Co-Steel Raritan, Inc. v. United States International Trade Commission , 31 Ct. Int'l Trade 58 ( 2007 )

Slip Op. 07 - 7
UNITED STATES COURT OF INTERNATIONAL TRADE
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CO-STEEL RARITAN, INC. et al., :
Plaintiffs, :
v. Court No. 01-00955
:
UNITED STATES INTERNATIONAL TRADE
COMMISSION, :
Defendant. :
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Opinion & Order
[Result of remand to defendant
not in accordance with the law.]
Decided: January 17, 2007
Collier Shannon Scott, PLLC (Paul C. Rosenthal, Kathleen W.
Cannon and R. Alan Luberda) for the plaintiffs.
James M. Lyons, General Counsel, and Karen Veninga Driscoll,
U.S. International Trade Commission, for the defendant.
White & Case LLP (David P. Houlihan and Frank H. Morgan) for
the intervenor-defendants.
AQUILINO, Senior Judge: The Trade Agreements Act of
1979, as amended, 19 U.S.C. §1677(24)(A)(i), provides that imports
of merchandise corresponding to a U.S. domestic like product are
“negligible” if such imports account for less than three percent of
the volume of all such merchandise imported into the United States
during a defined 12-month period. Exceptions to this statutory
rule are as follows:
Court No. 01-00955 Page 2
(ii) . . . Imports that would otherwise be
negligible under clause (i) shall not be
negligible if the aggregate volume of imports
of the merchandise from all countries
described in clause (i) with respect to which
investigations were initiated on the same day
exceeds 7 percent of the volume of all such
merchandise imported into the United States
during the applicable 12-month period.
* * *
(iv) Negligibility in threat analysis.
Notwithstanding clauses (i) and (ii), the
[U.S. International Trade] Commission [“ITC”]
shall not treat imports as negligible if it
determines that there is a potential that
imports from a country described in clause (i)
will imminently account for more than 3
percent of the volume of all such merchandise
imported into the United States, or that the
aggregate volumes of imports from all
countries described in clause (ii) will
imminently exceed 7 percent of the volume of
all such merchandise imported into the United
States. The Commission shall consider such
imports only for purposes of determining
threat of material injury.
19 U.S.C. §1677(24)(A). The act further provides that, in
computing import volumes for purposes of foregoing subparagraph
(A), the ITC may make reasonable estimates on the basis of
available statistics. 19 U.S.C. §1677(24)(C).
I
In reviewing agency analyses under the foregoing
provisions, a court shall hold unlawful any determination, finding,
or conclusion found to be arbitrary, capricious, an abuse of
Court No. 01-00955 Page 3
discretion, or otherwise not in accordance with law. 19 U.S.C.
§1516a(b)(1)(A). See, e.g., Texas Crushed Stone Co. v. United
States, 35 F.3d 1535 (Fed.Cir. 1994). In exercising this statutory
standard of review, the courts have sustained negative preliminary
determinations of the Commission
only when (1) the record as a whole contains clear and
convincing evidence that there is no material injury or
threat of such injury; and (2) no likelihood exists that
contrary evidence will arise in a final investigation.
American Lamb Co. v. United States, 785 F.2d 994, 1001 (Fed.Cir.
1986). And this approach has necessarily been followed at bar viz.
Co-Steel Raritan, Inc. v. U.S. Int’l Trade Comm’n, 26 CIT 639, 648-
49, 244 F.Supp.2d 1349, 1358 (2002); Co-Steel Raritan, Inc. v.
Int’l Trade Comm’n, 357 F.3d 1294, 1310-11 (Fed.Cir. 2004), citing
the Uruguay Round Agreements Act Statement of Administrative Action
(“URAA-SAA”), H.R. Doc. No. 103-316, vol. 1 (1994). That statement
includes:
In threat of material injury analyses, the
Commission will examine “actual” as well as “potential”
import volumes. Import volumes at the conclusion of the
12-month period examined for purposes of considering
negligibility may be below the negligibility threshold,
but increasing at a rate that indicates they are likely
to imminently exceed that threshold during the period the
Commission examines in conducting its threat analysis.
