Usinor Industeel, S.A. v. United States , 26 Ct. Int'l Trade 467 ( 2002 )

Slip Op. 02-39
UNITED STATES COURT OF INTERNATIONAL TRADE
:
USINOR INDUSTEEL, S.A., DUFERCO :
CLABECQ, S.A., AG der DILLINGER HÜTTENWERKE,:
SALZGITTER AG STAHL und TECHNOLOGIE, and :
THYSSEN KRUPP STAHL AG, :
:
Plaintiffs, :
: Consolidated Court
v. : No. 01-00006
:
THE UNITED STATES, : Public Version
:
Defendant, :
:
and :
:
BETHLEHEM STEEL CORPORATION and :
U.S. STEEL GROUP, A UNIT OF USX CORP., :
:
Defendant-Intervenors. :
:
[ITC sunset review determination remanded.]
Dated: April 29, 2002
Barnes, Richardson, & Colburn (Gunter von Conrad and Stephen W. Brophy) for plaintiff
Usinor Industeel, SA.
White and Case LLP (Walter J. Spak, Lyle B. Vander Schaaf, Joseph H. Heckendorn, and
Caleb W. Sullivan) for plaintiff Duferco Clabecq, S.A.
DeKieffer and Horgan (J. Kevin Horgan and Marc E. Montalbine) for plaintiffs AG der
Dillinger Hüttenwerke, Salzgitter AG Stahl und Technologie and Thyssen Krupp Stahl AG.
Lyn M. Schlitt, General Counsel, James M. Lyons, Deputy General Counsel, United
States International Trade Commission (Rhonda M. Hughes), for defendants.
CONSOL. COURT NO . 01-00006 PAGE 2
Dewey Ballantine LLP (Alan Wm. Wolff, Kevin M. Dempsey, and Rory F. Quirk) and
Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer, John J. Mangan, and James
C. Hecht) for defendant-intervenors Bethlehem Steel Corporation, U.S. Steel Group, a unit of
USX Corporation.
OPINION
RESTANI, Judge: This consolidated matter is before the court on a motion for
judgment based upon the agency record pursuant to USCIT Rule 56.2. The motion has been
brought by Usinor Industeel, S.A., Duferco Clabecq, S.A., AG der Dilllinger Hüttenwerke,
Salzgitter AG Stahl und Technologie and Thyssen Krupp Stahl AG (collectively “Plaintiffs”),
respondents in the underlying antidumping investigation. Plaintiffs challenge certain aspects of
the final determination of the U.S. International Trade Commission (“Commission” or “ITC”) in
its five-year sunset review of antidumping and countervailing orders in Certain Carbon Steel
Products From Australia, Belgium, Brazil, Canada, Finland, France, Germany, Japan, Korea,
Mexico, Netherlands, Poland, Romania, Spain, Sweden, Taiwan, and United Kingdom, 65 Fed.
Reg. 75,301 (Int’l Trade Comm’n 2000) (“Final Determination”). Plaintiffs primarily challenge
the Commission’s decision to cumulate subject imports from Belgium and Germany with those
from other countries on the ground that conditions of competition in European Community
(“E.C.”) changed substantially between the initial investigation and this sunset review. Plaintiffs
also challenge the Commission’s affirmative competition overlap determination, arguing that the
Commission applied an improper statutory standard and, generally, that the Commission’s
finding of likely material injury was not supported by substantial evidence.
CONSOL. COURT NO . 01-00006 PAGE 3
JURISDICTION
This action commenced under section 516A(a)(2)(A)(i)(I) and (B)(iii) of the Tariff Act of
1930, as amended (the “Act”). 19 U.S.C. §§ 1516a(a)(2)(A)(i)(I) and (B)(iii) (1999). The court
has jurisdiction pursuant to 28 U.S.C. § 1581(c) (1994).
BACKGROUND
On September 1, 1999, the Commission instituted five-year sunset reviews, pursuant to
section 751 of the Act, to determine whether revocation of antidumping and countervailing duty
orders on certain carbon steel products1 from various countries would likely lead to continuation
or recurrence of material injury to the domestic industry. See Certain Carbon Steel Products
From Australia, Belgium, Brazil, Canada, Finland, France, Germany, Japan, Korea, Mexico,
Netherlands, Poland, Romania, Spain, Sweden, Taiwan, and United Kingdom, 64 Fed. Reg.
47,862 (Int’l Trade Comm’n 1999) (institution of five year reviews). On December 21, 1999, the
Commission decided to conduct full five-year reviews for all orders. See Certain Carbon Steel
Products from Australia, Belgium, Brazil, Canada, Finland, France, Germany, Japan, Korea,
Mexico, Netherlands, Poland, Romania, Spain, Sweden, Taiwan, and United Kingdom, 64 Fed.
Reg. 71,494 (Int’l Trade Comm’n 1999) (notice of Commission determination to conduct full
five-year reviews).
On December 1, 2000, the Commission published notice of its final affirmative
determination. Final Determination, 65 Fed. Reg. 75,301. The Commission unanimously found
1
The reviews covered three separate products: (1) cut-to-length carbon steel plate; (2)
cold-rolled carbon steel flat products; and (3) corrosion-resistant carbon steel plate. Plaintiffs’
challenge is limited to cut-to-length carbon steel plate.
CONSOL. COURT NO . 01-00006 PAGE 4
that revocation of the antidumping and countervailing duty orders on cut-to-length carbon steel
plate (“CTL plate”) from Belgium, Brazil, Finland, Germany, Mexico, Poland, Romania, Spain,
and Sweden would likely lead to a continuation or recurrence of material injury to the domestic
industry. Id.2 Plaintiffs’ challenge here is directed at retention of the antidumping orders.
