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Antidumping and Countervailing Duty Law and Practice: The Mexican Experience

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Although Mexican antidumping and countervailing duty laws are similar in important respects to the unfair trade laws of Mexico’s NAFTA partners, the United States and Canada, there are significant procedural and substantive differences. In light of
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  Electronic copy available at: http://ssrn.com/abstract=1564462      Arizona Legal Studies Discussion Paper No. 10-10 Antidumping and Countervailing Duty Law and Practice: The Mexican Experience   Gregory W. Bowman Mississippi College - School of Law Nick Covelli Canadian International Trade Tribunal David A. Gantz The University of Arizona  James E. Rogers College of Law Ihn-Ho Uhm Canadian International Trade Tribunal (retired)  June 2010  ARTICLE Anti-dumping and Countervailing Duty Law and Practice:The Mexican Experience  Gregory W. Bowman, Nick Covelli, David A. Gantz & Ihn Ho Uhm  Although Mexican anti-dumping and countervailing duty laws are similar in important respects to the unfair trade laws of Mexico’s North American Free Trade Agreement (NAFTA) partners, the United States and Canada, there are significant proceduralandsubstantivedifferences.Inlightofthesedifferences,andgiventhatMexicoisoneoftheWorldTradeOrganization’s(WTO’s) most frequent usersof unfair trade laws (including atleast twenty-five actions against United States producers in recentyears), the subject warrants closer study and analysis by academics and practitioners alike. This article explores the subject of Mexican anti-dumping and countervailing duty laws in detail by discussing their srcins and historical development, comparingthem to their US and Canadian counterparts, and guiding the reader through the life cycle of Mexican anti-dumping and countervailing duty cases.Italsoanalysesthevarious administrative and judicialreview options, includingNAFTA’sChapter 19,along with relevant Mexican court, NAFTA binational panel, and WTO Dispute Settlement Body (DSB) jurisprudence. 1. I NTRODUCTION While much has been written on Canadian and UnitedStates anti-dumping and countervailing duty laws, 1 there is a relative paucity of English-language litera-ture on the anti-dumping and countervailing dutylaws of Mexico. 2 This is unfortunate, especially sinceMexico is active in its use of these laws, and since thelaws have undergone important recent amendments.This article is intended to rectify this imbalance, atleast in part, and contribute to the comparative analy-sis of Mexican trade remedy laws with the anti-dumping and countervailing duty laws of its NorthAmerican Free Trade Agreement (NAFTA) partnersin particular and other countries in general.This article is organized as follows. First, it discussesthe historical development of Mexican anti-dumpingand countervailing duty laws. It also provides a sum-mary of the major differences between these and USand Canadian anti-dumping and countervailing duty   This article is based on a chapter in G.W. Bowman et al.,  Trade Remedies in North America  (Alphen aan den Rijn, The Netherlands: Kluwer LawInternational, 2010). That book provides a comparative legal and economic analysis of Canadian, Mexican, and United States trade remedylaws. Primary authorship of this article and of Ch. 5 of that book is by David A. Gantz. We acknowledge with gratitude the assistance of DrGabrielCavazos,ProfessorSteve Zamora,andLicenciadosAdrianVazquez,IsabelParra,andLuisMartinezfortheirassistancein expandingourunderstanding ofMexicanunfairtradeand/or amparo laws.Anyerrorsoromissionsare,however, our ownresponsibility. The opinionsthatweexpress herein are purely personal and are in no way intended to reflect the views of the Government of Canada, including the CanadianInternational Trade Tribunal, or of the other institutions with which some of us are affiliated.   