Indorama Chemicals (Thailand) Ltd. v. U.S. International Trade Commission , 26 Ct. Int'l Trade 1059 ( 2002 )

Slip-Op. 02-105
UNITED STATES COURT OF INTERNATIONAL TRADE
____________________________________
:
INDORAMA CHEMICALS :
(THAILAND) LTD., SINOCHEM :
INTERNATIONAL FURAN :
CHEMICALS, ET AL., :
:
Plaintiffs, :
:
v. : Consol. Court No. 01-00305
: BEFORE: CARMAN, CHIEF JUDGE
UNITED STATES INTERNATIONAL : PUBLIC VERSION
TRADE COMMISSION, :
:
Defendant. :
:
____________________________________:
[Plaintiffs’ motions for judgment upon the agency record are denied.]
Date: September 4, 2002
Kalik Lewin (Martin J. Lewin and Adam S. Apatoff), Washington, D.C., for Plaintiff
Indorama Chemicals (Thailand) Ltd.
Aitken Irvin Berlin & Vrooman, LLP (Bruce Aitken), Washington, D.C., for Plaintiffs
Sinochem International Furan Chemicals, et al.
Lyn M. Schlitt, General Counsel, United States International Trade Commission; James
M. Lyons, Deputy General Counsel, United States International Trade Commission; Charles A.
St. Charles, Attorney, Office of the General Counsel, United States International Trade
Commission, for Defendant.
OPINION
CARMAN , CHIEF JUDGE: This consolidated action comes before the Court on Plaintiffs’
respective motions for judgment upon the agency record pursuant to USCIT R. 56.2. Plaintiffs
Consol. Court No. 01-00305 Page 2
Indorama Chemicals (Thailand) Ltd. (“Indorama”) and Sinochem International Furan Chemicals,
et al. (“Sinochem”) seek review of the International Trade Commission’s (“ITC” or
“Commission”) final affirmative determinations under Section 751(c) of the Tariff Act of 1930
(“the Act”), as amended, 19 U.S.C. § 1675(c) (2000), in the five-year review of the antidumping
duty orders on furfuryl alcohol (“FA”) from China and Thailand. The ITC determined that
revocation of the antidumping duty orders on FA from China and Thailand would be likely to
lead to continuation or recurrence of material injury within a reasonably foreseeable time. See
Furfuryl Alcohol From China and Thailand, Inv. Nos. 731-TA-703 and 705 (Review) (Views of
the Commission), USITC Pub. 3412 (April 24, 2001), Prop. List 2, Doc. 50, Def.’s Conf. App.
Ex. 6. Notice of the ITC’s final determination was published in the Federal Register at 66 Fed.
Reg. 21,015 (Apr. 26, 2001) (Final Determination). Indorama seeks review of the Commission’s
determinations with respect to subject imports from Thailand and Sinochem seeks review of the
Commission’s determination with respect to subject imports from China. Defendant, the
International Trade Commission, opposes Plaintiffs’ motions. The Court has jurisdiction
pursuant to 28 U.S.C. § 1581(c) (2000).
I. BACKGROUND
On June 14, 1995 and July 18, 1995, the Commission determined that an industry in the
United States was materially injured as a result of imports of FA sold at less than fair value
(“LTFV”) from China and Thailand, respectively. See Furfuryl Alchohol from the People’s
Republic of China and South Africa, Inv. Nos. 731-TA-703 and 704 (Final), USITC Pub. 2897
(June 1995); Furfuryl Alcohol from Thailand, Inv. No. 731-TA-705 (Final), USITC Pub. 2909
Consol. Court No. 01-00305 Page 3
(July 1999) (collectively “Original Determinations”). The Department of Commerce
(“Commerce”) subsequently published antidumping (“AD”) duty orders covering the subject
merchandise. See Notice of Antidumping Duty Order: Furfuryl Alcohol From the People’s
Republic of China, 60 Fed. Reg. 32,302 (June 21, 1995) (China Order); Amended Final
Antidumping Duty Determination and Order; Furfuryl Alcohol From Thailand, 60 Fed. Reg.
38,035 (July 25, 1995) (Thailand Order) (collectively “AD Orders”). In the case of China,
Commerce found margins ranging from 43.54 percent to 50.43 percent. See China Order, 60
Fed. Reg. at 32,302. In the case of Thailand, Commerce found a single margin of 7.82 percent
for the sole producer, Indorama. See Thailand Order, 60 Fed. Reg. at 38,036.
