AK Steel Corp. v. United States

Slip Op. 12-139
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Nicholas Tsoucalas, Senior Judge
AK STEEL CORP., ALLEGHENY LUDLUM :
CORP, and NORTH AMERICAN STAINLESS,:
:
Plaintiffs, :
:
v. : Court No.: 11-00366
:
UNITED STATES, : PUBLIC VERSION
:
Defendant, :
:
and :
:
THYSSENKRUPP MEXINOX S.A. de C.V., :
and MEXINOX USA, Inc., :
:
Defendant-Intervenors. :
:
OPINION and ORDER
Held: Plaintiffs’ Motion for Judgment on the Agency Record is
denied because the International Trade Commission’s second sunset
review determinations regarding cumulation, likely volume effect,
and likely price effect was based on substantial evidence.
Dated: November 15, 2012
Kelley Drye & Warren LLP, (Daved A. Hartquist, Kathleen W.
Cannon, and R. Alan Luberda) for AK Steel Corp., Allegheny Ludlum
Corp., and North American Stainless, Plaintiffs.
James M. Lyons, General Counsel; Neal J. Reynolds, Assistant
General Counsel; Karl Von Schriltz, Office of the General Counsel,
U. S. International Trade Commission, for Defendant, United States.
Hogan Lovells US LLP, (Lewis E. Leibowitz, Craig A. Lewis,
Brian S. Janovitz, and Wesley V. Carrington) for Thyssenkrupp
Mexinox S.A. de C.V. and Mexinox USA, Inc., Defendant-Intervenors.
TSOUCALAS, Senior Judge: Plaintiffs AK Steel Corp., Allegheny
Ludlum Corp., and North American Stainless (collectively “domestic
industry” or “plaintiffs”) move pursuant to USCIT Rule 56.2 for
Court No. 11-00366 Page 2
judgment upon the agency record challenging the determination of
the United States International Trade Commission (“Commission”) in
Stainless Steel Sheet and Strip from Germany, Italy, Japan, Korea,
Mexico and Taiwan, USITC Pub. 4244, Inv. Nos. 701-TA-382 and 731-
TA-798-803, 76 Fed. Reg. 46,323 (2011) (second sunset review)
(“Views”). The Commission and defendant-intervenors ThyssenKrupp
Mexinox S.A. de C.V. (“Mexinox”) and Mexinox USA, Inc. oppose the
motion.
BACKGROUND
In 1999, the Commission determined that certain imports of
stainless steel sheet and strip (“SSSS”) from France, Germany,
Italy, Japan, Korea, Mexico, Taiwan, and the United Kingdom had
materially injured an industry in the U.S., Certain SSSS from
France, Germany, Italy, Japan, Korea, Mexico, and the United
Kingdom, USITC Pub. 3208, Inv. Nos. 701-TA-380-382 and 731-TA-797-
804 (1999), resulting in the imposition of antidumping and
countervailing duty orders on August 6, 1999. Views, at 3–4. In
2005, the Commission completed its first five-year review of those
orders. Id. at 4. Based on the Commission’s findings, the
Department of Commerce revoked the orders as to France and the
United Kingdom. Id. at 4–5. As a result of changed circumstances,
Commerce also revoked the orders as to Italy in 2006. Id. The
Commission initiated its second five-year review of the remaining
orders on September 1, 2010, id. at 5, the results of which
Court No. 11-00366 Page 3
domestic industry appeals to this court. See Pls.’ Mem. Supp. Mot.
J. Agency R. (“Pls.’ Br.”) at 1–4.
Mexinox is one of several affiliated steel producers subject
to the antidumping and countervailing duty orders in question.
Respondents below also included German producers ThyssenKrupp
Nirosta GmbH and ThyssenKrupp VDM GmbH, Italian producer
ThyssenKrupp Acciai Speciali Terni S.p.A., domestic producer
ThyssenKrupp Stainless USA LLC (“SL-USA”), and several affiliated
importers. Views, at 5. The multinational ThyssenKrupp group
(collectively, including other unlisted corporate affiliates, “TK”)
is responsible for [[ ]] of SSSS production in Germany and
Italy, and [[ ]] of SSSS production in Mexico. Id. at 6.
Since the last review, TK has contracted $1.2 billion and
spent $950 million on a new production facility in Greenfield,
Alabama. Id. at 26–27 & n.127. TK plans to spend $1.4 billion on
the new Alabama facility in total, id., with the goal of adding two
additional cold rolling mills, a hot-annealing and pickling line,
a hot-rolling mill, and a melt shop to increase production capacity
substantially over the next several years. Id. at 48–49. The
Commission found that the facility’s SSSS production capacity “[[
]]” and
that its projected production is “[[
Court No. 11-00366 Page 4
]].” Id. at 49. SL-USA has control over the
Alabama facility. Id. at 27.
In its responses to the Commission’s questionnaires, TK
explained that it made its investment in SL-USA pursuant to its new
“local supply strategy.” Response of SL-USA to U.S. Producers’
Questionnaire (Mar. 9, 2011) Conf. Rec. 85 App’x at 10, 14–18.1
Under the local supply strategy, TK plans to serve the North
American market with SSSS produced by Mexinox and SL-USA “almost
exclusively[,] . . . while [TK’s] German and Italian operations
focus on serving the European market.” Views, at 26–27; see CR 96
at 7–8. TK plans to limit imports from Germany and Italy to “small
quantities of niche products not produced by SL-USA or Mexinox,
such as certain embossed or pattern surfaced SSSS.” Views, at 49.