In such circumstances, the [ITC] will not make a material
injury determination concerning such imports because they
are currently negligible, but it will consider the
imports for purposes of a threat determination.
URAA-SAA, p. 856.
Court No. 01-00955 Page 4
A
As reported in this court’s subsequent slip opinion 05-63
filed herein, 29 CIT ___ (June 7, 2005), familiarity with which is
presumed, the decision of two members of the three-judge panel of
the Court of Appeals for the Federal Circuit (“CAFC”) in Co-Steel
Raritan, Inc. v. Int’l Trade Comm’n, supra, was read to require
further proceedings . . .[to] consider the contention in
[plaintiffs’] original motion for judgment on the
administrative record that it did not address in Co-Steel
I . . . [,] that the Commission erred in concluding in
the preliminary determination that there was no
reasonable indication that wire rod imports from Egypt,
South Africa, and Venezuela would imminently exceed
statutory negligibility levels, whether considered
individually or collectively.
357 F.3d at 1317. When the parties hereto did not disagree1, this
court sought to comply with this mandate to consider the “record as
a whole”, “the record at the time the Commission render[ed] its
preliminary determination”, 357 F.3d at 1314, and the parties’
arguments based thereon. Again as reported, the court strained
to discern a supposition, let alone clear and convincing
evidence, of no potential that imports from South Africa
will imminently account for more than three percent of
all subject merchandise imported into the United States.2
Whereupon the court was constrained to grant plaintiffs’ motion for
judgment on the agency record
1
See Slip Op. 05-63, p. 2, 29 CIT at ___.
2
Id. at 12-13 (footnote omitted).
Court No. 01-00955 Page 5
to the extent of remand to the defendant to (a)
reconsider its preliminary determination that wire rod
imports from South Africa will not imminently exceed
three percent of the volume of all such merchandise
imported into the United States and (b) pinpoint the
clear and convincing evidence on the record, if there is
any, that there is little potential that the imports from
South Africa and those from Egypt and Venezuela,
collectively, will not imminently exceed seven percent.3
B
The defendant has sought to comply with this remand,
finding subject imports from South Africa, individually, and also
aggregated with those from Egypt and Venezuela, to be negligible,
so that its antidumping-duty investigations of such imports from
those countries “are terminated by operation of law.” Views of the
Commission, p. 36.
(1)
Slip opinion 05-63 pointed out that, in sustaining the
defendant’s affirmative threat-of-material-injury determination,
the court in Asociacion de Prod. de Salmon y Trucha de Chile AG v.
U.S. Int’l Trade Comm’n, 26 CIT 29, 39, 180 F.Supp.2d 1360, 1371
(2002), concluded that the foreign producers’ ability to increase
shipments to this country “within one to two years” qualified as
imminent. The court reasoned that “[n]o bright-line test exists to
determine when injury is imminent.”
3
Id. at 15.
Court No. 01-00955 Page 6
. . . The term does not necessarily mean, as the Asocia-
ción argues, immediate, as the statute does not establish
any specific time limit governing when a potential action
can be characterized as imminent. . . .
26 CIT at 39, 180 F.Supp.2d at 1372. The defendant now responds
herein:
The production process and market for steel wire rod
are quite different than those for salmon. . . . In
contrast to the several year production cycle for salmon,
wire rod can be quickly produced and delivered to the
U.S. market with short lead times. . . . The wire rod
industry is thus far less constrained than the salmon
industry in its ability to increase production and
shipments quickly. . . . In light of the[se]
circumstances, we find “imminent” encompasses a shorter
time frame in this case than in Salmon.
Views of the Commission, pp. 16-18.
The Commission examined actual imports of South African
wire rod to again find that
the ratio of subject imports from South Africa to total
imports never exceeded 3.0 percent over the period of
investigation. It was 1.8 percent in 1998, 2.0 percent
in 1999, 2.4 percent in 2000, 2.0 percent in interim
2000, and 2.6 percent in interim 2001.