The determinations at issue reviewed a 1979 antidumping duty order on carbon steel plate
from Taiwan3 and a 1993 antidumping duty order on CTL plate from various countries including
Belgium and Germany.4 Id. Plaintiffs Usinor Industeel, SA (“Usinor”) and Duferco Clabecq,
S.A. (“Duferco”) are Belgian producers and exporters of CTL plate. Plaintiffs AG der Dilllinger
Hüttenwerke, Salzgitter AG Stahl und Technologie and Thyssen Krupp Stahl AG (collectively,
the “German Producers”) are German producers and exporters of CTL plate. Usinor, Duferco,
and the German Producers (collectively “Plaintiffs”) participated in the review proceedings and
contest the Final Determination here. The U.S. producers participating in the review were
Bethlehem Steel Corp. (“Bethlehem”), U.S. Steel Group, a Unit of USX Corp. (“U.S. Steel”),
2
The Commission voted 6-0 that revocation of orders on CTL plate from Canada would
not likely lead to continuation or recurrence of material injury to the domestic industry. Id. By a
vote of 4-2, the Commission determined that revocation of the orders CTL plate from the United
Kingdom would likely lead to continuation or recurrence of material injury. By a vote of 5-1, the
Commission determined that revocation of the orders on CTL plate from Taiwan would likely
lead to a continuation or recurrence of material injury.
3
On May 12, 1979 the Commission determined that imports of plate from Taiwan
injured or were likely to injure a regional industry in the United States. See Carbon Steel Plate
from Taiwan, USITC Pub. 970, AA1921-197 (May 1979).
4
The 1993 period of review (“POR”) was 1990 to 1992. See Certain Flat-Rolled Carbon
Steel Products from Argentina, Australia, Austria, Belgium, Brazil, Canada, Finland, France,
Germany, Italy, Japan, the Republic of Korea, Mexico, the Netherlands, New Zealand, Poland,
Romania, Spain, Sweden, and the United Kingdom, USITC Pub. 2664, INV. Nos. 701-TA-319
to 332, 334, 336 to 342, 344, and 347 to 353 (final); and 731-TA-573 to 579, 581-592, 594 to
597, 599 to 609, and 612 to 619 (final) (Aug. 1993) (hereinafter “1993 ITC Determination”).
CONSOL. COURT NO . 01-00006 PAGE 5
Gulf States Steel, Inc., U.S. Denro Steel, Inc., and IPSCO Steel, Inc. (collectively the “Domestic
Producers”). Bethlehem and U.S. Steel are Defendant-Intervenors in the present action.
Pursuant to 19 U.S.C. § 1675a(a)(7), the Commission elected to cumulate likely volume
and price effects from all countries except Canada.5 Final Determination at 29. In support of
cumulation, the Commission found that: (1) subject imports from all countries except Canada
were likely to have a discernible adverse impact on the domestic industry if orders were revoked;
(2) there would be reasonable overlap of competition between subject imports from all countries
and the domestic like product if orders were revoked; and (3) except for Canada, no significant
differences in the conditions of competition existed between the remaining countries. Id. at 29-
37.
Upon cumulation, the Commission determined that material injury was likely if orders
were revoked. In support, the Commission found that volume of cumulated subject imports
would likely be significant if orders were revoked.6 Id. at 40-42. The Commission found that
5
With respect to Canada, only one of the three major Canadian producers to which the
antidumping duty order applied, Stelco, remained subject to the order. IPSCO was excluded
pursuant to a remand determination in 1995 that lowered its margin to de minimis and
Commerce revoked the order on Algoma in 1999. Staff Report at PLATE-IV-3. The
Commission determined that likely future levels of subject imports from Canada would not be
significant, that the probable volumes would likely be too small to affect domestic prices
significantly and, in the absence of significant volume or price effects, that the likely impact of
subject imports from Canada on the domestic plate industry, in the event of revocation, would
not be significant. Accordingly, the Commission found that subject imports from Canada would
not lead to continuation or recurrence of material injury within a reasonably foreseeable time if
the order were revoked. Final Determination at 48-49.
6
The Commission’s volume analysis was ostensibly based on significant foreign
production capacity and excess capacity to produce both subject and non-subject plate products,
foreign plate inventories, significant exports by most producers of subject plate (indicating that
exporting is an important part of these producers’ businesses), and barriers to exporting to third
countries. Id. at 40-42. In addition, the Commission found that the incentive for foreign
CONSOL. COURT NO . 01-00006 PAGE 6
increased volume of CTL plate would undersell domestic like products and have significant price
suppressing and depressing effects within a reasonably foreseeable time. Id. at 43. Finding that
revocation of orders would likely lead to increases in volume with significant adverse price
effects, the Commission determined that, because of the vulnerability of the domestic industry,
the cumulated effects would likely have a significant adverse impact on the domestic industry
and would likely cause the domestic industry to lose market share. Id. at 47.
The Commission concluded that if orders were revoked, subject imports from Belgium,
Brazil, Finland, Germany, Mexico, Poland, Romania, Spain, Sweden, Taiwan, and the United
Kingdom would be likely to enter the U.S. market in sufficient quantities and at prices below
those of the domestic like product so as to have a significant adverse impact on the domestic
industry within a reasonably foreseeable time. Id. at 46-48. In light of these conclusions, the
Commission found that revocation of the orders would likely lead to a continuation or recurrence
of material injury to the domestic industry within a reasonably foreseeable time. Id. at 49-50.