As SL-USA increases its 300-series SSSS production, Mexinox will
shift its focus onto production of 400-series SSSS. Id. at 56; CR
96 at 7–8. In addition to contracting $1.2 billion in developing
SL-USA’s capacity, TK reconfigured its corporate hierarchy and
consolidated its steel marketing divisions under the vice president
for sales at SL-USA in furtherance of this strategy. Views, at 48;
see Intervenor-Def.’s Mem. Opp’n Pls.’ Br. at 15–16 (detailing
uncontroverted administrative changes). Lastly, TK vested SL-USA’s
1
Hereinafter all documents in the public record will be
designated “PR” and all documents in the confidential record
designated “CR” without further specification except where
relevant.
Court No. 11-00366 Page 5
vice president for sales with the authority to “veto” any imports
from TK’s international production facilities with instructions “to
wield such authority to safeguard [TK’s] substantial investment in
SL-USA.” Views, at 50; see PR 102 at 161 (“SL-USA will not permit
any action” by an affiliated foreign producer “that could
potentially harm the economic viability of its operations and
jeopardize the billions that we have invested in the Alabama
mill.”).
TK also explained that it adopted its local supply strategy in
response to a series of changes in the domestic and international
SSSS market arising since the last review. PR 102 at 143–44.
Customers in the U.S. began to demand shorter “lead times” for SSSS
products, now expecting delivery in as little as four to six weeks
where they had previously tolerated six to eight weeks. Views at
44–45. Domestic producers were able to meet this expectation by
increasing inventories, id. at 45, but TK found it “impossible” to
do the same with its German and Italian production. Id. at 44, 50.
Furthermore, logistical costs for ocean transport and raw materials
increased over the period of review, rendering importation from
Europe generally less feasible. Id. at 50. Lastly, the relative
weakness of the U.S. dollar over the period of review resulted in
higher costs for all of TK’s foreign goods sold in the U.S. Id.The Commission recognized two additional changes in the SSSS
market during the last period of review. First, domestic industry
Court No. 11-00366 Page 6
reorganized substantially and expanded its production capacity,
leading the Commission to find that it stood at a much stronger
competitive posture than in previous reviews. Id. at 38–41, 58–62.
Second, although U.S. demand for SSSS dipped at the end of the
review period due to a recession, world demand for SSSS was at its
highest level of the period of review in 2010. Id. at 42–43. U.S.
and world demand for SSSS is expected to increase significantly
over the next several years, Mexico and Latin America included.
Id.; CR 96 at 8.
After the period of review, TK announced its intention to sell
its entire SSSS production unit. In a statement to the Commission
regarding the planned sale, Clemens Iller, Chairman of TK’s SSSS
Marketing Board, wrote that the sale represents “a chance for [the]
stainless [unit] to further develop its strength as a manufacturer
of high-quality stainless steel and high performance alloys on an
independent basis.” PR 108 Ex. 3 at 2. TK offered evidence
indicating that it would assemble a set of possible separation
plans by January, 2012, including “an IPO[,] Spin-Off[,] . . .
[and] possible strategic partnerships.” Id. 2–3; see PR 102 at
206–07. Nevertheless, Chairman Iller affirmed that “there are no
intentions to break the current stainless activities apart,” as TK
intended to sell “the stainless activities in total.” PR 108 Ex.
3 at 3; see PR 102 at 206–07.
The Commission made three determinations relevant to the
Court No. 11-00366 Page 7
present appeal. First, based on the implications of TK’s common
ownership and the local supply strategy, the Commission cumulated
subject imports from Mexico, Germany and Italy together on the one
hand, and cumulated those from Japan, Korea, and Taiwan on the
other. Views, at 14, 26–32. Second, relying on TK’s historical
practices, the likely effect of the local supply strategy, and
current SSSS market conditions, the Commission found that the
cumulated volume of imports from Mexico, Germany, and Italy were
not likely to increase substantially in the event of revocation.
Id. at 46–54. Lastly, the Commission relied on TK’s historical
sales and the local supply strategy to conclude that the cumulated
effect of Mexican, German, and Italian imports on prices would not
be substantially depressive or suppressive in the event of
revocation. Id. at 54–64.
JURISDICTION
The court has jurisdiction over this matter pursuant to 28
U.S.C. § 1581(c) and section 516A(a)(2)(B)(iii) of the Tariff Act
of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006).2
STANDARD OF REVIEW
Under 19 U.S.C. § 1516a, “[t]he court shall hold unlawful any
determination, finding or conclusion found . . . to be unsupported
by substantial evidence, or otherwise not in accord with the law.”
2
All further citations to the Tariff Act of 1930 are to the
relevant provisions of Title 19 of the United States Code, 2006
edition, and all applicable supplements thereto.
Court No. 11-00366 Page 8
19 U.S.C. § 1516a(b)(1)(B)(i). “Substantial evidence is ‘such
relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.’” Huaiyin Foreign Trade Corp. (30) v. United
States, 322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Consol.
Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial
evidence “can be translated roughly to mean[:] [I]s [the
determination] unreasonable?” Globe Metallurgical Inc. v. United
States, 32 CIT 274, 275, 547 F. Supp. 2d 1371, 1374 (2008) (quoting
Nippon Steel Corp. v. United States, 458 F.3d 1345, 1351 (Fed. Cir.
2006)) (alteration in Nippon).
Challenging a Commission determination under the substantial
evidence standard is “a course with a high barrier to reversal.”
Mitsubishi Heavy Indus., Ltd. v. United States, 275 F.3d 1056, 1060
(Fed. Cir. 2001). The Commission’s factual determinations “are
presumed to be correct,” and “[t]he burden of proving otherwise .
