a subsidy and injury caused thereby should be
considered simultaneously. In any event the evidence of both
the existence of subsidy and injury shall be considered simul
taneously (a) in the decision whether or not to initiate an
investigation and (b) thereafter during the course of the investi
gation, starting on a date not later than the earliest date on
which in accordance with the provisions of this Agreement
provisional measures may be applied. [Emphasis added.]
It seems to me that the words "a causal link
between the subsidized imports and the alleged
injury" in paragraph 1 and the specification in
paragraph 4 that "the evidence of both a subsidy
and injury caused thereby should be considered
simultaneously" put it beyond argument that any
injury found by a signatory has to arise from the
effect of subsidized imports and not from subsidi
zation in itself.
Moreover, it is not open to the parties to the
agreement to act contrary to the Code, or even to
supplement it, with respect to the subsidies of
other parties. Article 19, paragraph 1, provides:
Article 19
Final provisions
I. No specific action against a subsidy of another signatory can
be taken except in accordance with the provisions of the
General Agreement, as interpreted by the Agreement. (This
paragraph is not intended to preclude action under relevant
provisions of the General Agreement, where appropriate.)"
In sum, I find the interpretation of the Code
crystal-clear as to national action against the sub
sidies of other countries: countervailing duties can
be imposed only where there is "a causal link
between the subsidized imports and the alleged
injury." All signatories are bound to this standard.
The Special Import Measures Act, which came
into effect by proclamation in Canada on Decem-
ber 1, 1984, replaced the Anti-dumping Act
[R.S.C. 1970, c. A-15] which had been in effect
from January 1, 1969. There is no recital to the
Act to indicate its precise relationship with the
GATT and the Code. It nevertheless refers directly
to the Code in several key areas.
One of these references has already been set out
in the text of subsection 3 of section 42 itself,
which provides that "The Tribunal ... shall take
fully into account the provisions of ... paragraph 7
of Article 6" of the Code, which is as follows:
Article 6
7. In exceptional circumstances the territory of a signatory
may, for the production in question, be divided into two or
more competitive markets and the producers within each
market may be regarded as a separate industry if (a) the
producers within such market sell all or almost all of their
production of the product in question in that market, and (b)
the demand in that market is not to any substantial degree
supplied by producers of the product in question located else
where in the territory. In such circumstances injury may be
found to exist even where a major portion of the total domestic
industry is not injured provided there is a concentration of
subsidized imports into such an isolated market and provided
further that the subsidized imports are causing injury to the
producers of all or almost all of the production within such
market. [Emphasis added.]
This reference, it is true, is only with respect to
subdividing the total domestic market into regional
37 No other relevant provision was drawn to the Court's
attention, nor have I found any such.
markets, but the incorporation by reference of the
term "subsidized imports" and of the concept that
it is the subsidized imports that are causing injury
to the producers involve a more fundamental
incorporation of the Code itself. Moreover, to
exclude British Columbia from the affected
market, the CIT in the case at bar had to have
recourse to this provision of the Code.
The definition section (subsection 2(1)) of SIMA
identifies "Subsidies and Countervailing Duties
Agreement" as the international agreement of
December 17, 1979, which I am referring to as the
Code. Subsection 2(5) then provides as follows:
2....
(5) The Deputy Minister, in considering any question relat
ing to the interpretation or application of the definition "subsi-
dized goods" or "subsidy" or the expression "export subsidy",
shall take fully into account the provisions of Articles 9 and 11
of the Subsidies and Countervailing Duties Agreement.
Articles 9 and 11 of the Code are as follows:
Article 9
Export subsidies on products
other than certain primary products
I. Signatories shall not grant export subsidies on products
other than certain primary products.
