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ARTICLE 1904 BINATIONAL PANEL REVIEW


ARTICLE 1904 BINATIONAL PANEL REVIEW
pursuant to the
NORTH AMERICAN FREE TRADE AGREEMENT

___________________________________






)
IN THE MATTER OF:


)






)
HARD RED SPRING WHEAT

)

Secretariat File No.
FROM
CANADA
) USA-CDA-2003-1904-06
____________________________________)


PANEL MEMBERS*:

Serge
Anissimoff
James R. Holbein
Maureen Irish

Kevin C. Kennedy, Chairperson

Paul C. LaBarge




COUNSEL:

For the Canadian Wheat Board: Steptoe & Johnson LLP (Richard O.
Cunningham, Esq., Edward Krauland, Esq., and Matthew S. Yeo, Esq.)

For the North American Millers Association Ad Hoc CVD/AD Committee: Weil,
Gotshal & Manges LLP (M. Jean Anderson, Esq., and John M. Ryan, Esq.)

For the Investigating Authority: U.S. International Trade Commission, Office of
the General Counsel (Michael Diehl, Esq.)

For the North Dakota Wheat Commission: Robins, Kaplan, Miller & Ciresi LLP
(Charles A. Hunnicutt, Esq., and G. Brent Connor, Esq.)


* The Panelists wish to express their appreciation for the support received from Panel
Assistants David Forrest, Asaph Ksienski, Nick Ranieri, and Jennifer Vieira.



DECISION OF THE PANEL


I. INTRODUCTION


This Panel has been constituted pursuant to Article 1904.2 of the North American
Free Trade Agreement and appointed to review the final affirmative injury determination of
the U.S. International Trade Commission involving imports of hard red spring wheat from
Canada. See Hard Red Spring Wheat from Canada, Inv. Nos. 701-TA-430B and 731-TA-
1019B (Final), USITC Pub. 3639 (Oct. 2003).
1
In addition to the Investigating Authority,
the U.S. International Trade Commission (ITC or Commission), the parties to this
proceeding are the Canadian Wheat Board, the North American Millers Association Ad
Hoc CVD/AD Committee, and the North Dakota Wheat Commission.
2

1
Notice of the Commissions determination was published in the Federal Register on October 23, 2003. 68
Fed. Reg. 60,707, 60,708. In a parallel investigation, the Commission determined that imports of durum wheat
from Canada were not materially injuring or threatening material injury to domestic producers of durum wheat.
See Durum Wheat from Canada, Inv. Nos. 731-TA-430A and 731-TA-1019A (Final), 68 Fed. Reg. 60,707
(Oct. 23, 2003). No interested party requested panel review of the Commissions final negative injury
determination regarding Canadian imports of durum wheat.

2
Pursuant to Rules 35 and 40 of the NAFTA Rules of Procedure for Article 1904 Panel Reviews, the
Government of Canada filed a Notice of Appearance in connection with this NAFTA Chapter 19 binational
panel review on January 8, 2004. On March 18, 2004, the U.S. International Trade Commission filed a
Motion to Strike the Notice of Appearance of the Government of Canada, to which the Government of
Canada (GOC) responded on March 29, 2004. Following oral argument, on January 10, 2005, the Panel
issued its order granting the Commissions Motion to Strike (Panelist Maureen Irish dissenting). The Panel
ruled that because the GOC would lack standing to participate in a judicial review proceeding brought to
challenge the ITCs affirmative injury determination in this case, it likewise lacks standing to challenge that
determination in this Chapter 19 panel review. T
T
he relevant NAFTA provisions and U.S. statutes are clear
and unambiguous: The GOC does not have an express, unconditional right to appear and participate in a
Chapter 19 panel review if it did not participate as an interested party in the administrative proceeding
below.
Panelist Irish, in dissent, would have found that Articles 1904(2) and 1904(5) of NAFTA give a
Party a right to participate in panel review that is not conditional on meeting a domestic standing rule.
The Panels decision on the motion to strike and the dissenting opinion are attached hereto as
Appendix A.


2 The Panel hereby renders its decision in accordance with Article 1904.8 of the
Agreement and Part VII of the Rules of Procedure for Article 1904 Binational Panel
Reviews.