Id. at 20-21 (footnote omitted). It compared total import volumes
during calendar year 2000 and the statutory negligibility period
and finds that they remained “essentially level”, id. at 21, and
further notes that overall apparent U.S. wire-rod consumption,
which increased from 1998 to 2000, dropped [] percent between
interim 2000 and interim 2001. See id. at 22. The ITC thus
Court No. 01-00955 Page 7
concluded that those data indicated a “decreased demand for wire
rod”. Id.
Again comparing data from calendar year 2000 and the
statutory negligibility period, the Commission determines that South
African subject imports increased “by only 0.14 percentage points, from
2.44 percent to 2.58 percent” during that time. Id. at 21. According
to it, that percentage supports a finding that the “rate of increase
for subject imports from South Africa slowed considerably after
calendar year 2000”. Id. The ITC further determines that “decreased
demand for wire rod may have been a factor in th[is] decreased rate of
increase for subject imports from South Africa.” Id. at 22.
The Commission points to increased volumes of subject imports
from Brazil, Canada, Mexico, and Trinidad and Tobago from 1998 to July
2001, along with those countries’ expanding and “increasingly dominant
share of total import volumes”, as
ma[king] the [U.S. wire-rod] market more competitive,
thereby diminishing the possibility that the volume of
subject imports from South Africa would increase
materially in the imminent future . . . render[ing]
minimal any effect an increase in subject imports from
South Africa would have on its share of total imports.
Id. at 25. The ITC finds the rate of increase of South African imports
“much lower” than the rate of increase of imports from those countries.
Id. n. 94.
Turning to potential imports, the Commission cites decreased
U.S. consumption to support a trend analysis foretelling that this
Court No. 01-00955 Page 8
decrease in consumption would tend to discourage
importers or exporters of wire rod from South Africa from
attempting to increase . . . shipments to the U.S.
market. . . . [I]f imports were to increase, that
increase would be far more likely to consist of subject
imports from Brazil, Canada, Mexico and Trinidad and
Tobago, rather than subject imports from South Africa.
Id. at 28. The ITC analyzes the export potentials of the competing
countries and finds that certain subsidies, high production
capacities, and business strategies vis-à-vis the U.S. market make
them more likely than South Africa to increase their exports should
total U.S. imports of wire-rod increase in the future. See id. at
28-31.
The Commission examined questionnaire responses from two
U.S. importers of South African wire rod and estimated that they
accounted for almost all U.S. imports of subject merchandise from
that country during 2000. See id. at 26. One of them reported an
anticipated delivery of subject imports in August 2001, which the ITC
finds “d[id] not reflect an intent on the part of [that importer] to
materially increase its subject imports from South Africa into the
U.S. market in the imminent future.” Id. at 26-27.
The Commission also relies on data provided by the lone
responding South African producer, Scaw Metals, Limited, which “did
not export to the United States during the period of investigation
and stated that it d[id] not plan to do so in the future”, id. at 27,
to conclude that
Court No. 01-00955 Page 9
neither the largest responding importer of subject
imports, nor the only exporter in South Africa that
responded to our questionnaire, gave any indication that
they were intending to increase their imports or their
exports, respectively, to the U.S. market in the imminent
future.
Id. at 28. In light of the above actual and potential import trend
analyses, the ITC
conclude[s] that there is no potential that subject
imports from South Africa will exceed the applicable
individual statutory negligibility threshold of three
percent of total wire rod imports in the imminent future,
and that they will remain at approximately 2.6 percent of
total imports in the imminent future.
Id. at 32.
(2)
The Commission finds that aggregate imports from Egypt,
South Africa, and Venezuela comprised 6.1 percent of subject
imports during the applicable negligibility period, “well below the
statutory [7 percent] threshold.” Id. In reaching this con-
clusion, it confirms its earlier findings of the share of total
imports for Egypt and Venezuela individually, which were 1.4
percent and 2.1 percent, respectively. By adding these figures to
its previously-determined 2.6 percent for South Africa, the ITC
concludes that “subject imports from Egypt, South Africa and
Venezuela would, in aggregate, account for approximately 6.1
percent of total imports in the immediate future.” Id. at 35.