Gregory Bowman is an Associate Professor of Law at Mississippi College School of Law. Nick Covelli is a Legal Counsel to the government of Canada in Ottawa, Ontario. David A. Gantz is a Professor of Law and a Director of the International Trade and Business Law Program at theUniversity of Arizona. Ihn Ho Uhm is a Consulting Trade Economist.1 See, for example, C. Bown, ‘How Different Are Safeguards from Antidumping?: Evidence from US Trade Policies Towards Steel, Working Paper’(Department of Economics and International Business School, Brandeis University, 2004), passim; C. Bown, ‘Canada’s Antidumping andSafeguard Policies:Overt and SubtleForms ofDiscrimination’,  The World Economy  30, no. 9 (2007): 1457–1476; J.N. Buchanan, ‘Anti-dumpingLaw and the SpecialImportMeasuresAct’, CanadianBusinessLawJournal  11(1985):2–22;N.Covelli& V.Hohots,‘TwoDecades withthe SpecialImportMeasuresAct:AStatisticalAnalysisofDumpingandSubsidyCases,1984–2003’, CanadianBusinessLawJournal  39(2004):412–424;J.L.Dunoff, ‘TheMany Dimensions ofSoftwoodLumber’, Alberta Law Review   45 (2007): 319–356;G. Mastel, Antidumping Laws and the U.S.Economy (Armonk, NY: M.E. Sharpe & Co., 1998); M. Moore, ‘U.S. ‘‘Facts Available’’ Antidumping Decisions: An Empirical Analysis’,  European Journal of Political Economy  22 (2006): 639–652; A.M. Rugman & S.D. Porteous, ‘Canadian and U.S. Unfair Trade Laws: A Comparison of Their Legal andAdministrative Structures’,  North Carolina Journal of International Law & Commercial Regulation  15 (1990): 1–20; V. Stevens, ‘The PoliticalEconomyof Anti-dumping in Canada: Section 45 of the Special ImportMeasures Act’,  University ofToronto Faculty ofLaw Review  (Winter, 2006):1–44;I.H.Uhm,‘JudicialReviewofInjuryDeterminationbytheAD/CVDAuthority:CanadianJurisprudenceinthePost-WTOEra’, TradeRemedyReview   17 (2005): 58 et seq; and E.A. Vermulst, ‘The Anti-dumping Systems of Australia, Canada, the EEC and the United States of America:Have Anti-dumping Laws Become a Problem in International Trade?’,  Michigan Journal of International Law   10 (1989): 765–806.2 For two exceptions to this, see C.R. Giesze, ‘Mexico’s New Antidumping and Countervailing Duty System’,  St. Mary’s Law Journal   25 (1994):927 and B.A. Vazquez, ‘The Law of Amparo: A Critical Analysis of the Function and Uses of the Amparo Process in International Trade LawMatters’,  United States – Mexico Law Journal   6 (1998). Notes Global Trade and Customs Journal, Volume 5, Issue 7/8 ! 2010 Kluwer Law International. 267  laws, and accounts for Mexican use of such laws since1986. Next, this article discusses the application of Mexico’s Foreign Trade Law (FTL), as revised through2006, 3 and its implementing regulations (the FTL Reg-ulations of 2000). 4 The analysis concludes with a dis-cussion of administrative and judicial review, andNAFTA Chapter 19 review, of Mexican anti-dumpingand countervailing duty determinations. While underthe Mexican legal system decisional law is not control-ling, the analysis nevertheless draws on the decisionsof Mexican courts, the World Trade Organization(WTO) Dispute Settlement Body (DSB), and NAFTAChapter 19 binational panels, as well as on final deter-minations by the investigating authority in Mexico. Allof these are aids to understanding how the FTL andFTL Regulations have been applied in practice. 2. H ISTORICAL  D EVELOPMENT 2.1. Accession to the GATT Unlike the United States and Canada, Mexico does nothave a long history of implementation of anti-dumpingand countervailing duty laws. Rather, the enactmentof these laws coincided with Mexico’s accession to theGeneral Agreement on Tariffs and Trade (GATT) in1986. Prior to 1986, Mexico was primarily a closedeconomy. High tariffs and the extensive use of importquotas protected high-cost inefficient local industry;there was no need for anti-dumping or countervailingduty laws to provide additional protection. 5 As CraigGiesze has observed: Ad valorem  tariff rates as high as 100 percent incertain product categories, restrictive import quotas,incomprehensible price-reference schemes, cumber-some import licensing requirements, and other bur-densome customs procedures effectively strangledall foreign competition at the Mexican border andshielded Mexican producers, manufacturers, andresellers from both fair and unfair import competi-tion in the Mexican domestic market. 6 Mexico began to move away from an import sub-stitution policy towards broader participation in theworld economy shortly after the financial crisis of 1982, a process that resulted in its membership toGATT in 1986 and an abrupt shift in Mexican eco-nomic policy. GATT obligations, particularly Article I(Most-Favoured Nation treatment), Article III (non-discrimination/national treatment), and Article XI(prohibition against most import restraints), meantthat Mexico could no longer protect its domestic indus-try through the previous mechanisms such as importquotas and import licensing systems. Both the admin-istration of President de la Madrid and Mexican indus-try realized that such limitations greatly increased therisks of foreign dumping or subsidization that wouldinjure Mexican domestic producers. Some also sawthe desirability of replacing the older forms of protec-tionism with mechanisms that would arguably beGATT-legal and would also offer protection to domesticinterests. 