JMC Steel Group v. United States

Slip Op. 15-51
UNITED STATES COURT OF INTERNATIONAL TRADE
JMC STEEL GROUP,
Plaintiff,
ALLIED TUBE AND CONDUIT,
WHEATLAND TUBE, and UNITED
STATES STEEL CORPORATION,
Plaintiff-Intervenors,
v.
UNITED STATES,
Before: Mark A. Barnett, Judge
Defendant, Court No. 13-00022
AL JAZEERA STEEL PRODUCTS CO.
SOAG, VIETNAM HAIPHONG
HONGYUAN MACHINERY
MANUFACTORY CO., LTD.,
UNIVERSAL TUBE AND PLASTIC
INDUSTRIES, LTD., KHK
SCAFFOLDING & FORMWORK, LLC,
UNIVERSAL TUBE AND PIPE
INDUSTRIES, LLC, ZENITH BIRLA
(INDIA) LIMITED, and CONARES
METAL SUPPLY LIMITED,
Defendant-Intervenors.
OPINION
[The court sustains the International Trade Commission’s Redetermination.]
Dated: May 29, 2015
John R. Magnus, Tradewins LLC, of Washington, DC, for plaintiff.
Roger B. Schagrin and John W. Bohn, Schagrin Associates, of Washington, DC, for
plaintiff-intervenor Allied Tube and Conduit.
Court No. 13-00022 Page 2
Stephen P. Vaughn, Robert E. Lighthizer, and James C. Hecht, Skadden, Arps, Slate,
Meagher & Flom LLP, of Washington, DC, for plaintiff-intervenor United States Steel
Corporation.
Gilbert B. Kaplan and Brian E. McGill, King & Spalding, LLP, of Washington, DC, for
plaintiff-intervenor Wheatland Tube.
Karl von Schriltz, Attorney, Office of the General Counsel, Dominic L. Bianchi, General
Counsel, and Andrea C. Casson, Assistant General Counsel for Litigation, U.S.
International Trade Commission, of Washington, DC, for defendant.
David L. Simon, Law Offices of David L. Simon, of Washington, DC, for defendant-
intervenor Al Jazeera Steel Products Co. SAOG.
Donald B. Cameron, Julie C. Mendoza, R. Will Planert, Brady W. Mills, Mary S.
Hodgins, and Sarah S. Sprinkle, Morris, Manning & Martin LLP, of Washington, DC, for
defendant-intervenors Universal Tube and Plastic Industries, Ltd., KHK Scaffolding &
Formwork, LLC, and Universal Tube and Pipe Industries, LLC.
Max F. Schutzman, Ned. H. Marshak, and Kavita Mohan, Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt, LLP, of New York, NY, for defendant-intervenors Zenith Birla
(India) Ltd. and Conares Metal Supply Ltd.
Robert F. Gosselink and Jonathan M. Freed, Trade Pacific, PLLC, of Washington, DC,
for defendant-intervenor Vietnam Haiphong Hongyuan Machinery Manufactory Co., Ltd.
Barnett, Judge: This matter, which arises from the International Trade
Commission’s (“ITC” or “Commission”) antidumping and countervailing duty
investigations into certain circular welded carbon-quality steel pipe (“CWP”) from India,
Oman, the United Arab Emirates, and Vietnam (“subject imports”), returns to the court
following remand to the Commission in JMC Steel Group v. United States, 38 CIT __,
24 F. Supp. 3d 1290 (2014) (“JMC I”). 1 In that decision, the court ordered the
Commission to (1) “reconsider its findings with regard to lost sales and revenue, taking
1The court presumes familiarity with the background and procedural history of the case,
although relevant portions are summarized below.
Court No. 13-00022 Page 3
into account [the] argument that the structure of the domestic CWP market precludes
Plaintiffs from providing the ITC the lost sales and revenue information in the form and
manner in which it was sought,” and (2) “explain how it has evaluated the impact of
subject imports on the domestic industry within the context of the business cycle.” Id. at
__, 24 F. Supp. 3d at 1321. On February 9, 2015, the ITC filed its final negative injury
remand results, in which it again found no material injury or threat thereof to the
domestic industry. See Views of the Commission, USITC Pub. 4521, Inv. Nos. 701-TA-
482-484 and 731-TA-1191-1194 (Final) (Remand) (Feb. 2015) (“Remand Views”). 2
Plaintiff, JMC Steel Group, and Plaintiff-Intervenors, United States Steel Corporation
and Wheatland Tube, (“Plaintiffs”) challenge the remand results. 3 (See generally
Confidential Comments of JMC Steel Group, Wheatland Tube, and United States Steel
Corporation on the Commission’s Remand Determination (“Comments”) (ECF No.
