Nippon Steel Corp. v. United States , 29 Ct. Int'l Trade 338 ( 2005 )

Slip Opinion 05-38
UNITED STATES COURT OF INTERNATIONAL TRADE
__________________________________________
:
NIPPON STEEL CORPORATION, :
NKK CORPORATION, :
KAWASAKI STEEL CORPORATION :
and :
TOYO KOHAN CO., LTD., :
:
Plaintiffs, :
:
v. : Court No. 00-09-00479
:
UNITED STATES, : Public Version
:
Defendant, :
:
INTERNATIONAL STEEL GROUP INC., :
:
Defendant-Intervenor. :
__________________________________________:
[ITC third remand determination sustained.]
Dated: March 23, 2005
Willkie Farr & Gallagher LLP (William H. Barringer, Christopher Dunn, James P. Durling,
Daniel L. Porter, and Robert E. DeFrancesco) for plaintiffs.
Lyn M. Schlitt, Director of Office of External Relations, James M. Lyons, General Counsel,
Marc A. Bernstein, Assistant General Counsel, United States International Trade Commission
(Laurent de Winter and Neil J. Reynolds) for defendant.
Stewart and Stewart (Terence P. Stewart, Eric P. Salonen, Sarah V. Stewart, and Jordan Taylor)
for defendant-intervenor.
OPINION
RESTANI, Chief Judge:
Before the court is the United States International Trade Commission’s (“Commission”
or “ITC”) third remand determination concerning tin- and chromium-coated steel sheet
C OURT N O . 00-09-00479 PAGE 2
(“TCCSS” or “tin plate”) imports from Japan. Views of the Commission on Third Remand,
(“Third Remand Determination”). In its original determination, the Commission concluded that
the United States TCCSS industry was materially injured by reason of TCCSS imports from
Japan (“subject imports”) that were sold at less than fair value (“LTFV”). Tin- and Chromium-
Coated Steel Sheet From Japan, 65 Fed. Reg. 50,005, USITC Pub. 3300, Inv. No. 731-TA-860
(final determ.) (Aug. 2000) (A.R. 2-148) (“Final Determination”). The court, however, found
that the Commission’s analysis was inadequate, and remanded the matter for further
investigation. Nippon Steel Corp. v. United States, 182 F. Supp. 2d 1330, 1356 (Ct. Int’l Trade
2001) (“Nippon I”). On remand, the Commission again determined that the domestic industry
was materially injured by reason of subject imports. Tin- and Chromium-Coated Steel Sheet
from Japan, Inv. No. 731-TA-860 (final determ.) (March 2002) (A.R. 2-261R) (“First Remand
Determination”). Because the Commission’s conclusions were unsupported by substantial
evidence, and because the Commission failed to address Plaintiffs’ claims and the court’s
concerns, the court vacated the Commission’s decision and directed it to enter a negative
determination. Nippon Steel Corp. v. United States, 223 F. Supp. 2d 1349, 1371–72 (Ct. Int’l
Trade 2002) (“Nippon II”). On appeal, the Federal Circuit vacated the court’s decision in
Nippon II, and remanded the matter to the Commission “to attend to all the points made by the
Court of International Trade.” Nippon Steel Corp. v. International Trade Commission, 345 F.3d
1379, 1382 (Fed. Cir. 2003) (“Nippon III”). On remand, the Commission again entered an
affirmative material injury determination. Tin- and Chromium-Coated Steel Sheet from Japan,
Inv. No. 731-TA-860 (Feb. 2004) (A.R. 2-263R) (“Second Remand Determination”). Because
the record supported only a negative determination, however, and because the Commission was
C OURT N O . 00-09-00479 PAGE 3
unable to obtain new evidence to significantly supplement the record, the court remanded the
matter to the Commission with instructions to (1) issue a negative material injury determination,
and (2) determine whether the domestic industry was threatened with material injury. 1 Nippon
Steel Corp. v. United States, 350 F. Supp. 2d 1186 (Ct. Int’l Trade 2004) (“Nippon IV”).2
Now, after a third remand, the Commission issues a determination that the domestic
industry is neither materially injured nor threatened with material injury by reason of Japanese
TCCSS imports. The Commission notes, however, that it would have not made this
determination in absence of the court’s directive in Nippon IV. Defendant-intervenor,
International Steel Group Inc. (“ISG”),3 challenges the Commission’s determination, arguing
that the record as a whole supports an affirmative threat determination. Plaintiffs, Nippon Steel
Corporation, NKK Corporation, Kawasaki Steel Corporation, and Toyo Kohan Co., Ltd.