Plaintiffs challenge the Commission’s decision to cumulate Belgian and German imports with
those of the remaining countries, as well as the Commission’s affirmative determination upon
cumulation.
producers to increase sales to maximize the use of available capacity, the role of increasingly
consolidated service centers in seeking out sources of low-cost supplies, as well as the price-
sensitive nature of the domestic plate market and the weakened condition of the domestic
industry indicated that the volume of subject imports would likely be significant. Id.
CONSOL. COURT NO . 01-00006 PAGE 7
STANDARD OF REVIEW
The Commission’s determinations in five-year sunset reviews will be upheld unless the
court determines that they are “unsupported by substantial evidence on the record, or otherwise
not in accordance with law.” 19 U.S.C. § 1516a(B)(1)(b)(1).
DISCUSSION
I. Cumulation
Plaintiffs challenge the Commission’s decision to cumulate imports from Belgium7 and
Germany with imports from other countries. Cumulation is discretionary in sunset reviews. See
19 U.S.C. § 1675a(a)(7); see also Eveready Battery Co. v. United States, 77 F. Supp. 2d 1327,
1331 (Ct. Int’l Trade 1999); Statement of Administrative Action, (“SAA”) accompanying
H.R.Rep. No. 103-826(I), at 887, reprinted in 1994 U.S.C.C.A.N. 4040, 4212. Section
1675a(a)(7) provides that:
[T]he Commission may cumulatively assess the volume and effect of imports of the
subject merchandise from all countries with respect to [sunset reviews that] were initiated
on the same day, if such imports would be likely to compete with each other and with
domestic like products in the United States market.
Id. (emphasis added). The statute prohibits cumulation if the Commission determines that
subject imports are likely to have “no discernible adverse impact” on the domestic industry. Id.In order to satisfy this provision, the Commission must also determine that “a reasonable overlap
of competition” exists between imports from different countries. Wieland Werke, AG v. United
States, 13 CIT 561, 563, 718 F. Supp. 50, 52 (1989). In addition to these statutory requirements,
7
There were two CTL plate producers in Belgium during the POR, Duferco and
Fabrique de Fer de Charleroi, S.A. (now Usinor). Staff Report at PLATE-IV-1.
CONSOL. COURT NO . 01-00006 PAGE 8
the Commission analyzes the “overall similarities in the conditions of competition that would
prevail if the finding and orders are revoked.” Certain Steel Wire Rope from Japan, Korea, and
Mexico, USITC Pub. 3259, INV. Nos. 731-TA-547, at 11 (Dec. 1999) (five-year review).
Plaintiffs challenge the Commission’s affirmative determinations with respect to each.
A. Discernible Impact
The Commission may not cumulatively assess the volume and effects of subject imports
if it determines that such imports are “likely to have no discernible adverse impact on the
domestic industry.” 19 U.S.C. § 1675a(a)(7). Citing the absence of any guidance in the statute
or SAA, the Commission states that it “generally considers the likely volume of the subject
imports and the likely impact of those imports on the domestic industry within a reasonably
foreseeable time.” Final Determination at 22. In terms of product mix, the Commission found
“a reasonable overlap” between the types of plate products manufactured in each subject country
and those produced in the United States and, therefore, imports are likely to be substitutable for
and competitive with domestic plate. Id. at 31 (citing Domestic Producer Questionnaire
Responses, C.R. Doc. 236, Tables CTL-SUPP-13 through 24). Focusing primarily on foreign
excess capacity8 and the ability of the foreign producers to produce all types of plate products, the
Commission found that volume of subject imports was likely to increase significantly if orders
were revoked. Relying heavily upon the weakened condition of the domestic industry, the
Commission determined that this increased volume would have a discernible adverse impact on
8
The Commission calculated that capacity in each country was equivalent to over five
percent of U.S. consumption, except with regard to Canada. Final Determination at 30 n.98
(citing Staff Report, Tables PLATE-IV-3 through 13 (summarizing capacity and capacity
utilization for subject countries)). The Commission found the size of the industry in each
country significant when compared to U.S. consumption. Final Determination at 30.
CONSOL. COURT NO . 01-00006 PAGE 9
the domestic industry. Plaintiff Usinor challenges this determination arguing that: (1) the
Commission’s discernible impact methodology lacks a consistent analytical framework; and (2)
Belgium was entitled to a country-specific analysis.
1. Differing Analytical Frameworks
In lieu of explaining individual Commissioner’s discernible adverse impact
methodologies, the Final Determination referred to prior sunset reviews for a discussion of the
various analytical frameworks used by Chairman Koplan and Commissioners Hillman, Miller
and Bragg in applying the “no discernible adverse impact” provision.9 Final Determination at 22,
nn.73-74. Usinor claims that Chairman Koplan and Commissioner Bragg improperly analyzed
the sunset review cumulation provision as a negligibility provision. Usinor misstates Chairman
Koplan’s position. In the decisions cited, the commissioners read the “no discernible adverse
impact” provision “to be largely a negligibility provision without the use of a strict numerical test
of the sort now required by the statute in original antidumping and countervailing duty
investigations.” Malleable Cast Iron Pipe Fittings, Sep. Views of Comm’rs Miller & Hillman at
12, Sep. Views of Comm’r Koplan at 25-26 n.3. The Commissioners interpreted the provision to
require a focus on the total volume of imports that would likely occur in the event of revocation
of the orders rather than the change in volumes of such imports, Malleable Cast Iron Pipe
Fittings, Sep. Views of Comm’rs Miller & Hillman at 12; Iron Metal Castings, Views of Comm’r
9
Chairman Koplan and Commissioner Miller referred to their discussion of cumulation in
their separate views in Malleable Cast Iron Pipe Fittings from Brazil, Japan, Korea, Taiwan, and
Thailand, USITC Pub. 3274, Inv. Nos. 731-TA-278-280 (Review), 731-TA-347-348 (Review)
(Feb. 2000). Chairman Koplan also cited his individual discussion of cumulation in Iron Metal
Castings from India; Heavy Iron Construction Castings from Brazil; and Iron Construction
Castings from Brazil, Canada and China, USITC Pub. 3247, Inv. Nos. 303-TA-13 (Review);
701-TA-249 (Review); and 731-TA-262, 263 & 265 (Review) (Oct. 1999).