On May 1, 2000, the Commission instituted five-year sunset reviews pursuant to 19
U.S.C. § 1675(c) to determine whether revocation of the AD Orders on imports of FA from
China and Thailand would be likely to lead to continuation or recurrence of material injury. See
Furfuryl Alcohol From China and Thailand, 65 Fed. Reg. 25,363 (Int’l Trade Comm’n May 1,
2000). On August 3, 2000, the Commission decided to conduct full reviews with respect to the
AD Orders.1
In the original investigation, the ITC defined the domestic industry as including a single
company - QO Chemicals. In the five-year review, the Commission defined the domestic
industry as including Great Lakes Chemical Corporation (“Great Lakes”), its successor in
interest, Penn Specialty Chemicals, Inc. (“Penn”), which produces the like product for open
1
A full review includes a public hearing, the issuance of questionnaires, and other
procedures. Expedited reviews do not include such procedures. See 19 U.S.C. § 1675(C)(3); 19
C.F.R. §§ 207.62 - 207.58 (2000).
Consol. Court No. 01-00305 Page 4
market sales and internal consumption and toll produces for [[
]], and Ferro Industries, which toll-produced for [[ ]]. See Views of the
Commission at 5-6. The foreign industries in the five-year review included, 1) with respect to
subject imports from Thailand, Indorama, the sole producer of the subject merchandise in
Thailand, and, 2) with respect to subject imports from China, Sinochem International Furan
Chemicals Co., Ltd., Shandong Zhucheng Chemical Co., Ltd., Shandong Baofeng Chemicals
Group, Corp., Linzi Organic Chemical Inc., Jilin Sanchun Chemical Plant Co., Ltd., Sinochem
Hebei Fuheng Co., Ltd., Shanxi Province Gaoping Chemical Industry Co., Ltd., Qingdao Import
and Export Corp., and the China Chamber of Commerce of Metals, Minerals, and Chemicals,
Chinese producers and exporters of the subject merchandise (collectively “Sinochem”). See id.Pursuant to 19 U.S.C. § 1675a(a)(7), the Commission elected to cumulate likely volume
and price effects from China and Thailand after finding that the reviews of the AD Orders were
(1) initiated on the same day; (2) the subject imports from each country would be likely to have a
discernible adverse impact on the domestic industry if the AD Orders were revoked; and (3) there
would likely be a reasonable overlap of competition among the subject imports from the two
countries and the domestic like product in a reasonably foreseeable time. See id. at 8-13. On
April 24, 2001, the ITC concluded that revocation of the AD Orders on imports of FA from
China and Thailand, considered cumulatively, would be likely to lead to continuation or
recurrence of material injury to the domestic FA industry within a reasonably foreseeable time.
See id. at 13-25. Therefore, the AD Orders remain in place. See 19 U.S.C. § 1675(d)(2).
Plaintiffs challenge the following ITC determinations: (1) the Commission’s decision to
Consol. Court No. 01-00305 Page 5
cumulate imports from China and Thailand; and (2) the Commission’s determination that
revocation of the AD Orders on imports from China and Thailand is likely to result in a
continuation or recurrence of material injury.
II. STANDARD OF REVIEW
This Court must sustain the Commission’s determination in a full five-year review unless
it is “unsupported by substantial evidence on the record, or otherwise not in accordance with
law.” 19 U.S.C. § 1516a(b)(1)(B)(i) (2000). Substantial evidence is “such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.” Matsushita Elec. Indus. Co.,
Ltd. v. United States, 750 F.2d 927, 933 (Fed. Cir. 1984) (quoting Consolidated Edison Co. v.
NLRB, 305 U.S. 197, 229 (1938)). “The possibility of drawing two inconsistent conclusions
from the [same] evidence does not” mean that the agency’s finding is unsupported by substantial
evidence. Consolo v. Federal Mar. Comm’n, 383 U.S. 607, 620 (1966). The Commission’s
determination will not be overturned merely because the plaintiff “is able to produce evidence . .
. in support of its own contentions and in opposition to the evidence supporting the agency’s
determination.” Torrington Co. v. United States, 745 F. Supp. 718, 723 (1990) (internal
quotation omitted), aff’d, 938 F.2d 1276 (Fed. Cir. 1991).