(collectively “Plaintiffs”), agree with the Commission’s negative determination, but challenge
certain subsidiary findings. For the reasons set forth below, the Commission’s Third Remand
Determination is sustained.
1
Although the court previously declined to remand this matter for a determination of
threat, largely on the basis that the defendant-intervenor neither raised the issue before the court
nor presented a viable threat case to the Commission, see Nippon Steel Corp. v. United States,
No. 00-09-00479, Slip Op. 02-116 (Ct. Int’l Trade Sept. 26, 2002), the court in Nippon IV
concluded that “it is better practice for the agency in the first instance to determine whether a
threat of injury dispute remain[ed].” 350 F. Supp. 2d at 1222.
2
The court assumes familiarity with its earlier opinions.
3
On November 24, 2004, the court entered an order substituting ISG as defendant-
intervenor in place of Weirton Steel Corporation.
C OURT N O . 00-09-00479 PAGE 4
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2000). The court will uphold
the Commission’s final determination in an antidumping investigation unless it is “unsupported
by substantial evidence on the record, or is otherwise not in accordance with law.” 19 U.S.C. §
1516a(b)(1)(B)(i) (2000).
DISCUSSION
The statute directs the Commission to “make a final determination of whether . . . an
industry in the United States . . . is materially injured, or . . . threatened with material injury . . .
by reason of [LTFV] imports . . . .” 19 U.S.C. § 1673d(b). In this case, the Commission
determined that the domestic TCCSS industry is neither materially injured nor threatened with
material injury by reason of Japanese imports. The court sustains both determinations as
supported by substantial evidence and otherwise in accordance with the law.
I. Material Injury
An affirmative material injury determination requires the Commission to find that the
volume, price effects, and impact of the subject imports are significant, and that the material
injury was by reason of the subject imports. Id. § 1677(7)(B). In its Third Remand
Determination, the Commission concluded that the domestic TCCSS industry is not materially
injured by Japanese imports, stating that it “must issue” this determination “in the place of [its]
previous affirmative determination” to comply with the court’s order in Nippon IV.4 Third
4
Although the Commission complied with the court’s order, it insists that the court
exceeded the scope of its authority. The Commission characterizes the court’s action as a re-
weighing of the facts. The court, on the other hand, found that after viewing the entirety of the
evidence in context, such evidence could not support the Commission’s determination. Under
(continued...)
C OURT N O . 00-09-00479 PAGE 5
Remand Determ. at 8. As discussed at length in Nippon IV, despite some isolated fragments of
positive evidence, the record in this case does not show that subject imports had a significant
effect on domestic prices, or that purchasers bought significant volumes of subject imports by
reason of lower prices. Instead, “the record fully supports a negative determination and will not
support an affirmative one.” Nippon IV, 350 F. Supp. 2d at 1222 (emphasis in original).
Accordingly, pursuant to the court’s directions, the Commission issued a negative finding as to
material injury, which the court sustains.