152).) For the reasons stated below, the remand results are sustained.
BACKGROUND AND PROCEDURAL HISTORY
A. The Administrative Proceedings
On October 26, 2011, Plaintiffs filed a petition with the ITC, alleging material
injury and threat of material injury by reason of the subject imports. See Circular
Welded Carbon-Quality Steel Pipe from India, Oman, United Arab Emirates, and
Vietnam, 76 Fed. Reg. 68,208 (ITC Nov. 3, 2011) (initiation of antidumping and
2 All citations to the Remand Views and to the agency record are to their confidential
versions.
3 Plaintiff-Intervenor Allied Tube and Conduit did not submit comments on the remand
results.
Court No. 13-00022 Page 4
countervailing duty investigations). In December 2012, the ITC published a final
determination, Circular Welded Carbon-Quality Steel Pipe from India, Oman, the United
Arab Emirates, and Vietnam, 77 Fed. Reg. 73,674 (ITC Dec. 11, 2012) (“Final
Determination”), and accompanying Views of the Commission, USCIT Pub. 4362, Inv.
Nos. 701-TA-482-484 and 731-TA-1191-1194 (Final) (Dec. 2012) (“Original Views”),
which examined a period of investigation (“POI”) of January 2009 through June 2012.
The Commission determined that subject imports and the domestic like product are
“generally fungible,” share the same channels of distribution, have a “reasonable
overlap” of competition, and that price is a significant factor in CWP purchasing
decisions. It found a significant increase in the volume of subject imports during the
POI, in absolute terms and relative to domestic consumption and production, but
concluded that the increase did not have significant adverse effects on the domestic
industry. Although the ITC observed that subject imports “pervasively undersold” the
domestic like product by significant margins during the POI, it nevertheless found “no
evidence” that subject imports significantly depressed or suppressed prices of the
domestic like product. The ITC also found that the domestic industry’s performance
improved in “almost every measure [during the POI] despite the weak recovery in CWP
demand” following the 2008 economic crisis and that there was no correlation between
subject import volume, market share, and underselling, on the one hand, and domestic
industry performance, on the other. The Commission thus determined that the subject
imports neither caused nor threatened to cause material injury to the domestic industry.
See generally Final Determination; Original Views.
Court No. 13-00022 Page 5
B. JMC I
Plaintiffs challenged the Final Determination on numerous grounds. (See
generally ECF Nos. 71, 76, 77, 82, 85.) In JMC I, the court addressed Plaintiffs’
arguments and affirmed, in part, and remanded, in part, the determination. Of
relevance to the present opinion, the court found that the ITC did not assume that
negative volume effects alone cannot warrant an affirmative injury determination and
also held that “the fact that the ITC found a significant increase in subject import volume
and market share does not compel an affirmative injury determination.” JMC I, 38 CIT
at __, 24 F. Supp. 3d at 1299. The court also affirmed the Commission’s findings that
there was no correlation between increased subject import volume and negative price
effects on the domestic like product, and between subject imports’ increased volume
and the domestic industry’s performance during the POI. Id. at __, 24 F. Supp. 3d at
1302-03, 1306-10.
The court, however, remanded the Final Determination to the ITC on two
grounds. First, the court questioned the Commission’s treatment of the domestic
producers’ lost sales and revenue allegations in the price effects analysis. Id. at __, 24
F. Supp. 3d at 1304-05. Plaintiffs had averred that they could not provide lost sales and
revenue information, in the form and manner requested by the Commission, due to the
structure of the domestic CWP market. The court held that, in such circumstances,
pursuant to 19 U.S.C. § 1677m(c), the Commission must “consider the ability of the
party to submit the information and may modify its requirements to avoid imposing an
unreasonable burden on the party when certain additional requirements are met. In
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certain cases, the Commission also is required to provide such parties any assistance
that is practicable.” Id. at __, 24 F. Supp. 3d at 1304-05 (citation omitted). The court
found that “[t]he record is ambiguous as to whether domestic interested parties took the
necessary steps to properly invoke these provisions and, if so, the extent to which the
Commission considered modifying its information requests or otherwise assisting these
parties in addressing the questions regarding lost sales and revenue.” Id at __, 24 F.
