Slip Op. 11-52
UNITED STATES COURT OF INTERNATIONAL TRADE
JTEKT CORPORATION and KOYO
CORPORATION OF U.S.A., et al.,
Plaintiffs,
v.
Before: Timothy C. Stanceu, Judge
UNITED STATES,
Consol. Court No. 07-00377
Defendant,
and
THE TIMKEN COMPANY,
Defendant-Intervenor.
OPINION AND ORDER
[Ordering relief in the form of a remand on certain of plaintiffs’ claims contesting the final
results of the seventeenth administrative reviews of antidumping duty orders on ball bearings and
parts thereof]
Dated: May 5, 2011
Sidley Austin, LLP (Neil R. Ellis and Jill Caiazzo) for plaintiffs JTEKT Corporation and
Koyo Corporation of U.S.A.
Baker & McKenzie, LLP (Washington, District of Columbia) (Kevin J. Sullivan and
Kevin M. O’Brien) for plaintiffs FYH Bearing Units USA, Inc. and Nippon Pillow Block
Company Ltd.
Crowell & Moring, LLP (Matthew P. Jaffe) for plaintiffs NSK Corporation, NSK Ltd.,
and NSK Precision America, Inc.
Baker & McKenzie, LLP (Kevin M. O’Brien, Christine M. Streatfeild, Diane A.
MacDonald, and Joseph W. LaFramboise) for plaintiffs American NTN Bearing Manufacturing
Corp., NTN Bearing Corporation of America, NTN Bower Corporation, NTN Corporation, NTN
Driveshaft, Inc., and NTN-BCA Corporation.
Consol. Court No. 07-00377 Page 2
Crowell & Moring, LLP (Daniel J. Cannistra and Alexander H. Schaefer) for plaintiffs
Aisin Seiki Company, Ltd. and Aisin Holdings of America, Inc.
Riggle & Craven (David A. Riggle and Shitao Zhu) for plaintiff Asahi Seiko Co., Ltd.
O’Melveny & Myers, LLP (Nausheen Hassan and Greyson L. Bryan) for plaintiffs Nachi
Technology, Inc., Nachi-Fujikoshi Corporation, and Nachi America, Inc.
Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M.
McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States
Department of Justice (Loren M. Preheim and Claudia Burke); Joanna Theiss, Aaron Kleiner,
Thomas Beline, Brian Soiset, and Deborah R. King, Office of Chief Counsel for Import
Administration, United States Department of Commerce, of counsel, for defendant.
Stewart and Stewart (Geert M. De Prest, Terence P. Stewart, William A. Fennell, and
Lane S. Hurewitz) for plaintiffs and defendant-intervenor The Timken Company.
Stanceu, Judge: JTEKT Corporation, formerly Koyo Seiko Company, Ltd.,1 and Koyo
Corporation of U.S.A. (collectively, “JTEKT”) brought an action under section 201 of the
Customs Court Act of 1980, 28 U.S.C. § 1581(c) (2006), to contest the final determination of the
United States Department of Commerce (“Commerce” or the “Department”) in the seventeenth
administrative reviews (“AFBs 17 reviews” or “AFBs 17”) of antidumping duty orders on ball
bearings and parts thereof (“subject merchandise”) from France, Germany, Italy, Japan,
Singapore, and the United Kingdom. Summons 1; Ball Bearings & Parts Thereof from France,
Germany, Italy, Japan, Singapore, & the United Kingdom: Final Results of Antidumping Duty
Admin. Reviews & Rescission of Review in Part, 72 Fed. Reg. 58,053, 58,053 (Oct. 12, 2007)
(“Final Results”); Issues & Decision Mem. for the Antidumping Duty Admin. Reviews of Ball
Bearings & Parts Thereof from France, Germany, Italy, Japan, Singapore, & the United
1
Notice of Final Results of Antidumping Duty Changed-Circumstances Review: Ball
Bearings & Parts Thereof from Japan, 71 Fed. Reg. 26,452, 26,452-53 (May 5, 2006) (finding
that JTEKT is the successor-in-interest to Koyo Seiko Company, Ltd.) (“JTEKT-Koyo Successor
Notice”).
