Nsk Corporation v. United States

Slip Op. 10-38

UNITED STATES COURT OF INTERNATIONAL TRADE

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:
NSK CORPORATION, et al., :
:
Plaintiffs, :
:
and :
:
FAG ITALIA S.p.A., et al., :
:
Plaintiff-Intervenors, :
: Before: Judith M. Barzilay, Judge
v. : Consol. Court No. 06-00334
:
UNITED STATES, :
:
Defendant, :
:
and :
:
THE TIMKEN COMPANY, :
:
Defendant-Intervenor. :
:
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OPINION & ORDER

[The court sustains in part and remands in part the second remand determination of the U.S.
International Trade Commission, the agency acting on behalf of Defendant.]

Dated: April 12, 2010

Crowell & Moring LLP (Matthew P. Jaffe, Robert A. Lipstein, and Carrie F. Fletcher), for
Plaintiffs NSK Corporation, NSK Ltd., and NSK Europe Ltd.
Consol. Court No. 06-00334 Page 2

Sidley Austin LLP (Neil R. Ellis and Jill Caiazzo), for Plaintiffs JTEKT Corporation and Koyo
Corporation of U.S.A.

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP (Max F. Schutzman and Andrew T.
Schutz), for Plaintiff-Intervenors FAG Italia S.p.A., Schaeffler Group USA, Inc., Schaeffler KG,
The Barden Corporation (U.K.) Ltd., and The Barden Corporation.

Steptoe & Johnson (Herbert C. Shelley and Alice A. Kipel), for Plaintiff-Intervenors SKF
Aeroengine Bearings UK and SKF USA, Inc.

United States International Trade Commission, James M. Lyons (General Counsel), Neal J.
Reynolds (Assistant General Counsel for Litigation), and David A.J. Goldfine, Office of the
General Counsel, for Defendant United States.

Stewart and Stewart (Terence P. Stewart, Eric P. Salonen, Elizabeth A. Argenti, and Philip A.
Butler), for Defendant-Intervenor The Timken Company.

Barzilay, Judge: This case returns to the court following the U.S. International Trade

Commission’s (the “Commission”) second remand determination on the sunset review from

2000 to 2005 of certain antidumping duty orders covering ball bearings from Japan and the

United Kingdom.1 Views of the Commission on Remand, Inv. Nos. 731-TA-394-A, 731-TA-399-

A (Jan. 5, 2010) (“Second Remand Determination”). In NSK Corp. v. United States, 32 CIT ___,

577 F. Supp. 2d 1322 (2008) (“NSK I”), as further directed by NSK Corp. v. United States, 32

CIT ___, 593 F. Supp. 2d 1355 (2008) (“NSK II”), and NSK Corp. v. United States, 33 CIT ___,

637 F. Supp. 2d 1311 (2009) (“NSK III”), the court affirmed in part and remanded in part the

Commission’s sunset review of the subject antidumping duty orders. While the lack of

substantial evidence undercut some of the agency’s findings, the bulk of the court’s concerns

centered on the Commission’s failure to sufficiently address certain evidence on global

1
The court presumes familiarity with the procedural history of the case.
Consol. Court No. 06-00334 Page 3

restructuring within the ball bearings industry and the significant presence of non-subject imports

in the United States market. See generally NSK III, 33 CIT ___, 637 F. Supp. 2d 1311; NSK II,

32 CIT ___, 593 F. Supp. 2d 1355; NSK I, 32 CIT ___, 577 F. Supp. 2d 1322. In August 2009,

the court remanded the Commission’s affirmative injury determination for a second time, and

asked the agency to reconsider (1) whether the Commission may cumulate ball bearings from the

United Kingdom with other subject imports, (2) the likely impact of subject imports on the

domestic industry upon revocation of the antidumping duty orders, and (3) whether the subject

imports likely would constitute more than a minimal or tangential cause of material injury to the

domestic industry in the absence of the subject orders. NSK III, 33 CIT at ___, 637 F. Supp. 2d

at 1328-29. In the Second Remand Determination, currently at issue, the Commission does not

support part of its cumulation analysis with substantial evidence, and the court therefore cannot

address the merits of the remaining two issues and, consequently, remands the case to the agency.