Supp. 3d at 1305. The court concluded that the ITC had, in effect, treated the domestic
industry’s inability to provide this information, in the form and manner requested, as an
adverse inference against it, without addressing the requirements of 19 U.S.C. § 1677e.
Id. The court remanded the issue and instructed the ITC to reconsider its findings with
regard to lost sales and revenue. Id. The court also ruled that “the Commission may
collect additional evidence relevant to this issue and reconsider any aspect of the Final
Determination which relied upon or took into consideration the Commission’s prior
findings regarding lost sales and revenue.” Id.
Second, the court found that the ITC, in assessing the effects of subject imports
on the domestic industry, did not “‘evaluate all relevant factors which have a bearing on
the state of the [CWP] industry in the United States . . . within the context of the
business cycle,’” as required by 19 U.S.C. § 1677(7)(C)(iii). Id. at __, 24 F. Supp. 3d at
1307 (ellipses in original) (quoting 19 U.S.C. § 1677(7)(C)(iii)). Specifically, the court
stated:
While the Commission referenced the dismal economic conditions
that affected the industry at the beginning of the POI, it did not clearly
address whether the improvements in nearly every measure of industry
Court No. 13-00022 Page 7
performance may appear significant because of the broader economic
recovery, thereby masking the injurious impact of subject imports on the
domestic industry. Without expressly discussing the effects of the economic
recovery on the domestic industry and explicitly addressing those effects in
contrast to the effects of subject imports, the court cannot assume that the
Commission has evaluated all relevant factors having a bearing on the state
of the industry within the context of the business cycle.
The court recognizes that certain other issues discussed in this
opinion (e.g., the use of pre-POI data . . . ) could be considered part of the
Commission’s proper consideration of the business cycle; however, in light
of the emphasis placed on the distortive effect of the 2009 economic
collapse, it was incumbent upon the Commission to be clear about how it
evaluated all relevant factors, particularly in the aftermath of the economic
collapse, in the context of the business cycle. The court therefore remands
the Commission’s determination so that the Commission may explain how
it has evaluated the relevant economic factors bearing on the state of the
domestic industry within the context of the business cycle. The Commission
may make additional determinations, including reconsidering issues
otherwise addressed and affirmed in this opinion, as are necessary to
account for such explanations.
Id. at __, 24 F. Supp. 3d at 1308 (internal citations and quotation marks omitted).
C. Remand Results
On remand, the ITC declined to reopen the record. Remand Views at 6 (citation
omitted). The Commission determined not to reconsider “those issues either affirmed
by the Court or not subject to appeal, and therefore adopt[ed] its findings, analysis, and
conclusions with respect to those issues in their entirety, including domestic like
product, domestic industry, negligibility, cumulation, legal standards, and conditions of
competition.” Id. at 6-7. It also adopted “those portions of the Original Views pertaining
to the analysis of volume, price, impact, and threat that were affirmed by the Court . . .
or not subject to appeal.” Id. at 7.
Court No. 13-00022 Page 8
In its revised lost sales and revenue analysis, the ITC noted that the court had
affirmed its finding that subject imports had no negative price effects on the domestic
like product. Id. at 10. The ITC then determined that it “ha[d] no need to rely on the
absence of confirmed lost sales and revenue allegations as further support for these
findings.” Id. In response to the court’s order that the Commission “tak[e] into account
Plaintiffs’ argument that the structure of the domestic CWP market precludes Plaintiffs
from providing the ITC the lost sales and revenue information in the form and manner in
which it was sought,” JMC I, 38 CIT at __, 24 F. Supp. 3d at 1321, the Commission
reexamined the record and found “no evidence that the domestic interested parties
invoked [19 U.S.C. § 1677m(c)], nor d[id] the domestic interested parties claim to have
done so” during the remand proceedings. Remand Views at 8 n.29. The Commission
clarified that it does not make adverse inferences against parties for failing to report lost
sales and revenue allegations because, inter alia, responses to lost sales and revenue
questions are voluntary. Id. at 10-11 (“Because the reporting of lost sales and revenue
allegations is voluntary, . . . the domestic interested parties’ alleged inability to report
such allegations . . . would not have constituted a failure . . . to cooperate to the best of
their ability . . . within the meaning of the statutory provision governing adverse
inferences.”) (citing 19 U.S.C. § 1677e(a)). When a party cannot respond to the best of
its ability to such a request, “the Commission’s practice has been to rely on the
information available, rather than resorting to the use of adverse inferences.” Id. at 11-
12.