. . rest[s] upon the party challenging such a decision.” 28 U.S.C.
§ 2639(a)(1). The Commission’s determination can be supported by
substantial evidence despite the “possibility of drawing two
inconsistent conclusions from the evidence.” Nevinnomyssikiy Azot
v. United States, 31 CIT 1373, 1379 (2007) (not published in the
Federal Supplement) (quoting Consolo v. Fed. Mar. Comm’n, 383 U.S.
607, 620 (1966)). “When ‘the totality of the evidence does not
illuminate a black-and-white answer,’ it is the role of the
[Commission] as the ‘expert factfinder’ to decide which side is
Court No. 11-00366 Page 9
most likely accurate.” Id. (quoting Nippon, 458 F.3d at 1359).
Consequently, the court “may not ‘displace the [Commission’s]
choice between two fairly conflicting views,’” U.S. Steel Corp. v.
United States, 36 CIT , , 856 F. Supp. 2d 1318, 1321 (2012)
(quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951)),
and it may not “‘reweigh the evidence or substitute its own
judgment for that of the agency.’” Id. (quoting Usinor v. United
States, 28 CIT 1107, 1111, 342 F. Supp. 2d 1267, 1272 (2004)).
DISCUSSION
Domestic industry objects to the Commission’s cumulation,
volume, and price effects determinations — as well as the
Commission’s decision to rely on TK’s local supply strategy in
making those determinations — on the basis that they are
unsupported by substantial evidence.
“The [Commission] is required to conduct a sunset review every
five years after publication of an antidumping duty order, a
countervailing duty order, or a prior sunset review.” Nucor Corp.
v. United States, 32 CIT 1380, 1385, 594 F. Supp. 2d 1320, 1333
(2008), aff’d, 601 F.3d 1291 (Fed. Cir. 2010) (citing 19 U.S.C. §
1675(c)(1)). In such a review, the Commission is charged with
determining “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). The
likelihood of continuation or recurrence of material injury depends
Court No. 11-00366 Page 10
on “the likely volume, price effect, and impact of imports of the
subject merchandise on the industry if the order is revoked.” Id.
Furthermore, in analyzing the potential for injury, the ITC has the
discretion to “cumulatively assess the volume and effect of imports
of the subject merchandise” from a set of countries to better
assess the effect of revocation, so long as certain requirements
are met. Nucor, 32 CIT at 1385–86, 594 F. Supp. 2d at 1320(quoting 19 U.S.C. § 1675a(a)(7)).
I. The Local Supply Strategy
As a preliminary matter, domestic industry argues that the
Commission’s reliance on TK’s local supply strategy in support of
its cumulation, volume, and price determinations renders each
unsupported by substantial evidence because the local supply
strategy has limited predictive value. Pls.’ Br. at 9–13. “[T]he
statutory term ‘likely’ . . . is the fulcrum upon which most of the
determinations that the [Commission] is required to make in a
sunset review turn.” Siderca, S.A.I.C. v. United States, 29 CIT
572, 574, 374 F. Supp. 2d 1285, 1288 (2005). Courts understand
“likely” to mean “‘probable,’ or, to put it another way, ‘more
likely than not.’” Id. (citing A.G. der Dillinger Huttenwerke v.
United States, 26 CIT 1091, 1101 n.14, 193 F. Supp. 2d 1339 n.14
(2002); Usinor Industeel, S.A. v. United States, 26 CIT 813,
813–14, 215 F. Supp. 2d 1356, 1357–58 (2002); Usinor Industeel,
S.A. v. United States, 26 CIT 1402, 1403–04 (2002) (not published
Court No. 11-00366 Page 11
in Federal Supplement)). “‘[U]nder the likelihood standard, the
Commission will engage in a counter-factual analysis: it must
decide the likely impact [of revocation] in the reasonably
foreseeable future.’” Consol. Fibers, Inc. v. United States, 32
CIT 820, 829–30, 571 F. Supp. 2d 1355, 1365 (2008) (quoting Uruguay
Round Amendments Act, Statement of Administrative Action, H.R. Doc.
No. 103-316, vol. 1, at 884 (1994), reprinted in 1994 U.S.C.C.A.N.
4040, 4209).
The first prong of domestic industry’s argument in opposition
to the Commission’s reliance on the local supply strategy is that
the strategy “was only in the process of being implemented, there
was no evidence of actual application of that policy, and the new
policy was a departure from TK’s historical sales policy.” Pls.’
Br. at 12. In support of its contentions, domestic industry cites
uncontroverted evidence tending to show that the Alabama facility
[[
]]. Pls.’ Br. at 10–11 (citing
CR 135 Ex. 6). Domestic industry also asserts that “there is no
record evidence that [SL-USA] had ever exercised [its veto]
authority as to Mexinox.” Pls.’ Br. at 12. In essence, domestic
industry suggests that it was unreasonable for the Commission to
rely on the local supply strategy in determining the likely effects
of revocation because TK would not actually pursue it.