I. Standard of Review

The Court cannot sustain an agency determination “unsupported by substantial evidence

on the record.” 19 U.S.C. § 1516a(b)(1)(B)(i). An agency supports its findings with substantial

evidence when it offers “more than a mere scintilla” of relevant and reasonable evidence to

buttress the conclusion. See Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938). To provide

the requisite support, the agency must offer more than conjecture. See NMB Sing. Ltd. v. United

States, 557 F.3d 1316, 1319-20 (Fed. Cir. 2009) (citation omitted). Although the court does not

require perfection from the agency in its explanations, the path taken by the administrative body

“must be reasonably discernible.” Id. at 1319 (citation omitted). At a minimum, the agency must
Consol. Court No. 06-00334 Page 4

explain the standards applied and rationally connect them to the conclusions drawn from the

record. See Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed. Cir. 1984).

That evidence drawn from the record could support two opposing conclusions “does not prevent

an administrative agency’s finding from being supported by substantial evidence,” Consolo v.

Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966) (citations omitted), and the court may not displace

the agency’s choice for its own. See Universal Camera Corp. v. NLRB, 340 U.S. 474, 488

(1951). However, an administrative law touchstone requires the agency to address the evidence

from which conflicting inferences may be drawn in its analysis. See Suramerica de Aleaciones

Laminadas, C.A. v. United States, 44 F.3d 978, 985 (Fed. Cir. 1994).

II. Discussion

A. The Cumulation of Ball Bearings from the United Kingdom with Other Subject

Imports

In a sunset review, the Commission may 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. See 19 U.S.C. § 1675a(a)(7); Neenah Foundry Co. v. United States, 25 CIT 702,

708-09, 155 F. Supp. 2d 766, 772 (2001) (quoting H.R. Rep. No. 100-40, pt. 1, at 130 (1987)).2

The statute qualifies the agency’s discretion and sets forth the following conditions precedent to

2
The Federal Circuit recently reasserted the Commission’s discretion whether to
cumulate subject imports in a sunset review and the rationale supporting such a measure. Nucor
Corp. v. United States, Appeal No. 09-1234, slip op. at 3, 9 (Fed. Cir. Apr. 7, 2010). Notably,
the agency declined to cumulate certain subject imports under conditions of competition and
other facts similar to this case. See id. at 4-6.
Consol. Court No. 06-00334 Page 5

cumulation: (1) all subject reviews must have been initiated on the same day; (2) the subject

imports must likely compete with each other and with domestic like products in the United States

market; and (3) and the Commission must determine that the subject imports likely will have a

discernible adverse impact on the domestic industry. § 1675a(a)(7). With respect to the final

prong, the Commission must conclude that the likely impact will be both discernible and adverse,

though no statutory provision enumerates the factors that the Commission must consider in its

analysis. See Neenah Foundry Co., 25 CIT at 712-13, 155 F. Supp. 2d at 775. In its analysis,

“the Commission generally considers the likely volume of subject imports and the likely impact

of such imports on the domestic industry within a reasonably foreseeable time” in the absence of

the orders.3 Allegheny Ludlum Corp. v. United States, 30 CIT 1995, 2000, 475 F. Supp. 2d 1370,

1376 (2006) (citation omitted). While the impact standard may be met “easily,” the Court has

found that

a reasonable finding of likely discernible adverse impact requires that the
[Commission] establish that it is likely that [the producer] could obtain a
discernible amount of [the subject product] from somewhere – such as by
exploiting excess capacity, by shifting from domestic and internal production, or
by shifting from other export markets – and would have some incentive to sell a
discernible amount into the U.S. market.

Cogne Acciai Speciali S.p.A. v. United States, 29 CIT 1168, 1173 (2005) (not reported in F.

Supp.) (“Cogne”); accord Nippon Steel Corp. v. U.S. Int’l Trade Comm’n, 494 F.3d 1371, 1379

(Fed. Cir. 2007) (“Nippon Steel”); see also Usinor Industeel, S.A. v. United States, 27 CIT 1395,

1403 (2003) (“Usinor”) (not reported in F. Supp.), aff’d, 112 F. App’x 59 (Fed. Cir. 2004).

