National Corn Growers Assn. v. Canada (Import tribunal)

National Corn Growers Assn. v. Canada (Import tribunal)
Collection
Supreme Court Judgments
Date
1990-11-08
Report
[1990] 2 SCR 1324
Case number
21366, 21368
Judges
Dickson, Robert George Brian; Lamer, Antonio; Wilson, Bertha; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Gonthier, Charles Doherty; McLachlin, Beverley
On appeal from
Federal Court of Appeal
Subjects
Administrative law
Customs and excise
Statutes
Notes
SCC Case Information: 21366, 21368
Decision Content
National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324
American Farm Bureau Federation Appellant
v.
Canadian Import Tribunal Respondent
and
Ontario Corn Producers' Association,
Manitoba Corn Growers Association Inc.
and Fédération des producteurs de
cultures commerciales du Québec Interveners
and
British Columbia Division,
Canadian Feed Industry Association,
British Columbia Turkey Association
and B.C. Chicken Growers Association Interveners
and between
St. Lawrence Starch Company Limited,
Casco Company, Nacan Products Limited
and King Grain (1985) Limited Appellants
v.
Canadian Import Tribunal Respondent
and
Ontario Corn Producers' Association,
Manitoba Corn Growers Association Inc.
and Fédération des producteurs de
cultures commerciales du Québec Interveners
and
British Columbia Division,
Canadian Feed Industry Association,
British Columbia Turkey Association
and B.C. Chicken Growers Association Interveners
indexed as: national corn growers assn. v. canada (import tribunal)
File Nos.: 21366 and 21368.
1990: March 29; 1990: November 8.
Present: Chief Justice Dickson* and Chief Justice Lamer** and Wilson,
La Forest, L'Heureux‑Dubé, Gonthier and McLachlin JJ.
on appeal from the federal court of appeal
Administrative law -- Judicial review -- Canadian Import Tribunal ‑‑ Subsidizing of grain corn in U.S. ‑‑ Tribunal holding that subsidies causing or likely to cause material injury to Canadian production -- Whether Tribunal's decision patently unreasonable ‑‑ Interpretation of s. 42 of Special Import Measures Act, S.C. 1984, c. 25 -- Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 28.
Statutes -- Interpretation -- Canadian legislation enacted to implement Canada's GATT obligations -- Whether Canadian Import Tribunal may refer to GATT to interpret Canadian legislation -- Special Import Measures Act, S.C. 1984, c. 25, s. 42.
Customs and excise -- Subsidies and countervailing duties ‑‑ Subsidization of grain corn in U.S. -- Whether subsidies causing or likely to cause material injury to Canadian production -- Interpretation of s. 42 of Special Import Measures Act, S.C. 1984, c. 25.
Pursuant to s. 42 of the Special Import Measures Act ("SIMA "), the Canadian Import Tribunal conducted an inquiry respecting the importation into Canada of grain corn originating in or exported from the U.S. From the evidence, the majority of the Tribunal was persuaded that the dramatic decline in the international price for grain corn, which corresponded to the American price, was in large measure a direct consequence of U.S. policies and programs. Because of the open nature of the Canadian market, the low prices of American subsidized corn were transferred to Canada, with substantial adverse effect on Canadian producers. The Tribunal concluded that the subsidizing of importations into Canada of U.S. grain corn has caused, is causing and is likely to cause material injury to the production in Canada of like goods, and that a countervailing duty could accordingly be imposed. In interpreting s. 42 of SIMA , the majority of the Tribunal consulted the terms of the GATT Subsidies Code and adopted a broad interpretation of the Canadian legislation, one which took into account in the determination of the material injury not only the actual imports but also the potential imports that would certainly ensue absent a price response by Canadian producers. The Federal Court of Appeal dismissed appellants' applications, under s. 28 of the Federal Court Act , to review and set aside the Tribunal's decision. These appeals are to determine whether the decision of the Canadian Import Tribunal is patently unreasonable so as to warrant this Court's intervention pursuant to s. 28 of the Federal Court Act .
Held: The appeals should be dismissed.