2.2. Initial Legislation Legislation regulating tariffs is specifically authorizedby Article 131 of the Mexican Constitution, whichprovides in part:The Executive may be empowered by the Congressof the Union to increase or decrease the amounts of export or import duties enacted by the Congress andto create others, as well as restrict or prohibitimports, exports and goods in transit when it isdeemed necessary in order to regulate the economyof the country and the stability of nationalproduction. 7 Mexico’s first anti-dumping law, the 1986 ForeignTrade Act, 8 which was enacted several months beforeMexico formally acceded to GATT, was apparentlyinfluenced only to a limited extent by the GATT TokyoRound Anti-dumping Code, despite the fact that theCode was approved and became a part of Mexican law 3 ‘Decreto por el que se Reforman, Adicionan y Derogan Diversas Disposiciones de la Ley de Comercio Exterior’,  Diario Oficial de la Federacio´n ,21 Dec. 2006, ‘Decreto por el que se Reforman, Adicionan y Derogan Diversas Disposiciones de la Ley de Comercio Exterior’,  Diario Oficial  , 13Mar. 2003, and ‘Ley de Comercio Exterior’,  Diario Oficial  , 27 Jul. 1993, amended by ‘Decreto que Reforma, Adiciona y Deroga Disposiciones deDiversas LeysRelacionadas con el Tratado de Libre Comerciode Ame´rica del Norte’,  DiarioOficial  , 22 Dec. 1993. The Organization of AmericanStates provides an English version of the FTL at < www.sice.oas.org/antidumping/legislation/mexico/LCEXT.asp > , but it does not reflect thepost-1993 amendments and changes.4 ‘Reglamento de la Ley de Comercio Exterior’,  Diario Oficial  , 29 Dec. 2000 and  Diario Oficial  , 30 Dec. 1993.5 B. Leycegui, ‘A Legal Analysis of Mexico’s Antidumping and Countervailing Duty Regulatory Framework’, in  Trading Punches: Trade RemedyLaw and Disputes under NAFTA , ed. B. Leycegui, W.B.P. Robson & S.D. Stein (Washington, DC: National Planning Association, 1995) andGiesze,  supra  n. 2, 927.6 Giesze,  supra  n. 2, 928.7 Article 131 of the  Consitutcio´n Polı´tica de los Estados Unidos Mexicanos .8 ‘Ley Reglamentaria del Articulo 131 de la Constitucio´n Polı´tica de los Estados Unidos Mexicanos en Materia de Comercio Exterior’,  DiarioOficial  , 13 Jan. 1986. Notes Anti-dumping and Countervailing Duty Law and Practice Global Trade and Customs Journal, Volume 5, Issue 7/8 ! 2010 Kluwer Law International. 268  in 1988. 9 (Mexico did not adhere to the SubsidiesCode, presumably because of subsidies programmesthen in place; the lack of consensus on how to definea subsidy may also have been a factor.) 10 This initialattempt at devising an anti-dumping law has beencriticized as being ‘relatively rudimentary andunsophisticated’. 11 Both the private sector and likely many in the gov-ernment realized even before the NAFTA negotiationsbegan in 1991 that the 1986 Act had major proce-dural and substantive deficiencies, but the governmentwisely held off changes until reciprocal benefits couldbe obtained from the United States during the NAFTAnegotiations. 12 According to observers, everyone wasunhappy with the 1986 Act, including the Mexicanindustry because the investigating authority, then theMexican Secretariat of Commerce and IndustrialDevelopment ( Secretaria de Comercio y Fomento Indus-trial   (SECOFI)), appeared slow to initiate investigationsand willing to delay or dismiss actions for politicalreasons. US exporters also faulted Mexico because of procedural deficiencies, a lack of transparency, and theutilization of an injury test that did not meet interna-tional standards. 13 2.3. NAFTA Negotiations The NAFTA negotiations, as well as a US anti-dumpingaction against imports of Mexican cement in which theUnited States blocked adoption of a GATT Panel reportin favour of Mexico, 14 had a major policy impact onthe evolution of Mexico’s unfair trade law and practice.The cement experience, affecting one of Mexico’s mostimportant and globally competitive industries, likelyencouraged Mexico to reform its unfair trade laws insuch a matter as to be able to reciprocate in the eventthat another GATT Contracting Party (such as theUnited States) applied its unfair trade laws in whatMexico believed to be an unduly harsh manner againstMexican exports. 