3
The term “likely” means “probable” or “more likely than not,” and requires more than
mere possibility. Weiland-Werke AG v. United States, 31 CIT 1884, 1890, 525 F. Supp. 2d 1353,
1361-62 (2007) (quotation marks & citations omitted), aff’d, 290 F. App’x 348 (Fed. Cir. 2008).
Consol. Court No. 06-00334 Page 6

Inherent in the language of these cases lies the requirement that the incentive likely would lure

those additional exports specifically toward the United States in the absence of the order.4

Nippon Steel, 494 F.3d at 1379 (finding that higher prices in domestic market attracted “any”

excess production of subject goods and caused “potential redirection” from other countries

specifically to United States); Cogne, 29 CIT at 1173 (noting Commission must establish that

some incentive likely would drive subject producer to direct discernible amount of subject goods

particularly to United States); Usinor, 27 CIT at 1403 (upholding affirmative cumulation

determination where Commission presented evidence that subject producers were export oriented

and had demonstrated interest in exporting their products specifically to United States).

In NSK III, the court found that the Commission failed to complete its cumulation

analysis in the first remand determination in accordance with law and to support its

determination with substantial evidence. 33 CIT at ___, 637 F. Supp. 2d at 1325-27. First, the

court asked the Commission to revisit its analysis on the large-scale restructuring within the ball

bearing market and the significant rise in non-subject imports in the United States market, id. at

___, 637 F. Supp. 2d at 1327, since the effect from those two elements “might have skewed its

analysis of the domestic industry’s level of vulnerability” and the agency’s discernible adverse

impact analysis. NSK I, 32 CIT at ___, 577 F. Supp. 2d at 1338. Next, on the question of

restructuring, the court asked the Commission (1) to reevaluate the vulnerability of the domestic

4
The standard does not require the Commission to determine that the incentive likely
would cause subject producers to export the discernible amount of the subject merchandise only
to the United States and, thus, does not foreclose the possibility that the subject producers may
divert some of the additional exports to other markets. See Nippon Steel, 494 F.3d at 1379;
Cogne, 29 CIT at 1173; Usinor, 27 CIT at 1403.
Consol. Court No. 06-00334 Page 7

industry and to consider the conflicting evidence on the record showing that companies within

the domestic industry “restructure[d] their U.S. business platform for reasons totally unrelated to

the subject imports”;5 (2) to rationally explain how declines in the domestic industry’s production

and shipment levels demonstrate vulnerability, as opposed to highlighting the natural

consequences flowing from significant restructuring within the United States ball bearing

market;6 and (3) to link certain economic indicia to the agency’s discernible adverse impact

conclusion in a rational fashion. NSK III, 33 CIT at ___, 637 F. Supp. 2d at 1325-27. With

respect to non-subject imports, the court found that the agency failed to address conflicting

record evidence that suggested large volumes of non-subject imports minimized the discernible

5
In its characterization of the court’s analysis of this issue, the Commission implies that
the court displaced the agency’s reading of the record with its own. Second Remand
Determination at 15 (“According to the Court, the record could be read to show that the reported
capacity and production declines were generally due to factors other than the subject imports.”)
(emphasis added) (citing NSK III, 33 CIT at ___, 637 F. Supp. 2d at 1325-26). To the contrary, a
full reading of the subject passage reveals that the court required the Commission to “explain
rationally why [the conflicting] evidence is insignificant to its [vulnerability] finding on the next
remand,” NSK III, 33 CIT at ___, 637 F. Supp. 2d at 1326, a charge consistent with an agency’s
duty to address conflicting evidence on the record and support its conclusions with substantial
evidence. See Suramerica de Aleaciones Laminadas, C.A., 44 F.3d at 985. In any event, the
Commission abandons its position and now concedes that “the industry was engaged in
significant restructuring during the period of review, that the resulting changes in the industry’s
capacity levels had a depressing effect on the industry’s production, shipment and sales levels,
and that these reductions were not due solely or primarily to the effects of the subject import
competition.” Second Remand Determination at 21.
6
The court also asked the Commission to explain why it focused solely on the years
falling under the most recent sunset review, given that the antidumping order has covered the
subject merchandise since 1989. NSK III, 33 CIT at ___, 637 F. Supp. 2d at 1326. On remand,
the agency reasonably explained that the period from 2000 to 2005 contained “the most probative
data on the current state of the industry” and that “the industry’s restructuring efforts had been
primarily effectuated during the second period of review.” Second Remand Determination at 25
& n.92 (citations omitted).
Consol. Court No. 06-00334 Page 8