Court No. 13-00022 Page 9
With regard to the second remanded issue, the ITC reassessed the domestic
industry’s performance in the context of the business cycle, and, in particular, whether
the economic downturn in 2009 and subsequent recovery masked injury to the domestic
industry by subject imports. Id. at 16-27. The ITC found that the domestic industry
improved “markedly during the POI according to every measure except market share,
capacity, and employment,” although the domestic industry faced weak CWP demand
due to the lackluster economic recovery. Id. at 18 (citing Original Views at 34-37)
(adopting full discussion of domestic industry’s performance in Original Views). Stated
differently, the ITC concluded that the tepid economic recovery did not obscure injury to
the domestic industry.
The ITC also contrasted the effects of the economic recovery with those of
subject imports to discern whether subject imports had a significant adverse impact on
the domestic industry that was distinguishable from the business cycle. The
Commission concluded, for several reasons, that “the domestic industry’s recovery
would not have been significantly stronger but for the increase in subject import volume
and market share.” Id. at 23. First, the absence of a significant decline in the domestic
industry’s performance, irrespective of trends in subject import volume, market share,
and underselling, was “consistent with the weak recovery in CWP demand during the
period.” Id. at 23-24 (noting increased U.S. shipments, stable market share compared
to 2000-2008, increased prices in three of four pricing products and average value of
U.S. shipments, reduced ratio of cost of goods sold (“COGS”) to net sales, and
improved, though irregular, operating income and operating income margin). Second,
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there was no correlation between the performance of the domestic industry and subject
import market share, underselling, or the size of the underselling margins. Id. at 25-26
(citing Original Views at 30-32, 38-39; Staff Report at Tables V-1-4, VI-1). Finally, “the
significant presence of competitively-priced nonsubject imports in the U.S. market
throughout the POI further undermines any possible relationship between subject import
competition and the domestic industry’s performance during the period.” Id. at 26 (citing
Staff Report at Tables IV-3, IV-10, C-1, App. D).
After addressing these remand issues, the ITC concluded that it was
unnecessary to “reconsider issues otherwise addressed and affirmed by the Court” in
JMC I. Id. at 7. In a 4-2 vote, the ITC again determined that subject imports neither
caused nor threatened to cause material injury to the domestic industry. Id. at 1.
Plaintiffs now challenge the remand results on three grounds. They contest, as
unsupported by substantial evidence or not in accordance with law, (1) the ITC’s alleged
use of the absence of lost sales allegations to support its finding of no negative volume
effects, (Comments at 11-13); (2) the ITC’s alleged failure to explain why the domestic
industry’s loss of market share to subject imports did not lead to an affirmative injury
determination, (Comments at 4-11); and (3) its finding of no correlation between subject
import volume and the domestic industry’s financial performance, (Comments at 13-25).
STANDARD OF REVIEW
The standard of review applicable to a challenge to a remand determination is
the same as that applicable to an original agency determination: the court will uphold an
agency determination that is supported by substantial evidence and otherwise in
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accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i); Spa v. E.I. Dupont de Nemours, 26
CIT 1357, 1360-61 (2002), aff’d, Ausimont SpA v. United States, 90 F. App’x 399 (Fed.
Cir. 2004). 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.
N.L.R.B., 305 U.S. 197, 229 (1938)). “[T]he court may not reweigh the evidence or
substitute its own judgment for that of the agency.” Usinor v. United States, 28 CIT
1107, 1111, 342 F. Supp. 2d 1267, 1272 (2004) (citation omitted).
DISCUSSION
As discussed above, in JMC I, the court remanded the ITC’s determination with
regard to two issues: (1) the ITC’s treatment of the domestic producers’ lost sales and
revenue allegations in its price effects analysis and (2) its evaluation of the domestic
industry in the context of the business cycle. The court affirmed all other aspects of the
Final Determination. While the court authorized the Commission to reconsider any
aspect of the Final Determination that relied upon or took into consideration its prior
findings on the remanded issues, the Commission determined to affirm its original
findings in the price effects analysis, without considering lost sales and revenue
allegations, and provided further explanation of the role of the business cycle in the
domestic industry’s performance. In making those findings, the Commission found it
unnecessary to reconsider any other aspect of its Final Determination. Therefore, the
Commission’s findings, apart from the two issues remanded for further consideration,
are effectively final.