Consol. Court No. 07-00377 Page 3
Kingdom for the Period of Review May 1, 2005, through April 30, 2006, at 2 (Oct. 4, 2007)
(“Decision Mem.”). The reviews applied to imports of subject merchandise made during the
period of May 1, 2005 through April 30, 2006 (“period of review” or “POR”). Final Results,
72 Fed. Reg. at 58,053.
Upon the motion of defendant-intervenor The Timken Company (“Timken”) to
consolidate, the court consolidated JTEKT’s action with six other cases. Timken US
Corporation’s Mot. to Consolidate 1 (“Mot. to Consolidate”). The six other groups of plaintiffs
in the consolidated cases (referred to in this Opinion and Order collectively with their affiliates)
are Asahi Seiko Co., Ltd. (“Asahi”); Aisin Seiki Company, Ltd. and Aisin Holdings of America,
Inc. (collectively “Aisin”); Nachi Technology, Inc., Nachi-Fujikoshi Corporation, and Nachi
America, Inc. (collectively “Nachi”); FYH Bearing Units USA, Inc. and Nippon Pillow Block
Company Ltd. (collectively, “NPB”); American NTN Bearing Manufacturing Corp., NTN
Bearing Corporation of America, NTN Bower Corporation, NTN Corporation, NTN Driveshaft,
Inc., and NTN-BCA Corporation (collectively, “NTN”); and NSK Corporation, NSK Ltd., and
NSK Precision America, Inc. (collectively, “NSK”).
Before the court are the motions of each of the seven plaintiffs for judgment on the
agency record, submitted under USCIT Rule 56.2. Also before the court are three other motions.
Defendant-intervenor moves to vacate the preliminary injunction against the liquidation of
entries with respect to Nachi. Timken’s Mot. to Vacate Prelim. Inj. with respect to Nachi
(“Timken Mot.”). NTN filed a motion for a stay pending further administrative action on, or
alternatively for further briefing on, the zeroing issue, which motion is opposed by defendant and
defendant-intervenor. Pl.’s Mot. to Stay Further Proceedings Pending the Finality of New
Consol. Court No. 07-00377 Page 4
Antidumping Margin Methodology or, in the Alternative, Mot. to Allow Further Briefing.
(“NTN Mot. to Stay”). NTN filed a motion to reply to defendant’s and defendant-intervenor’s
opposition. Pl.’s Am. Unopposed Mot. for Leave to File a Reply to Def.’s Opp’n to the Mot. to
Stay (“NTN Mot. to Reply”).
Aisin, Asahi, JTEKT, Nachi, NPB, NSK, and NTN (collectively, “plaintiffs”) assert
claims contesting various decisions and determinations in the Final Results that affect the
antidumping duty order involving Japan. The court addresses these claims in the respective
sections of Part II of this Opinion and Order, as follows: (A) claims of JTEKT, NPB, NTN,
Aisin, and Nachi challenging the application of Commerce’s “zeroing” methodology to non-
dumped sales; (B) claims challenging the Department’s revised model-match methodology, the
adoption of which JTEKT, NPB, NSK, and NTN oppose generally and the specific application of
which JTEKT, NPB, NSK, NTN, and Asahi challenge in certain respects; (C) NSK’s claim that
Commerce unlawfully deducted certain benefit expenses when determining the constructed
export price of NSK’s subject merchandise; and (D) the resolution by Commerce in a
redetermination upon voluntary remand (“First Remand Redetermination”) of an issue affecting
the constructed export price (“CEP”) for certain U.S. sales of Aisin’s merchandise. Defendant
and defendant-intervenor oppose plaintiffs’ Rule 56.2 motions on various grounds.
The court remands the Final Results for reconsideration in response to the claims of the
five plaintiffs who challenge the Department’s use of the zeroing methodology. The court also
directs that Commerce reconsider the determinations challenged in certain claims by JTEKT,
NPB and NTN. The court affirms the decision made in the First Remand Redetermination
Consol. Court No. 07-00377 Page 5
pertaining to the CEP for certain U.S. sales of Aisin’s merchandise. The court denies Timken’s
motion to vacate the preliminary injunction with respect to Nachi.
I. BACKGROUND
The court sets forth below the procedural history of the administrative and judicial
proceedings in general terms common to all plaintiffs. Additional background information
specific to the individual claims is presented in Part II of this Opinion and Order.