CONSOL. COURT NO . 01-00006 PAGE 10
Koplan at 28, and an evaluation of the likely conditions of competition as well. Malleable Cast
Iron Pipe Fittings, Sep. Views of Comm’rs Miller & Hillman at 12-13; Iron Metal Castings,
Views of Comm’r Koplan at 28. That interpretation is consistent with the methodology
employed here and is not contrary to the discretionary cumulation standard.
Commissioner Bragg referred to her discussion of cumulation in Potassium Permanganate
from China and Spain,USITC Pub. 3245, Inv. Nos. 731-TA-125 to 126 (Review) (Oct. 1999)
and Brass Sheet and Strip from Brazil, Canada, France, Germany, Italy, Japan, Korea, the
Netherlands, and Sweden, USITC Pub. 3290, Inv. Nos. 701-TA-269 & 270 (Review), 731-TA-
311-317 & 379-380 (Review) (Apr. 2000). Commissioner Bragg first determines: (1) whether
the reviews were initiated on the same day, and (2) whether there is a likely reasonable overlap in
competition if orders are revoked. If so, Commissioner Bragg then examines whether such
imports are likely to have no discernible adverse impact on the domestic industry. Potassium
Permanganate, Sep. Views of Comm’r Bragg at 27; Brass Sheet and Strip, Sep. Views of
Comm’r Bragg at 27.
Usinor argues that under19 U.S.C. § 1675a(a)(7), the Commission must make an
affirmative determination that discernible adverse impact is likely before analyzing competition
overlap. Usinor’s objection fails here for two reasons. First, Commissioner Bragg ultimately
determined that subject imports from Belgium alone would likely have a discernible adverse
impact if orders were revoked.10 Final Determination, Sep. Views of Comm’r Bragg at 27.
10
Consistent with the majority methodology, Commissioner Bragg based her discernible
adverse impact determination on excess capacity noting that Belgium possessed approximately [
] tons of excess capacity to produce subject plate and [ ] tons of excess capacity to
produce all plate. Belgian producers’ inventories of subject merchandise were [ ] tons at
the end of the interim period, and that total unused capacity plus end-of-period inventories were
CONSOL. COURT NO . 01-00006 PAGE 11
Second, a majority of the Commission employed other uncontested analyses. Therefore, the
court need not remand even if Commissioner Bragg’s analysis were faulty. See Ad Hoc Comm.
of Domestic Uranium Producers v. United States, 162 F. Supp. 2d 649, 654 (Ct. Int’l Trade
2001) (not reaching the issue of significance of different production capacities and inventories
where other factors cited by the Commission were deemed adequate). Differing methodologies
by individual commissioners is not, by itself, sufficient to require remand. See, e.g., Neenah
Foundry Co. v. United States, 155 F. Supp. 2d 766 (Ct. Int’l Trade 2001) (upholding distinct
approaches on discernible adverse impact); Cemex, S.A. v. United States, 16 CIT 251, 252, 790
F. Supp. 290, 292 (1992) (ITC’s determination affirmed when two majority commissioners
utilized different analyses).
2. Country-Specific Analysis
Usinor next argues that the Commission did not analyze each country individually in
making its findings, and specifically failed to discuss its analysis with respect to Belgium. In
support of its discernible impact determination, the Commission specifically referred to that
portion of the Staff Report analyzing the Belgian CTL plate industry. Final Determination at 30
n.101. The Staff Report analyzes the facts specific to subject imports from Belgium. Staff
Report at PLATE-IV-1 through 3. While citation to the staff report is not ideal, the court can
deduce from the Commission’s reference that: (1) CTL plate accounts for a substantial portion
of Belgian sales;11 (2) that Usinor itself reported that [
equivalent to approximately [ ] percent of domestic production during 1999, and [ ]
percent of apparent domestic consumption that year.
11
The Staff Report states that CTL plate accounted for between [ ] percent of
the Belgian Mills’ total sales in the most recent fiscal year. Staff Report at PLATE-IV-1, 2.
CONSOL. COURT NO . 01-00006 PAGE 12
]; and (3) that Belgium exports the majority of
CTL plate produced.12 The Belgium specific analysis in the Staff Report is consistent with the
Commission’s general finding in the Final Determination. Id. at 30 (noting size of industry,
capacity to produce all types of plate products, and export orientation in support of general
finding).
B. Competition Overlap
The Commission states that it generally considers four factors to determine whether
competition overlap is likely: (1) the degree of fungibility between the imports from different
countries and between imports and the domestic like product; (2) the presence of sales or offers
to sell in the same geographical markets of imports from different countries and the domestic like
product; (3) the existence of common or similar channels of distribution for imports from
different countries and the domestic like product; and (4) whether the imports are simultaneously
present in the market. Final Determination at 23, n.76; see also Wieland Werke, AG v. United
States, 13 CIT 561, 563 (1989). These factors are neither exclusive nor determinative. See Goss
Graphics Sys. v. United States, 33 F. Supp. 2d 1082, 1086 (Ct. Int’l Trade 1998). In finding that
competition overlap is likely, the Commission made affirmative determinations as to each factor.
Final Determination at 31-33. Duferco contests each finding, arguing that the Commission did
not apply the proper statutory standard and that the determinations are not supported by
substantial evidence.