II. Threat of Material Injury
In a threat of material injury determination, the Commission must consider whether
“further dumped . . . imports are imminent and whether material injury by reason of imports
would occur unless an order is issued.” 19 U.S.C. § 1677(7)(F)(ii). The statute directs the
Commission to consider, among other relevant factors,
(II) any existing unused production capacity or imminent, substantial
increase in production capacity in the exporting country indicating the likelihood
of substantially increased imports of the subject merchandise into the United
States, taking into account the availability of other export markets to absorb any
additional exports,
(III) a significant rate of increase of the volume or market penetration of
imports of the subject merchandise indicating the likelihood of substantially
increased imports,
(IV) whether imports of the subject merchandise are entering at prices that
are likely to have a significant depressing or suppressing effect on domestic
prices, and are likely to increase demand for further imports,
(V) inventories of the subject merchandise,
4
(...continued)
such circumstances, the court issued appropriate remand instructions. Because this matter was
sufficiently addressed in Nippon IV, see 350 F. Supp. 2d at 1221–22, the court will not discuss it
again here in detail.
C OURT N O . 00-09-00479 PAGE 6
(VI) the potential for product-shifting if production facilities in the foreign
country, which can be used to produce the subject merchandise, are currently
being used to produce other products, . . .
(VIII) the actual and potential negative effects on the existing
development and production efforts of the domestic industry, including efforts to
develop a derivative or more advanced version of the domestic like product, and
(IX) any other demonstrable adverse trends that indicate the probability
that there is likely to be material injury by reason of imports (or sale for
importation) of the subject merchandise (whether or not it is actually being
imported at the time).
19 U.S.C. § 1677(7)(F)(i).5 The Commission must evaluate these statutory factors “as a whole.”
Id. § 1677(7)(F)(ii). Moreover, a threat determination may not be made on the basis of “mere
conjecture or supposition.” Id.
In this case, although it found that certain statutory factors weigh in favor of an
affirmative threat determination, the Commission concluded that it “simply [cannot] issue[] an
affirmative threat determination and act[] consistently with the [c]ourt’s opinion [in Nippon
IV].” ITC Reply Br. at 3. Thus, the Commission determined that the domestic industry is not
threatened with material injury by reason of TCCSS imports from Japan. ISG challenges the
Commission’s determination, arguing that regardless of the court’s opinion in Nippon IV, the
record as a whole supports an affirmative threat determination. Plaintiffs agree with the
Commission’s negative threat determination, but challenge certain subsidiary findings. The
statutory factors of (A) production capacity, (B) volume and market penetration, and (C)
domestic price depression and suppression, are discussed below. 6
5
Subsections (I) and (VII) deal with subsidies and raw agricultural products,
respectively, and do not apply to this investigation. See id. § 1677(7)(F)(i)(I), (VII).
6
Although the Commission addressed all of the statutory threat factors, neither ISG nor
Plaintiffs dispute the Commission’s findings regarding inventories of subject imports (factor V),
(continued...)
C OURT N O . 00-09-00479 PAGE 7
A. Production Capacity
In making a threat determination, the Commission is required to analyze whether any
unused production capacity or any imminent, substantial increase in production capacity in the
foreign country indicates the likelihood of substantially increased subject imports into the U.S.
See id. § 1677(7)(F)(i)(II). In this case, although the Commission ultimately issued a negative
threat determination, it found that existing unused production capacity in Japan could be used to
significantly increase imports of subject merchandise to the United States in the imminent future.
The Commission relies on the fact that the amount of unused production capacity in Japan was
greater than the volume of TCCSS shipments to the U.S. Given the low level of Japanese
imports, however, this is not remarkable.7 Further, unused production capacity alone is
insufficient to reasonably indicate that increased imports into the United States are likely.
See 19 U.S.C. § 1677(7)(F)(i)(II) (requiring ITC to “tak[e] into account the availability of other
export markets to absorb any additional exports”). The Commission cannot simply view unused
production capacity in isolation and find a possibility of increased U.S. shipments. It must
examine the likelihood of this eventuality. Moreover, as Plaintiffs point out, (1) high capacity
utilization rates over the period of investigation, (2) large volumes of shipments to non-U.S.