Contrary to domestic industry’s assertion, the Commission
Court No. 11-00366 Page 12
cited substantial, uncontroverted evidence demonstrating TK’s
actual dedication to the local supply strategy. The Commission
found that “[TK’s] investment of $1.4 billion in SL-USA — $1.2
billion of which has been contracted and $950 million of which has
been spent — is compelling evidence of the company’s commitment to
this strategy.” Views at 50 (emphasis added). In addition to
providing SL-USA with unequivocal “veto power” over imports from
other TK producers, including Mexinox, TK consolidated its “North
American administration and marketing in[to] SL-USA” and placed
responsibility of U.S. and Canadian sales in the hands of the vice
president for sales of SL-USA. Id. at 27. This organizational
shift corroborates TK’s numerous statements before the Commission
affirming its commitment to the local supply strategy. Id. at 27;
e.g., PR 102 at 143–47 (“[TK] has recognized for a long time that
the local supply strategy is a competitive necessity.”); CR 96 at
8 (“[[
]].”); CR 135 Ex. 1 at 10–18 ([[
]]).
Furthermore, although domestic industry establishes that the
local supply strategy is relatively new, it does not and cannot
dispute the existence of new economic conditions that the
Commission also relied upon to conclude that TK would likely follow
Court No. 11-00366 Page 13
through with its plan. Unlike domestic producers, TK found
customer demands for shorter lead times “impossible to satisfy
[when importing] from Germany and Italy,” Views, at 50, given the
“financial risks associated with maintaining large inventories of
subject imports” so far from the point of production. Id. at 45;
see PR 102 at 143–44. “[I]ncreased logistical costs for ocean
transport and raw materials” coupled with “the weakness of the
dollar relative to the euro” further strained TK’s ability to
import from abroad. Views, at 50. Domestic industry’s “neither
surprising nor persuasive” alternative interpretation of evidence
regarding SSSS market conditions does not undermine the
Commission’s own reasonable interpretation. See Nevinnomysskiy
Azot, 31 CIT at 1379 (quoting Matsushita Elec. Indus. Co. v. United
States, 750 F.2d 927, 936 (Fed. Cir. 1984)). The Commission
reasonably concluded and explained TK’s new local supply strategy
was a commercially “logical approach” to new economic conditions,
Views, at 50, and corroborated its conclusion with uncontroverted
evidence on the record showing that TK made substantial new
investments and established new hierarchical structures in
implementing that strategy. Id. at 27.
Second, domestic industry argues that because TK “intended to
sell a majority stake in its stainless steel business,” Pls.’ Br.
at 14–18 (quoting PR 107 Ex. 2), “there is no reason to anticipate
that the TK strategies and plans would be followed by the new
Court No. 11-00366 Page 14
owner, who would then have operational control.” Id. at 15–17.
Domestic industry objects to the Commission’s finding that the SSSS
unit would remain intact after the sale, or at least that the new
“single owner would continue to operate those facilities as a
group.” Id. at 16. “[W]hether or not TK’s facility [would be]
sold intact,” domestic industry continues, “the Commission’s
presumption that the local supply strategy would be adopted by a
new owner based on the ‘strong rationale’ for pursuing that
strategy is without merit” because there are “other rational
strategies for selling products.” Id. at 17.
Domestic industry’s arguments are again insufficient to
undermine the Commission’s reasonable reliance on the local supply
strategy. The Commission must predict the outcome of revocation
for the “foreseeable future,” Consol. Fibers, 32 CIT at 829–30, 571
F. Supp. 2d at 1365 (quoting 1994 U.S.C.C.A.N. at 4209), which
domestic industry argues is “behavior projected over roughly two
years.” Pls.’ Br. at 13 n.4 (citing Magnesium from China and
Russia, USITC Pub. 4214 at 31 n.176, Inv. Nos. 731-TA-
10701–1072(2011) (second sunset review); SSSS from France, Germany,
Italy, Japan, Korea, Mexico, Taiwan, and the United Kingdom, USITC
Pub. No. 3788 at 48 & n.56, Inv. Nos. 701-TA-380-382 and 731-TA-
797-804 (2005) (first sunset review)). The Commission commenced
the second sunset review in 2010 and published the results in 2011,
well before the January 2012 target TK set as a deadline to develop
Court No. 11-00366 Page 15
several different plans for selling its SSSS unit. Views, at 29
(citing PR 102 at 207). As the record indicates little likelihood
that TK would have selected a strategy, found a buyer, and
completed the sale within the foreseeable future, domestic
industry’s doubts regarding the continued application of the local
supply strategy for the foreseeable future are not persuasive.3
Furthermore, the Commission reasonably relied on unambiguous
evidence indicating TK would sell its SSSS unit as a whole,4 see PR
3
Domestic industry repeatedly characterizes TK’s sale of
the SSSS unit as imminent, even going so far as to say that the
sale would occur in January, 2012. See Pls.’ Br. at 15 (the
local supply strategy “could not be presumed to continue in 2012
following the ownership change” and the sale “was planned to
occur in less than a year”); Pls.’ Reply Supp. Mot. J. Agency R.
at 4 (“TK planned to sell its stainless operations in both the
United States and Mexico by January 2012.”). The record does not
support this interpretation, as it is clear that TK only intended
to prepare plans by January, 2012. Views, at 29; see Pls.’ Br. at
14 (quoting PR 102 at 207) (“[TK] also said that it would decide
in January 2012 how exactly it would go about spinning off its
stainless steel operations, following a review by a group that
had ‘just recently started’ to study the issue, that would
present several ‘options,’ and ‘then a decision will be taken
which way to go.’”).