Per La Forest, L'Heureux‑Dubé, Gonthier and McLachlin JJ.: Although s. 28 of the Federal Court Act is broad in scope, the courts, in the presence of a privative clause, will only interfere with the findings of a specialized tribunal where it is found that the decision of that tribunal cannot be sustained on any reasonable interpretation of the facts or of the law. Here, s. 76 of SIMA provides that the Tribunal's decision, with certain limited exceptions, is final and conclusive. Given this provision, this Court will only interfere with the Tribunal's ruling if it acted outside the scope of its mandate by reason of its conclusions being patently unreasonable.
The Tribunal acted within the scope of its mandate and made no error of law or of fact which would warrant this Court's intervention. First, it was not patently unreasonable for the Tribunal to give consideration to the terms of the GATT in interpreting s. 42 of SIMA . Since the Canadian legislation was designed to implement Canada's GATT obligations, it is reasonable for a tribunal to examine the domestic law in the context of the relevant agreement to clarify any uncertainty. Indeed, where the text of the domestic law lends itself to it, one should also strive to expound an interpretation which is consonant with the relevant international obligations. Further, it is reasonable to make reference to an international agreement at the very outset of the inquiry to determine if there is any ambiguity, even latent, in the domestic legislation.
Second, in applying s. 42 of SIMA , it was not patently unreasonable for the Tribunal to conclude that reliance could be placed on potential as well as actual imports. The goods to which s. 42 refers are "imported" subsidized goods. The section provides that the Tribunal must determine if the subsidization "is likely to cause material injury". Aside from the text of s. 42 itself, Rule 36 of the Tribunal's Rules of Procedure directs the Tribunal to "examine ... the actual and potential volume of the ... subsidized goods imported into Canada". Given these requirements, it was reasonable for the Tribunal to consider that the potential for increased imports properly formed part of its inquiry. Further, the GATT Code, in particular Article 6 , provides broad guidelines for assessing "material injury" and there is nothing in that Code to forbid that notice be taken of potential imports in a case such as this. Since, because of the potential for a great influx of relatively cheap imports the domestic price is determined by that of actual imports, it was not unreasonable for the Tribunal to conclude that the GATT Code allowed it to consider the potential for substantial loss of market share. Under Article 6, account may be taken of price undercutting and all relevant economic factors including actual as well as potential decline in profits, productivity, sales and market share. These criteria could reasonably be interpreted as encompassing, in a case such as this one, consideration of the strong potential for increased amounts of subsidized imports. Finally, having regard to the broad wording of the GATT Code provisions, it was not unreasonable and was therefore open to the Tribunal to make a finding of material injury even in the absence of an increase in the amount of imports.
Third, the Tribunal's conclusion that American subsidization of imports had caused, was causing and was likely to cause material injury to Canadian producers was not patently unreasonable. There was evidence before the Tribunal which supports its finding of a causal link between the American price and the injury to the Canadian market. It was not unreasonable for the Tribunal to infer in this case, given the open nature of the Canadian market and given that the United States is the only viable source for imports, that American stocks not used for domestic consumption would have flowed into Canada in greater amounts. It could reasonably assume that Canadian buyers would purchase the products at issue at the lowest price available, and that, absent an appropriate price response by Canadian producers, a significant amount of American goods would penetrate the Canadian market.
Per Dickson C.J. and Lamer C.J. and Wilson J.: In a long line of decisions on the question of judicial review, this Court made it clear that it should not interfere with a specialized tribunal's interpretation of its constitutive legislation where the interpretive exercise was one that was within the tribunal's area of expertise and where the impugned interpretation was not patently unreasonable. Where the matter at issue is one which falls within the administrative tribunal's jurisdiction, the "reasonableness" test still remains the appropriate standard of review. In applying the "reasonableness" test, however, one must begin not with the question whether the tribunal's conclusions are patently unreasonable, but rather with the question whether the tribunal's interpretation of the provisions in its constitutive legislation is patently unreasonable. If the tribunal has not interpreted its constitutive statute in a patently unreasonable fashion, the process of judicial review should come to an end. The courts must not then proceed to a wide ranging review of whether the tribunal's conclusions are unreasonable.