6
(...continued)
the potential negative effects on the existing development and production efforts of the domestic
industry (factor VIII), or the vulnerability of the domestic industry (19 U.S.C. § 1677(7)(F)(i)
(“other relevant economic factors”)).
7
Relative to consumption of TCCSS in the United States, the market share of subject
imports in terms of quantity was [
]. Staff Report at IV-5, Table IV-4. In contrast, the market share held by
the domestic industry in terms of quantity was [
]. Id.C OURT N O . 00-09-00479 PAGE 8
markets, and (3) reductions in Japan’s TCCSS capacity, undercut the Commission’s finding that
subject imports will significantly increase in the future.
First, Japan’s capacity utilization was 89.0% in 1997, 85.4% in 1998, and 88.5% in 1999
and these rates were projected to increase in 2000 and 2001. 8 Staff Report at VII-3, Table VII-2.
The Commission concedes that these rates were high, ITC Reply Br. at 4; however, it argues that
this fact is irrelevant because Japanese producers still had the ability to increase exports to the
United States. The record shows, however, that in 1998 and 1999, when U.S. exports increased,
capacity utilization rates were lower than in 1997; and between the first quarters of 1999 and
2000, U.S. exports declined by nearly half, as capacity utilization increased from 89.5% to
91.0%.9 This evidence demonstrates that rising capacity utilization rates do matter, and supports
a finding of no threat.
8
In comparison to other cases of threat, the rates here are high. See Kern-Liebers USA v.
United States, 19 CIT 87, 88–90 (1995) (finding that capacity utilization rates, “which ranged
from 74.4% to 77.8%, were . . . very low for this industry . . . [and] are supportive of a threat
finding”); see also Asociacion de Productores de Salmon y Trucha de Chile AG v. United
States, 180 F. Supp. 2d 1360, 1372 (Ct. Int’l Trade 2002) (recognizing “that incentives exist for
subject producers to expand production when low capacity utilization exists”); Companhia
Paulista De Ferro-Ligas v. United States, 20 CIT 473, 483 (1996) (upholding ITC finding that
“very low capacity utilization, reasonably demonstrates a probability that [subject] imports will
be a cause of actual injury in the near future”); Citrosuco Paulista, S.A. v. United States, 12 CIT
1196, 1220, 704 F. Supp. 1075, 1095 (1988) (upholding Commission’s finding that low
utilization levels, among other factors, supports a positive threat determination).
9
Capacity utilization rates compared to short tons of TCCSS exported to the U.S. were as
follows: [
]. Staff Report at VII-3, Table VII-2.
C OURT N O . 00-09-00479 PAGE 9
Second, over the period of investigation, roughly three-fourths of total Japanese exports
were to non-U.S. markets, and that amount was projected to rise in the future.10 Although it may
be reasonable for the Commission to discount projected increases, due to the stability of past
shipments, the fact remains that the vast majority of past Japanese exports targeted third-country
markets.
Third, the Staff Report reveals that three of the four major Japanese TCCSS producers
reported decreases in their TCCSS capacity.11 Moreover, the Commission points out that
Japanese producers have a limited ability to shift production between subject and non-subject
products. Third Remand Determ. at 13 n.67 (considering product-shifting as instructed by factor
VI). This evidence suggests that once Japanese producers shift production to non-subject
merchandise, their ability to easily shift back to TCCSS is limited.
As a whole, high capacity utilization rates, large volumes of shipments to third-country
markets, and reductions in Japan’s TCCSS capacity contradict the Commission’s subsidiary
conclusion with respect to production capacity. This evidence does, however, support the
Commission’s overall negative threat determination. See Am. Bearing Mfrs. Ass’n v. United
10
The percentage of total TCCSS exports shipped to non-U.S. markets over the period of
investigation were [
]. Id.
11
[
]. Staff Report at VII-3, Table VII-2 n.1.