12
The Staff Report notes that, in 1999, over [ ] percent of Duferco’s sales were to
other European countries. Staff Report at PLATE-IV-2; Table PLATE-IV-3. Duferco and
Usinor are the only producers of CTL plate in Belgium.
CONSOL. COURT NO . 01-00006 PAGE 13
1. “Likely”
Plaintiff Duferco argues that the Commission failed to properly construe the phrase
“likely” under 19 U.S.C. § 1675.13 The Act does not expressly define the term likely.
“[U]ndefined terms in a statute are deemed to have their ordinary meaning.” Koyo Seiko Co. v.
United States, 36 F.3d 1565, 1571 n.9 (Fed. Cir. 1994). Webster’s Dictionary and Black’s Law
Dictionary define “likely” as probable. See Webster’s Ninth New Collegiate Dictionary, at 692
(1990); Black’s Law Dictionary (6th ed., 13th reprint) at 834 (1998). Under Chevron U.S.A., Inc.
v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984), the court must (1)
determine whether the statute is ambiguous; and, if so (2) determine whether the agency’s
construction of the statute is reasonable. The court determines that the statute is clear and,
therefore, does not reach step two. “Likely” means “likely” – that is, probable. “Likely” is
nowhere defined as merely “possible”.
While the Final Determination does not provide a contrary construction, Duferco argues
that the Commission implicitly interprets and applies the term “likely” to mean possible, not
probable. Plaintiffs argue that by emphasizing excess capacity without explaining why producers
from Belgium would shift exports to United States, the Commission has, without more, only
determined that imports are possible.14 Counsel for Defendant confuses the matter by arguing
that likely does not mean probable. Defendant cites the SAA which reads:
The determination called for in these types of reviews is inherently predictive and
speculative. There may be more than one likely outcome following revocation or
13
Plaintiff Usinor incorporates Duferco’s argument by reference.
14
Plaintiffs suggest that, among other things, recent changes in the European Community
have made exporting to E.C. members more attractive than exporting to the U.S.
CONSOL. COURT NO . 01-00006 PAGE 14
termination. The possibility of other likely outcomes does not mean that a determination
that revocation or termination is likely to lead to continuation or recurrence of dumping
or countervailable subsidies, or injury, is erroneous, as long as the determination of
likelihood of continuation or recurrence is reasonable in light of the facts of the case. In
such situations, the order or suspended investigation will be continued.
SAA at 883. (emphasis added). The SAA cannot change the words of the statute. In any case,
the SAA is not necessarily inconsistent with the statute. It may simply mean that different
conclusions as to likelihood by commissioners or the court do not destroy a substantially
supported conclusion as to likelihood. In the Final Determination, the Commission does not
expressly address its understanding of the term “likely” or explain its application under the
statute. Given counsel’s argument and the Commission’s emphasis on potential future volume of
subject imports and the weakened state of the domestic industry, the court cannot determine
whether the Commission determined competition overlap to be likely. As discussed, a
determination based on a mere possibility would be counter to the clear meaning of the statute.15
The court, therefore, remands the matter to the Commission to determine whether injury is likely,
not just possible, and for further explanation of its findings.
2. Fungibility
Duferco argues that Belgian products are not fungible because it exported only [
] during the period of review and because no other subject country shipped [ ].
When asked about the interchangeability of Belgian plate with plate from the other subject
countries, no U.S. producer reported a lack of interchangeability; importers responded similarly.
Staff Report at PLATE-II-5. Only one U.S. producer out of ten responding reported any
15
It is an overall determination of likely injury that is required. Certain subsidiary
findings may be negative or neutral, but competition overlap is key.
CONSOL. COURT NO . 01-00006 PAGE 15
differences other than price between Belgian plate and other subject imports. Id. at PLATE-II-
23. The Commission noted that responding importers reported similarly. Id. at PLATE-II-6.16
The court finds that the Commission cited ample support on fungibility.
3. Channels of Distribution
The Commission found that both domestic producers and importers ship plate to end
users, distributors and service centers/processors. Final Determination at 32; Staff Report at
PLATE-II-1. Duferco contends that the ITC erred because it never explicitly stated that there is
likely to be overlap in channels of distribution, and never addressed the overlap with respect to
Belgium specifically. Duferco concedes, however, that it exports to end users.17 The other
Belgian producer concedes that it shipped the majority of its plate to distributors, processors, and
service centers.18 Thus, there appears to be no error in regard to channels of distribution.
16
In addition to [ ], Belgian producers manufacture standard, or commodity,
plate. Presently, a significant percentage of the plate products that Duferco manufactures are
standard products. Final Determination at 32 n.108. [ ] percent of Belgium’s plate
production in 1999 was subject plate. See Supplementary Material IV, C.R. Doc. 235, at CTL-
SUPP-1. Moreover, [ ] represented only [ ] percent of Belgium’s total plate
shipments in 1999. Id. at CTL-SUPP-13.
17
Duferco’s affiliated company, which is the exclusive importer of its products in the
United States, shipped [ ] short tons of plate in 1997, [ ] short tons in 1998 and [
] short tons in 1999. See Duferco Importer Questionnaire Response, C.R. Doc. 334, at 8.
18
Usinor stated that [ ] percent of its U.S. shipments went to
distributors/processors/service centers in 1997, [ ] percent went to them in 1998 and [ ]
percent went to them in 1999. See Fabrique de Fer’s Importer Questionnaire Response, C.R.
Doc. 335, at 7.