A. Administrative Proceedings
On May 15, 1989, Commerce issued antidumping duty orders on imports of ball bearings
from France, Germany, Italy, Japan, and the United Kingdom.2 On July 3, 2006, Commerce
initiated the seventeenth set of administrative reviews of these orders. Initiation of Antidumping
& Countervailing Duty Admin. Reviews, 71 Fed. Reg. 37,892, 37,900 (July 3, 2006); Decision
Mem. 2. Commerce issued the preliminary results of the administrative reviews (“Preliminary
Results”) on June 6, 2007. Ball Bearings & Parts Thereof from France, Germany, Italy, Japan,
Singapore, & the United Kingdom: Prelim. Results of Antidumping Duty Admin. Reviews &
Intent to Rescind Review in Part, 72 Fed. Reg. 31,271 (June 6, 2007) (“Prelim. Results”). On
October 12, 2007, Commerce issued the Final Results and incorporated by reference therein an
2
Antidumping Duty Orders: Ball Bearings, Cylindrical Roller Bearings, Spherical Plain
Bearings, & Parts Thereof From France, 54 Fed. Reg. 20,902 (May 15, 1989); Antidumping
Duty Orders: Ball Bearings, Cylindrical Roller Bearings, & Spherical Plain Bearings & Parts
Thereof From the Federal Republic of Germany, 54 Fed. Reg. 20,900 (May 15, 1989);
Antidumping Duty Orders: Ball Bearings & Cylindrical Roller Bearings, & Parts Thereof From
Italy, 54 Fed. Reg. 20,903 (May 15, 1989); Antidumping Duty Orders: Ball Bearings,
Cylindrical Roller Bearings, & Spherical Plain Bearings, & Parts Thereof From Japan, 54 Fed.
Reg. 20,904 (May 15, 1989); Antidumping Duty Orders & Amendments to the Final
Determinations of Sales at Less Than Fair Value: Ball Bearings, & Cylindrical Roller Bearings
& Parts Thereof From the United Kingdom, 54 Fed. Reg. 20,910 (May 15, 1989).
Consol. Court No. 07-00377 Page 6
internal issues and decision memorandum (“Decision Memorandum”) containing the
Department’s analysis of issues raised by interested parties. Final Results, 72 Fed. Reg.
at 58,054-55; Decision Mem. In the Final Results, Commerce assigned plaintiffs the following
dumping margins: Aisin, 6.15%; Asahi, 1.28%, JTEKT, 15.01%; Nachi, 11.46%; NPB, 26.89%;
NSK, 3.66%; and NTN, 7.76%. Final Results, 72 Fed. Reg. at 58,054.
B. Judicial Review in the Consolidated Actions
JTEKT commenced this action on October 12, 2007. Summons; Compl. On
November 7, 2007, the court granted the consent motion of Timken to intervene on behalf of
defendant. Order, Nov. 7, 2007. Upon defendant-intervenor’s motion, the court ordered
consolidation under Consolidated Court No. 07-00377 of JTEKT Corp. v. United States,
No. 07-00377, NSK Ltd. v. United States, No. 07-00387, Aisin Seiki Co. v. United States, No. 07-
00392, NTN Corp. v. United States, No. 07-00395, Nippon Pillow Block Co. v. United States,
No. 07-00398, Asahi Seiko Co. v. United States, No. 07-00409, and Nachi-Fujikoshi Corp. v.
United States, No. 07-00412. Order, July 29, 2008; Mot. to Consolidate 1. JTEKT, NPB, NSK,
NTN, Nachi, and Asahi each filed a motion for judgment upon the agency record in November
2008, which motions defendant and defendant-intervenor oppose in the entirety.3
3
Mem. of P. & A. in Supp. of Mot. of Pls. JTEKT Corp. & Koyo Corp. of U.S.A. for J.
on the Agency R. (“JTEKT Mem.”); Mem. in Supp. of the Mot. for J. upon the Agency R.
Submitted on behalf of Pls. Nippon Pillow Block Co. Ltd & FYH Bearing Units USA, Inc.
(“NPB Mem.”); Mem. of P. & A. in Supp. of NSK’s Mot. for J. on the Agency R. (“NSK
Mem.”); Mem. in Supp. of Mot. for J. on the Agency R. Submitted on behalf of Pls. NTN Corp.,
NTN Bearing Corp. of Am., Am. NTN Bearing Mfg. Corp., NTN-BCA Corp., NTN-Bower
Corp., & NTN Driveshaft, Inc. (“NTN Mem.”); Mem. in Supp. of a Mot. for J. on the Agency R.