Court No. 01-00955 Page 10
The Commission identifies a trend in support of this
conclusion, citing declining aggregate imports from those three
countries that totaled 7.5 percent in 1999, 6.4 percent in 2000,
5.6 percent in interim 2000, and 5.1 percent in interim 2001. See
id. at 32-33. The determination regarding aggregate imminent non-
negligibility is further based upon those same factors it
considered in its assessment of individual South African
negligibility, namely, its conclusion that the U.S. market has
become more competitive, that other foreign producers have a
“variety of incentives to increase their presence in the U.S.
market”, and that, should total imports of wire rod increase, “it
is much more likely for that increase to come from countries other
than Egypt, South Africa and Venezuela”. Id. at 35-36.
II
The plaintiffs contend that the defendant has erred in
concluding that there is no potential that the ratio of South
African wire-rod exports to the U.S. would imminently exceed the
three-percent negligibility threshold:
The Commission’s remand determination . . . repeats
the same errors made in its original decision . . . [and]
relies on the same, faulty reasoning cited in its prior
decision to support its conclusion that imports from
South Africa will not imminently exceed the three percent
negligibility threshold.
Court No. 01-00955 Page 11
Plaintiffs’ Comments [hereinafter “Brief”], p. 2. They add that
[a]dditional information cited by the Commission in its
remand determination . . . as reported by the major
importer of product from South Africa . . . demonstrates
that imports from South Africa not only will exceed the
three percent threshold, but will do so in just one month
beyond the period the Commission examined. . . . [That
entity’s] affirmative statement that it will import over
17,000 tons of wire rod in the month of August 2001 alone
is directly inconsistent with the Commission’s conclusion
that “the largest responding importer” did not give “any
indication that they were intending to increase[] their
imports . . . to the U.S. in the imminent future.”
Id. at 3-4 (emphasis in original; confidential bracketing omitted),
quoting Views of the Commission, p. 28. The plaintiffs postulate
that, given that shipment, South African subject imports would
exceed three percent during the period of September 2000 through
August 2001. See id. at 3-6.
Focusing on that shipment, the plaintiffs posit that “the
Commission’s . . . definition of ‘imminent[]’ . . . is irrelevant”.
Id. at 6. They claim that
[d]efinitive evidence [of] . . . substantial volume of
imports from South Africa in the very next month beyond
that for which data were collected that would cause
imports from South Africa to surpass the three percent
threshold is “imminent” under any definition of that
term.
Id. at 6-7 (emphasis in original; confidential bracketing omitted).
The plaintiffs also find fault with the ITC’s
interpretation of record evidence. They contend that its
Court No. 01-00955 Page 12
theories as to why there would be no increase in future
imports from South Africa are . . . without support . . .
[and its] theories as to how imports from South Africa
would likely react to specific market conditions fly
directly in the face of record evidence to the contrary.
Id. at 7. Specifically, they point to an increase in South African
subject imports between interim 2000 and 2001, during which period
such imports increased 31.5 percent despite an overall 16.6 percent
drop in apparent U.S. consumption of wire rod. See id. at 8. They
maintain that
there is no support for the Commission’s conclusion that
a decline in demand would cause future imports from South
Africa to decline.
Id.
The plaintiffs similarly challenge the Commission’s
conclusion that increased market competitiveness would make it
unlikely that South Africa would increase its share of subject
imports by asserting that it
was one of the countries increasing its imports steadily
and consistently during [the investigative period of 1998
through interim 2001], even as imports from other
countries increased. . . . Contrary to the Commission’s
theory, despite the increased competition from other
imports that occurred over this period, the volume of
imports from South Africa did not diminish but continued
to increase in every year from prior levels.
Id. at 8-9 (citations omitted). Whereupon the plaintiffs conclude
that the
Court No. 01-00955 Page 13
constant increases in imports from South Africa in this
highly-competitive market environment indicate that,
irrespective of the competition from other imports,
imports from South Africa will increase in volume as
well. . . . [T]he increased competition and sales of
imports from other subject countries were not coming at
the expense of imports from South Africa but at the
expense of the domestic industry, whose sales and market
share fell rapidly while the market share of imports from
South Africa and other subject countries increased.
