FAG Italia S.P.A. v. United States

Slip Op. 03-12
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
___________________________________
:
FAG ITALIA S.p.A. and FAG BEARINGS :
CORPORATION; SKF USA INC. and :
SKF INDUSTRIE S.p.A., :
:
Plaintiffs and :
Defendant-Intervenors, :
:
v. :
: Consol. Court No.
UNITED STATES, : 97-11-01984
:
Defendant, :
:
and :
:
THE TORRINGTON COMPANY, :
:
Defendant-Intervenor :
and Plaintiff. :
___________________________________:
[Commerce’s Remand Results are affirmed. Case dismissed.]
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP (Max
F. Schutzman, Andrew B. Schroth, Mark E. Pardo and Adam M. Dambrov)
for FAG Italia S.p.A. and FAG Bearings Corporation, plaintiffs and
defendant-intervenors.
Steptoe & Johnson LLP (Herbert C. Shelley, Alice A. Kipel and
Anne Talbot) for SKF USA Inc. and SKF Industrie S.p.A., plaintiffs
and defendant-intervenors.
Robert D. McCallum, Jr., Assistant Attorney General; David M.
Cohen, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Lucius B. Lau and Reginald T.
Blades, Jr.); David R. Mason Jr., Office of the Chief Counsel for
Import Administration, United States Department of Commerce (of
counsel: Elizabeth Cooper Doyle), for the United States, defendant.
Stewart and Stewart (Terence P. Stewart and Geert De Prest)
for The Torrington Company, defendant-intervenor and plaintiff.
Dated: January 30, 2003
Consol. Court No. 97-11-01984 Page 2
JUDGMENT
I. Standard of Review
The Court will uphold Commerce’s redetermination pursuant to
the Court’s remand 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) (1994). Substantial evidence is
“more than a mere scintilla. It means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.”
Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951) (quoting
Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).
Substantial evidence “is something less than the weight of the
evidence, and the possibility of drawing two inconsistent
conclusions from the evidence does not prevent an administrative
agency’s finding from being supported by substantial evidence.”
Consolo v. Federal Maritime Comm’n, 383 U.S. 607, 620 (1966).
II. Background
On August 7, 2002, this Court issued an order directing the
United States Department of Commerce, International Trade
Administration (“Commerce”), to explain “why [Commerce] uses a
different definition of ‘foreign like product’ for price-based
calculations for normal value [“NV”] than [Commerce] does for
calculations of constructed value [“CV”].” FAG Italia, S.p.A. v
United States (“FAG Italia III”), 26 CIT ___, ___, Ct. No. 97-11-
Consol. Court No. 97-11-01984 Page 3
01984, 2002 WL 1818086, at *1 (CIT Aug. 7, 2002) (citation
omitted). This order was mandated by the decision of the Court of
Appeals for the Federal Circuit (“CAFC”) in FAG Italia S.p.A. v.
United States (“FAG Italia II”), 291 F.3d 806 (Fed. Cir. 2002),
vacating-in-part the judgment of this Court in FAG Italia S.p.A.
v. United States (“FAG Italia I”), 24 CIT ___, 2000 WL 978462 (CIT
July 13, 2000). The CAFC based its decision in FAG Italia II on
its prior holding in SKF USA Inc. v. United States, 263 F.3d 1369(Fed. Cir. 2001). The administrative determination, at issue in
FAG Italia I, FAG Italia II and subject to the order of FAG Italia
III, is entitled Amended Final Results of Antidumping Duty
Administrative Reviews of Antifriction Bearings (Other Than Tapered
Roller Bearings) and Parts Thereof From France, Germany, Italy,
Japan, Romania, Singapore, Sweden and the United Kingdom (“Final
Results”), 62 Fed. Reg. 61,963 (Nov. 20, 1997).
On November 7, 2002, Commerce, pursuant to this Court’s order
in FAG Italia III, submitted its Final Results of Redetermination
Pursuant to Court Remand (“Remand Results”).1 In particular,
Commerce: (1) set forth the pertinent factual background of its (a)
model-match process, and (b) constructed value (“CV”) profit
1
Prior to the final Remand Results, Commerce released the
draft results of redetermination on October 17, 2002. FAG Italia
S.p.A. and FAG Bearings Corporation (“FAG”) and SKF USA Inc. and
SKF Industrie S.p.A. (“SKF”) submitted comments to draft Remand
Results on October 29, 2002, and October 30, 2002, respectively.