adverse impact of the subject United Kingdom imports.7 Id. at ___, 637 F. Supp. 2d at 1327.

The agency had provided only conclusory statements that such evidence did not affect its

determination.8 Id. (citing Certain Ball Bearings and Parts Ther[e]of from Japan and the United

Kingdom, USITC Pub. 4082, Inv. Nos. 731-TA-394-A, 731-TA-399-A, at 25 (May 2009)).

On remand, the Commission confirmed the vulnerability of the domestic ball bearing

industry and concluded that the subject ball bearings from the United Kingdom likely will have a

discernible adverse impact in the absence of the order. Second Remand Determination at 21-54.

Plaintiffs NSK Corporation, NSK Ltd., and NSK Europe Ltd. (together, “NSK”) attack several

components of the Commission’s determination.9 NSK avers that the subject United Kingdom

producers have no incentive to ship additional amounts of the subject merchandise to the United

States in the absence of the order. NSK Comments 4-14. NSK bases its assertion on the United

Kingdom industry’s capacity and production capabilities and focus on markets other than the

7
The court also found that the Commission detrimentally relied on deficient conclusions
from other portions of the first remand determination in its non-subject imports analysis for
purposes of the cumulation inquiry. NSK III, 33 CIT at ___, 637 F. Supp. 2d at 1319-24, 1327
(citing Certain Ball Bearings and Parts Ther[e]of from Japan and the United Kingdom, USITC
Pub. 4082, Inv. Nos. 731-TA-394-A, 731-TA-399-A, at 25, 37-41 (May 2009)).
8
The court suggested that, as part of its analysis, the Commission might choose to
explain “how the subject imports from the United Kingdom are well suited to begin pricing their
products more aggressively in the market to recover market share once the order is revoked.”
NSK III, 33 CIT at ___, 637 F. Supp. 2d at 1327. The agency has taken this statement to embody
the court’s principal remand instruction from NSK III.
9
While Plaintiffs JTEKT Corporation and Koyo Corporation of U.S.A. (collectively,
“JTEKT”) focus their comments exclusively on the separate issue of causation and the role of
non-subject imports in that inquiry, JTEKT Comments 5-28, the companies take no position on
the Commission’s reassessment of the vulnerability and discernible adverse impact findings.
JTEKT Comments 5 n.2.
Consol. Court No. 06-00334 Page 9

United States, as well as the lack of a meaningful trend in certain price comparison data. NSK

Comments 4-14. Finally, NSK discounts the Commission’s vulnerability finding and asserts the

record shows that (1) the three largest United States producers and (2) the remaining members of

the domestic industry likely will not suffer an adverse impact by unrestrained subject imports.10

NSK Comments 14-25. Defendant-Intervenor The Timken Company (“Timken”) agrees with the

Commission’s cumulation analysis, reasoning that the agency supported its vulnerability and

discernible adverse impact analyses with substantial evidence. Timken Comments 8-19, 34-42.

On vulnerability, Timken shadows the agency’s analysis and offers additional evidence on

reductions in the industry’s production capacity to purportedly prove the weakened condition of

the United States ball bearing industry.11 Timken Comments 8-19. Timken similarly echoes the

Commission’s analysis on discernible adverse impact. Timken Comments 34-42.