2. The practices listed in points (a) to (I) in the Annex are
illustrative of export subsidies. 38
Article l l
Subsidies other than export subsidies
I. Signatories recognize that subsidies other than export subsi
dies are widely used as important instruments for the promo
tion of social and economic policy objectives and do not intend
to restrict the right of signatories to use such subsidies to
achieve these and other important policy objectives which they
consider desirable. Signatories note that among such objectives
are:
(a) the elimination of industrial, economic and social disad
vantages of specific regions,
(b) to facilitate the restructuring, under socially acceptable
conditions, of certain sectors, especially where this has
become necessary by reason of changes in trade and
economic policies, including international agreements
resulting in lower barriers to trade,
(c) generally to sustain employment and to encourage
re-training and change in employment,
38 I do not set out these illustrative export subsidies as I do
not believe they are necessary for the argument.
(d) to encourage research and development programmes,
especially in the field of high-technology industries,
(e) the implementation of economic programmes and poli
cies to promote the economic and social development of
developing countries,
(f) redeployment of industry in order to avoid congestion
and environmental problems.
2. Signatories recognize, however, that subsidies other than
export subsidies, certain objectives and possible form of which
are described, respectively, in paragraphs 1 and 3 of this
Article, may cause or threaten to cause injury to a domestic
industry of another signatory or serious prejudice to the inter
ests of another signatory or may nullify or impair benefits
accruing to another signatory under the General Agreement, in
particular where such subsidies would adversely affect the
conditions of normal competition. Signatories shall therefore
seek to avoid causing such effects through the use of subsidies.
In particular, signatories, when drawing up their policies and
practices in this field, in addition to evaluating the essential
internal objectives to be achieved, shall also weigh, as far as
practicable, taking account of the nature of the particular case,
possible adverse effects on trade. They shall also consider the
conditions of world trade, production (e.g. price, capacity utili
zation, etc.) and supply in the product concerned.
3. Signatories recognize that the objectives mentioned in
paragraph 1 above may be achieved, inter alia, by means of
subsidies granted with the aim of giving an advantage to
certain enterprises. Examples of possible forms of such subsi
dies are: government financing of commercial enterprises,
including grants, loans or guarantees; government provision or
government financed provision of utility, supply distribution
and other operational or support services or facilities; govern
ment financing of research and development programmes;
fiscal incentives; and government subscription to, or provision
of, equity capital.
Signatories note that the above form of subsidies are normal
ly granted either regionally or by sector. The enumeration of
forms of subsidies set out above is illustrative and non-exhaus
tive, and reflects these currently granted by a number of
signatories to this Agreement.
Signatories recognize, nevertheless, that the enumeration of
forms of subsidies set out above should be reviewed periodically
and that this should be done, through consultations, in con
formity with the spirit of Article XV1:5 of the General
Agreement.
4. Signatories recognize further that, without prejudice to their
rights under this Agreement, nothing in paragraphs l-3 above
and in particular the enumeration of forms of subsidies creates,
in itself, any basis for action under the General Agreement, as
interpreted by this Agreement.
To my mind the distinction between export sub
sidies and subsidies for the promotion of social and
economic policy objectives, set out by Article 11,
paragraph 1, of the Code and incorporated by
reference in SIMA, is of capital importance. It is
true that the other paragraphs of Article 11 recog
nize that these other subsidies may nevertheless
have export consequences, but this is by way of
admonition to exporting countries ("Signatories
shall therefore seek to avoid causing such effects
through the use of subsidies") rather than by way
of founding any challenge to such other subsidies
by importing countries. It seems to me that this is
spelled out by paragraph 4, which establishes that
nothing in the previous paragraph "creates, in
itself, any basis for action" under the GATT. I
cannot come to any other conclusion, then, than
that the Deputy Minister is required by subsection
2(5) of SIMA, in considering the question of subsi
dized goods, to take fully into account that subsi
dies for the promotion of social and economic
policy objectives, do not found any retaliatory
action. This would appear to involve an acceptance
of the whole scheme of the Code, which requires a
causal connection between subsidized imports and
domestic injury.
By section 7 SIMA also requires the Governor in
Council to obtain authority from the Committee of
Signatories under Article 16 of the Code before
imposing countervailing duties on goods found by
the Deputy Minister to be subsidized. Since the
Committee on Subsidies and Countervailing Meas
ures under Article 16 is said in that Article to
"afford signatories the opportunity of consulting
on any matters relating to the operation of the
Agreement or the furtherance of its objectives",
this authorization is presumably a procedural
rather than a substantive one.