4
Domestic industry selectively quotes statements from
Chairman Iller to imply that TK is considering selling its SSSS
entities piecemeal. Pls.’ Br. at 14; Pls.’ Reply at 3. As the
Commission correctly noted at oral argument, the quotations at
issue actually refer to TK’s openness to the variety of methods
of sale, not whether the sale would include each of TK’s SSSS
producers. Immediately following the text domestic industry
quotes, Chairman Iller states: “I would like to point out that
there are no intentions to break the current stainless activities
apart, but rather bring forward the stainless activities in
total.” PR 108 Ex. 3 at 3 (emphasis added). Chairman Iller was
no less clear during a hearing before the Commission, stating
that TK wants “to separate the whole [SSSS] business” such that
“all of the [SSSS] units” would be part of the deal. PR 102 at
Court No. 11-00366 Page 16
102 at 207; PR 108 Ex. 3 at 2–3, and as above, reasonably concluded
that “short lead times[,] . . . increased logistical costs, and
exchange rate volatility” would provide any future owner of the
SSSS unit with a “strong rationale” to pursue the same local supply
strategy. Views, at 29–30.
This court owes “the expert factfinder — here the majority of
the Presidentially-appointed, Senate-approved Commissioners” — a
considerable amount of deference in using its expertise to make
such predictions, and as such, domestic industry has a high burden
to overcome. Nippon, 458 F.3d at 1352, 1359. The Commission cited
record evidence in support of its determinations concerning new
economic realities of the SSSS market, which domestic industry
either fails to dispute or fails to explain using more than an
alternative, equally viable interpretation. Consequently, the
Commission’s reliance on the local supply strategy to buttress its
cumulation, volume, and price determinations was reasonable. See
Nucor Corp. v. United States, 34 CIT , , 675 F. Supp. 2d 1340,
1350 (2010) (“While it is true . . . that there are circumstances
under which [a foreign producer would increase imports] . . . even
if doing so caused harm to [its domestic producer], the mere
plausibility of a set of given circumstances is insufficient to
overcome the high barrier to reversal of an agency
determination.”).
207–08 (emphasis added).
Court No. 11-00366 Page 17
II. Cumulation
“In a sunset review,” the Commission has discretion to
“cumulate unfairly traded imports from multiple countries to
adequately capture the goods’ simultaneous injurious effects on the
domestic industry that might otherwise be obscured in the agency’s
country-by-country review of the subject imports.” NSK Corp. v.
United States, 34 CIT , , 712 F. Supp. 2d 1356, 1360–61 (2010).
Under 19 U.S.C. § 1675a(a)(7), the Commission “may cumulatively
assess the volume and effects of imports of the subject merchandise
from all countries” subject to a sunset review if (1) the reviews
of each country began on the same day,5 (2) imports from each
country would be likely to compete with each other and domestic
like products, and (3) such imports would likely have a discernible
adverse impact on the domestic industry. 19 U.S.C. § 1675a(a)(7);
see NSK Corp., 34 CIT at , 712 F. Supp. 2d at 1361. “[T]he
Commission has wide latitude in selecting the types of factors it
considers relevant in undertaking its cumulation analysis.”
Allegheny Ludlum Corp. v. United States, 30 CIT 1995, 2005, 475 F.
Supp. 2d 1370, 1380 (2006).
Domestic industry’s primary argument is that TK’s imports from
Mexico would not compete under similar conditions with its imports
5
There is no dispute that this statutory requirement is
satisfied because the Commission initiated sunset reviews with
respect to all countries subject to the orders on June 1, 2010.
Views, at 5.
Court No. 11-00366 Page 18
from Italy and Germany because the record demonstrates that TK will
limit imports from Italy and Germany while maintaining
“substantial” imports from Mexico. Pls.’ Br. at 21–23. As
domestic industry puts it, “TK announced a coordinated program
whereby Mexinox — which already accounted for a substantial market
share — would continue to export sizeable volumes of SSSS, while
imports from Germany and Italy would be limited to ‘small
quantities of niche products.’”6 Id. at 22 (quoting Views, at 49).
Because “the projected volumes of imports from Mexico would be akin
to those from Japan, Korea, and Taiwan, in arriving in the U.S.
market in significant volumes,” domestic industry concludes, the
Commission should have cumulated Mexican SSSS imports with those
from Japan, Korea, and Taiwan. Id. at 23.
Although domestic industry demonstrates that the volume of
6
The fundamental structure of TK’s local supply strategy is
to use Mexinox and SL-USA instead of its European producers to
supply U.S. markets. PR 102 at 143–47; Views, at 26–27.
Consequently, the “coordinated program” TK “announced” is none
other than the local supply strategy domestic industry urges this
court to ignore above. See Pls.’ Br. at 18–24. Domestic
industry also relies on the local supply strategy elsewhere in
its briefs as convenience dictates. See, e.g., Pls.’ Br. at 26
(imploring the court to evaluate its position on the Commission’s
volume determination while “assuming for the sake of argument
that it was proper for the Commission to rely on . . . [the]
local supply policy”). Unsurprisingly, domestic industry does
not explain how it would fashion a remand simultaneously
instructing the Commission to disregard TK’s local supply
strategy and to use a critical component of that strategy in
crafting revised cumulation, price, and volume determinations.
Because the Commission grounded its determinations on substantial
evidence, however, the court need not undertake this challenge
itself.
Court No. 11-00366 Page 19
subject Mexican imports would differ from the volume of subject
Italian and German imports, this fact alone is insufficient to
overcome the Commission’s wide latitude in using its discretion to
cumulate imports from those countries based on the substantive
implications of TK’s common ownership. See U.S. Steel Corp. v.