Court No. 13-00022 Page 12
A. Lost Sales and Revenue Allegations
In JMC I, the court ordered the ITC to reevaluate its treatment of the domestic
producers’ lost sales and revenue allegations in its price effects analysis to account for
Plaintiffs’ assertion that they could not provide lost sales and revenue information, in the
form and manner requested by the Commission, due to the structure of the domestic
CWP market. The court further concluded that the ITC had, in effect, treated the
domestic industry’s inability to provide this information as an adverse inference against
it, without addressing the requirements of 19 U.S.C. § 1677e.
In the remand results, the ITC expressly abandoned the use of lost sales and
revenue allegations in the price effects analysis. Remand Views at 10. It noted that the
court had affirmed its finding that subject imports had no negative price effects on the
domestic like product and, therefore, concluded that it “ha[d] no need to rely on the
absence of confirmed lost sales and revenue allegations as further support for these
findings.” Id. (footnote omitted). The Commission also clarified that it does not make
adverse inferences against parties for failing to report lost sales and revenue
allegations; rather, when a party does not submit lost sales and revenue allegation
reports, “the Commission’s practice has been to rely on the information available, rather
than resorting to the use of adverse inferences.” Id. at 10-12.
Because the Commission expressly abandoned any reliance on the lack of
verifiable lost sales and revenue allegations in making its remand determination, the
Commission has addressed the court’s concern that the agency improperly used the
Court No. 13-00022 Page 13
domestic producers’ failure to provide lost sales and revenue allegations as a basis for
an adverse inference against the domestic industry.
Plaintiffs now assert that the ITC unlawfully used the absence of lost sales
allegations to support its finding of a lack of negative volume effects in the remand
results. (Comments at 11-13.) They aver that the Commission should have treated the
increase in subject import volume and market share between 2009 and 2011 as
evidence of lost sales. According to Plaintiffs, by using its longstanding methodology,
the Commission repeated the error that the court found in the ITC’s price effects
analysis in JMC I, i.e. that it may have failed to account for Plaintiffs’ assertions that
they could not provide the lost sales information in the form and manner requested by
the Commission due to the structure of the domestic CWP market and, therefore, made
an unlawful adverse inference against them. (Comments at 12-13 (citing JMC I, 38 CIT
at __, 24 F. Supp. 3d at 1304-05).)
In the Remand Views, the Commission explicitly adopted the volume arguments
and findings in the Original Views. Remand Views at 7. The Commission did not take
into account the absence of verifiable lost sales allegations when conducting those
analyses. See Original Views at 28-29. In fact, in the Remand Views, the language
that provides the basis for Plaintiffs’ objection merely describes the methodology the
ITC customarily employs when analyzing lost sales and revenue. Remand Views at 10
n.40. This explanation of standard practice does not indicate that the Commission used
the absence of lost sales allegations in its evaluation of subject imports’ volume effects
as Plaintiffs allege.
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In certain prior cases, the court has held that in markets with fungible goods,
such as CWP, “volume rather than anecdotal evidence may be the best indicator of lost
sales.” Granges Metallverken AB v. United States, 13 CIT 471, 481, 716 F. Supp. 17,
26 (1989) (citations omitted). However, the court has never required the Commission to
examine volume in lieu of anecdotal evidence for such purposes. See Copperweld
Corp. v. United States, 12 CIT 148, 169-70, 682 F. Supp. 552, 572 (1988) (noting lack
of any statutory provision requiring ITC to perform any particular type of analysis of lost
sales or revenue allegations) (citing Me. Potato Council v. United States, 9 CIT 293,
302, 613 F. Supp. 1237, 1245 (1985)). It is not enough for Plaintiffs simply to proffer an
alternate methodology to that relied upon by the agency, even if that alternate
methodology is reasonable and not inconsistent with the statute. 4 Plaintiffs must
demonstrate that the ITC could not properly rely on its selected methodology,
something they have failed to do. The court will not disturb the ITC’s analysis of subject
import volume and market share, notwithstanding the fungible nature of CWP. See
JMC I, 38 CIT at __, 24 F. Supp. 3d at 1304.