The words of subsection 42(1), if taken in their
most literal sense, viz., "The Tribunal ... shall
make inquiry ... as to whether the ... subsidizing
of the goods (i) has caused, is causing or is likely
to cause material injury", and without regard to
the words omitted from this quotation, might be
said unambiguously to allow consideration of sub
sidization of goods in another country and ma
terial injury to producers in Canada without
regard to importation. But even the most extreme
form of the plain meaning rule would not allow
scattered words to establish the interpretation of a
statute. In fact, this Court has held that words
must be taken in their total context: Lor- Wes
Contracting Ltd. v. The Queen, [1986] 1 F.C. 346,
at page 352; (1985), 60 N.R. 321 (C.A.), at page
325; Cashin v. Canadian Broadcasting Corpora
tion, [1988] 3 F.C. 494 (C.A.); Canada Packers
Inc. v. Canada (Minister of Agriculture), [1989] 1
F.C. 47 (C.A.); Nova, An Alberta Corporation v.
Minister of National Revenue (1988), 87 N.R.
101; (1988), 20 F.T.R. 240 (F.C.A.).
Among the words omitted above is a reference
to the fact that the Tribunal process commences
with a notice of a preliminary determination of
subsidizing by the Deputy Minister, viz., "The
Tribunal, forthwith after receipt by the Secretary
pursuant to subsection 38(2) of a notice of a
preliminary determination of dumping or subsidiz
ing in respect of goods". The Deputy Minister
must, as we have seen, in this preliminary determi
nation take account of Article 11 of the GATT
Code. Moreover, the Tribunal itself under subsec
tion 42(3) had to look to the Code for the regional
market approach the majority adopted.
The statement of the then Minister of State
(Finance), Honourable Roy MacLaren, introduc
ing SIMA in the House of Commons on May 23,
1984, is also relevant. The Minister said (Canada,
House of Commons Debates, at pages 3968-3969):
Before going into details, I should like to recall the purpose
of the legislative changes proposed. They are designed to ensure
that the Government has the necessary authority to take great
er advantage of our rights under the General Agreement on
Tariffs and Trade, GATT, and of the agreements on non-tariff
measures negotiated during the Tokyo Round of multilateral
trade negotiations which was concluded in 1979, in particular
the agreements on anti-dumping and countervailing duties.
They are particularly aimed at ensuring that Canada is
equipped to deal effectively with injurious import competition
and other trade problems. They will ensure that Canada's
procedures are as effective as those of our main trading part
ners who have already adopted similar legislation.
Under the current regime, the Department of National Reve
nue is responsible for investigating dumping and subsidization
where they are of the opinion that the alleged dumping or
subsidization is causing injury to Canadian producers. The
Anti-dumping Tribunal, which will be renamed the Canadian
Import Tribunal under the proposed Act, conducts the formal
inquiry into the alleged injury. I should stress here that Cana-
da's international obligations under the GATT require that
anti-dumping or countervailing duties be imposed only where it
has been determined that there is a direct link between the
dumped or subsidized imports and the material injury to
Canadian producers.
Although such a ministerial statement is not yet
admissible to indicate Parliament's intention in
passing the legislation, it may be used to expose
the mischief, event or condition to which Parlia
ment was directing its attention: Lor-Wes Con
tracting, supra, at pages 355 F.C.; 326 N.R.;
Thomson v. Canada (1988), 84 N.R. 169
(F.C.A.), at pages 184-185. In the present case the
mischief is evidently Canada's lack of procedures
"as effective as those of our main trading part
ners" who have already implemented the Tokyo
Round under the GATT. Indirectly, this emphasizes
the tie between SIMA and the Code.
The most authoritative statement is our law with
respect to the interpretation of domestic law vis-Ã -
vis international conventional law is, I believe, that
of Diplock L.J. (as he then was) in Salomon v.
Comrs. of Customs and Excise, [1966] 3 All E.R.