CONSOL. COURT NO . 01-00006 PAGE 16
4. Simultaneous Market Presence and Geographical Overlap
Duferco argues that the Commission’s findings regarding simultaneous market presence
and geographical overlap are pure speculation. The Commission stated that:
[t]he record is mixed regarding current market presence and geographic overlap with the
orders in place. However, in light of the importance of sales to steel service centers,
which are dispersed throughout the United States and hold sizable plate inventories, we
find it likely that subject imports from each subject country would be simultaneously
present in the U.S. market as a whole and in the same geographical markets as other
subject imports and the domestic like product.
Final Determination at 32-33 (footnote omitted).
With regard to market presence, the Commission cited to the Staff Report which states
that subject plate imports from nine of the twelve countries at issue were present in the market
throughout the period of review. For two of the remaining three countries, Spain and Sweden,
subject plate imports were present in two out of the three years comprising the period of review.
Subject imports from Taiwan were present in one year. Staff Report at PLATE-IV-1. With
respect to geographic overlap, the Commission again cited the Staff Report and noted that both
U.S. producers and importers reported nationwide sales. Final Determination at 33 n.112 (citing
Staff Report at PLATE-II-1). According to the Staff Report, these producers and importers
reported nationwide sales as a whole, although most individual firms reported a concentration of
sales in particular regions. Id. The court finds that the Commission provided sufficient support
for its findings in this regard.
CONSOL. COURT NO . 01-00006 PAGE 17
C. Conditions of Competition
In addition to competition overlap analysis, the Commission reviews the conditions of
competition.
[The] cumulation analysis in a five-year [sunset] review encompasses more than an
examination of whether there would likely be a reasonable overlap of competition of the
products in the U.S. market. To aid us in our decision whether to exercise our discretion
to cumulate, we have also examined the overall similarities in the conditions of
competition that would prevail if the finding and orders are revoked.
Certain Steel Wire Rope from Japan, Korea, and Mexico, USITC Pub. 3259 at 11. As discussed,
sunset review analyses are inherently prospective, therefore, the Commission attempts to predict
future conditions of competition. As with ordinary injury determinations, the statute does not
enumerate what factors the Commission should consider in analyzing conditions of competition
in sunset reviews.
Plaintiffs attack the affirmative competition overlap determination and conditions of
competition analysis by arguing that the Commission did not fully explain why it was “likely”
that Belgian and German producers would shift sales from Europe to the U.S. Both here and in
the investigation below, Plaintiffs argued that the recent changes in the European Community
have made it unlikely that Belgian and German producers would shift sales to the U.S.
In 1993, the European Community19 created the European Single Market (“ESM”), which
consolidated all of the Community’s customs legislation into a single text and created a free trade
19
The European Community presently has fifteen member states: Austria, Belgium,
Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands,
Portugal, Spain, Sweden, and the United Kingdom. At the time of this opinion, the E.C. is
preparing for the accession of thirteen (13) eastern and southern European countries: Bulgaria,
Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovenia,
Slovakia, and Turkey. Europa: The European Union On-Line, http://europa.eu.int/abc-en.htm
(last visited on April 22, 2002).
CONSOL. COURT NO . 01-00006 PAGE 18
zone among member countries. On January 1, 1999, the euro became the single currency for
most member states in an attempt to further reduce the barriers to intra-community trade by
eliminating the risk of exchange rate volatility. 20 The German Producers suggest that the ESM
and euro effectively transformed the E.C. into one large “home market” for E.C. producers.
In the investigation below, the German Producers submitted extensive evidence that,
because of developments in the E.C., the German CTL plate sales to other member countries had
increased substantially since the investigation in 1993. See Prehearing Brief on Behalf of AG der
Dillinger Hüttenwerke, Salzgitter AG Stahl und Technologie, Stahlwerke Bremen GmbH and
Thyssen Krupp Stahl AG at 2-12 (Aug. 28, 2000), Pl. App. Tab 5 (hereinafter Prehearing Brief]).
Between 1993 and 1999, the percentage of German CTL plate sales made to other E.C. members
increased from 16.92% to 27.74%. Prehearing Brief at 20-21; see also Written Testimony of
Klaus Heller Concerning German Cut-to-Length Plate Market at Figure 3 (Sept. 15, 2000). By
1999, almost 90% of German CTL plate sales were E.C. sales (combining sales to both Germany
and other E.C. members). Id. at 21.
At roughly the same time, the U.S. producers’ domestic market share grew from 84.1%
(1992) to 93.2% (first quarter of 2000) during a period where U.S. consumption of CTL plate
also grew significantly. Compare 1993 ITC Determination at C-3, Pl. App. Tab 1, with Revised
Staff Report to the Commission at C-3 (Oct. 18, 2000) (hereinafter Revised Staff Report) (from
4,965,000 short tons in 1992 to over 6,000,000 by 1999). The German Producers attribute these
20
On January 1, 1999, the euro became the currency for Belgium, Germany, Spain,
France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland.
CONSOL. COURT NO . 01-00006 PAGE 19
changes in the E.C. and U.S. to “an ever decreasing reliance [by the German Producers] on
export sales outside of the European Community.”
Although plaintiffs raised this argument below, the Commission dismissed these changes
stating simply that “we are not convinced that there has been a shift of such fundamental nature
as to make significant exports to the United States unlikely.” Final Determination at 40, n. 155
(emphasis added). The Commission did not cite to any evidence in the Staff Report or elsewhere
to support this finding. Plaintiffs argues that the Commission has improperly placed the burden
on Plaintiffs to establish that future imports, and therefore future material injury, is not likely.
Given the lack of clarity as to the Commission’s definition of “likely,” this may be so. In any
case, the Commission has not addressed the material arguments of plaintiffs with respect to
likelihood of competition overlap. See ALTX, Inc. v. United States, 167 F. Supp. 2d 1353, 1360
n.6 (Ct. Int’l Trade 2001) (stating that 19 U.S.C. § 1677f(i)(3)(B) requires that the Commission
properly respond in the Final Determination to all relevant arguments raised by interested
parties).