Consol. Court No. 01-00305 Page 6
III. DISCUSSION
A. The Commission’s Decision to Cumulate Subject Imports From China and Thailand
Was Supported by Substantial Evidence on the Record and Otherwise in
Accordance With Law
1. Contentions of the Parties
(a) Plaintiff Indorama
Plaintiff Indorama contends the ITC’s decision to cumulate subject imports from China
and Thailand is unsupported by substantial evidence, or otherwise not in accordance with law.
Indorama argues the Commission erred in (1) determining that subject imports from Thailand
would be likely to have a “discernible adverse impact” on the domestic industry if the order
against subject imports from Thailand were revoked, and (2) finding a reasonable overlap of
competition likely would exist between the subject imports from Thailand and the domestic like
product if the order were revoked.
(i) Discernible Adverse Impact
Indorama contends the factors cited by the Commission to support its determination do
not establish that revocation of the AD Orders would have a discernible adverse impact on the
domestic industry. Specifically, Indorama questions the Commission’s reliance on the Thai
industry’s large production capacity relative to the U.S. market, export orientation, and
significant U.S. market share. Indorama argues the mere ability of the foreign industry to
increase exports to the U.S. and the fact the foreign industry is “export oriented” do not
demonstrate that revocation of an order against imports of that industry would have an adverse
impact.
Instead, Indorama contends despite the presence of the AD Orders, the record shows the
Consol. Court No. 01-00305 Page 7
Thai producer had been selling into the U.S. FA market [[
]].2 Additionally, Indorama contends the [[
]]. Further, Indorama notes the record established that as the sole
Thai producer, Indorama [[
]]. Finally, Indorama contends there is [[
]].
(ii) Reasonable Overlap of Competition
Indorama makes two arguments in support of its contention that the Commission erred in
finding a reasonable overlap of competition between the subject imports from Thailand and the
domestic like product likely would exist if the order were revoked: (1) the U.S. market for FA is
more segmented than it was during the original investigation; and (2) FA imported from Thailand
and domestic FA do not compete in the U.S. market.
Indorama argues that at the time of the original investigation, the domestic producer sold
FA to all segments of the U.S. market - both large producers that used FA to produce furan
resins, as well as smaller wholesalers and specialty distributors. Indorama notes that the market
2
[[
]] See Prehearing Staff Report at IV-4, Indorama’s Conf. App.
Ex. 2 at 5.
Consol. Court No. 01-00305 Page 8
structure for FA in the U.S. has changed dramatically over the life of the AD Orders. As a result,
Indorama asserts, imports from Thailand currently supply the requirements for [[
]], while the domestic producer, however, competes solely in the smaller
wholesaler and specialty distributor market.
Indorama argues that the Commission erred when it concluded there was likely to be a
reasonable overlap of competition because its conclusion was based solely on the domestic
producer’s assertion that it [[
]].3 Indorama asserts the record strongly suggests that the domestic producer is neither
interested nor able to sell into this market segment. Instead, Indorama urges, the domestic
producer has maintained a three-pronged strategy of focusing on internal consumption of FA for
its primary derivatives business, tolling FA, and selling to small distributors. This practice has
served the domestic producer very well, Indorama argues, therefore there is no incentive for the
domestic producer to change this [[ ]] and well-performing business strategy and
end the tolling agreement.
(b) Plaintiff Sinochem
Because the Court finds Sinochem’s arguments in this matter substantially similar to
3
Generally, under a tolling arrangement the tollee supplies raw material to the toller,
which produces the product for a fee. Usually, the tollee pays to the toller only a fabrication fee
and the price of the materials it did not supply. See, e.g., Brass Sheet and Strip from France,
Italy, Sweden and West Germany, Inv. No. 701-TA-270 (Final), 731-TA-311, 312, and 315
(Final), USITC Pub. 1930 (Dec. 1986).
Consol. Court No. 01-00305 Page 9
those presented by the Indorama, the Court will not recount them in this opinion, although they
have been duly considered.
(b) Defendant
Defendant contends the Commission’s exercise of discretion to cumulate imports from
China and Thailand was supported by substantial evidence on the record and otherwise in
accordance with law. Defendant contends the Commission correctly found that revocation of the
AD Orders would likely have a discernible adverse impact on the domestic industry, and that
sales of the domestic like product and subject imports would likely overlap within a reasonably
foreseeable time.
(i) Discernible Adverse Impact
Defendant argues Indorama ignores the standard of review and is seeking to have this
Court reweigh the record evidence. Defendant outlines the multiple findings upon which the
Commission based its affirmative determination, asserting that Plaintiffs do not contest the
majority of those findings.