Here, this Court should not interfere with the Canadian Import Tribunal's interpretation of s. 42 of SIMA . The Tribunal concluded that s. 42 covered situations in which Canadian producers are forced to lower prices in order to keep subsidized goods out of the Canadian market. The interpretation of s. 42 is a matter that falls clearly within the Tribunal's jurisdiction and range of expertise and its interpretation is not "so patently unreasonable that its construction cannot be rationally supported by the relevant legislation". In SIMA, the terms "subsidy" and "subsidized goods" are defined in very broad terms and the definition of "material injury" cannot be said to preclude the "broader" interpretation of s. 42(1) that the Tribunal favoured. If the Tribunal's interpretation is one that the legislature concludes is not in Canada's interests or is not consistent with Canada's international obligations, then it is for the legislature to amend SIMA to provide narrower definitions of the terms used in the relevant provision. It was not open to this Court to consider any additional issues.
Cases Cited
By Gonthier J.
Applied: Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; referred to: Bell Canada v. Canada (Canadian Radio‑Television and Telecommunications Commission), [1989] 1 S.C.R. 1722; Schavernoch v. Foreign Claims Commission, [1982] 1 S.C.R. 1092; Japan Electrical Manufacturers Association v. Anti‑dumping Tribunal, [1982] 2 F.C. 816; British Steel Corp. v. U.S., 6 I.T.R.D. 1065 (1984).
By Wilson J.
Applied: Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; referred to: Port Arthur Shipbuilding Co. v. Arthurs, [1969] S.C.R. 85; Metropolitan Life Insurance Co. v. International Union of Operating Engineers, Local 796, [1970] S.C.R. 425; Anisminic Ltd. v. Foreign Compensation Commission, [1969] 2 W.L.R. 163; Service Employees' International Union, Local No. 333 v. Nipawin District Staff Nurses Association, [1975] 1 S.C.R. 382; Volvo Canada Ltd. v. U.A.W., Local 720, [1980] 1 S.C.R. 178; Douglas Aircraft Co. of Canada v. McConnell, [1980] 1 S.C.R. 245; Alberta Union of Provincial Employees, Branch 63 v. Board of Governors of Olds College, [1982] 1 S.C.R. 923; Teamsters Union, Local 938 v. Massicotte, [1982] 1 S.C.R. 710; Canada Labour Relations Board v. Halifax Longshoremen's Association, [1983] 1 S.C.R. 245; Blanchard v. Control Data Canada Ltd., [1984] 2 S.C.R. 476; CAIMAW v. Paccar of Canada Ltd., [1989] 2 S.C.R. 983; Syndicat des employés de production du Québec et de l'Acadie v. Canada Labour Relations Board, [1984] 2 S.C.R. 412; U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048; Bell Canada v. Canada (Canadian Radio‑Television and Telecommunications Commission), [1989] 1 S.C.R. 1722.
Statutes and Regulations Cited
Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade, Art. 6.
Canadian Import Tribunal Rules, SOR/85‑1068, r. 36.
Federal Court Act, R.S.C. 1970, c. 10 (2nd Supp.), s. 28.
General Agreement on Tariffs and Trade, Art. 6(a).
Special Import Measures Act, S.C. 1984, c. 25, ss. 2(1) "material injury", "subsidized goods", "subsidy", 31(1), 38(1), 42, 76(1).
Authors Cited
Arthurs, H. W. "Protection against Judicial Review" (1983), 43 R. du B. 277.
Arthurs, H. W. "Rethinking Administrative Law: A Slightly Dicey Business" (1979), 17 Osgoode Hall L.J. 1.
Brownlie, Ian. Principles of Public International Law, 3rd ed. Oxford: Clarendon Press, 1979.
Cane, Peter. An Introduction to Administrative Law. Oxford: Clarendon Press, 1986.
Craig, P. P. Administrative Law. London: Sweet & Maxwell, 1983.
Craig, P. P. "Dicey: Unitary, Self‑Correcting Democracy and Public Law" (1990), 106 L.Q.R. 105.
Dicey, Albert Venn. Introduction to the Study of the Law of the Constitution. London: MacMillan, 1885.
Dicey, Albert Venn. Introduction to the Study of the Law of the Constitution, 10th ed. London: MacMillan & Co., 1959.
Dussault, René et Louis Borgeat. Traité de droit administratif, t. III, 2e éd. Québec: Presses de l'Université Laval, 1989.