1. The Vulnerability of the Domestic Ball Bearing Industry

On remand, the Commission determined that, although the domestic industry

significantly reduced its capacity levels during the period of review for reasons not primarily

related to the subject United Kingdom imports, Second Remand Determination at 26-28, the

10
Defendant-Intervenor The Timken Company (“Timken”) objects to NSK’s assertion
that “evidence of the motives and intentions of individual producers” can negate an affirmative
vulnerability finding. Timken Comments 9 n.11. The court agrees for reasons explained in this
opinion.
11
Curiously, Timken reaches for other record evidence to support the Commission’s
vulnerability finding after reminding the court in the preceding pages that “[s]o long as there is
[an] adequate basis in support of the Commission’s choice of evidentiary weight, the Court of
International Trade . . . must defer to the Commission.” Timken Comments 13 (citing Nippon
Steel Corp. v. United States, 458 F.3d 1345, 1359 (Fed. Cir. 2006)). The Commission
presumably accounted for this data in its analysis.
Consol. Court No. 06-00334 Page 10

United States ball bearings industry currently remains in a “weakened state” and, therefore, in a

vulnerable condition at the end of the period of review. Id. at 29. As a result, the agency found

the United States industry susceptible “both to the likely discernible adverse impact of the

subject U.K. imports upon revocation of the U.K. order and to the likely material impact of the

cumulated subject imports.” Id. at 26. The Commission correctly notes that it need not

determine that the subject imports caused the vulnerability of the domestic industry. Id. at 22-25

(citations omitted). The agency reasonably cites to the following economic indicia to stress that,

contrary to NSK’s claims that restructuring led to a more productive or efficient domestic

industry, the United States industry remained in a weakened state during the period of review:

(1) a 12.9% drop from 2000 to 2005 in the industry’s capacity utilization rate; (2) a 22% decline

in the industry’s productivity, measured in terms of bearings produced per hour; (3) a

deteriorated cost structure, including an increase in the ratio of the cost of goods sold relative to

net sales revenues; and (4) dwindling profit levels, which consisted of across-the-board decreases

in operating income levels and income margins, gross profits, and gross profit margins. Id. at 30-

33. The Commission also points to declines in net sales revenue and market share during the

period of review as substantial evidence of a vulnerable domestic industry.12 Id. at 35-36. In

view of this evidence and the agency’s conclusion on this issue, the Commission has provided

12
Importantly, the Commission rationally explains that, while the overall sales revenues
increased from 1985 to 2005, “the growth in the industry’s sales revenues since the original
period of investigation failed to keep up with the growth in apparent U.S. consumption in the
market between 1985 and 2005, indicating that the industry has been unable to improve its sales
revenues to track the growth in demand.” Second Remand Determination at 35-36 (footnotes
omitted).
Consol. Court No. 06-00334 Page 11

the rational connection missing from its previous determinations, and the court sustains the

agency’s vulnerability finding.13

2. The Likely Discernible Adverse Impact of United Kingdom Ball Bearings

The Commission concluded that the subject United Kingdom imports likely would

increase “to a level that would have a discernibly adverse impact” based on the subject

producers’ level of available capacity, high degree of export orientation, and continued presence

in and the price attractiveness of the United States market. Second Remand Determination at 47.

While the court appreciates the “relatively low threshold” the imports must cross to create a

discernible adverse impact, Nippon Steel, 494 F.3d at 1379 n.6 (citation omitted), the court still

must ensure that the agency supports its determination with substantial evidence, which includes

the requisite rational connection between the facts on the record and the conclusions drawn.14

Matsushita Elec. Indus. Co., 750 F.2d at 933. The agency fails to do so in the Second Remand

Determination.

13
The Commission also addresses two other relevant arguments from NSK on this issue.
First, despite NSK’s request, the agency reasonably explains that it will not consider fluctuations
in certain economic indicators at the end of the period of review as proof of a robust domestic
industry, since “the small increases in these indicia simply did not come close to offsetting the
double-digit declines in these indicia for the entire [period of review].” Second Remand
Determination at 37. Second, the Commission correctly declined NSK’s request to exclude the
financial results of three domestic producers from its vulnerability analysis, id. at 37-38, for the
agency must evaluate the entire industry, which includes “producers as a whole of a domestic
like product.” 19 U.S.C. § 1677(4)(A); see also Nevinnomysskiy Azot v. United States, 32 CIT
___, ___, 565 F. Supp. 2d 1357, 1373 (2008) (“[T]he Commission must evaluate the entire
industry and include all of the participating producers.”) (citation omitted).
14
This rational connection is especially important considering the facts of this case and
the minuscule amount of subject United Kingdom imports present in the United States market,
both in terms of market share measured by value and the quantity sold relative to the domestic
market supply.
Consol. Court No. 06-00334 Page 12