871 (C.A.), at pages 875-876:
Where by a treaty Her Majesty's Government undertakes
either to introduce domestic legislation to achieve a specified
result in the United Kingdom or to secure a specified result
which can only be achieved by legislation, the treaty, since in
English law it is not self-operating, remains irrelevant to any
issue in the English courts until Her Majesty's Government has
taken steps by way of legislation to fulfil its treaty obligations.
Once the government has legislated, which it may do in antici
pation of the coming into effect of the treaty as it did in this
case, the court must in the first instance construe the legisla
tion, for that is what the court has to apply. If the terms of the
legislation are clear and unambiguous, they must be given
effect to whether or not they carry out Her Majesty's treaty
obligations, for the sovereign power of the Queen in Parliament
extends to breaking treaties (see Ellerman Lines, Ltd. v.
Murray ([1930] All E.R. Rep. 503; [1931] A.C. 126.), and any
remedy for such a breach of an international obligation lies in a
forum other than Her Majesty's own courts. If the terms of the
legislation are not clear, however, but are reasonably capable of
more than one meaning, the treaty itself becomes relevant, for
there is a prima facie presumption that Parliament does not
intend to act in breach of international law, including therein
specific treaty obligations; and if one of the meanings which
can reasonably be ascribed to the legislation is consonant with
the treaty obligations and another or others are not, the mean
ing which is consonant is to be preferred. Thus, in case of lack
of clarity in the words used in the legislation, the terms of the
treaty are relevant to enable the court to make its choice
between the possible meanings of these words by applying this
presumption.
If this were the whole of the test, I would conclude
that, in the case at bar, if subsection 42(1) is not
clearly an implementation of the Code, it is at the
very least doubtful in meaning. Certainly, when
read as a whole, it cannot be said to be "clear and
unambiguous" that the injury does not have to be
caused by subsidized imports, i.e., that it is not in
conformity with the Code.
However, in point of fact Diplock L.J. went on
to allow considerations such as the identity of the
subject-matter of the statute and the convention to
determine the relationship (at page 876):
It has been argued that the terms of an international conven
tion cannot be consulted to resolve ambiguities or obscurities in
a statute unless the statute itself contains either in the enacting
part or in the preamble an express reference to the internation
al convention which it is the purpose of the statute to imple
ment. The learned judge seems to have been persuaded that
Ellerman Lines, Ltd. v. Murray ([1930] All E.R. Rep. 503;
[1931] A.C. 126.) was authority for this proposition; but, with
respect it is not. The statute with which that case was con
cerned did refer to the convention. The case is authority only
for the proposition for which I have already cited it. MAUGH-
AM, L.J., in Hogg v. Toye & Co. ([1935] All E.R. Rep. 618 at
p. 625; [ 1935] Ch. 497 at p. 520.), clearly took the view that it
was unnecessary that there should be an express reference to
the convention in the statute itself, if it was apparent from a
comparison of the subject matter of the statutory provision and
the convention that the former was enacted to carry out Her
Majesty's Government's obligations in international law under
the convention. I can see no reason in comity, or common sense
for imposing such a limitation on the right and duty of the
court to consult an international convention to resolve ambigui
ties and obscurities in a statutory enactment. If from extrinsic
evidence it is plain that the enactment was intended to fulfil
Her Majesty's Government's obligations under a particular
convention, it matters not that there is no express reference to
the convention in the statute. One must not presume that
Parliament intend to break an international convention merely
because it does not say expressly that it is intending to observe
it. Of course, the court must not merely guess that the statute
was intended to give effect to a particular international conven
tion. The extrinsic evidence of the connexion must be cogent.
Here we have a convention dealing specifically and exclusively
with one narrow topic, the method of valuation of imported
goods for the purpose of assessing ad valorem customs duties.
Section 258 of, and Sch. 6 to, the Customs and Excise Act,
1952, deal specifically and exclusively with the same narrow
topic. The terms of the statute and convention are nearly
identical, save that the statute omits the "Interpretative Notes
to the Definition of Value" which appear in the convention.