15 The results of the successful NAFTA negotiations,conducted under the direction of President Carlos Sal-inas de Gortiari for Mexico, required modifications inMexico’s trade remedy laws. As part of the bargain thatextended the Canada – United States Free Trade Agree-ment (CUSFTA) Chapter 19 binational panel process toMexico, 16 Mexico was required to make more thantwenty procedural changes to the 1986 Act, resultingin the FTL and the FTL Regulations of 1993. TheNAFTA-mandated changes required Mexico,  inter alia ,to eliminate the possibility of imposing duties withinfive days after acceptance of the petition; permit inter-ested parties to participate fully in the process andprovide rights of administrative and judicial review of final determinations; provide immediate access to bina-tional panel review of final determinations withoutexhaustion of administrative remedies; provide theright to annual reviews of dumping and subsidy mar-gins; and implement a variety of changes designed toincrease transparency and procedural due process. 17 2.4. WTO Accession Little more than a year later, Mexico became a chartermember of the WTO and party to the WTO Anti-dumping Agreement (AD Agreement) and the WTOSubsidies and Countervailing Measures Agreement(SCM Agreement), along with the other WTO agree-ments. The incorporation of the WTO agreements intoMexican law apparently did not require any immediatefurther modifications of the FTL or its Regulations. Nofurther major amendments to the FTL were made until2003. 18 3. M AJOR   D IFFERENCES IN  M EXICO ’ S A  PPROACH TO  A  NTI - DUMPING AND C OUNTERVAILING  D UTY   L AWS The fact that the AD Agreement and the SCMAgreement establish the requirements for national 9 ‘Decreto por el que se Aprueba del Acuerdo Relative a la Aplicacı´on del Artı´culo VI del Acuerdo General Sobre Aranceles Aduaneros yComercio’,  Diario Oficial  , 4 Dec. 1987 and ‘Decreto de Promulgacio´n del Acuerdo Relative a la Aplicacio´n del Artı´culo VI del Acuerdo GeneralSobre Aranceles Aduaneros y Comercio’,  Diario Oficial  , 21 Apr. 1988.10 Leycegui,  supra  n. 5, 44.11 Giesze,  supra  n. 2, 930.12 Leycegui,  supra  n. 5, 44.13 Giesze,  supra  n. 2, 930–933.14 GATT Committee on Antidumping Practices, Panel Report, United States – Antidumping Duties on Gray Portland Cement and CementClinker from Mexico, ADP/82, 7 Sep. 1992, not adopted. For additional discussion, see G.W. Bowman et al.,  Trade Remedies in North America (Alphen aan den Rijn, The Netherlands: Kluwer Law International, 2010), 597–600.15 Giesze,  supra  n. 2, 940–941, referencing prominent Mexican lawyers and legislators.16 See Bowman et al.,  supra  n. 14, Ch. 2 passim.17 See NAFTA, Annex 1904.15 and Bowman et al.,  supra  n. 14, Ch. 2 passim.18 O´. Cruz Barney, ‘Antecedentes del Systema Contra Pra´cticas Desleales de Comercio en Me´xico: La Evolucio´n de las Disposiciones Antidump-ing’,  Boletı´ n Mexicano de Derecho Comparado  119 (2007): 12. Notes Gregory W. Bowman, Nick Covelli, David A. Gantz & Ihn Ho Uhm Global Trade and Customs Journal, Volume 5, Issue 7/8 ! 2010 Kluwer Law International. 269  anti-dumping and countervailing duty laws meansthat the divergence among the laws of the UnitedStates, Canada, and Mexico should be relatively minor.However, as lawyers are frequently made aware, simi-lar laws can be implemented by national authorities inwidely divergent manners, particularly with regard tothe transparency of the process and adherence to prin-ciples of procedural due process.Leaving aside these procedural issues, there are sev-eral significant differences between the laws of theUnited States and Canada, on the one hand, and thoseof Mexico, on the other. The most important of these isthe use in Mexico of a single investigating authority tomake both dumping and subsidy determinations andmaterial injury determinations, while in the UnitedStates and Canada, autonomous quasi-judicial agen-cies, the US International Trade Commission (USITC)and the Canadian International Trade Tribunal (CITT),respectively, are responsible for determining materialinjury or the threat thereof. In Mexico (as in manyother WTO Members, including the European Union(EU)), a single agency, the Secretariat of the Economy,makes both types of determinations.The second major difference relates to the fact thatMexico is a civil law nation, while both the UnitedStates and Canada share the British common law tra-dition, with the common law tradition dominant infederal administrative tribunals in Canada, despitethe civilian influence of Quebec. A discussion of thedifferences between common and civil law systems iswell beyond the scope of this article. 