4 When evaluating challenges to the ITC’s choice of methodology, the court will affirm
the chosen methodology as long as it is reasonable. Shandong TTCA Biochemistry Co.
v. United States, 35 CIT __, __, 774 F. Supp. 2d 1317, 1327 (2011) (citing U.S. Steel
Grp. v. United States, 96 F.3d 1352, 1361-62 (Fed. Cir. 1996)); accord Hynix
Semiconductor, Inc. v. United States, 30 CIT 1208, 1210, 1215, 431 F. Supp. 2d 1302,
1306, 1310-11 (2006). When presented with a challenge to the Commission’s
methodology, the court examines “not what methodology [Plaintiffs] would prefer, but
. . . whether the methodology actually used by the Commission was reasonable.”
Shandong TTCA Biochemistry Co., 35 CIT at __, 774 F. Supp. 2d at 1329 (citation and
internal quotation marks omitted).
Court No. 13-00022 Page 15
The court therefore sustains the Commission’s treatment of lost sales and
revenue allegations.
B. The Business Cycle
In JMC I, the court ordered the ITC to explain how it evaluated the relevant
economic factors bearing on the state of the domestic industry within the context of the
business cycle, as required by 19 U.S.C. § 1677(7)(C)(iii). Specifically, the court
ordered the Commission to address whether the improvements in nearly every measure
of the domestic industry’s performance during the POI may have appeared significant
due to the economic collapse in 2009 and subsequent economic recovery, thereby
masking the injurious impact of subject imports on the domestic industry.
In the remand results, the ITC undertook a two-part analysis of the business
cycle and its effects on the domestic industry. It first examined the effects of the
economic recovery on the performance of the domestic industry “in the context of the
severe economic downturn in 2009 that depressed apparent U.S. consumption to a
level 37.5 percent below that in 2008, and the weak demand recovery thereafter.”
Remand Views at 16-17 (footnote omitted) (citations omitted).
The Commission found that the domestic industry’s performance improved in
nearly every measure, except market share, capacity, and employment, during the POI,
even though CWP demand remained weak. Id. at 18 (footnote and citations omitted).
Growth in U.S. consumption led to increased production and U.S. shipments by the
domestic industry. Id. (citing Staff Report at Tables III-3, IV-9, C-1). Although the
domestic industry’s market share fell during the POI, the ITC concluded that the
Court No. 13-00022 Page 16
disproportionate effect of the recession on imports had made the 2009 rate unusually
high and, therefore, exaggerated the decline in market share. Id. (citing Staff Report at
Table C-1).
Although the domestic industry’s capacity fell during the POI, the Commission
attributed the decline to the recession rather than subject imports. Id. at 19 (citing
Original Views at 30). Moreover, the decline, in conjunction with increased production,
boosted the capacity utilization rate, and capital investment remained stable. Id. (citing
Original Views at 42-43; Staff Report at Tables III-3, C-1)).
Employment in the domestic industry fell between 2009 and 2011, but hours
worked and wages paid rose due to increased production and shipments. Id. (citing
Staff Report at Tables III-7, C-1). From interim 2011 to interim 2012, industry
employment and wages rose, and hours worked remained steady. Id. at 19-20 (citing
Staff Report at Tables III-7, C-1). The domestic industry’s productivity was unchanged
between 2009 and 2011, and peaked in interim 2012. Id. at 20 (citing Staff Report at
Tables III-7, C-1).
The domestic prices for three of four pricing products increased during the POI,
as did the average unit value of the domestic industry’s U.S. shipments, and the
domestic industry’s COGS to net sales ratio declined. The ITC found these trends
“[c]onsistent with recovering demand.” Id. (citing Original Views at 30-32).
The ITC found that the domestic industry’s recovering sales and prices directly
led to improved financial performance. Operating income grew from a loss equivalent to
negative 15.1 percent of net sales in 2009, to a positive 3.5 percent of net sales in 2010
Court No. 13-00022 Page 17
and 2.3 percent of net sales in 2011. Id. (citing Staff Report at Tables VI-1, C-1).
Although the domestic industry did not return to the performance levels that it had
enjoyed prior to 2008, the Commission concluded that this tempered performance
stemmed from “the anemic recovery in CWP demand during the POI,” and not subject
imports. Id. at 21-22 (footnote and citation omitted).
In the second part of its business cycle analysis, the Commission compared the
effects of the economic downturn and recovery on the domestic industry with those of
subject imports on the domestic industry to discern “whether subject imports had a
significant adverse impact on the domestic industry that [was] distinguishable from the ill
effects of the economic downtown of 2009 and the weak recovery thereafter.” Id. at 23.