Id. at 9, citing Carbon and Certain Alloy Steel Wire Rod From
Brazil, Canada, Egypt, Germany, Indonesia, Mexico, Moldova, South
Africa, Trinidad and Tobago, Turkey, Ukraine, and Venezuela, USITC
Pub. 3456, p. IV-11, Table IV-5 (Oct. 2001).
Additionally, the plaintiffs argue that the contested
determination is flawed due to the Commission’s
complete failure to acknowledge or address the refusal of
the major exporter of wire rod from South Africa, Iscor,
to provide any response to its questionnaire[] and its
reliance instead on the largely irrelevant response of a
company that has never exported wire rod to the United
States.
Id. Because that company, Scaw Metals, which was the only South
African wire-rod producer that responded to the ITC’s questionnaires,
never exported wire rod to the United States . . . the
fact that it did not plan to increase exports to the
United States is not surprising or even relevant to the
Commission’s analysis. . . . The petition that was filed
in this case by the domestic industry identified Iscor as
the major exporter of wire rod and alleged dumping by
Iscor, not Scaw Metals. . . . That Scaw Metals . . . had
no plans to export to the U.S. in the future provides no
evidence, one way or the other, for concluding whether
Court No. 01-00955 Page 14
Iscor would increase exports of wire rod from South
Africa in the future.
Id. at 10-11 (citations omitted; emphasis in original). To remedy
this perceived defect, the plaintiffs suggest that the Commission
should have either made adverse inferences against Iscor
for non-compliance, as contemplated by 19 U.S.C. §
1677e(b), or postponed until the final proceeding a
decision on South Africa so that it could further attempt
to obtain a response from Iscor at that time, consistent
with the standard in American Lamb[.]
Id. (citation omitted). They speculate that,
[i]f Iscor had responded, it might have reported that
increased exports to the United States were planned for
the imminent future[,] . . . that it was expanding
capacity or had excess capacity that would lead to
increased exports, or that it planned to divert exports
from its home or third country markets to the United
States. . . . Instead, this void in the record inured to
Iscor’s benefit . . . [and] has rewarded Iscor’s
recalcitrance by prematurely terminating the case against
imports from South Africa[.]
Id. at 12-14 (footnote omitted).
The plaintiffs lastly take exception to the ITC’s
determination that the aggregate Egyptian, South African, and
Venezuelan subject-import ratio would not imminently exceed seven
percent, and they continue to object to the ITC’s determination
that subject Venezuelan imports will not significantly increase in
the imminent future. They claim that data provided by producer
Sidor indicate that Venezuelan subject imports would have
Court No. 01-00955 Page 15
imminently increased during the second half of 20014, thus pushing
aggregate imports over the negligibility threshold.
A
In considering “imminent”, the defendant has identified
several factors that distinguish wire-rod production from that of
salmon, namely, the steel industry’s ability to increase capacity
within a short period of time, its ability to quickly produce and
deliver product to the U.S. market, and its ability to shift the
use of production equipment from other steel products to wire rod.
See Views of the Commission, pp. 16-18. The ITC noted that,
because wire-rod sales are
made generally either on the spot market or through
short-term three month contracts . . . [, t]he wire rod
industry is thus far less constrained than the salmon
industry in its ability to increase production and
shipments quickly.
Id. at 17 (footnote omitted).
4
The court declines reconsideration of the issue of imminent
Venezuelan non-negligibility, which was decided by slip opinion 05-
63. The ITC’s confirmation on remand of its earlier Venezuelan
import ratio determination, and its subsequent reliance thereon in
factoring its forecast of aggregate imports, does not open the door
to reargument as to whether Venezuelan imports are likely to
increase significantly in the imminent future. Rather, the issue
of whether the aggregate import ratio will imminently pass the
seven-percent threshold remains at issue only to the extent that
the Commission’s non-negligibility remand determination regarding
South Africa might affect collective imminent non-negligibility.