Evans, J. M. "Developments in Administrative Law: The 1984‑85 Term" (1986), 8 Sup. Ct. L. Rev. 1.
Evans, J. M. et al. Administrative Law, 3rd ed. Toronto: Emond Montgomery Publications Ltd., 1989.
Hewart of Bury, Lord. The New Despotism. London: E. Benn Ltd., 1945.
Jennings, Sir Ivor. The Law and the Constitution, 5th ed. London: University of London Press, 1959.
Langille, Brian. "Developments in Labour Law: The 1981‑82 Term" (1983), 5 Sup. Ct. L. Rev. 225.
Langille, Brian. "Judicial Review, Judicial Revisionism and Judicial Responsibility" (1986), 17 R.G.D. 169.
Victor, A. Paul. "Injury Determinations by the United States International Trade Commission in Antidumping and Countervailing Duty Proceedings" (1984), 16 N.Y.U.J. Int'l L. & Pol. 749.
Wade, Sir William. Administrative Law, 6th ed. Oxford: Clarendon Press, 1988.
APPEALS from a judgment of the Federal Court of Appeal, [1989] 2 F.C. 517, 58 D.L.R. (4th) 642, 92 N.R. 264, 18 C.E.R. 268, dismissing appellants' applications to review and set aside a decision of the Canadian Import Tribunal (1987), 14 C.E.R. 1. Appeals dismissed.
John T. Morin, Q.C., and Robert W. Staley, for the appellant American Farm Bureau Federation.
J. L. McDougall, Q.C., R. C. Heintzman and D. H. Pearson, for the appellants St. Lawrence Starch Co. et al.
No one appeared for respondent.
C. J. Michael Flavell and Geoffrey C. Kubrick, for the interveners Ontario Corn Producers' Association et al.
Gordon B. Greenwood, for the interveners the British Columbia Division, Canadian Feed Industry Association et al.
The judgment of La Forest, L'Heureux-Dubé, Gonthier and McLachlin JJ. was delivered by
//Gonthier J.//
GONTHIER J. -- These are two appeals from a judgment of the Federal Court of Appeal dismissing applications by the appellants pursuant to s. 28 of the Federal Court Act, R.S.C. 1970, c. 10 (2nd Supp.), for judicial review of a decision of the Canadian Import Tribunal finding that the subsidizing of importations into Canada of grain corn originating in and exported from the United States of America has caused, is causing and is likely to cause material injury to the production in Canada of like goods. At issue is the reasonableness of the interpretation and application made by the Tribunal of s. 42 of the Special Import Measures Act, S.C. 1984, c. 25 ("SIMA"), providing for such a determination involving more particularly its consideration of the General Agreement on Tariffs and Trade ("GATT"), the taking into account of potential as well as actual importations and the finding as to causation of injury.
I. The Facts
The facts giving rise to these appeals may be summarized as follows.
On July 2, 1986, the Deputy Minister of National Revenue for Customs and Excise initiated an investigation pursuant to s. 31(1) of SIMA in relation to American subsidization of grain corn. The investigation was launched as a result of a complaint made by the intervener, the Ontario Corn Producers' Association ("OCPA"), that subsidies paid to American producers substantially lowered Canadian corn prices causing material injury to the domestic industry. The specific complaint, to the effect that the lower American prices were transferred to Canada because of the ready access of Canadian buyers to U.S. supplies, was succinctly expressed by the Tribunal as follows:
... the corn producers of Ontario, Quebec and Manitoba contended that subsidized U.S. grain corn has caused and would likely continue to cause material injury to the producers of like goods in Canada, in the absence of the protection provided by the countervailing duty. In support of their position, the growers demonstrated a significant linkage between the prices of corn in U.S. markets and the prices of corn in Canadian markets. In day-to-day business, Canadian farmers, processors and dealers routinely and consciously look to the U.S. markets for pricing signals, movements, and levels. Major purchasers and users of grain corn in Canada may not want to physically import U.S. corn but they do use its availability on open and continuous offer ... as a bargaining lever opposite their Canadian suppliers.
((1987), 14 C.E.R. 1, at p. 10.)