United States, 32 CIT 832, 834–35, 572 F. Supp. 2d 1334, 1340–41
(2008) (Commission determination not to cumulate imports under
common ownership with unaffiliated imports from other countries
affirmed as reasonable where those under common ownership would
also compete with a domestic affiliate). Domestic industry does
not and cannot argue that Japanese, Korean, and Taiwanese SSSS
producers risked injuring their own corporate affiliates by
importing into the U.S. Domestic industry also does not and cannot
argue that in pursuing contracts and planning output, Korean,
Japanese, and Taiwanese producers needed to consider a possible
“veto” from a corporate affiliate. On the other hand, domestic
industry acknowledges that TK would coordinate its Mexican,
Italian, and German imports under a unified business plan, see
Pls.’ Br. at 22, and the record establishes that TK’s Mexican,
Italian, and German imports face competition and the threat of a
veto from an affiliated U.S. production facility. Views, at 26–30.
Simply put, the Commission’s decision to cumulate Mexican imports
with German and Italian imports was reasonable because the weight
of the evidence shows similar conditions of competition between
Court No. 11-00366 Page 20
Mexican, German, and Italian SSSS producers.
III. Likelihood of Continuation or Recurrence of Material Injury
“After making the threshold determination whether to cumulate,
the Commission must determine whether revocation of the order under
review would be likely to lead to continuation or recurrence of
material injury.” Wieland-Werke AG v. United States, 31 CIT 1884,
1888–89, 525 F. Supp. 2d 1353, 1360 (2007), aff’d, 290 Fed. App’x
348 (Fed. Cir. 2008). The Commission evaluates the likelihood of
continuation or recurrence of injury by predicting the volume,
price effects, and impact of subject imports on domestic industry.
19 U.S.C. § 1675a(a)(2)–(4). In so doing, “[t]he Commission is
required to consider any prior injury determinations, including
volume, price effect, impact of imports before the order was in
place, improvements in the state of the industry, industry
vulnerability and Commerce’s duty absorption findings.” Allegheny
Ludlum, 30 CIT at 2007, 475 F. Supp. 2d at 1382. The Act provides
an outline of factors for the Commission to consider in making its
volume, price, and impact determinations, id., but “[t]he presence
or absence of any factor . . . shall not necessarily give decisive
guidance with respect to the Commission’s determination.” 19
U.S.C. § 1675a(a)(5).
A. Volume
Domestic industry argues that the Commission erred in finding
that subject imports from Mexico would not likely increase above
Court No. 11-00366 Page 21
historical levels because “Mexinox is becoming even more central to
TK’s coordinated plans for the U.S. market than it has been at any
time since the antidumping duty order was issued.” Pls.’ Br. at
26. Domestic industry supports this contention with record
evidence that it characterizes as demonstrating that the U.S. was
Mexinox’s “primary market,” Pls.’ Br. at 25–27, that Mexinox
intentionally increased its U.S. market share during the review
period, id. at 27–29, that Mexinox has significant excess capacity,
id. at 29–32, and that Mexinox would likely direct that excess
capacity towards the U.S.7 Id. at 32–33.
Under 19 U.S.C. § 1675a(a)(2), the Commission determines the
likely volume of imports after revocation by evaluating (1) “any
likely increase in production capacity or existing unused
production capacity in the exporting country,” (2) “existing
inventories of the subject merchandise, or likely increases in
inventories,” (3) “the existence of barriers to the importation of
such merchandise into countries other than the United States,” and
7
Domestic industry also insists that TK intended to expand
subject capacity at Mexinox, quoting announcements from TK to the
effect that it sought to “grow with [its] customers in the months
and years ahead,” and “to support and grow with its U.S.
Customers.” Pls.’ Br. at 28 (quoting PR 93 Ex. 4). As the
Commission correctly points out in its response, TK’s statements
are actually responses to concerns about Mexinox’s ability to
maintain its sales given the antidumping duties in place, not any
declaration of an intention to expand subject capacity. Def.’s
Mem. Opp’n Pls.’ Br. (“Def.’s Br.”) at 28; see PR 93 Ex. 4
(addressing “valued customers” regarding “concerns surrounding
recent announcements in the press on the dumping margins
impacting Mexinox”).
Court No. 11-00366 Page 22
(4) “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.”
Id. § 1675a(a)(2)(A)–(D).
First, domestic industry cites the local supply strategy and
Mexinox’s consistent market share during prior periods of review to
argue that the U.S. was and will be its “primary market.” Pls.’
Br. at 25–27. This contention is unpersuasive without a corollary
explanation of how such facts demonstrate a likely increase in
import volume. See Pls.’ Br. at 25–27. The local supply strategy
explicitly requires Mexinox to supply the U.S. market without
harming SL-USA. CR 96 at 8. The 400 series grade SSSS Mexinox
sells in the U.S. affects the price of the 300 series grade SSSS
SL-USA produces, meaning that any excessive increase in export
volume from Mexinox would adversely impact SL-USA and thus would be
subject to SL-USA’s veto power. Views, at 50–51; PR 102 at 161.
Indeed, domestic industry does not identify any evidence suggesting
that TK’s local supply strategy calls for Mexinox to increase
import volume. See also PR 93 Ex. 3 at 23 (presentation slide
stating TK’s intention to “replace imports by new TK Stainless mill
in Alabama”).
Second, domestic industry cites data showing that Mexinox’s
“average market share” during the current review period was [[
]] higher than its “average market share” during the investigation,
Court No. 11-00366 Page 23
Pls.’ Br. at 28, and suggests that Mexinox would continue to
increase its market share. Id. at 29. Domestic industry’s figures
are unpersuasive in light of the Commission’s uncontroverted
finding that TK’s cumulated U.S. market share — principally
comprised of Mexinox’s products — remained in the [[ ]] range
since the imposition of the antidumping orders, and that its
cumulated market share is actually [[ ]] lower in 2010 than it
was at the end of the investigation. Def.’s Br. at 28; Views, at
46–47. Domestic industry also fails to explain how a [[ ]]
increase from an average [[ ]] market share during the last
review is a “significant” increase, a telling omission given that
ongoing restructuring and sensitivity of the domestic SSSS market
could lead to frequent changes in prices and market share. See
Views, at 41–46, 50—51, 56–57.