The agency’s first problem stems from its reliance on the court’s review of the

Commission’s assessment of certain price data under the “likely volume” and “likely price

effects” components of the material injury analysis to support its affirmative discernible adverse

impact conclusion. Second Remand Determination at 47 nn.177-78, 48 n.180, 49 nn.181 & 183,

53 n.201 (citing NSK I, 32 CIT at ___, 577 F. Supp. 2d at 1342-47). However, this Court has

found that the discernible adverse impact and material injury analyses “are discrete inquiries” and

that the agency may not rely on conclusions from one analysis to prove another. Weiland-Werke

AG, 31 CIT at 1895, 525 F. Supp. 2d at 1365. Nor does the court’s review of a separate issue

with similar factors obviate the agency’s duty to support its conclusions on separate claims with

substantial evidence. Matsushita Elec. Indus. Co., 750 F.2d at 933. Therefore, the Commission

must separately discuss the pricing data in the context of a cumulation analysis on remand.

The Commission also relies on inadequate evidence in support of its analysis. First, the

Commission notes that while the subject producers operate near maximum capacity, the United

Kingdom producers’ available capacity constitutes “more than ten-fold” the number of subject

bearings they shipped to the United States in 2005. Second Remand Determination at 45. The

agency implicitly assumes that the subject United Kingdom producers would ship all excess

capacity to the United States in the absence of the order, but it does not provide evidence for its

assumption. Second Remand Determination at 45 & n.171. The agency might have based its

assumption on the price attractiveness of the domestic market, but that would have been in error

if, as seems to be the case, the Commission relied on conclusions reached in the court’s review of

a different issue, as explained in the previous paragraph. If, on the other hand, the Commission
Consol. Court No. 06-00334 Page 13

used the subject producers’ presence in the domestic market and their export orientation as

support for its finding, that reliance also fails for the reasons explained below. Either way, the

Commission failed to provide substantial evidence to support its conclusion.

The Commission fails to explain rationally how United Kingdom ball bearings would

compete with domestic ball bearings and non-subject imports in the absence of the order and,

thus, likely reach the requisite level of impact.15 First, the agency reasonably notes the fungibility

between the domestic, United Kingdom, and non-subject ball bearings. Id. at 43. Second, as

additional proof that the United Kingdom imports would compete aggressively on price, the

Commission claims that those imports “have maintained a consistent and stable presence in the

market during the first and second period of review, shipping between $8.2 million and $17.2

million worth of bearings to the United States during both periods.” Id. (citing See Certain

Bearings from China, France, Germany, Italy, Japan, Singapore, and the United Kingdom:

Investigation Nos. 731-TA-344, 391-A, 392-A and C, 393-A, 394-A, 396, and 399-A (Second

Review), USITC Pub. 3876 (Aug. 2006) (“Staff Report”) at Table BB-I-1). The court questions

the reasonableness of the Commission’s statement, especially given that the agency fails to

15
The Commission cites to certain price comparison data to show that United Kingdom
imports would be able to compete more aggressively on price with the domestic and non-subject
imports to obtain market share in the absence of the order. Second Remand Determination at 49-
52. The agency relies on this data despite the court’s explicit statements in NSK I that it could
“discern no meaningful trend from this information” and that the Commission based its
conclusions on “a deficient sample.” 32 CIT at ___, 577 F. Supp. 2d at 1347; see also Second
Remand Determination at 49 n.184 (“As the Court correctly pointed out in NSK I, the
Commission . . . had price comparison data for the U.K. imports for [only] one of the ten price
comparison products reviewed in the Commission’s report in the sunset review.”) (emphasis
added) (citation omitted). The court declined to find that the pricing data supplied the requisite
rational basis to support the agency’s findings in NSK I, and the Commission does not convince
the court to decide otherwise in its review of the second remand determination.
Consol. Court No. 06-00334 Page 14

account for the dramatic fluctuation and strong downward trend in the value of the subject United