On November 7, 1986, the Deputy Minister, pursuant to s. 38(1), made a preliminary determination as regards the complaint and decided to impose a provisional duty on American corn. Following this preliminary determination, the Canadian Import Tribunal conducted an inquiry, under s. 42 of SIMA , and concluded that the "subsidizing of importations into Canada of grain corn ... originating in or exported from the U.S. ... has caused, is causing and is likely to cause material injury to the production in Canada of like goods" (p. 26). Under the relevant SIMA provisions, a countervailing duty could accordingly be imposed.
II. Relevant Statutory Provisions
For ease of reference, I reproduce below the statutory provisions relevant to these appeals.
Special Import Measures Act
38. (1) Subject to sections 39 and 40, within ninety days after the initiation of an investigation respecting the dumping or subsidizing of goods, the Deputy Minister shall make a preliminary determination of dumping or subsidizing with respect to the goods in respect of which the investigation has not been terminated pursuant to section 35 or 36 after estimating and specifying, in relation to each importer of goods in respect of which the investigation is made, as follows, namely,
(a) in the case of dumped goods,
(i) estimating the margin of dumping of the goods to which the preliminary determination applies, using the information available to him at the time the estimate is made, and
(ii) specifying the goods to which the preliminary determination applies;
(b) in the case of subsidized goods,
(i) estimating the amount of the subsidy on the goods to which the preliminary determination applies, using the information available to him at the time the estimate is made,
(ii) specifying the goods to which the preliminary determination applies, and
(iii) where the whole or any part of the subsidy on the goods to which the preliminary determination applies is an export subsidy, specifying that there is an export subsidy on the goods and estimating the amount of the export subsidy thereon ...; and
(c) in the case of dumped or subsidized goods, specifying the name of the person he believes, on the information available to him at the time he makes the estimate referred to in paragraph (a)(i) or (b)(i), as the case may be, is the importer in Canada of the goods.
(2) Where the Deputy Minister makes a preliminary determination of dumping or subsidizing in respect of goods, he shall
(a) cause notice of the determination to be given and published as provided in paragraph 34(a); and
(b) cause to be filed with the Secretary written notice of the determination, stating the reasons therefor, together with such other material relating to the determination as may be required under the rules of the Tribunal.
42. (1) 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,
(a) in the case of any goods to which the preliminary determination applies, as to whether the dumping or subsidizing 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;
(b)in the case of any dumped goods to which the preliminary 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 application of anti-dumping measures, or
(B) the importer of the goods was or should have been aware that the exporter was practising 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; and
(c) in the case of any subsidized goods to which the preliminary determination applies where a subsidy on the goods is 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 subsidized goods in order to prevent the recurrence of such material injury.
...
76. (1) Subject to this section and paragraph 91(1)(g), every order or finding of the Tribunal is final and conclusive.
Canadian Import Tribunal Rules, SOR/85-1068
36. Parties to an inquiry respecting the dumping or subsidizing of goods should, in the submissions and evidence that they present to the Tribunal, take into account that, in considering any issue of material injury or retardation, the Tribunal
(a) will wish to be informed about and will examine
(i) the actual and potential volume of the dumped or subsidized goods imported into Canada,
(ii) the effect of the dumped or subsidized goods on the prices of like goods in the domestic market, and
(iii) the impact of the dumped or subsidized goods on the production of like goods in Canada;
(b) will, in relation to the factors mentioned in subparagraphs (a)(i) and (ii), consider
(i) whether there has been a significant increase in the importation into Canada of the dumped or subsidized goods, either absolutely or relative to the production or consumption in Canada of like goods,
(ii) whether the prices of the dumped or subsidized goods imported into Canada have significantly undercut the prices of like goods produced and sold in Canada, and
(iii) whether the effect of the importation into Canada of the dumped or subsidized goods has been
(A) to depress significantly the prices of like goods produced and sold in Canada, or
(B) to limit to a significant degree increases in the prices of like goods produced and sold in Canada;
(c) will, in relation to the factor mentioned in subparagraph (a)(iii), consider all relevant economic factors and indices that have a bearing on the industry that comprises or includes the like goods, including, without limiting the generality of the foregoing,
(i) actual and potential decline in output, sales, market share, profits, productivity, return on investments or utilization of capacity,
(ii) factors affecting domestic prices,
(iii) actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital or investments and, in the case of subsidizing of an agricultural product, whether there has been an increase in the financial burden on a federal or provincial government agricultural support program in Canada; and
(d) will consider such other matters as may be relevant to the inquiry.