“In order to reach a judgment on the administrative record, the Court must have a basis
for understanding the reasons for the Commission’s actions.” The Timken Co. v. United States,
20 CIT 1115, 1118 (1996). The court may not substitute its judgment for that of the agency. See
Acciai Speciali Terni, S.p.A. v. United States, 19 CIT 1051, 1054 (1995). The court must,
however, be able to reasonably discern that the Commission conducted its analysis in accordance
with statutory requirements. See, e.g., Taiwan Semiconductor Indus. Ass’n v. United States, 59
F. Supp. 2d 1324, 1328 n. 7 (Ct. Int’l Trade 1999). “[W]here an explanation is lacking on the
record, post hoc rationalization for the [Commission’s] actions is insufficient” and remand may
CONSOL. COURT NO . 01-00006 PAGE 20
be appropriate for further explanation. Timken, 20 CIT at 1118, 937 F. Supp. at 955. In view of
the changes occurring in Europe since the 1993 investigation, the Commission should at
minimum analyze the effects of those changes. On remand, the Commission should address
Plaintiffs’ arguments as to whether E.C. changes have affected conditions of competition
significantly. In so doing, the Commission must determine whether, despite these changes,
imports to the U.S. are likely to occur, and explain its reasons therefor. To the extent that these
issues also affect the non-cumulation portion of the determination discussed infra, the same
considerations apply.
II. Other Aspects of the Likely Continuation or Recurrence of Material Injury Analysis
In sunset reviews, the Commission is required to determine whether revocation of
antidumping or countervailing duty orders is likely to lead to a continuation or recurrence of
material injury to the domestic industry. 19 U.S.C. § 1675a(a)(1). Pursuant to § 1675a(a)(1), the
Commission analyzes the likely volume, price effect and impact of subject imports if the orders
are revoked. Id. The German Producers challenge the Commission’s affirmative determinations
with respect to each.
A. Volume
In finding that volume would likely be significant, the Commission noted that the excess
capacity of the subject countries “greatly exceed[ed]” the volume of total subject imports in the
1993 investigations.21 Final Determination at 39. The Commission found that foreign producers
21
In 1992, the cumulated volume of all subject imports was 787,626 short tons. The
German Producers argue that this amount is inflated and that 1992 imports from the cumulated
countries amounted to 430,618. The Commission was, however, clearly referring to all
cumulated imports. The point of this comparison was that the excess capacity of the cumulated
CONSOL. COURT NO . 01-00006 PAGE 21
have an incentive to increase sales to maximize the use of available capacity. Id. at 42. In 1999,
cumulated capacity to produce subject plate in ten of the subject countries was 11.5 million short
tons, and excess subject capacity was 1.8 million short tons. Cumulated capacity to produce both
subject and nonsubject plate was 13.4 million short tons, with excess total capacity being 1.9
million short tons. Id. at 39. The Commission noted that all producers of the cumulated subject
imports, except those in Mexico, export substantial quantities of their production. Id. at 39-40
(citing Staff Report at PLATE-IV-3-4, 6-13). The Commission found it significant that a number
of foreign producers were subject to antidumping and countervailing duty findings in other
countries.22 Final Determination at 40-41. The Commission discussed foreign plate inventories
in making its finding on likely volume, noting that although importers reported no inventories of
subject product, the cumulated subject foreign producers reported significant end-of-period
inventories.23 Id. at 40 n.154, 42. It explained that service centers were becoming increasingly
consolidated and sought sources of low-cost supplies. Id. at 42.
The German Producers argue that the Commission’s analysis “ignore[d] the fact that
several countries, including Germany, were operating at very high levels of capacity utilization.”
countries was greater than the sum of imports from all countries subject to cumulation in 1992.
The ITC stated that it obtained this figure from official Commerce statistics. Staff Report at
PLATE-I-1.
22
Brazilian plate was subject to antidumping findings in Canada and Mexico and a
countervailing duty finding in Mexico; Finnish plate was then subject to an ongoing antidumping
investigation in Canada; Romanian plate was subject to an antidumping finding in the European
Union; Spanish plate was subject to antidumping and countervailing duty findings in Canada.
Final Determination at 41.
23
Excluding Poland, there were 1,097,642 short tons in subject foreign producers’
inventories in 1997, 1,009,785 short tons in 1998 and 949,568 short tons in 1999. Staff Report at
PLATE-IV-3-4, 6-13.
CONSOL. COURT NO . 01-00006 PAGE 22
German Producers Br. at 26. Between 1993 and 2000, German capacity for all cut-plate
products, subject and non-subject, decreased greatly. Response to Posthearing Questions, Pl.
App. Tab 9, Exh. 8.24 Between 1992 and 1999, the German Producers reduced CTL plate
production by over one million short tons. Staff Report at PLATE-II-5. During roughly the same
period, German capacity utilization rates increased from 69.18% (1993)25 to 95.36% (2000).26
The German Producers calculate that unused capacity decreased very significantly between 1993
and 2000 .27 Id. The German Producers argue that, because of the reduction in unused capacity,
Germany had virtually no excess capacity for U.S. exports.
Defendant responds that the Commission did consider these changes but ultimately found
the present excess subject capacity of the cumulated countries to be significant, especially when
coupled with the ease with which product mix adjustments could occur, and afforded that fact
more weight than it gave to the reduction in unused capacity. Final Determination at 39-40. In
the Final Determination, the Commission acknowledged plaintiffs’ argument that “demand
conditions in a number of the subject countries may suggest a decreased level of cumulated
imports,” but went on to rely more heavily upon other factors.28 Id. at 42. The Commission may
24
Capacity decreased from [ ] to [ ] short tons during this period.