Kingdom ball bearings sold in the United States since the first period of review. Staff Report at

Table BB-I-1. The significant downward change in the subject imports’ market share in terms of

value since the first period of review – between 20% and 40% – also undercuts the

Commission’s rationale that the subject United Kingdom imports maintained a stable presence in

the domestic market and, thus, would compete on price with domestic ball bearings and non-

subject imports. Second Remand Determination at 43 n.162. The Commission also suggests that

because the United Kingdom producers sold the subject imports in most end-use sectors and

major sales channels of the domestic market, they likely will compete more aggressively on

price. Id. at 44. The court is not persuaded. Presence alone in numerous channels of the United

States market does not prove that, in the absence of the order, the subject goods likely would

compete with domestic ball bearings and non-subject imports in the domestic market or that the

subject producers likely would use those channels. The same gap in logic plagues the

Commission’s reliance on the export-oriented character of the United Kingdom industry as

additional proof that the subject goods likely would compete on price. Orientation alone does

not demonstrate a likelihood of competition, and the Commission’s reliance on such evidence,

together with its other points, does not raise the agency’s justification to the requisite rational

connection needed for the court to sustain the finding.

Finally, the Commission does not support with substantial evidence its conclusion that

the United Kingdom industry likely would export an additional discernible amount of its

products to the United States upon revocation, especially in view of the subject industry’s
Consol. Court No. 06-00334 Page 15

increased focus “on products of ‘particular interest’ to the European market.” Id. at 44 n.166, 47

n.178. The agency bases its conclusion on record evidence that purportedly shows that “U.K.

imports retain a stable presence in the U.S. market and are sold in most of the end use sectors of

the market.” Id. at 44 n.166 (citing Staff Report at Table BB-I-10). The agency does not support

with substantial evidence its conclusions on the United Kingdom’s market share and presence in

the United States market for reasons previously explained, and its reliance on the same evidence

does not cure its conclusion on this point. The agency subsequently supplies a laundry-list of

other evidence to purportedly justify its conclusion. First, the agency points to similarities in the

United Kingdom and domestic industries’ sales to the automotive and customs bearings market.

Second Remand Determination at 44 n.166. That the two industries may sell to similar

subsections of their respective markets does not necessarily demonstrate that United Kingdom

producers likely would shift their focus from Europe to the United States. The court cannot

discern, without more, the rational connection between the record evidence and the agency’s

conclusion on this point. Second, the Commission also relies on certain evidence from the three

largest producers in the United Kingdom to support its finding: the producer with the greatest

amount of excess capacity in 2005 continued to ship the subject merchandise to the United States

during the period of review and another had excess capacity that “could” enable it to do so in the

future, though the agency agreed that the third company was not likely to “take advantage of

revocation” of the order. Id. at 47 n.178 (citing Staff Report at Table BB-IV-3). The agency

again presumes, without a rational basis and relying on impermissible conjecture, that the United

Kingdom producers would divert all excess capacity to the United States market, and the
Consol. Court No. 06-00334 Page 16

Commission’s use of the term “could” denotes mere possibility, rather than the requisite

probability needed to satisfy the likely standard. The evidence offered by the Commission does

not rise above a speculative level and, therefore, does not show that the subject United Kingdom

imports (1) are more likely than not to focus on the United States market and (2) likely will have

a discernible adverse impact on the domestic industry.

In sum, the court finds that the Commission supports its vulnerability finding with

substantial evidence. However, as to the remainder of its cumulation analysis, the Commission

does not support with substantial evidence its conclusion that the subject imports from the United

Kingdom likely would have a discernible adverse impact in the absence of the antidumping duty

order. More specifically, the Commission fails to provide the requisite rational connection which

demonstrates some incentive likely would draw a discernible amount of the subject goods

specifically to the United States market in the absence of the order. See Nippon Steel, 494 F.3d

at 1379; Cogne, 29 CIT at 1173; Usinor, 27 CIT at 1403. The court does not believe that the

existing record, taken as a whole, can support an affirmative discernible adverse impact finding.