Federal Court Act
28. (1) Notwithstanding section 18 or the provisions of any other Act, the Court of Appeal has jurisdiction to hear and determine an application to review and set aside a decision or order, other than a decision or order of an administrative nature not required by law to be made on a judicial or quasi-judicial basis, made by or in the course of proceedings before a federal board, commission or other tribunal, upon the ground that the board, commission or tribunal
(a) failed to observe a principle of natural justice or otherwise acted beyond or refused to exercise its jurisdiction;
(b) erred in law in making its decision or order, whether or not the error appears on the face of the record; or
(c) based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it.
General Agreement on Tariffs and Trade
Article VI
...
6. (a) No contracting party shall levy any anti-dumping or countervailing duty on the importation of any product of the territory of another contracting party unless it determines that the effect of the dumping or subsidization, as the case may be, is such as to cause or threaten material injury to an established domestic industry, or is such as to retard materially the establishment of a domestic industry.
Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade (GATT Code on Subsidies and Countervailing Duties)
Article 6
Determination of Injury
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.
2. With regard to volume of subsidized imports the investigating 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 importing 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 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 economic 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, inventories, 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 programmes. 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 attributed to the subsidized imports.
III. The Decisions of the Courts Below
As I stated earlier, the majority of the Tribunal concluded that the subsidization of U.S. corn had caused, was causing and was likely to cause material injury to Canadian producers. I turn now to the reasons of the majority for reaching that conclusion, as well as to the decision of the Federal Court of Appeal.
Canadian Import Tribunal
Majority Decision
The majority first outlined the position of Canadian corn growers. It remarked that the latter basically argued that, in the face of American subsidies, they had two choices: they could either maintain their prices and risk losing a share of the market, or they could lower their prices in an effort to remain competitive with their American counterparts. The Tribunal observed that the Canadian producers had, for the most part, chosen the latter alternative.
The majority then dealt with the appellants' main argument, namely that there was no causal linkage between the financial predicament of Canadian producers and the importation of American grain in Canada. In this respect, the majority noted (at p. 15):
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 majority next went on to find that the American subsidies adversely affected the price of corn in Canada. It concluded (at p. 20):
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.... Because of the open nature of the Canadian market, these lower prices were transferred to Canada, with substantial adverse effect on Canadian producers.... 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.
After having determined that American subsidies caused Canadian prices to fall and that the Canadian industry had suffered and was suffering as a result, the Tribunal considered more closely s. 42 of SIMA . The appellants' argument was that the goods which are targeted by s. 42 , given the scheme of SIMA and Canada's obligations under the GATT, are imported subsidized goods. It was contended that the OCPA could not benefit from the protection of a countervailing duty as its case was based on potential as opposed to actual imports. Rejecting that argument, the majority gave a broader interpretation to the Canadian legislation. Accepting the OCPA's argument that consideration could be given not only to actual imports but also to the inflow of imports that would certainly ensue absent a price response by Canadian producers, the majority, after noting that it felt entitled to look at the GATT for guidance, stated (at p. 22):
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. 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 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.
After observing that there have been, in recent years, imports of American grain into Canada, the majority stated that the real issue was whether imports would increase in the absence of a price response by Canadian producers to American subsidies. The majority concluded that, given the openness of the Canadian market, higher levels of imports would have been a certainty.
Dissent
The dissenting member of the panel, while accepting that American policy had contributed to the world glut in the grain corn industry, rejected the claim that the Canadian producers were entitled to the relief afforded by the imposition of a countervailing duty. In his opinion, the OCPA, in order to succeed, had to show that the injury related to subsidized imports and not merely "to the availability of trans-border stocks at depressed world prices" (p. 36). The OCPA, in his view, had failed in making its case.