C OURT N O . 00-09-00479 PAGE 10
States, 350 F. Supp. 2d 1100, 1124 (Ct. Int’l Trade 2004) (upholding ITC’s finding that
substantially increased imports not likely where “subject foreign producers reportedly operated
at high rates of capacity utilization and devoted a significant portion of their exports to markets
other than the United States”); Taiwan Semiconductor Indus. Ass’n v. United States, 24 CIT
914, 930, 118 F. Supp. 2d 1250, 1264 (2000) (upholding ITC’s conclusion that production
capacity did not indicate likelihood of increased subject imports based, in part, on evidence that
“several foreign producers reported . . . that new capacity would not be dedicated to [subject]
production”).
B. Volume and Market Penetration
As part of its required threat evaluation, the Commission is also obligated to consider
whether a significant increase in volume or market penetration indicates the likelihood of
substantially increased subject imports. 19 U.S.C. § 1677(7)(F)(i)(III). In this case, the
Commission found that, contrary to its ultimate determination, increases in volume and market
penetration of subject imports show that substantially increased subject imports are likely.
Plaintiffs counter that the Commission’s analysis fails to consider the context of the broader
TCCSS market.
The volume and market share of subject imports grew over the period of investigation.12
In determining whether these increases evidence the likelihood of substantially increased imports
and a threat of material injury, however, the Commission must consider prevailing market
12
Exports of Japanese TCCSS, in short tons, to the U.S. were [
]. Staff Report at VII-3, Table VII-2. The
market share of subject imports also increased from [
]. Id. at IV-5, Table IV-4.
C OURT N O . 00-09-00479 PAGE 11
conditions in the TCCSS industry. See 19 U.S.C. § 1677(7)(F)(i) (requiring the ITC to consider
“other relevant economic factors”); Statement of Administrative Action, H.R. Doc. No. 316,
103rd Cong., 2nd Sess. (1994), reprinted in Uruguay Round Agreements Act, Legislative
History, Vol. VI, at 885 (“In threat determinations, the Commission must carefully assess current
trends and competitive conditions in the marketplace to determine the probable future impact of
imports on the domestic industry and whether the industry is vulnerable to future harm.”);
Asociacion de Productores de Salmon y Trucha de Chile AG, 180 F. Supp. 2d at 1373 (“Under
U.S. law, where there is evidence that the U.S. industry is . . . threatened with injury, by factors
other than less than fair value imports, the Commission must consider all relevant economic
factors.”). As Plaintiffs note, market conditions such as domestic supply problems and regional
zones of competition undercut the likelihood that the domestic TCCSS industry is threatened
with material injury by reason of increased subject imports.
With respect to domestic supply problems, the record consistently shows that purchasers
bought increased volumes of subject imports primarily because of concerns with U.S. suppliers’
quality and reliability. See Nippon IV, 350 F. Supp. 2d at 1213–19. Moreover, in a dissenting
opinion, Chairman Koplan recognized that such domestic problems would likely decrease in the
future. See Koplan Dissent, (Aug. 11, 2000), at 19, A.R. 2-149, Pls.’ App., Tab 6 (concluding
that subject imports do not threaten material injury, in part, because “Weirton, having re-started
its second blast furnace, is positioned to improve its performance and recapture any sales lost
due to poor on-time performance”). This information suggests that substantial increases in
subject import volume and market share are unlikely.
C OURT N O . 00-09-00479 PAGE 12
Regarding regional zones of competition, subject producers compete heavily on the West
Coast while domestic producers primarily supply East and Midwest purchasers. See Nippon IV,
350 F. Supp. 2d at 1219–20. Furthermore, this segregated competition is not expected to change.
See Koplan Dissent, at 19, Pls.’ App., Tab 6 (“Imports from Japan into the West have held
relatively constant as a percent of their total imports for roughly ten years. I do not anticipate
that ratio changing. Thus, I would not expect subject import volume to increase imminently or
to shift to a greater emphasis away from the West.”). This market condition mitigates the
likelihood of threat by reason of increased subject imports.