The Commission first noted the absence of “a significant decline in domestic industry
performance during the POI that could support a significant adverse impact finding.” Id.
It then examined the domestic industry’s performance during the POI and reiterated that
it improved by most measures, “irrespective of trends in subject import volume, market
share, and underselling.” Id. Citing to increased U.S. shipments, market share levels
“that compared favorably to th[ose] during the 2000-2008 period,” higher prices on three
of four pricing products, rising average unit values of U.S. shipments, higher operating
income and operating income margins, and lower COGS to net sales ratios, the ITC
reaffirmed that “[t]hese improvements . . . were consistent with the weak recovery in
CWP demand during the period.” Id. at 23-24 (footnotes and citations omitted).
Further analysis led the ITC to conclude that the presence of subject imports in
the domestic market did not significantly affect the domestic industry’s performance. It
Court No. 13-00022 Page 18
found no correlation between domestic industry performance trends and subject import
market share or underselling. 5 Id. at 24-26. Subject imports took significant market
share from the domestic industry only between 2009 and 2010, a period which
coincided with improvement in the domestic industry “by almost every measure,”
including a swing in its operating income margin from negative 15.1 percent to a
positive 3.5 percent. Id. at 24 (citing Staff Report at Tables IV-10, VI-1, C-1). Between
2010 and 2011, subject imports’ 1.4 percent gain in market share occurred “largely at
the expense of nonsubject imports.” Id. Nevertheless, the domestic industry’s income
and operating income margin fell. Id. at 25 (citing Staff Report at Tables IV-10, VI-1, C-
1). The domestic industry’s operating income and operating income margin peaked in
interim 2011, when the market share of subject imports also peaked, and fell in interim
2012, although subject import volume and market share fell as well. Id. (citing Staff
Report at Tables IV-10, VI-1, C-1).
The Commission also found that the significant underselling by subject imports,
which occurred throughout the POI, did not significantly depress or suppress the prices
of the domestic like product. Id. (citing Original Views at 30-32). During the POI, the
domestic industry increased prices on three of four pricing products, increased the
average unit value of U.S. shipments, improved the metal margin, and reduced its
COGS to net sales ratio. Id. at 25-26 (citing Original Views at 30-32). This lack of
correlation between domestic industry performance and subject import underselling
5The court affirmed these findings in JMC I. 38 CIT at __, 24 F. Supp. 3d at 1302-03,
1309-10.
Court No. 13-00022 Page 19
continued even when accounting for the prevalence and degree of underselling. Id. at
26 (citing Staff Report at Tables V-1-4, VI-1). Between 2009 and 2010, the domestic
industry’s performance improved “markedly by most measures,” even though the
prevalence of subject import underselling rose, and the margin of underselling was at its
highest point of the POI. Id. (citing Staff Report at Tables V-1-4, VI-1). Although the
prevalence of underselling increased further in 2011, the domestic industry’s
performance improved, with the exceptions of its operating income and operating
income margin. Id. (citing Staff Report at Tables V-1-4, VI-1). The domestic industry’s
operating income margin reached a peak in interim 2011, despite underselling by
subject imports in all quarterly comparisons, and that operating income margin declined
in interim 2012, even though the prevalence and margin of underselling by subject
merchandise fell. Id. (citing Staff Report at Tables V-1-4, VI-1).
The Commission examined nonsubject imports and found that they held a higher
market share, and had lower prices, than subject imports and the domestic like product
during the POI. Id. (citing Staff Report at Tables IV-3, IV-10, C-1, App. D). According to
the ITC, this data demonstrated that “nonsubject import competition was no less a factor
in the U.S. market than subject imports.” Id. at 27. For example, the only significant
decrease in the domestic industry’s operating income and operating income margin
occurred between interim 2011 and interim 2012, when subject imports lost market
share to nonsubject imports, and not the domestic industry. Id. (citing Staff Report at
Tables IV-10, V-I). The ITC thus concluded that the significant presence of competitive
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nonsubject imports in the U.S. market undermined the possibility of a link between
subject imports and the domestic industry’s performance. Id. at 26.
On the basis of this analysis, the Commission determined that the domestic
industry’s improved performance during the POI stemmed from the economic collapse
in 2009 and the subsequent, albeit tepid, recovery. Id. at 27. The presence of subject
imports, by contrast, “did not significantly impede the domestic industry’s progress.” Id.