Court No. 01-00955 Page 16
Given its consideration of the facts and circumstances of
production of wire rod, the nature of the industry, and the market
therefor, the Commission’s conclusion that “imminent” in the case
at bar “encompasses a shorter time frame” than the one-to-two-year
period in Asociacion de Prod. de Salmon y Trucha is not
unreasonable, arbitrary and capricious, or an abuse of discretion.
The plaintiffs contend, however, that the South African
import ratio would exceed three percent even within such shorter
period, viz. by the end of September 2001. Relying on information
contained in the ITC’s remand papers, plaintiffs’ approach would
shift the 12-month period contemplated by 19 U.S.C. §1677(24)(A)(i)
one month ahead during which a significant shipment of South
African wire-rod was predicted. Plaintiffs’ arithmetic would then
divide the expected higher South African import volume by that of
total U.S. wire-rod imports tallied during the statutory period,
which would equal some 3.1 percent of total U.S. imports. See
Plaintiffs’ Brief, p. 5.
While admitting, as they must, that their denominator is
a “proxy” due to the lack of a “precise[] . . . amount [of] total
import tonnage . . . for the September 2000 through August 2001
period”,5 the plaintiffs posit that their approach
5
Plaintiffs’ Brief, p. 5.
Court No. 01-00955 Page 17
[a]t the very least . . . provides a strong indication of
a likely imminent increase in imports from South Africa
to beyond negligible levels, if not definitive proof of
this fact.
Id. (confidential bracketing omitted).
The court concurs that the impending August 2001
importation of South African wire-rod necessarily falls within the
shorter “imminent” period that the ITC sees fit to apply
preliminarily. Its remand papers, however, fail to consider what
impact that shipment would have upon the exceeding-three-percent
dispositive issue. In fact, rather than considering the
prospective quantitative impact thereof, the Commission compared it
with historic company imports of South African product in 2000 and
2001, which is hardly the proper focus when attempting to gauge the
imminent future import ratios contemplated by the statute. See
Views of the Commission, p. 26.
The ITC’s reliance on that comparative data, along with
its statement that the “modest” August 2001 reported shipment did
not reflect an “intent on the part of [that importer] to material-
ly increase its subject imports”, falls short on another level, to
wit, its failure to account for the fact that that importer would
only “have known of any additional deliveries in the remainder of
2001 when it submitted its questionnaire response in mid-September
Court No. 01-00955 Page 18
2001”6, i.e., the last few months of 2001. That failure leaves open
the potential of shipments that would fall within the Commission’s
7
amorphous imminence period , thus rendering the company-specific
analysis and conclusions derived therefrom inherently tenuous.
A similar gap exists in the evidence on the agency record
concerning South African wire-rod production and export potential due
to Iscor’s failure to respond to the ITC questionnaire. In the
absence of data from Iscor, which plaintiffs’ petition “identified . .
. as the major exporter of [South African] wire rod and alleged
dumping”8, the Commission considered data supplied by Scaw Metals,
which accounted for [] percent of South African wire-rod production
yet reported no exports to the United States during the period under
investigation and projected none in the future.
Despite the absence of a response by South Africa’s
largest wire-rod producer, plaintiffs’ contention that the ITC
6
Views of the Commission, pp. 26-27 (confidential bracketing
omitted).
7
Although the ITC observed that the company’s limited ability
to predict future shipments of South African wire “comports with
[its] conclusions regarding the appropriate ‘immiment’ period for
this case”, ibid. n. 102, the observation does nothing to its
chosen imminence period in the matter at bar, that is, less time
than the one-to-two-year period considered imminent in Asociacion
de Prod. de Salmon y Trucha.
8
Plaintiffs’ Brief, p. 10.
Court No. 01-00955 Page 19
should have drawn adverse inferences against Iscor is not
persuasive in light of 19 U.S.C. §1677e(b), which provides:
Adverse inferences. If the . . . Commission . . . finds
that an interested party has failed to cooperate by not
acting to the best of its ability to comply with a re-
quest for information . . ., the . . . Commission . . .,
in reaching the applicable determination under this
title, may use an inference that is adverse to the
interests of that party in selecting from among the facts
otherwise available. . . .
On its face, this standard is permissive. Cf. URAA-SAA, pp. 869,
870. And the defendant did not err in declining to rely on adverse
inferences with regard to Iscor.