Third, domestic industry argues that Mexinox had a significant
amount of excess production capacity. Pls.’ Br. at 29–32.
Domestic industry does not contest the facts underlying the
Commission’s findings with respect to Mexinox’s capacity,
specifically that its [[ ]] capacity utilization rate left an
“[[
]].” Views, at 47. Instead, domestic
industry contends that Mexinox harbored the potential to shift its
production from non-subject cut-to-length stainless steel strip
(“CTLSSS”) production to subject SSSS production. Pls.’ Br. at
Court No. 11-00366 Page 24
30–32. Domestic industry supports its contention with evidence
showing that “subject producers can easily shift” from CTLSS
production to coiled SSSS, that “coiled SSSS involves fewer
processing steps than [CTLSS] and is easier to transport and more
flexible for customers to use,” and that “the growth in imports of
CTLSS from Mexico strongly correlates to the filing of the
antidumping case.” Pls.’ Br. at 30–31.
For product shifting to evidence a likely increase in import
volume, “in addition to the physical ability to product-shift,” the
practice must “otherwise [be] a viable option.” Siderca, S.A.I.C.
v. United States, 28 CIT 1782, 1797–99, 350 F. Supp. 2d 1223,
1237–38 (2004). As the Commission recognized, CTLSS is a “value
added product” that demands higher prices than subject SSSS,
meaning that there is little incentive for Mexinox to abandon its
CTLSS capacity. Views, at 54. “Moreover, U.S. demand for [CTLSS
began to increase prior to the imposition of the orders,” contrary
to domestic industry’s assertion that Mexinox increased CTLSS
production “primarily as a means of circumventing the orders on
SSSS.” Id. More importantly, the local supply strategy limits
Mexinox’s ability to increase imports regardless of what type of
subject goods they produced. CR 96 at 7–8. Although it can
demonstrate the possibility of product shifting, domestic industry
simply does not identify evidence indicating that such a strategy
would be an economically viable option for Mexinox. See Siderca,
Court No. 11-00366 Page 25
28 CIT at 1797–99, 350 F. Supp. 2d at 1237–38.
In further support of its excess capacity argument, domestic
industry suggests that TK misled the Commission about its
production capacity, citing a 2008 press report indicating that “TK
planned to increase its Mexinox capacity from 295,000 short tons to
340,000 short tons,” as “corroborated by Mexinox’s own website as
well as TK’s presentation to its banks showing SL-USA supplying
Mexinox with 340,000 short tons of hot-rolled SSSS feedstock by
2012/2013.” Pls.’ Br. at 30. The Commission reasonably chose to
weigh the article, which is dated 2008 and appears on a Chinese
website of unclear repute, PR 93 Ex. 2 at 1–2, less heavily than
TK’s more recent and highly detailed questionnaire responses. See
generally, CR 96 (TK’s detailed questionnaire responses).
Furthermore, the “corroborating” evidence does not cast doubt on
TK’s questionnaire responses regarding its SSSS production capacity
because neither the website nor the presentation slides
differentiate between subject and nonsubject production. See PR 93
Ex. 2 at 3 (TK webpage indicating that Mexinox has an “annual cold
rolling capacity of 270,000 metric tons,” without further
specification); id. Ex. 3 at 21 (arrow indicating flow of 340,000
short tons of “hot rolled supply” without further specification).
The marginal probative value of this evidence is insufficient to
support domestic industry’s dubious falsification claim.
Lastly, domestic industry asserts that Mexinox’s alleged
Court No. 11-00366 Page 26
excess capacity would be directed towards the U.S. market. The
Commission determined that Mexinox would not direct excess towards
the U.S. because of higher average unit prices in Mexico, a
projected significant increase in Mexican demand, and the
prohibitive structure of the local supply strategy. Views, at 52.
Domestic industry criticizes the average unit value figure as being
based on a non-specific mix of expensive and inexpensive products,
Pls.’ Br. at 33, but it does not dispute the “significant
[projected] increase in Mexican home market demand.” Views, at 52
(emphasis added); see PR 93 Ex. 3 at 7 (slide from TK’s
presentation to its creditors showing a map of North America
indicating Mexinox would sell products made from additional
feedstock from SL-USA to consumers in Mexico rather than the U.S.).
In light of an uncontroverted projected increase in demand and the
probable effect of the local supply strategy, the Commission’s
finding was reasonable despite domestic industry’s objection to
average unit values.
Domestic industry’s four arguments are insufficient to
unsettle the Commission’s reasonable likely volume determination,
as they are merely an invitation for this court to reweigh record
evidence in its favor. See Nevinnomysskiy Azot, 31 CIT at 1379
(quoting Consolo, 383 U.S. at 620). Consequently, domestic
industry’s challenge to the Commission’s likely volume
determination must fail.
Court No. 11-00366 Page 27
B. Price
In reviewing whether the continuation or recurrence of
material injury is likely if an antidumping duty order is revoked,
“the Commission shall consider” the price effects of imports
without the order in place. 19 U.S.C. § 1675a(a)(3).