Defendant then makes three arguments refuting Indorama’s main contentions. First,
Defendant refutes Indorama’s contention that “export orientation” and export shifting alone are
not enough to support a finding of discernible adverse impact. Defendant points to the multiple
findings made by the Commission to demonstrate it did not base its discernible adverse impact
determination “solely” upon the findings that the Thai producer is export oriented and has
demonstrated an ability to increase exports to the U.S. Defendant also argues that the pattern of
imports from Thailand supports a finding that the Thai producers are able to shift their exports
among various export markets. The ITC notes this Court has expressly affirmed the
Consol. Court No. 01-00305 Page 10
Commission’s reliance upon subject producers’ strong export orientation and ability to increase
exports to the U.S. in assessing the likely potential volume of subject imports in the context of a
threat of material injury determination. Defendant posits, therefore, because the Commission
was operating under the “imminent” threat standard in the case affirmed by this Court, it follows
that the finding of likely increased imports would be supported here in a five-year review where
the Commission is operating under the “reasonably foreseeable time” standard.
Second, Defendant refutes Indorama’s assertion that its exports have been constant since
the AD duty order was issued, arguing that it simply is not true. Defendant argues even the
incorrect data offered by Indorama demonstrate [[ ]] fluctuations in imports from
Thailand from year to year and a [[ ]] increase for the final two years of the four year
period, further highlighting Indorama’s ability to shift exports.
Third, Defendant contends the record supports the Commission’s finding that unit values
of the Thai product were consistently lower than the domestic unit values throughout the period
of review. Defendant notes product fungibility and the importance of price have allowed the
low-priced subject imports from Thailand to capture a significant share of the U.S. market since
1998. Based upon this, Defendant argues, the Commission correctly concluded that in the event
of revocation of the order, Thai producers have considerable incentive to enter the U.S. market
and engage in aggressive pricing to recapture market share. Contrary to Indorama’s objections,
Defendant asserts the Commission reasonably relied upon average unit value data for the
domestic and Thai product in the Commission staff report because FA is a commodity product
sold in a single grade. Defendant notes Indorama’s objections to the price/quantity differences
between the Thai and domestic like product focus on the Commission’s consideration of
Consol. Court No. 01-00305 Page 11
domestic producers other than the current domestic producer, Penn. Defendant asserts 19 U.S.C.
§ 1677(4)(A) authorizes the Commission to examine the average unit values of all the domestic
producers over the five-year period of review, not just the current domestic producer, Penn.
Defendant argues that the quantity differences cited by Indorama are not sufficient to
demonstrate that the average unit values relied upon by the Commission are invalid for the
purpose of the Commission’s discernible adverse impact determination.
Finally, Defendant argues Indorama’s suggestion that there can be no discernible adverse
impact in this case because the U.S. industry [[
]] is simply not persuasive. Defendant contends the fact that the
U.S. industry [[
]] reinforces rather than undermines the reasonableness of the Commission’s finding that
removal of the order would have a discernible adverse impact on the domestic industry.
(ii) Reasonable Overlap of Competition
Defendant argues the Commission’s finding regarding likely channels of distribution is
supported by substantial record evidence. Defendant notes Indorama speaks extensively of the
ways in which the U.S. industry today differs from the U.S. industry at the time of the original
investigation (i.e., it is more segmented today). Defendant concedes that the industry and its
participants have changed over time. Defendant contends, however, that Indorama fails to
indicate any ways in which that fact affects the substantiality of the evidence supporting the
Commission’s determination.
Defendant argues that the Commission correctly determined that the Thai product is sold
exclusively to large end users. Defendant also asserts that the Commission correctly found that
Consol. Court No. 01-00305 Page 12
although only a small volume of the domestic like product is currently sold to end users,
abundant record evidence indicated Penn intends [[
]].
Thus, Defendant contends, the Commission’s conclusion that both the domestic like product and
subject imports are likely to compete directly for sales to end users in the reasonably foreseeable
future is supported by the record.
2. Analysis
Section 752(a) of the Act, as amended, sets forth the requirements for cumulation:
For purposes of this subsection, the Commission may cumulatively assess the volume and
effect of imports of the subject merchandise from all countries with respect to which
reviews under section 1675(b) or (c) of this title 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. The Commission shall not cumulatively assess the volume and
effects of imports of the subject merchandise in a case in which it determines that such
imports are likely to have no discernible adverse impact on the domestic industry.