The inference that the statute was intended to embody the
convention is irresistible, even without reference to its legisla
tive history, to which RUSSELL, L.J., will refer. In my view, we
can refer to the convention to resolve ambiguities or obscurities
of language in the section of, and the Schedule to, the statute.
In the same case, Lord Denning M.R., painting
with a broader brush, said simply (at page 874):
[W]e ought always to interpret our statutes so as to be in
conformity with international law. Our statute does not in
terms incorporate the convention, nor refer to it; but that does
not matter.
In the case at bar it is not merely a comparison of
the subject-matter of the statute and the conven
tion that leads to the conclusion that SIMA was
enacted to implement the Code. It is, most particu
larly, the quantity and the quality of the incorpo
ration of the Code by SIMA to the point that
principal concepts of the Code (i.e. subsidized
imports, subsidized imports causing injury to the
domestic producers, tolerance of subsidies other
than export subsidies) have been adopted. In sum,
the Act is so enmeshed with the Code that it must
be taken to be an implementation and reflection of
it. It must therefore be presumed that Parliament
intended that SIMA should be interpreted in
accordance with the Code. Consequently, to the
extent that the majority decision of CIT depended
upon an interpretation of SIMA contrary to the
Code it was vitiated by error of law.
Counsel for the interveners argued in the alterna
tive that the majority decision could be upheld on
the basis of a rationale consistent with Canada's
international obligations. This contention makes
necessary a close look at the majority decision.
The majority's first statement of the issue
appears to be cast in terms of subsidization in the
United States rather than of importation into
Canada (Appeal Book, at page 139):
The essential question to be addressed is whether the opera
tion of the 1985 U.S. Food Security Act, which, as the Deputy
Minister found, subsidized grain corn produced in the United
States, was such as to cause prices in Canada to decline to
levels judged to be of a material nature. Other indicia of injury
normally considered, such as increased imports and loss of sales
and employment, are not present in this case because Canadian
corn producers have accepted lower prices in order to maintain
sales in the face of the potential inflow of low-priced U.S. corn.
The factual situation, as outlined by the Tri
bunal majority, is that because grain-corn move
ment between Canada and the United States is
essentially unrestricted, because U.S. corn produc
tion dwarfs that of Canada (Canadian production
being somewhat less than 4 percent of U.S.
output), and because Canadian health require
ments make the United States the only viable
source for imported grain corn, domestic prices in
Canada are determined in large measure by prices
and events in the United States. The majority
inclined to the view that the Chicago Board of
Trade price is effectively the world price.
It is common ground that prices have declined
substantially since mid-1985 and that the price
declines experienced by Canadian grain-corn pro
ducers are of a magnitude such as to constitute
material injury, whether borne by farmers directly
as reduced income, or causing an increased burden
on government-support programmes. The majority
then phrased the issue a second time (Appeal
Book, at page 140):
The question remaining to be answered, however, is whether
this injury is caused in any significant measure by the subsidi
zation found by the Deputy Minister.
Because this phrasing is so close to that of subsec
tion 42(1) of SIMA, it cannot be said to be wrong,
but neither does it reflect a clear understanding of
the Act's intrinsic relationship to the Code.
The major element of the subsidy established by
the Deputy Minister in his final determination
involved deficiency payments made to U.S. corn
producers, which had been authorized by the U.S.
Food Security Act of 1985 [Pub. L. No. 99-198,
Stat. 99 (1985)] ("the 1985 Farm Bill"). The
basic mechanism used is a system of target prices,
which operate in general as guaranteed prices, and
loan rates, which are prices at which U.S. pro
ducers may pledge a crop as collateral. The defi
ciency payments are equal to the difference be
tween the target price and the higher of the loan
rate or the market price. Release of stocks held as
loan collateral is usually not allowed until market
prices rise to stipulated levels above loan rates.
Entry of producers into the programme is subject
to acreage and crop limitations.
The earlier 1981 U.S. Farm Bill was intended to
encourage production at a time of world optimism.
By 1985 it had become clear that the optimism
was ill-founded, largely because of increasing self-
sufficiency on the part of importing countries.