Plaintiffs’ position concerning the reasonableness of the
ITC’s reliance on Scaw Metals data, however, is on firmer ground.
See Plaintiffs’ Brief, p. 11. Although, when making a preliminary
determination, the Commission is to use “the information available
to it at the time of the determination”, 19 U.S.C. §1673b(a)(1),
consideration must also be given to whether questionnaire data are
“sufficiently complete to provide an accurate characterization of
the condition” of an industry and whether “there [is] no likeli-
hood that additional evidence obtained in a final investigation
9
would produce a materially different view of the industry”. The
9
Torrington Co. v. United States, 16 CIT 220, 222, 790
F.Supp. 1161, 1166 (1992) (holding that ITC did not abuse its
discretion during preliminary review wherein it relied on
questionnaire data provided by 25 producers representing a
substantial quantum of production).
Court No. 01-00955 Page 20
court concurs that the ITC’s reliance upon questionnaire data
submitted by Scaw Metals, a producer which apparently had not
exported wire rod to the U.S. market and accounts for only []
percent of South African production, amounted to an abuse of
discretion. Defendant’s remand papers do not articulate why those
data are sufficient to properly describe the condition of the
South African industry, and this court, on the record presented,
cannot do so itself.
Scaw Metals’ questionnaire data bear little connection to
the Commission’s paramount concern, namely, the potential, vel
non, that rising South African exports would cause that country’s
U.S. import ratio to imminently exceed the three-percent
negligibility threshold. Scaw Metals product did not contribute
to any data indicative of either historic or future South African
export growth, and its numbers are not probative of the capacity,
costs, inventories, or marketing strategies of the industry that
produces the unaccounted-for majority of South African product.
The ITC’s alternative reliance on data from the
affiliated reporting importer, which it found historically
accounted for nearly all of the reported imports from South Africa,
does not remedy this defect. In addition to its above-mentioned
temporal infirmities, that importer data does not identify the
potential of South African industry to increase its U.S.-bound
Court No. 01-00955 Page 21
exports and are no substitute for producer data when considering
potential South African export growth and its concomitant impact
upon the import ratio, which is the statutory focal point of the
Commission’s negligibility-exception inquiry.
The paucity of producer data hardly supports a conclusion
that the South African wire-rod industry has no potential to
imminently increase its U.S.-bound exports and constrains the
court to conclude that the ITC’s view is essentially surmise and
conjecture, to wit, that the actual production, capacity10,
inventory, and marketing strategy of South Africa’s largest wire-
rod exporter would reveal no potential that its U.S. exports would
or could significantly increase within the imminent future.11 It
simply cannot be said that the record on remand shows that “there
[is] no likelihood that additional evidence obtained in a final
10
In fact, the Commission Staff Report estimated South African
wire rod production capacity to be [] percent during 2000, which
was “essentially unchanged in interim 2001.” Staff Report to the
Commission on Investigations Nos. 701-TA-417-421 and 731-TA-953-963
(Preliminary) (Oct. 9, 2001), p. II-6.
11
As the plaintiffs correctly point out, the Commission’s
reliance upon speculation rather than record evidence “inured to
Iscor’s benefit.” Plaintiffs’ Brief, p. 13. Additional policy
concerns are implicated thereby, in that the speculation would
permit the major exporter of South African subject imports named by
plaintiffs in their petition to
avoid answer of a questionnaire . . . [and] benefit from
a record (without such response) that might be more
favorable . . . lead[ing] to [a] premature termination of
an investigation.
Slip Op. 05-63, p. 14 n. 8.
Court No. 01-00955 Page 22
investigation would produce a materially different view of the
industry”12, absent relevant evidence indicative of future imminent
export potential of the South African industry.
The ITC’s consideration of overall wire-rod import trends
does not fill this void. While the results on remand may identify
reasons why producers in Brazil, Canada, Mexico, or Trinidad and
Tobago might increase U.S.-bound wire-rod exports should domestic
demand rise within the imminent future, the Commission does not
point to any evidence concerning South African export incentives
for comparison. In fact, in adopting this approach, the ITC relied
on record evidence concerning those third countries’ “ability and
incentive to significantly increase their exports to the United
States”,13 the same kind of evidence that the record lacks for South
Africa. That other countries might increase their exports to the
United States in the imminent future does not necessarily preclude
South Africa from doing the same thing.