19 U.S.C. § 1675a(a)(7). Cumulation is discretionary in sunset reviews, even if the Commission
determines that the subject imports would be likely to compete with each other and with
domestic like products in the United States market. See 19 U.S.C. § 1675a(a)(7) (“[T]he
Commission may cumulatively assess the volume and effect of imports . . . .”) (emphasis added);
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, at 887,
reprinted in 1994 U.S.C.C.A.N. 4040, 4212. The statute prohibits cumulation, however, if the
Commission determines that imports of subject merchandise are likely to have “no discernible
adverse impact” on the domestic industry. 19 U.S.C. § 1675a(a)(7). In addition to these
Consol. Court No. 01-00305 Page 13
statutory requirements 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).
(a) Discernible Adverse Impact
The logical starting point for a cumulation discussion is “discernible adverse impact,”
because 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). Noting that neither the statute nor the SAA
provide specific guidance on what factors the Commission is to consider in making this
determination, the Commission states 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 if the orders are revoked.” Views of the Commission at 7.
The Commission concluded that “subject imports from [China and Thailand] would enter
the U.S. market in sufficient quantities and at sufficiently low prices such that they would . . .
likely have [a] discernible adverse impact on the domestic industry.” Id. at 10. The Commission
made the following findings in support of its conclusion. With respect to conditions of
competition: First, FA is a fungible commodity. See id. at 16. Second, the U.S. is the world’s
largest FA market. See id. at 17. Third, U.S. prices are higher than world prices. Despite an
overall increase in the supply of FA and stagnant demand, U.S. prices have not declined as much
as prices in the world market. See id. Fourth, three purchasers dominate the market and account
for [[54]] percent of the apparent U.S. consumption in 2000. See id. Fifth, both the three largest
purchasers and the smaller purchasers base their purchasing decisions primarily on price. See id.
Consol. Court No. 01-00305 Page 14
With respect to volume and impact: First, industry capacity in Thailand has grown since
the original investigations and is [[ ]] to U.S. apparent consumption, while industry
capacity in China has remained sizeable and [[ ]] U.S. apparent consumption.4 See id.
Second, the FA industries in both China and Thailand devote considerable resources to export
markets. In 2000, 57.5 percent of total shipments of FA were exported from China, while the
comparable figure for Thailand was [[ ]] percent. In 2000, subject imports from Thailand had
a [[ ]] percent share of the value of the U.S. market. See id. at 9-10, 19-20. Third, subject
producers have demonstrated an ability to shift exports between different markets, including
between third country markets and the U.S. market. See id. at 20. Fourth, average unit values
were consistently lower than the domestic unit values during the period of review. See id. at 21.
Upon review, the Court finds that the Commission’s conclusion that Thai and Chinese
imports of subject merchandise would have a discernible adverse impact on the domestic
industry is supported by substantial evidence on the record.
Plaintiffs make several arguments in an attempt to persuade the Court that the
Commission’s determination is unsupported by substantial evidence. Plaintiffs, however, do not
assert that the evidence upon which the Commission relied was not “such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.” See Universal Camera
Corp. v. United States, 340 U.S. 474, 477 (1951). Rather, the Plaintiffs request a reweighing of
4
In 1994, production capacity in Thailand was [[ ]] million pounds. In 2000, it had
increased to [[ ]] million pounds. See Views of the Commission at 9 n.32 (citing Confidential
Final Staff Report at IV-3, IV-4, Def.’s Conf. App. Ex. 5.). For the five responding Chinese
producers, capacity has also grown over the last few years, from 49.3 million pounds in 1996 to
54.5 million pounds in 2000. See id. at 19 n.85. By contrast, apparent U.S. consumption of FA
in 2000 was [[ ]] million pounds. See id. at 9 n.32.
Consol. Court No. 01-00305 Page 15
the evidence.
Indorama’s assertion that export orientation and ability to shift exports are not in
themselves sufficient to support a finding of discernible adverse impact is without merit. As
demonstrated above, the Commission clearly relied upon multiple findings in making its
determination - the majority of which Indorama does not contest.
In an apparent attempt to minimize the Commission’s finding with regard to its shifts in
and out of the U.S. market, Indorama contends that its exports to the U.S. have been constant
since the AD Orders were issued. However, as Defendant notes, this is simply untrue. Indorama
exited the U.S. market in 1995 and 1996, immediately after the issuance of the AD Orders, and
then resumed [[ ]] levels in 1998. See Conf. Final Staff Report at Table I-1, Def.’s
Conf. App. Ex. 5 at 7.