However, in its early years the 1981 Farm Bill was
of benefit to Canadian producers by reason of its
price-enhancing influence. It was only with respect
to the 1984/85 and 1985/86 years that an
independent study commissioned by the Tribunal
found that market prices would have been higher
in its absence.
The 1985 Farm Bill aimed at lowering prices so
as to expand exports, while at the same time
protecting U.S. farm income, and was in general a
more market-oriented farm programme. Prices fell
dramatically, but exports also continued to decline.
On the facts the CIT majority then concluded as
to the past and the present situations (Appeal
Book, at page 144):
From the evidence, the majority of the panel is persuaded
that the dramatic decline in the international price for grain
corn is, in very large measure, a direct consequence of the
provisions of the 1985 Farm Bill; in fact, one of the announced
objectives of the Bill was to make U.S. corn more competitive.
But this competitiveness must be interpreted in the context of
many years of continued subsidies to U.S. corn producers.
Because of the open nature of the Canadian market these lower
prices were transferred to Canada, with substantial adverse
effect on Canadian production. There is no doubt, at least to
the majority of this panel that the U.S. government could not
have, and would not have, instituted measures to lower prices
without insulating their domestic producers from the major
effect of such action. This they have done through the deficien-
cy-payment program. For these reasons, the majority of the
panel therefore concludes that the subsidization of U.S. grain
corn has caused and is causing material injury to Canadian
corn producers.
In my view this conclusion is erroneous in law,
since it is based on an analysis without regard to
the Code standard that the domestic material
injury must have been caused by subsidized
imports. In fact, except during the 1980/81, 1981/
82 and perhaps 1982/83 years U.S. corn imports to
Canada did not increase at all over their tradition
al levels. During those exceptional years Canada
was, as the dissenting member pointed out, used as
a flow-through country for U.S. exports to Eastern
Europe which were seeking a way around the U.S.
embargo on grain shipments to that area following
the Soviet invasion of Afghanistan: in this period
Canadian exports increased at least as much as
U.S. exports to Canada.
When measuring a completed period such as the
past, or even the present, in the only way in which
the present can be measured, material injury can
refer only to what has actually happened. What
has happened, in turn, must be taken in relation
ship to the Code standard of a causal link between
subsidized imports and material injury. Where
subsidized imports have not actually increased no
material injury can be shown to have been so
caused.
However, subsection 42(1) provides for a fur
ther test, "is likely to cause material injury", and
this is where the principal issue is joined. The
Tribunal majority wrote of this alternative,
immediately following the passage previously set
out, as follows (Appeal Book, at page 144):
There is every indication that present conditions will persist
for some time. Even with more onerous acreage set-asides, U.S.
production is unlikely to be brought into balance with current
demand much before the 1988/89 crop year. Disposal of the
existing burdensome stocks would seem to require even more
time. The 1985 Farm Bill provides for lower levels of target
prices and loan rates in the years to come. The level of
international trade shows no indication of increasing; on the
contrary, the opposite seems to be the case. In these circum
stances, prices cannot be expected to show much improvement,
thus requiring the continuation of government support for U.S.
producers. The majority of the panel finds, therefore, that the
subsidization of U.S. grain corn will continue to be a cause of
material injury to the Canadian production of like goods.
The applicants argued that this passage con
tained the whole of the majority's reasoning on the
question of likelihood. If so, it would be most
inadequate, but I do not so read the majority
decision. The majority went on to state the appli
cant's contention that, as they correctly put it,
"the material injury claimed to have been suffered
must relate to subsidized imports and not simply to
the fact of subsidization found by the Deputy
Minister to exist in a foreign country" (Appeal
Book, at page 145). The majority appeared to
accept this argument, at least ad hominem, but
make the point that even the Code allows for
response to threatened as well as to actually
caused material injury (Appeal Book, at page
146):
Both the Special Import Measures Act and the GATT Subsi
dies Code exist for the express purpose of dealing with unfairly
traded goods which cause or threaten injury. Necessarily, their
provisions must be interpreted, not in the abstract, but within
the context of the environment within which they apply,
namely, international trade. Since the economic and commer
cial realities of international trade dictate that price be met or
market share lost, the majority of the panel is persuaded to
adopt the broader interpretation of "subsidized imports," that
is, that cognizance be taken of potential or likely imports in the
determination of material injury. To do otherwise, in the view
of the majority of the panel, would be to frustrate the purpose
of the system.