Consol. Court No. 97-11-01984 Page 4
methodology; (2) explained its application of the term “foreign
like product,” in addition to addressing the contentions raised by
FAG regarding this term; and (3) explained why its CV profit
methodology comports with statutory requirements.
On December 6, 2002, FAG filed comments to the Remand Results
with this Court. Commerce and The Torrington Company
(“Torrington”) later submitted rebuttal comments on December 20,
2002. SKF has not submitted any formal comments to this Court.
III. Contentions of the Parties
FAG contends that Commerce failed to comply with FAG Italia II
and FAG Italia III because Commerce did not supply the Court with
a reasonable explanation regarding Commerce’s use of differing
definitions of the term “foreign like product” in its CV profit and
NV price-based calculations.
Relying on the CAFC’s holding in SKF USA, 263 F.3d at 1382-83,
FAG argues that Commerce must overcome a strong presumption that
the same definition of the term “foreign like product” be employed
throughout the same antidumping proceeding. FAG interprets the
CAFC’s holding to mean that Commerce, in order to successfully
overcome this presumption, must provide an explanation that is
“completely novel.” FAG attacks several arguments made by Commerce
in the Remand Results in an attempt to show that Commerce has not
Consol. Court No. 97-11-01984 Page 5
met its burden to provide a reasonable explanation regarding its
use of differing definitions for the same statutory term.
FAG first raises issue with Commerce’s argument that employing
an identical definition of “foreign like product” for both NV and
CV profit calculations will render the preferred method for
calculating CV, found under 19 U.S.C. § 1677b(e)(2)(A) (1994),
inapplicable. FAG asserts that this argument is flawed because
Commerce is restricted in choosing comparison sales that are
contemporaneous when calculating NV; a requirement that is not
imposed on Commerce when calculating CV profit. Accordingly, sales
of the foreign like product exist upon which Commerce can base its
CV profit calculation.
Second, FAG attacks Commerce’s contention that the use of
aggregate foreign like products for the viability test conducted
under 19 U.S.C. § 1677b(a)(1)(C) (1994) justifies Commerce’s
application of different definitions for the same statutorily
defined term. According to Commerce, the statute, on its face, is
concerned with aggregate amounts of the foreign like product.
Therefore, Commerce’s argument that the phrase “aggregate quantity”
does not authorize Commerce to calculate an aggregate of foreign
like products defies logic and should be rejected. FAG, using
analogous logic, rejects Commerce’s explanation of its country-wide
below cost sales test and urges the Court to do the same.
Consol. Court No. 97-11-01984 Page 6
Third, FAG argues that the contemporaneity rule, under 19
U.S.C. § 1677b(a)(1)(A) (1994),2 has no bearing on Commerce’s use
of the same definition of “foreign like product.” According to
FAG, the specific language distinguishing a time element in the
contemporaneity rule does not appear in any statutory definition of
the term “foreign like product” under 19 U.S.C. § 1677(16) (1994)
and, therefore, Commerce cannot read such a requirement into the
statute. Moreover, FAG contends that Commerce’s current
methodology for calculating CV profit does not accord to any
contemporaneity requirement, although Commerce implies so in the
Remand Results.
Commerce responds that it has met the mandate set out by the
CAFC in FAG Italia II, providing reasonable explanations why
Commerce uses different definitions of the same term when
calculating NV and CV profit. See Def.’s Rebuttal Comments
Regarding the Remand Results Pursuant to Ct. Remand at 1-2.
Commerce contends that the Court must decide whether Commerce
reasonably interpreted the antidumping statute with regards to
implementing differing definitions of the same term in the same
proceeding, and that the issue is one of weighing the statute’s
2
The contemporaneity rule states that “[t]he normal value
of the subject merchandise shall be the price described in [19
U.S.C. § 1677b(a)(B)], at a time reasonably corresponding to the
time of the sale used to determine export price or constructed
export price under [19 U.S.C. § 1677a(a) or (b)].” 19 U.S.C. §
1677b(a)(1)(A).