The Court finds, contrary to Indorama’s arguments, that there is substantial evidence
supporting the Commission’s findings that unit values of the Thai product were consistently
lower than the domestic unit values throughout the period of review. The Commission
reasonably relied upon average unit value (“AUV”) data for the domestic and Thai product,
explaining that average unit value data provide a reliable basis for price comparisons because FA
is a fungible commodity product sold in a single grade. See Views of the Commission at 21 n.97.
A comparison of the average unit values clearly illustrates the Commission’s finding: The
average unit value per pound of U.S. shipments of the domestic product was $[[ ]] in 1998,
$[[ ]] in 1999, and $[[ ]] in 2000, while the average unit value of shipments of the subject
product from Thailand was $[[ ]] in 1998, $[[ ]] in 1999, and $[[ ]] in 2000. See
Conf. Final Staff Report at Table I-1 and App. C-1.
Consol. Court No. 01-00305 Page 16
Indorama suggests that its lower unit values are due to the fact that it sells to end users
(implying larger quantities and quantity discounts) whereas Penn’s sales to end users are limited.
These arguments are also without merit. The Commission examined the average unit values for
the entire domestic industry,5 not just Penn’s commercial sales, a practice wholly consistent with
the statute’s focus on producers as a whole. See 19 U.S.C. § 1677(4)(A). Furthermore, Indorama
does not allege that the unit values used by the Commission were incorrect or not reflective of
real prices. Indorama’s arguments neither allege nor meet its burden to “show, by hard evidence,
that in this case falling AUV’s are not representative of falling prices.” U.S. Steel Group v.
United States, 96 F.3d 1352, 1366 (Fed. Cir. 1996).
Finally, the Court rejects Indorama’s suggestion that the Commission’s discernible
adverse impact determination cannot occur because the U.S. industry [[
]]. The fact that the industry is [[
]] has no bearing on whether it will be [[ ]] if the order is
revoked. Additionally, the Commission noted that performance indicators for the domestic
industry were mixed in the last three years, contributing to the conclusion that if the order were
revoked, the imports from Thailand would be likely to have a discernible adverse impact on the
domestic industry within a reasonably foreseeable time. For the foregoing reasons this Court
holds the Commission’s discernible adverse impact determination was supported by substantial
5
Consistent with this, the average unit values of the domestic product did in fact include
sales to end users. For example, [[
]]. See Penn
Specialty Chemicals, Inc. Producer Questionnaire (Jan. 9, 2001), Prop. List 2, Doc. 90, at 6,
Def.’s Conf. App. Ex. 9 at 2.
Consol. Court No. 01-00305 Page 17
evidence on the record and is otherwise in accordance with law.
(b) Reasonable Overlap of Competition
The Commission generally considers the following four factors in order to determine
whether overlap of competition 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.
See U.S. Steel Group - A Unit of USX Corp. v. United States, 873 F. Supp. 673, 685 (Ct. Int’l
Trade 1994), aff’d, 96 F.3d 1352 (Fed. Cir. 1996); Fundicao Tupy, S.A. v. United States, 678 F.
Supp. 898, 902 (Ct. Int’l Trade 1988), aff’d, 859 F.2d 915 (Fed. Cir. 1988); see also SAA at 848
(citing with approval the analysis in Fundicao Tupy.). These factors are neither exclusive nor
determinative. See Goss Graphics Sys., Inc. v. United States, 33 F. Supp. 2d 1082, 1086 (Ct.
Int’l Trade 1998). In finding that overlap of competition is likely, the Commission made
affirmative determinations as to each factor. See Views of the Commission at 10-12. Indorama
challenges only the finding relative to the third factor, channels of distribution.
The Commission concluded that “in the reasonably foreseeable future both the domestic
like product and subject imports are likely to compete directly for sales to end users.” Id. at 11.
In making this determination, the Commission found that Thai subject imports are sold directly
to end users. See id. The Commission also found that while subject imports from China ceased
immediately after the imposition of the AD Orders, subject imports from both China and
Consol. Court No. 01-00305 Page 18
Thailand had been sold to end users during the original investigation. Therefore, the
Commission concluded that if China returned to the U.S. market, they would likely sell to end
users. See id. In relation to the domestic like product, the Commission found that while only a
small volume is currently being sold to end users, the domestic producer Penn had [[
]]. See id.