The Commission may reopen the record and obtain additional data on this issue in the next

remand proceeding, if it so chooses.

B. Additional Issues: The Likely Impact of Subject Imports on the Domestic Industry &

The Causation Inquiry

The Commission completes its redetermination of the likely impact and causation issues

under the assumption that it properly cumulated ball bearings from the United Kingdom with

other subject imports. Second Remand Determination at 64-83. The question of likely impact
Consol. Court No. 06-00334 Page 17

asks the agency to answer whether the cumulated subject imports likely will have a significant

adverse impact on the vulnerable domestic industry in the absence of the antidumping duty

orders. The causation inquiry requires the Commission to determine whether the cumulated

subject imports constitute more than a minimal or tangential cause of injury to the domestic

industry which will likely continue or recur in the absence of the antidumping duty orders. In

completing this task, the facts of this case necessitate that the Commission confirm that subject

imports likely will reach the requisite level of causation despite the significant presence of, and

seemingly impenetrable barrier imposed by, non-subject imports in the United States market.

Non-subject imports have “become a significant and price-competitive factor” in the United

States ball bearings market, amply increased their market share in terms of value at the expense

of domestic and subject ball bearings, and have undersold the domestic like product and subject

imports in at least two-thirds of the possible price comparisons. Id. at 69-70. In view of this

data, the non-subject imports may prevent the subject imports from achieving the requisite level

of causation and, therefore, serve as an impenetrable barrier that precludes the agency from

affirmatively finding injury in this sunset review. The Commission should address this

information as part of the causation inquiry. However, because the court finds that the agency

did not support its cumulation determination with substantial evidence, it cannot address the

merits of these remaining issues.

The court appreciates the Commission’s continued vigor in resolving these issues and the

diligence with which it has addressed these difficult questions thus far. Indeed, assuming that the

agency had correctly cumulated the subject imports, the Commission’s analysis of the two
Consol. Court No. 06-00334 Page 18

remaining issues nearly resembles the kind of substantial evidence needed for the court to sustain

an agency determination. When it addresses these two issues on remand, the Commission should

avoid the use of deficient price comparison data and certain conclusions that the court found

unsupported by substantial evidence in the agency’s cumulation analysis of the Second Remand

Determination. See, e.g., id. at 72, 74, 77.

III. Conclusion

For the foregoing reasons, it is

ORDERED that the court SUSTAINS in part and REMANDS in part the Commission’s

Second Remand Determination for further proceedings consistent with this opinion. Specifically,

it is

ORDERED that, with respect to the cumulation analysis, the court SUSTAINS the

Commission’s conclusion that the domestic industry is in a weakened and, therefore, a vulnerable

condition. However, the court REMANDS the discernible adverse impact analysis to the

agency. In the third remand determination, the Commission must demonstrate that some

incentive likely would draw a discernible amount of the subject United Kingdom goods

specifically to the United States market in the absence of the order. Because the court does not

believe the existing record, taken as a whole, can support an affirmative discernible adverse

impact finding, the Commission may reopen the record and obtain additional data on the issue; it

is further
Consol. Court No. 06-00334 Page 19

ORDERED that the Commission must decide whether the cumulated subject imports

likely will have a significant adverse impact on the vulnerable domestic industry in the absence

of the antidumping duty orders; it is further

ORDERED that the Commission must determine whether the cumulated subject imports

constitute more than a minimal or tangential cause of injury to the domestic industry that will

likely continue or recur in the absence of the antidumping duty orders, given the significant

presence of, and seemingly impenetrable barrier imposed by, non-subject imports in the United

States market; it is further

ORDERED that, in completing its analysis of the causation and likely impact inquires on

remand, the Commission must address the court’s concerns expressed in NSK III over the

agency’s redetermination of those issues; and it is further

ORDERED that the Commission shall provide a status report to the court within 30 days

from the date of this opinion that explains whether the agency will re-open the record on the

cumulation issue. The parties shall also file a joint scheduling order consistent with Court and

Chambers rules at that time.

Dated: April 12, 2010 /s/ Judith M. Barzilay
New York, New York Judith M. Barzilay, Judge