25
Unused capacity in 1993 was [ ] metric tons.
26
Unused capacity in 2000 was [ ] metric tons.
27
The German Producers calculate that unused capacity decreased from [ ]
between 1993 and 2000 from [ ] to [ ].
28
The Commission relied upon “significant capacity, and excess capacity, to produce
both subject and non-subject plate products, foreign plate inventories, significant exports by most
subject producers (sic)and barriers to exporting to third countries.” Final Determination at 42.
CONSOL. COURT NO . 01-00006 PAGE 23
weigh evidence as it sees fit. The same evidence may support a variety of findings. The court
finds no error in this finding in isolation.
B. Price Effect
The German Producers contest the Commission’s determination with respect to the
likelihood of adverse price effects claiming that German CTL plate consistently exceeded the
price of domestically produced plate. The German Producers rely on pricing information from
the industry publication Metal Bulletin regarding U.S. import prices for heavy plate, which is
outside the scope of the orders.29 Defendant responds that only one importer provided usable
pricing data to the Commission, and those data accounted for 37.5 percent of imports and such
imports were from Belgium only. Defendant argues that it would be unreasonable for the
Commission to extrapolate from data regarding non-commodity plate that is outside the scope of
the orders in order to draw conclusions regarding the prices of the commodity plate that is within
the scope. The court agrees with Defendant that it was reasonable for the Commission to afford
little weight to such incomplete pricing data and to rely instead on data from the original
investigation.
C. Impact
The German Producers argue that the Commission’s impact determination was erroneous
because, they claim, it was based solely on the Commission’s affirmative findings on volume and
price effects. In short, plaintiffs argue that the Commission conducted no analysis whatsoever
and that the affirmative determination was a foregone conclusion. Defendant responds by
29
Germany manufactures [
]. Supplementary Material IV at CTL-SUPP-17.
CONSOL. COURT NO . 01-00006 PAGE 24
recounting the Commission’s analysis, emphasizing the Commission’s determination that the
domestic industry was in a weakened state. Final Determination at 46. The Commission found
that by the end of the review period, operating income had fallen, capacity utilization was low,
production had decreased, inventories had increased, and that the number of production and
related workers had decreased, along with their hours worked. Id. The Commission also found
that capital expenditures had steadily declined. Based on the foregoing, the Commission found
that the volume and price effects of the cumulated subject imports would likely have a significant
adverse impact on the domestic industry and would likely cause the domestic industry to lose
market share in the reasonably foreseeable future. Final Determination at 46-47. The court finds
that the Commission did not err by analyzing potential impact in the context of likely volume and
price effects. Of course, as with the Commission’s findings on cumulation, these factors must be
reviewed in the context of the proper standard, discussed supra Part I.
III. Facts Available
The German Producers’ final argument challenges the Commission’s reliance upon a
limited number of questionnaire responses from U.S. producers. Plaintiffs argue that the
Commission’s information was incomplete because only twenty-two (22) of the one hundred and
five (105) producers surveyed submitted responses to ITC questionnaires. Plaintiffs compare this
return to that in Certain Cut-to-Length Plate From France, India, Indonesia, Italy, Japan, and
Korea, in which 29 producers submitted information. USITC Pub. 3273 at III-1. Arguing that
the majority of producers failing to respond were service centers, plaintiffs suggest that the
domestic industry under-reported capacity, production, and shipment information. Plaintiffs
CONSOL. COURT NO . 01-00006 PAGE 25
specifically point to a discrepancy between this review, in which reported U.S. consumption in
1998 was 8,222,194 short tons, and Certain Cut-to-Length Plate from France, in which reported
U.S. consumption was 9,692,346 short tons for the same year. Plaintiffs argue that the
difference, almost 1.5 million short tons, is illustrative of overall under-reporting by the domestic
industry. Plaintiffs argue that the Commission should have resorted to other information as facts
available pursuant to 19 U.S.C. § 1677e(a).
Although the Commission must obtain all accessible or obtainable information respecting
the economic factors it uses for its analysis, this does not require “a level of diligence beyond that
required by statute or the substantial evidence test.” Allegheny Ludlum Corp. v. United States,
116 F. Supp.2d 1276, 1296 n.37 (2000). Nonetheless, because this potentially significant
discrepancy was pointed out by the parties, the Commission must make an effort to analyze it
and weigh the evidence accordingly in conjunction with its overall remand analysis.
CONCLUSION
For the reasons discussed, the court cannot sustain the Commission’s Final
Determination. Because sunset reviews are prospective, the Act’s statutory analyses require the
Commission to predict whether future events are “likely.” With regard to the definition of
“likely,” the court finds that the statute is clear. On remand, the Commission must apply the
common meaning of “likely” – that is, probable – in conducting the relevant sunset review
analyses (cumulation and non-cumulation). In support of any affirmative determinations, the
Commission must cite to substantial evidence showing that its predictions are not only possible,
but probable. The Commission must specifically address Plaintiffs’ argument that recent
CONSOL. COURT NO . 01-00006 PAGE 26
developments in the European Community will deter German and Belgian producers from
shipping subject imports to the U.S. To support an affirmative determination, the Commission
must cite substantial evidence showing that injury from subject imports to the U.S. are likely
despite these changes. The United States International Trade Commission shall issue its Remand
Determination on or before July 1, 2002. Objections may be made within 20 days thereafter.
Parties may submit comments on those objections within 10 days after objections are due.
____________________________
Jane A. Restani
JUDGE
Dated: New York, New York
This 29th day of April, 2002