The Court finds there is substantial evidence on the record to support the Commission’s
conclusion that the domestic like product and subject imports are likely to compete directly for
sales to end users in a reasonably foreseeable time. While forcefully made, Indorama’s
arguments ask this Court to reweigh the record evidence and step into the shoes of the
Commission, an invitation the Court declines to accept. Indorama’s contention revolves around
whether Penn will actually [[ ]].
It is uncontested that Penn toll produces for another company, [[ ]]. See Conf. Final
Staff Report at I-12, Def.’s Conf. App. Ex. 5. But the record also demonstrates that Penn entered
into this agreement because it was unfamiliar with the FA industry and needed some time to gain
familiarity. Penn’s Vice President testified that he and his partners knew little about the FA
market when it acquired the business from Great Lakes in 1999 and viewed itself fortunate “to
have this tolling opportunity to keep things moving along.” Hr’g Tr. (March 1, 2001), at at 59,
60, Public List 1, Doc. 56, Def.’s Public App. Ex. 2. Penn’s equity partners were “looking for
something to buy a little bit of time to understand and be able to dig into some of these fine
chemicals and solvents, furfuryl alcohol being one of them, and understand what [they] knew
was a fairly complex market and a very global market indeed.” Id. at 60. “Toll production
Consol. Court No. 01-00305 Page 19
allowed the company time to understand the market before it fully availed itself of the production
and sales opportunities of furfuryl alcohol.” Conf. Final Staff Report at III-1.
There is also record evidence that [[
]]. Penn’s witness indicated at the hearing that [[
]]. Hr’g
Tr. (March 1, 2001), at 155, Prop. List 2, Doc. 22, Def.’s Conf. App. Ex. 1. Indorama contends
Penn is not likely to [[ ]] for
them. Penn’s witness testified, however, that [[
]] Id. Furthermore, it would appear logical that if the
tolling arrangement in itself is [[ ]] for Penn, that it would be just [[
]]. As Penn’s witness noted at the hearing, [[
]] Id.
Finally, the domestic like product that Penn toll produces for [[
]]. See id. at 173, 177. [[ ]] importer questionnaire response
[[
]]: [[
Consol. Court No. 01-00305 Page 20
]] Producer’s Questionnaire, [[ ]] (Jan. 8, 2001), Prop. List 2,
Doc. 68, Def.’s Conf. App. Ex. 7, at 2 (emphasis in original).
This Court finds the Commission’s determination that there likely will be a reasonable
overlap of distribution channels is supported by substantial evidence on the record. This Court
holds the Commission’s determination that there will likely be a reasonable overlap of
competition between the domestic like product and the subject imports in a reasonably
foreseeable time is supported by substantial evidence on the record and otherwise in accordance
with law.
B. The Commission’s Determination That Revocation of the AD Orders Would be
Likely to Lead to Continuation or Recurrence of Material Injury Within a
Reasonably Foreseeable Time is Supported by Substantial Evidence on the Record
and Otherwise in Accordance With Law
In five-year sunset reviews, the Commission “shall determine whether revocation of an
order . . . would be likely to lead to continuation or recurrence of material injury within a
reasonably foreseeable time.” 19 U.S.C. § 1675a(a)(1). In making this determination the
Commission is directed to “consider the likely volume, price effect, and impact of imports of the
subject merchandise if the order is revoked . . . .” Id. Plaintiffs challenge the Commission’s
affirmative determination as to each.
The Court notes at the outset that the standard is based on a “likelihood” of continuation
or recurrence of injury, not a certainty. The SAA makes this clear:
Consol. Court No. 01-00305 Page 21
There may be more than one likely outcome following revocation or 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 . . . 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 . . . will be continued.
SAA at 883. The Plaintiffs appear to ignore this standard in their arguments, again arguing that
the record evidence points to the possibility of an outcome contrary to the one determined by the
Commission.
After evaluating the statutory factors, the Commission concluded that revocation of the
AD Orders on import of FA from China and Thailand would be likely to lead to continuation or
recurrence of material injury to the U.S. FA industry within a reasonably foreseeable time. For
the reasons that follow, the Court finds this determination to be supported by substantial
evidence and otherwise in accordance with law.
1. Volume
The Commission determined that likely volume of cumulated imports from China and
Thailand would be significant within a reasonably foreseeable time if the orders were revoked.