II. BACKGROUND

Pursuant to a petition filed with the Commission on September 13, 2002, by the
North Dakota Wheat Commission (NDWC), the Durum Growers Trade Action
Committee, and the U.S. Durum Growers Association, the ITC conducted investigations
involving imports of durum wheat and hard red spring wheat (HRS wheat) from
Canada. The Commission reached preliminary affirmative injury determinations with
respect to both products on November 25, 2002. The Department of Commerce
subsequently issued final affirmative determinations that durum wheat and HRS wheat
were being subsidized and sold at less than fair value in the United States. Thereafter, on
October 16, 2003, the Commission unanimously determined that an industry in the
United States was neither materially injured nor threatened with material injury by reason
of imports of durum wheat. An evenly-divided Commission concluded that the domestic
industry was materially injured by reason of imports of HRS wheat.
3
On October 23,
2003, the Commerce Department issued antidumping and countervailing duty orders on
imports of HRS wheat from Canada.
4

3
Commissioners Hillman and Miller voted in favor of an affirmative injury determination, while Chairman
Okun and Commissioner Koplan voted in favor of a negative injury determination. Under U.S. law, an
evenly divided vote of the Commission is deemed an affirmative determination. See 19 U.S.C. § 1677(11).
Commissioner Lane did not participate in the investigation. Commissioner Pearson had not been sworn in
as a Commissioner as of the date of the Commission vote.

4
The Department of Commerce found a countervailing duty rate of 5.29 percent for both durum and HRS
wheat, and weighted-average dumping margins of 8.26 percent for durum wheat and 8.87 percent for HRS
wheat, subsequently amended to 8.86 percent. See Final Affirmative Countervailing Duty Determinations:

3 On November 24, 2003, the Canadian Wheat Board (CWB) filed a request for
panel review with the U.S. Section of the NAFTA Secretariat in accordance with Rule 34
of the NAFTA Article 1904 Panel Rules (Panel Rules). On December 23, 2003, the
CWB and the North American Millers Association Ad Hoc CVD/AD Committee
(NAMA) filed complaints in accordance with Rule 39 of the Panel Rules. Both the
CWB and NAMA allege generally that the Commissions final injury determination with
respect to HRS wheat is unsupported by substantial evidence. Beyond that broad claim of
error, the Complainants allege the following specific defects in the Commissions
determination. First, according to Complainants, the Commission erred in finding that
the volume of subject imports was significant. Second, the Commissions finding of
significant price underselling and significant price suppression is allegedly unsupported
by substantial evidence. Third, the Commissions finding that prices declined between
the 2000/01 and 2001/02 crop years, and the contribution of subject imports to that
alleged price decline, is unsupported by substantial evidence. Finally, according to
Complainants, the Commission failed to consider factors other than the subject imports as
the cause of injury to domestic producers, including (1) the different level of trade at
which the domestic product and the subject imports compete within the United States, (2)
the impact on wheat prices of prices for HRS wheat on the Minneapolis Grain Exchange,
and (3) the fact that prices for hard red winter wheat (HRW wheat), which the

Certain Durum Wheat and Hard Red Spring Wheat from Canada, 68 Fed. Reg. 52,747 (Sept. 5, 2003);
Final Determinations of Sales at Less than Fair Value: Certain Durum Wheat and Hard Red Spring Wheat
from Canada, 68 Fed. Reg. 52,741 (Sept. 5, 2003).

4 Commission determined to be a separate product from HRS wheat, move in tandem with
prices for HRS wheat.
5

Based on the parties briefs and oral arguments, the Panel remands the
determination to the Commission for resolution not inconsistent with this decision.

III. STANDARD OF REVIEW

Pursuant to NAFTA Article 1904.3 and NAFTA Annex 1911, the Panel must
apply the standard of review set forth in Section 516A(b)(1)(B) of the Tariff Act of 1930,
as amended, 19 U.S.C. § 1516a(b)(1)(B), as well as the general legal principles that the
Court of International Trade (CIT) would apply in reviewing a final determination by
the Commission. Accordingly, this Panel will uphold any ITC determination, finding, or
conclusion unless that determination, finding, or conclusion is either unsupported by
substantial evidence on