In their comments on the Remand Views, Plaintiffs criticize the Commission’s
business cycle analysis. They do not, however, articulate a challenge to the
Commission’s methodology or contend, with any specificity, that the agency’s
determination is not supported by substantial evidence. (See, e.g., Comments at 9-10,
16.) Rather, it appears that Plaintiffs simply do not like the result of the Commission’s
analysis.
The court finds that the Commission satisfactorily accounted for the effects of the
business cycle on the domestic industry’s performance. The ITC’s analysis cites to
substantial evidence supporting its analysis of the effects of the business cycle as
distinct from those of subject imports on the domestic industry. By doing so, the
Commission “explain[ed] how it has evaluated the impact of subject imports on the
domestic industry within the context of the business cycle,” as the court ordered in JMC
I, 38 CIT at __, 24 F. Supp. 3d at 1321, and fulfilled the requirements of 19 U.S.C.
§ 1677(7)(C)(iii). See Hynix Semiconductor, Inc., 30 CIT at 1226-27, 431 F. Supp. 2d at
1344 (noting that business cycle analysis aims to ensure that positive business cycle
trends do not mask unfair trading practices). While Plaintiffs might prefer that the
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Commission had undertaken a different type of analysis with regard to the business
cycle, the question is whether the Commission’s methodology was reasonable, not
whether it was the preferred methodology of Plaintiffs. Shandong TTCA Biochemistry
Co., 35 CIT at __, 774 F. Supp. 2d at 1329. The Commission’s business cycle analysis
complied with the court’s remand order and the statute; accordingly, the analysis is
sustained.
C. Plaintiffs’ Other Arguments
1. The Impact of Product Fungibility on the Commission’s Volume
Analysis
Plaintiffs maintain that the Commission has an obligation to explain “why the
negative volume impact of subject imports alone was not sufficient to require an
affirmative determination under the statutory definition of material injury.” (Comments at
4, 9-10.) They argue that the fungibility of subject imports with the domestic like product
ensures that an increase in subject import volumes “would likely be in substantial part”
at the expense of the domestic industry, particularly its share of the U.S. market.
(Comments at 6-8 & n.8.) Plaintiffs therefore aver that the increase in the volume of
subject imports during the POI necessitates that the ITC “identif[y] the other evidence
that nullifies the significance of fungibility so as to support a negative determination.”
(Comments at 6.)
Plaintiffs already have raised, (see ECF No. 71 at 13), and the court rejected, the
argument that the fungibility of subject imports and the domestic like product, in
conjunction with the increased volume of subject imports during the POI, necessitate a
Court No. 13-00022 Page 22
negative injury determination or further explanation by the Commission. JMC I, 38 CIT
at __, 24 F. Supp. 3d at 1298-99. The court will not reconsider these issues here. Kori
Corp. v. Wilco Marsh Buggies & Draglines, Inc., 761 F.2d 649, 657 (Fed. Cir. 1985)
(“The law of the case doctrine is that courts should generally refuse to reopen what has
been decided.”) (citation and quotation marks omitted). While the court provided that
the ITC could have reconsidered this issue on remand to the extent that its prior
consideration “relied upon or took into consideration [its] prior findings” on the business
cycle or lost sales and revenue issues, JMC I, 38 CIT at __, 24 F. Supp. 3d at 1305, the
Commission was not required to reconsider the issue and Plaintiffs’ arguments do not
suggest otherwise.
2. The Correlation Between Subject Imports and the Domestic
Industry’s Financial Performance
Plaintiffs argue that the Commission’s correlation analyses of the effects of
subject import volume and prices, and the financial performance of the domestic
industry, are erroneous because the ITC ignored record evidence that indicated the
contrary. (Comments at 13-25.)
In JMC I, the court affirmed the Commission’s findings of no correlation between
subject import volume and the domestic industry’s financial performance, and subject
import prices and the domestic industry’s financial performance. 38 CIT at __, 24 F.
Supp. 3d at 1302-03, 1309-11. Plaintiffs’ arguments do not suggest that the
Commission was required to reconsider these findings on remand and, therefore, the
court will not reconsider them. Kori Corp., 761 F.2d at 657.
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Conclusion
For the reasons provided above, the court sustains the ITC’s remand results. A
judgment follows.
/s/ Mark A. Barnett
Mark A. Barnett, Judge
Dated: May 29, 2015
New York, New York