The Commission found that revocation of the orders, which caused cumulated subject import
volumes to decline since the time of the original investigations, would create an incentive for
subject producers to shift or continue to shift exports from third countries, where demand is
stagnant, to the U.S., the world’s largest market. See Views of the Commission at 20.
Indorama’s objections here focus only on imports from Thailand, ignoring that the
Commission made its volume determination on a cumulated basis. As the Court stated in its
discernible adverse impact discussion above, the Commission’s determination with respect to
likely volume from Thailand was supported by substantial evidence on the record.
Consol. Court No. 01-00305 Page 22
Indorama makes a supplemental claim that the order has not been a barrier to imports
from Thailand. This claim is inaccurate. As noted earlier, the Commission found that there were
no subject imports from Thailand in 1995, 1996, or 1997. See Conf. Final Staff Report at Table
I-1. When imports resumed in 1998, they were still at a level [[ ]] below the 1994, pre-
order level. See id. The increase in 1999 and in 2000 support the finding that Indorama has a
demonstrated ability to shift among export markets. Indorama also argues it has no excess
production capacity, but that was also true in 1999 and 2000, years in which Indorama
[[ ]] increased exports to the U.S. notwithstanding [[
]]. See id. at IV-4. Finally, Indorama’s claim that it has a diversified global export base is
consistent with the Commission’s finding that Indorama has the ability and incentive to direct to
the U.S. exports currently directed elsewhere.
2. Price Effects
The Commission determined that if the AD Orders are revoked, the cumulated subject
imports would be priced at levels that would likely have significant price depressing or
suppressing effects on the domestic like product. See Views of the Commission at 21-22. In
support of that conclusion, the Commission found that the current underselling by the Thai
product, and the price effects observed during the original investigations, coupled with the
stagnant demand for FA worldwide, provide considerable incentive to the Thai and Chinese
producers to enter the U.S. market and engage in aggressive pricing to recapture market share.
This would result in increased pressure on the U.S. producers to either reduce or suppress prices
or lose market share. See Views of the Commission at 21.
Once again, Indorama’s arguments are based upon imports from Thailand alone, not on a
Consol. Court No. 01-00305 Page 23
cumulated basis. As the Court stated in its discernible adverse impact discussion above, the
Commission’s determination with respect to price effects from China and Thailand was
supported by substantial evidence on the record and otherwise in accordance with law.
3. Likely Impact
The Commission determined that the volume and price effects of the cumulated subject
imports would have a likely significant negative impact on the domestic industry’s prices and
would likely cause the domestic industry to lose market share. See Views of the Commission at
23. Supporting this conclusion, the Commission noted that in the original determination it had
found that increased volume and market share of the subject imports depressed U.S. prices and
led to the U.S. industry’s loss of market share. See id. at 22. Following the imposition of the AD
Orders, the domestic industry’s performance improved significantly. For example, the domestic
industry’s market share increased from [[ ]] percent in 1994 to [[ ]] percent in 1996.
Conf. Final Staff Report at Table I-1. Additionally, the domestic industry’s capacity utilization
rate increased from [[ ]] percent in 1994 to [[ ]] percent in 1996. See id. However, as
noted in the discernible adverse impact discussion, in the last three years, consistent with
Indorama’s reentrance into the market, the indicator’s for the domestic industry’s condition have
been mixed, indicating an impact by the imports.
Indorama’s arguments are based upon imports from Thailand alone, not on a cumulated
basis. As the Court stated in its discernible adverse impact discussion above, the Commission’s
determination with respect to likely impact of imports from China and Thailand was supported
by substantial evidence on the record and otherwise in accordance with law.
Consol. Court No. 01-00305 Page 24
CONCLUSION
For the reasons stated above, the Court finds the Commission’s Final Determination is
supported by substantial evidence and otherwise in accordance with law. Plaintiffs’ motions are
denied. This consolidated action is dismissed.
______________________________
Gregory W. Carman,
Chief Judge
Dated: September 4, 2002
New York, New York
ERRATA
Indorama Chemicals (Thailand) Ltd., Sinochem International Furan Chemicals, et al., v. United
States International Trade Commission, Consol. Court No. 01-00305, PUBLIC VERSION, Slip
Op. 02-105, dated September 4, 2002.
• Page 24, Line 511: Delete the words, “Dated: September 4, 2002” and replace with
“Signed: February 4, 2003”
• Page 24, Line 511: Insert the words, “Effective: September 4, 2002” after the words,
“Signed: February 4, 2003”
February 7, 2003