Similarly, lower U.S. demand leading to a diminished rate
of increase in South African subject imports bears no rational
connection to imminent potential South African import-ratio growth
in the absence of a clear and convincing prospective trend of
12
Torrington Co. v United States, 16 CIT at 221, 790 F.Supp.
at 1166.
13
Views of the Commission, p. 28.
Court No. 01-00955 Page 23
imminently declining U.S. demand, which the Commission does not
forecast. Cf. Views of the Commission, p. 31. Additionally, the
causal link connecting declining South African import-ratio growth
to declining U.S. demand for wire rod is challenged by the
plaintiffs, who cite interim 2001 data which are not accounted for
in the ITC results and suggest that the South African industry has
the potential to increase wire-rod exports even during periods of
declining U.S. consumption.
Viewed as a whole, there is not a sustainable
relationship between the facts that the ITC finds on remand and the
result that it reaches. The court is thus constrained to conclude
that the Commission’s termination of investigation of subject
imports from South Africa is not in accordance with the law set
forth above that “weight[s] the scales in favor of affirmative and
against negative determinations.” American Lamb Co. v. United
States, 785 F.2d at 1001. On remand, the defendant does not satisfy
the difficult standard of clear and convincing evidence of no
potential that imports from South Africa will imminently account
for more than three percent of all subject merchandise imported
into the United States.
Defendant’s remand analysis fails to meet the American
Lamb standard in a second respect. The Views of the Commission
indicate that, in reaching them, the ITC erroneously “considered
Court No. 01-00955 Page 24
the evidence for an indication of the affirmative, rather than of
the negative.” Yuasa-General Battery Corp. v. United States, 12
CIT 624, 626, 688 F.Supp. 1551, 1554 (1988). That is, the
Commission on remand has examined the record for an absence of
positive evidence showing that South African subject imports would
imminently rise, instead of clear and convincing evidence of the
opposite, as contemplated by the law, supra, governing this case.
See, e.g., Views of the Commission, pp. 2-3 (“we find no evidence
on the record that subject imports from South Africa . . . will
imminently exceed the applicable negligibility thresholds”); p. 23
(noting that the plaintiffs did not specifically argue that South
African imports were targeting the United States); id. n. 88
(stating that the plaintiffs “never argued that ‘market sources’
anticipated increased subject imports from South Africa”); p. 31 n.
119 (“Plaintiffs did not argue that subject imports specifically
from South Africa would imminently exceed the negligibility
threshold”).
The plaintiffs, on the other hand, have demonstrated
that, based on the record such as it still is, a likelihood exists
that contrary evidence would arise were a full investigation of
South African wire-rod exports to the United States undertaken. In
concurring, the court does not weigh the evidence on the record.
Rather, per American Lamb, that task again is that of the
defendant.
Court No. 01-00955 Page 25
III
Reaching this necessary conclusion, however, further
exacerbates the “timewarp”14 of this case, its “extraordinary
procedural posture”. Slip Op. 05-63, p. 2. Cf. Views of the
Commission, part II (Procedural History). Since, under the Trade
Agreements Act of 1979, as amended, there remain two levels of
judicial review of ITC determinations, and the CAFC in this case
and others15 adheres to the remedy of remand to the Commission,
which approach is not necessarily efficacious, defendant’s counsel
are hereby directed to attempt to settle and submit on or before
January 31, 2007 a proposed order of disposition of the remainder
of this case in this Court of International Trade that is not
inconsistent with the foregoing opinion.
So ordered.
Decided: New York, New York
January 17, 2007
/s/ Thomas J. Aquilino, Jr.
Senior Judge
14
Slip Op. 05-63, p. 4.
15
See, e.g., Nippon Steel Corp. v. United States, 458 F.3d
1345 (Fed.Cir. 2006), and cases cited therein.