Consol. Court No. 97-11-01984 Page 7
legislative history and the factual context in which the statute
was applied. According to Commerce, FAG presents a criticism of
Commerce’s explanations without evidence supporting that such
explanations were, in fact, unreasonable. See id. at 5. Commerce
also offers further explanations to show how the viability
provision and country-wide cost allegation validate Commerce’s use
of differing definitions of the term “foreign like product.” See
id. at. 6-9.
Torrington generally agrees with Commerce and considers the
arguments presented by FAG unconvincing. According to Torrington,
the CAFC in FAG Italia II did not find Commerce’s statutory
interpretation unreasonable, but instead required Commerce to
provide further explanation. See Rebuttal Comments of Torrington
at 5. Torrington asserts that Commerce provided such explanations.
See id.
IV. Analysis
The CAFC in FAG Italia II, 291 F.3d at 808, followed its prior
holding in SFK USA, 263 F.3d at 1382, regarding the issue of
whether “[Commerce] properly defined ‘foreign like product’ for
purposes of 19 U.S.C. §§ 1677b(a)(1) and 1677b(e).” FAG Italia II,
291 F.3d at 808. The CAFC has held that since Congress used the
term “foreign like product” in various sections of the antidumping
Consol. Court No. 97-11-01984 Page 8
statute and specifically defines the term in 19 U.S.C. § 1677(16),
it is
presume[d] that Congress intended that the term have the
same meaning in each of the pertinent sections or
subsections of the statute, and . . . that Congress
intended that Commerce, in defining the term, would
define it consistently. Without an explanation
sufficient to rebut this presumption, Commerce cannot
give the term “foreign like product” a different
definition (at least in the same proceeding) when making
the [NV] price determination and in making the
constructed value determination. This is particularly so
because the two provisions are directed to the same
calculation, namely, the computation of normal value (or
its proxy, constructed value) of the subject merchandise.
SKF USA, 263 F.3d at 1382. In SKF USA, the CAFC concluded that
Commerce failed to explain its justification for the inconsistent
use of the term “foreign like product” and outlined the explanation
that Commerce must provide to properly rebut the presumption that
Commerce cannot use differing definitions for an identical term in
the same proceeding. See SKF USA, 263 F.3d at 1382-83. In
accordance with the CAFC’s decisions on this issue in SKF USA and
FAG Italia II, this Court ordered Commerce to explain its
methodology for the calculation of CV profit and explain why the
methodology comported with statutory requirements. See FAG Italia
III, 26 CIT at ___, 2002 WL 1818086 at *1.
In the Remand Results, Commerce explained its unique model-
matching methodology and reporting requirements of sales
transactions used in Commerce’s calculation of NV. Commerce
explained that if it was “unable to find a sale of a comparison-
Consol. Court No. 97-11-01984 Page 9
market model made in the ordinary course of trade that is identical
to or shares the family designation of the [United States] sale at
a time reasonably corresponding to the time of the [United States]
sale, [Commerce then] resort[s] to CV.” Remand Results at 8.
Commerce detailed its calculation of CV, which Commerce derived by
adhering to 19 U.S.C. § 1677b(e), and later explained why Commerce
“interpreted and applied the statutory term ‘foreign like product’
more narrowly in its [calculation of NV] than in its calculation of
[CV] . . . under [19 U.S.C. § 1677b(e)(2)(A)] . . . .” Id. at 10.
According to Commerce, the preferred method for calculating
CV, found in 19 U.S.C. § 1677b(e)(2)(A), is to be used unless
“there are no home market sales of the foreign like product or
because all such sales are at below-cost prices.” Id. at 11
(citation omitted). Commerce can use the preferred methodology
only if sales of the foreign like product exist that are within
the ordinary course of trade. See 19 U.S.C. § 1677b(e)(2)(A).