First, the dissenting member pointed out that there were other factors besides American policy which were responsible for the Canadian producers' difficulties. He stated (at pp. 35-36):
... there is equally little doubt that other adverse factors were present to depress world prices. There were many references to the trade war between the U.S. and the European Economic Community and the distortions it creates in the supply of agricultural commodities generally. There is the effect of the technological advance in the development of corn hybrids, fertilizers and insecticides which has revolutionized the concepts of yield per acre. Such knowledge is available worldwide, particularly to developing countries which seek to attain self-sufficiency in agricultural products. The high value of the American dollar in recent years made the cost of imports more expensive. In the aftermath of the recent deep depression which affected all nations, debt-burdened countries restricted their purchases. Erstwhile importing nations have become exporters. There is more intensive competition for the available export business as import demand shrinks. And with the advantage of hindsight we can attach blame to poor forecasting.
The dissenting member of the panel then turned to s. 42 of SIMA . Like the majority, he considered the appellants' argument that there could be no material injury unless there was a causal link between the prejudice said to have been suffered and subsidized imports. After suggesting that the relevant provisions of the GATT provided protection against subsidized imports only and after having observed that there was only a slight amount of Canadian importations of U.S. corn in the relevant time frame, he stated, reaching a conclusion different from that of his colleagues, that (at pp. 42-43):
A number of factors have been identified as having contributed to this situation of distress, and no doubt the U.S. subsidization programme, by encouraging production, contributed to the world glut, but the injury being suffered is not the kind for which SIMA and the GATT have provided a remedy: namely, injury caused by reason of subsidized imports.
...
Given all of the above, I determine that imports of U.S. subsidized grain corn have not caused material injury to Canadian production.
Nor can I make a finding of likelihood of material injury. The admonition of the GATT Code is that such findings should not be based on speculation or conjecture, but that the circumstances required to justify such a conclusion must be real and imminent.
...
I cannot make a likelihood finding essentially for the same reason that I have determined that there was no past injury: injury must relate to the presence in Canada of subsidized imports. It would be sheer speculation and conjecture to hold that, in the absence of a countervailing duty, subsidized imports would enter Canada in such volume as to cause material injury.
Federal Court of Appeal
The Federal Court of Appeal dismissed the appellants' applications for judicial review made pursuant to s. 28 of the Federal Court Act : [1989] 2 F.C. 517. In a majority decision, the Court held at pp. 538‑39 that the approach of the Tribunal was "sensible and reasonable as it relates to deciding whether material injury is likely to be caused to Canadian domestic producers". In a s. 28 application, the Court noted that it is sufficient, in order for the Tribunal's decision to be maintained, that there is some basis for its findings and conclusion. In this case, the Court was of the view that such a basis had been established.
Majority
The majority of the Court of Appeal remarked that the main issue before it concerned the interpretation of s. 42 of SIMA .
After addressing itself to the scheme of SIMA and to the appropriate GATT provisions, the majority found that s. 42 was unambiguous in that it referred only to subsidizing and not to "subsidized imports". While acknowledging that a court should generally interpret statutes so as to be in conformity with international obligations, the majority held that, as the terms of s. 42 were clear, effect had to be given to the Canadian legislation in preference to other words used in the GATT. For all intents and purposes, the majority found that one could not use the GATT as a basis for reading the terms "subsidized imports" into s. 42 of SIMA . However, the majority observed, at p. 533, that:
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 reading of the section as a wider and, in effect, more liberal construction saying this was appropriate for the Act and GATT generally.
The majority noted that the decision of the Tribunal could be read as saying that there was, in fact, a causal relationship between imported corn and injury to Canadian producers. The majority remarked that the Tribunal had found that there were imports into Canada and that these imports would have taken on greater importance had Canadian producers not lowered their prices. While suggesting that the Tribunal's reasons were not as clear as they could have been, the majority held that its ruling was not unreasonable. The majority therefore declined to interfere with its findings.
Dissent
MacGuigan J., in dissent, observed that the most fundamental issue was whether there could be material injury in the absence of a causal link between that injury and subsidized imports. The answer to that question, he noted, depended on s. 42 of SIMA and the importance to be given, in interpreting the legislation, to Canada's obligations under the GATT.
MacGuigan J. remarked that, to the extent that the Canadian legislation would have to be read in light of the GATT, there could be no material injury unless that injury was caused by subsidized imports. With respect to the Code on Subsidies and Countervailing Duties he concluded, at p. 547:
In sum, I find the interpretation of the Code crystal-clear as to national action against the subsidies 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.
After reviewing the scheme of SIMA and observing that it refers to the GATT in "sev