I can only agree with this statement. As both SIMA
and the Code make clear, a concerned country is
entitled to weigh not only what has happened but
what is reasonably seen to be likely to happen. The
majority is clearly correct in interpreting cIT's
statutory mandate in this fashion.
But it must be obvious that this is an unusually
difficult calculation to make. Because it deals with
the future, it must be to some extent speculative. It
must not be a sheer speculation, but a reasonable
one, grounded on facts and probable projections,
on extrapolations from actuality. I do not find the
majority's analysis meets this test (Appeal Book,
at page 146):
In the case of grain corn, imports into Canada have existed
in recent years, albeit at modest levels. The issue, therefore, is
not whether imports have taken place, but whether they would
have increased substantially in the absence of a price response
by the domestic producers to the subsidized U.S. corn. Given
the openness of the Canadian market, much higher levels of
imports would have been a certainty.
But that much higher levels of imports would have
been a certainty, as stated and defended by the
majority, does not appear to be a reasonable
speculation about the future. Indeed, it is not
evident to me that the majority decision has any
rationale at all beyond this bold verbal assertion of
certainty.
If there were any further rationalization by the
majority, it could have been only in the context of
the effect of a countervailing duty, which it treated
as a subsidiary argument. In this way, it reviewed
two submissions to the contrary: first, that in the
area of feed use, which accounts for 75 percent of
domestic corn disposition, users would switch to
alternative feed grains, principally barley and feed
wheat; second, that manufacturers using domestic
corn in the production of goods which are export
ed, because of the availability of customs draw
back, would turn to imported corn for this purpose;
both factors would lead to reduce domestic con
sumption, which would be detrimental to Canadi-
an producers, whose plight is therefore the result
of depressed world conditions rather than of subsi
dized imports. For the majority the proponents of
those arguments lost because they did not meet the
onus of proof (Appeal Book, at page 147):
In the final analysis, there was no convincing evidence pro
duced to lead the majority of the panel to believe that the
domestic producers would not continue to benefit from the
countervailing duty in meaningful way, at least throughout the
remainder of the current crop year.
By dealing with an argument to the contrary, the
proof of which could be assumed according to the
normal rule to lie on those advancing it, the
majority effectively transferred the onus of proof
from those supporting the likelihood of material
injury to those opposing it, whereas I interpret
subsection 42(1) ("The Tribunal ... shall make
inquiry ... as to whether the ... subsidizing of the
goods ... has caused," etc.) to put the onus of
proof on those alleging material injury.
The conclusion of material injury to Canadian
producers in the absence of a price response by
them is not a simply observed fact, but would
require an inference to be drawn from the evi
dence. Not only did the Tribunal not consider at
all the availability of American corn for export to
Canada (given, e.g. the quantity held in U.S.
Government stocks and so removed from private
hands) or the proportion of the Canadian market
that could be affected after the exemptions
allowed for grain corn for consumption in British
Columbia and for yellow and white dent corn for
snack food and tortilla manufacturers, but it also
did not establish the fundamental point that low
Canadian prices in the future would arise from
subsidized American imports and not from world
conditions. It disposed of this issue by reversing
the onus of proof, thereby failing to establish a
causal link between the subsidized imports and the
material injury. I am forced to the conclusion that
the error of law which vitiated the majority's
holding with respect to the past and the present
continued through its finding with respect to the
likelihood of material injury in the future.
I would therefore allow the section 28 applica
tion, set aside the Canadian Import Tribunal deci
sion of March 6, 1987, and return the matter to it
for redetermination on the basis that, interpreting
the Special Import Measures Act in the light of
the Code on Subsidies and Countervailing Duties,
material injury to Canadian producers must be
causally linked to subsidized imports. Since the
Tribunal erred in law, I would not except from its
reconsideration grain corn for consumption in the
Province of British Columbia.
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