Title 19 of the United States Code and the Statement of
Administrative Action (“SAA”)3 establish that only when “no above-
3
The SAA represents “an authoritative expression by the
Administration concerning its views regarding the interpretation
and application of the Uruguay Round agreements.” H.R. Doc. 103-
316, at 656 (1994), reprinted in 1994 U.S.C.C.A.N. 4040. “[I]t is
the expectation of the Congress that future Administrations will
observe and apply the interpretations and commitments set out in
this Statement.” Id.; see also 19 U.S.C. § 3512(d) (1994) (“The
statement of administrative action approved by the Congress . . .
(continued...)
Consol. Court No. 97-11-01984 Page 10
cost sales [exist] in the ordinary course of trade in the foreign
market under consideration will Commerce [then] resort to [CV].”
SAA at 833 (emphasis in original). Accordingly, Commerce argues
that if it were to use the same definition of the term “foreign
like product” for the NV and CV profit calculations, it would
eliminate all sales of the foreign like product upon which to base
the CV profit calculation and would mandate that Commerce use one
of the alternative methods listed under 19 U.S.C. §
1677b(e)(2)(B)(i) through (iii) to calculate CV. See Remand
Results at 11; see also SKF USA, 263 F.3d at 1376-77. Commerce
explained that this outcome is common in every situation where
foreign like product is interpreted in the same manner for both
price and CV profit determinations. See Remand Results at 12.
Thus, “under a rigidly uniform interpretation of the term ‘foreign
like product,’ the preferred methodology for calculating CV-profit
would never be applied in any case.” Id.Commerce further explains that differing categories of
merchandise can satisfy the meaning of the term “foreign like
product,” depending on the specific facts of each antidumping
proceeding, and illustrates this point by explaining its usual
(...continued)
shall be regarded as an authoritative expression by the United
States concerning the interpretation and application of the Uruguay
Round Agreements and this Act in any judicial proceeding in which
a question arises concerning such interpretation or application”).
Consol. Court No. 97-11-01984 Page 11
practice of deriving different values, including NV. See id. at
12-15. In determining the viability of a comparison market for NV
under 19 U.S.C. § 1677b(a)(1)(C), Commerce adds that it normally
employs the definition of the term “foreign like product” provided
under § 1677(16)(C). See id. at 15-18. To find foreign like
products that would fit into the definition provided under §
1677(16)(A) (identical products versus products of the “same
general class or kind”), and to use such products in its viability
determination would require Commerce to perform a “product-specific
matching analysis, and other analyses,” requiring data not yet
available to Commerce. See id. at 16. The SAA makes clear that
“Commerce must determine whether the home market is viable at an
early stage in the [antidumping] proceeding to inform exporters
which sales to report.” SAA at 821. Commerce poses a similar
argument when explaining its normal practice of calculating whether
reasonable grounds to believe or suspect below cost sales exist
under 19 U.S.C. § 1677b(b)(2)(A)(i) (1994), and adds that it
defines the term “foreign like product” consistently in determining
CV profits. See Remand Results at 18-20.
Contrary to the contentions espoused by FAG, the Court finds
that the Remand Results provide sufficient explanation to rebut the
presumption that Commerce cannot use differing definitions for an
identical term in the same proceeding. Commerce adequately
explained why the differing use of the same term is necessary to
Consol. Court No. 98-09-02799 Page 12
establish NV and CV profit in the same antidumping proceeding.
Commerce set out the factual background of its calculations and
provided the Court with an adequate and reasonable explanation of
why the methodology at issue enables it to comply with the statute
on a whole. Accordingly, Commerce followed the mandate of FAG
Italia III.
V. Conclusion
The Court finds that Commerce sufficiently met its burden to
explain why a differing definition of the term “foreign like
product” is used in calculating NV and CV profit for FAG.
Therefore, having reviewed the Remand Results, it is hereby
ORDERED that the Remand Results are affirmed in their
entirety, and it is further
ORDERED that since all other issues have been decided, this
case is dismissed.
_________________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: January 30, 2003
New York, New York
Erratum
Slip Opinion 03-12
FAG Italia S.p.A. v. United States, Consol. Court No. 97-11-01984
On page 2, the heading “JUDGMENT” should be replaced with
the heading “ORDER”.
February 5, 2003.