Although for present injury purposes, “in isolation the Commission’s determination with
respect to the significance of subject import volume is supported by substantial evidence,”
Nippon I, 182 F. Supp. 2d at 1340 (emphasis added), in the context of the prevailing market
conditions in the TCCSS industry, the Commission’s subsidiary finding, with respect to
substantial future increases in subject import volume, is not.
C. Domestic Price Depression and Suppression
The statute governing threat also instructs the Commission to consider whether subject
imports are entering at prices likely to have a significant depressing or suppressing effect on
domestic prices. See 19 U.S.C. § 1677(7)(F)(i)(IV). In its Third Remand Determination, the
Commission noted that the court in Nippon IV rejected its findings of significant price effects in
the present material injury context. The Commission concluded that in light of the court’s
opinion, it was precluded from finding that subject imports are likely to enter at prices that will
suppress or depress domestic prices in the imminent future. ISG asserts that the Commission
C OURT N O . 00-09-00479 PAGE 13
erred by failing to conduct a full threat analysis. Contrary, to ISG’s contention, the
Commission’s analysis is reasonable.
Although a threat inquiry is a separate matter from a material injury investigation,
see Republic Steel Corp. v. United States, 8 CIT 29, 40, 591 F. Supp. 640, 650 (1984),
“[n]othing in the threat statute forbids the ITC from considering the . . . price effects findings it
is obligated to make with respect to present material injury.” Am. Bearing Mfrs. Ass’n, 350 F.
Supp. 2d at 1127 n.26. In other words, the fact that the record in this case does not support a
finding of significant price suppressing or depressing effects for purposes of material injury, is
relevant to the Commission’s threat inquiry. See id. (“While the absence of any indicia of
present injury is not considered conclusive that threat of injury does not exist, the findings made
with respect to whether there is present material injury are relevant.”) (cites, quotes, and
emphases omitted).
Moreover, contrary to ISG’s argument, the Commission did not shirk its obligation under
the statute to consider the likelihood of future depressing or suppressing effects on domestic
prices. Rather, the Commission reasoned as follows: (1) the court in Nippon IV held that the
record did not substantially support a finding of significant domestic price depression or
suppression, largely because certain conditions of competition minimized any effect subject
imports could have had on domestic prices, Third Remand Determ. at 14 (citing Nippon IV, 350
F. Supp. 2d at 1221); (2) the conditions of competition in the TCCSS industry are not likely to
significantly change in the imminent future, Id. at 15; and thus, (3) a determination that subject
imports are not likely to enter at prices that will significantly suppress or depress domestic prices
in the imminent future, or at prices that will increase demand for further imports, is appropriate.
C OURT N O . 00-09-00479 PAGE 14
Id. The Commission’s conclusion with respect to domestic price suppression and depression is
reasonable.13
In sum, although record evidence weighs against the Commission’s subsidiary findings
with respect to production capacity and volume and market penetration, the Commission’s
conclusion regarding domestic price depression and suppression is reasonable. Overall, the
record as a whole substantially supports the Commission’s ultimate conclusion. Accordingly,
the Commission’s negative threat of material injury determination is sustained.
CONCLUSION
Because the Commission’s negative material injury and negative threat of material injury
determinations are supported by substantial evidence and are otherwise in accordance with law,
the Commission’s Third Remand Determination is sustained.
/s/ Jane A. Restani
Jane A. Restani
Chief Judge
Dated: New York, New York
This 23rd day of March, 2005
13
ISG also argues that the record supports a finding that subject imports will have
domestic price depressing and suppressing effects in the imminent future, and requests that this
matter be remanded for the Commission’s consideration. ISG Comments at 10 n.14. The
arguments posited, and evidence relied upon, by ISG, however, have previously been considered
by the Commission and addressed by the court. Thus, another remand on this basis is not
necessary.