19 Suffice it to notethat there is a higher level of formality in litigation inmost civil law jurisdictions. For example, in Mexico, alawyer cannot represent a client before a court or other judicial body (including a Chapter 19 binational panel)without a duly notarized and authenticated power of attorney from the individual or corporate client. In theUnited States, in contrast, a lawyer normally mustsimply file a letter on his or her letterhead representingto the court that he or she represents the namedclient in the matter at hand. In Canada, the lawyer(and non-lawyer in the case of the CITT) must file aprescribed Notice of Representation.Much of the litigation against the investigatingauthority in Mexico, particularly in the early years of NAFTA, raised issues of the competence of the parti-cular branch of   Economı´ a  as a basis for voiding the finaldetermination; most such challenges have beenrejected by binational panels under NAFTA. 20 Likewise reflecting the civil law tradition and the‘monist’ approach to incorporating international trea-ties into domestic law, in Mexico, the WTO agree-ments, such as the AD Agreement and the SCMAgreement, and, earlier, the Tokyo Round Anti-dumping Code, are directly incorporated into Mexicanlaw. In the established hierarchy, the Mexican Consti-tution is at the highest level, followed by internationalagreements including the WTO agreements and,finally, by Mexican federal law. 21 In Mexico, unlike inthe United States and Canada, the WTO agreementsare cited, relied on, and applied in administrative andcourt proceedings. 22 However, these treaties, onceincorporated, must be implementedthrough the enact-ment of national laws and regulations, subject to thefact that the international obligations may not bebreached by the President or legislature. 23 One scholar has suggested that this means that thereviewing court or panel ‘must interpret [ . . . ] the Mex-ican statutes harmoniously with respect to the inter-national agreements [such as the AD Agreement]’. 24 In this sense, Mexico is a hybrid system rather than atrue monist system, reflecting the need with respect totrade agreements for implementing legislation in Mex-ico, as elsewhere, that set out in detail the proceduralrequirements applicable to anti-dumping and counter-vailing duty actions and designate the ‘investigatingauthority’ (in the WTO agreements) as, in the case of Mexico, the Secretariat of Economy. In any event,unlike in the United States, it is common practice forthe Federal Tax Court, when reviewing the authority’sadministrative decisions, to refer directly to the ADAgreement as well as to relevant provisions of the free 19 See, for example, B. Kozolchyk, ‘Law of the U.S. in Comparative – Legal Reasoning Perspective’, in  United States Law of Trade and Investment ,ed. B. Kozolchyk & J.F. Malloy (Littleton, CO: Fred B. Rothman Publications, 2001), 1-1.20 See, for example, Binational Panel,  Imports of High-Fructose Corn Syrup Originating in the United States of America (Dumping)  (2 Aug. 2001),MEX-USA-98-1904-01, 52–60 (rejecting claimant’s challenge to the investigating authority’s issuance of notices of the verification visits as‘irrelevant’ on grounds that the claimants failed to challenge the validity or results of the visits themselves) and Binational Panel,  Imports of Urea Originating in the United States of America (Dumping)  (23 May 2002), MEX-USA-00-1904-02, 10–21 and 79 (rejecting claimant’schallenge to the competence of   Economı´a’s  Director General of Legal Affairs to carry out the investigation).21 Thesis No. P. VII/2007, Supreme Court of Justice (full court), resolving  amparo  120/2002, 13 Feb. 2007 (holding that ‘International treatiesare an integral part of the supreme law of the Union and are placed hierarchically above the general, federal and local laws; interpretation of Article 133 of the Constitution’).22 See, for example, Binational Panel,  Carbon Steel Tubing with LongitudinalSeams Originating in the United States of America  (13 Mar. 2008), MEX-USA-2005-1904-01, paras 34 and 73.23  Amparo  en revision, 427/2006, Secretaria Economı´a, 29 Nov. 2006 (holdingthat the Period of Review specified in Art. 89 of the FTA must beconsistent with Art. 11.4 of the AD Agreement) and Juicio de Nulidad No. 100(20)4/96/17856/95 (25 Aug. 1998) Segunda Seccio´n, SalaSuperior de TFF (the Court is obligated to apply laws and regulations in a manner consistent with international treaties to which Mexico is aparty, such as the AD Agreement).24 G. Cavazos Villanueva & N. Ranieri, Memorandum to Various NAFTA Binational Panellists (30 May 2007), 9 (copy on file with the authors). Notes Anti-dumping and Countervailing Duty Law and Practice Global Trade and Customs Journal, Volume 5, Issue 7/8 ! 2010 Kluwer Law International. 270
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