Specifically, the Commission must consider whether “(A) there is
likely to be significant price underselling . . . as compared to
domestic like products, and (B) [whether] imports of the subject
merchandise are likely to enter the United States at prices that
otherwise would have a significant depressing or suppressing effect
on the price of domestic like products.” Id.
Domestic industry’s numerous arguments in opposition to the
Commission’s price determination follow two distinct paths, the
first of which addresses the likelihood of significant
underselling. Domestic industry asserts that the Commission
ignored evidence showing that “Mexinox undersold the domestic
industry . . . 54 percent of the time[] during the original
investigation,” “17.2 percent” after the imposition of the order,
and then “34.3 percent” during the current period of review. Pls.’
Br. at 34–35. Domestic industry further insists that “Mexinox . .
. used [this] underselling to increase or maintain market share,”
given that “Mexinox’s average annual U.S. market share increased”
from the first period of review to the current period of review.
Id. Domestic industry also cites a report prepared by North
Court No. 11-00366 Page 28
American Stainless, one of the plaintiffs in this action, showing
that offers for subject SSSS from Mexinox were “[[
]]” after SL-USA had begun production. Id. at 36.
The Commission did not improperly ignore evidence of past
underselling in determining that future underselling was unlikely.
The Commission found that “culminated subject imports . . .
oversold the domestic like product during the period of review . .
. in 50 of 75 quarterly comparisons, or two-thirds of the time.”
Views, at 55. As above, domestic industry’s reliance on average
market share over the investigation and each period of review
obscures the Commission’s reasonable finding that TK’s cumulated
market share remained consistently within the [[ ]] range from
the investigation through the second sunset review. Id. at 46–47.
Domestic industry relies on the same figures to color Mexinox’s
behavior in the most advantageous light, and therefore its argument
here is nothing more than an alternative interpretation of evidence
on the record. See Nevinnomysskiy Azot, 31 CIT at 1379 (quoting
Consolo, 383 U.S. at 620); U.S. Steel Corp., 32 CIT at 841–42, 572
F. Supp. 2d at 1345–46 (Commission’s price determination affirmed
as reasonable it was supported in part by evidence of “mixed”
overselling and underselling).
Domestic industry’s citation to Mexinox’s alleged 2011 price
offers are also insufficient for this court to upset the
Court No. 11-00366 Page 29
Commission’s determination. As the Commission explained below, the
price offers are “contradicted by the pricing data on the record of
these reviews, showing that imports from Mexico oversold the
domestic like product in 46 of 70 quarterly comparisons.” Views,
at 55 n.279. Furthermore, the proffered evidence did “not indicate
the product at issue or the source of the information” on some
pages, and “did not indicate the time frame” on others. Id.; see
CR 138 Ex. 3 (chart and emails regarding alleged price offers
without verifiable source citations and dates). Even if the
difference between offer prices and transaction prices is a
“quibble” as domestic industry claims, the Commission acted
reasonably in deciding to weigh verifiable transaction prices from
the period of review more heavily than evidence of offer prices
with limited source citations compiled by an interested party.
The second set of domestic industry’s arguments challenges the
Commission’s finding that Mexinox’s imports were not likely to have
an otherwise significant depressing or suppressing effect on
domestic prices. Domestic industry claims that “[m]aintaining high
prices in the U.S. market . . . is not TK’s announced objective”
because “[a]ll of TK’s published materials emphasize its push for
volume and market share in North America.” Pls.’ Br. at 34.
Further, “[e]ven assuming that SL-USA has an incentive to manage
its imports in a manner that will not harm its own business, it has
no incentive to manage its imports in a manner that does not harm
Court No. 11-00366 Page 30
the rest of the domestic SSSS industry.” Id. at 38. In other
words, “[t]o protect its $1.4 billion dollar investment and cover
its massive fixed costs at SL-USA, TK must first maximize its sales
volume,” in turn causing Mexinox to lower its prices in response to
an increasingly depressed U.S. SSSS market. Id. at 34.
Domestic industry’s argument fails to acknowledge sufficiently
one critical fact underlying the Commission’s determination: SL-USA
is a domestic producer. Indeed, while SL-USA’s “surge in new
capacity” may depress domestic prices, id. at 39, it bears little
relevance to the likelihood of whether Mexinox’s imports will have
a “significant” depressing or suppressing effect, let alone the
likely cumulated effect of all TK’s imports. See 19 U.S.C. §
1675a(a)(3)(B). Under the local supply strategy, SL-USA must
carefully manage subject imports from Mexinox and TK’s European
producers regardless of what impact its own production has on the
domestic market. The Commission found that cumulated subject
imports would not cause significant price depression or
suppression, and domestic industry’s argument here does not
undermine that finding. See Views at 54–57.
In short, domestic industry has identified no evidence in
either prong of its arguments demonstrating that TK’s cumulated
imports would cause price suppression or depression in the U.S.
SSSS market, whereas the Commission grounded its likely price
effect determination in substantial evidence. See U.S. Steel
Court No. 11-00366 Page 31
Corp., 32 CIT at 841–42, 572 F. Supp. 2d at 1345–46 (Commission
determination that revocation would not have significant depressing
or suppressing price effects reasonable where foreign producer’s
product would affect the price of affiliated domestic producer’s
similar product).
CONCLUSION
Based on the foregoing, the court concludes that the
Commission’s determination with regard to cumulation, volume
effects, and price effects are supported by substantial evidence
and are otherwise consistent with the law. Therefore, the
determination is hereby affirmed in its entirety and this matter is
dismissed.
/s/ NICHOLAS TSOUCALAS
Nicholas Tsoucalas
Senior Judge
Dated: November 15, 2012
New York, New York