Submitted by Pl. Asahi Seiko Co., Ltd., Pursuant to Rule 56.2 of the Rules of the U.S. Ct. of Int’l
Trade (“Asahi Mem.”); Br. of Pls. Nachi-Fujikoshi Corp., Nachi America, Inc. & Nachi
Technology, Inc. in Supp. of Rule 56.2 Mot. for J. on the Agency R. (“Nachi Mem.”); Def.’s
(continued...)
Consol. Court No. 07-00377 Page 7
The court held an in-camera oral argument on August 20, 2009. On September 3, 2009,
upon a consent motion for voluntary remand filed by defendant, the court ordered Commerce to
reconsider the methodology it used to calculate the constructed export price for Aisin. Order,
Sept. 3, 2009 (“Aisin Remand Order”). Commerce submitted the First Remand Redetermination
on December 16, 2009, as to which Aisin raised no objection and defendant-intervenor took no
position. Redetermination Pursuant to Remand (“First Remand Redetermination”); Aisin’s
Comments on the Dec. 16, 2009 U.S. Dep’t of Commerce Remand Determination 1 (“Aisin
Comments”); The Timken Co.’s Comments on the Dec. 16, 2009 U.S. Dep’t of Commerce
Remand Redetermination 1 (“Timken Comments”).
Timken filed its motion to vacate the injunction against liquidation as to Nachi on
December 7, 2010. Timken Mot. NTN filed its motion to stay or, alternatively, for further
briefing, on January 28, 2011. NTN Mot. to Stay. On February 28, 2011, NTN filed its motion
for leave to file a reply to Timken’s and defendant’s opposition to its motion to stay or for further
briefing. NTN Mot. to Reply.
II. DISCUSSION
The court exercises jurisdiction pursuant to 28 U.S.C. § 1581(c), under which the Court
of International Trade is granted exclusive jurisdiction of any civil action commenced under
section 516A of the Tariff Act of 1930 (“Tariff Act” or the “Act”), 19 U.S.C. § 1516a (2006).
The court reviews the Final Results on the basis of the agency record. See Customs Court Act,
§ 301, 28 U.S.C. § 2640(b) (2006); 19 U.S.C. § 1516a(b)(1)(B)(I) (2006). Upon such review, the
3
(...continued)
Opp’n to Pls.’ Mots. for J. on the Agency R. (“Def. Resp.”); Resp. of the Timken Co. & Timken
US LLC to the Rule 56.2 Mots. of JTEKT Corp., et al. (“Def.-Intervenor Resp.”).
Consol. Court No. 07-00377 Page 8
court must “hold unlawful any determination, finding, or conclusion found,” 19 U.S.C.
§ 1516a(b)(1), “to be unsupported by substantial evidence on the record, or otherwise not in
accordance with law.” Id. § 1516a(b)(1)(B)(I). “Substantial evidence is more than a mere
scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.” Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938).
A. Challenges to the Department’s Zeroing Procedure
Commerce applied its “zeroing” methodology in AFBs 17, under which it assigned to
U.S. sales made above normal value a dumping margin of zero, instead of a negative margin,
when calculating weighted average dumping margins. Decision Mem. 8. JTEKT, NPB, NTN,
Aisin, and Nachi challenge the use of this zeroing methodology in AFBs 17, arguing that use of
the zeroing methodology in an administrative review violates the U.S. antidumping laws and is
inconsistent with international obligations of the United States.
Asahi also included in its complaint a claim challenging the use of zeroing. Asahi
declined to raise any issue as to zeroing in its Rule 56.2 motion for judgment upon the agency
record but then attempted to raise the zeroing issue in its reply brief. Asahi Compl. ¶¶ 12-16;
Asahi Mem.; Reply Br. in Supp. of the Mot. for J. on the Agency R. Submitted by Pl. Asahi
Seiko Co., Ltd., Pursuant to Rule 56.2 of the Rules of the U.S. Ct. of Int’l Trade 5-6 (“Asahi
Reply”). In these circumstances, no motion for judgment on the agency record is before the court
on the zeroing claim in Asahi’s complaint, which claim is now abandoned. See USCIT
Rule 56.2(c).
Nachi argues that the United States Court of Appeals for the Federal Circuit (“Court of
Appeals”), although upholding the Department’s use of zeroing in administrative reviews, did
Consol. Court No. 07-00377 Page 9
not conclude that zeroing is “the correct application of the statute” and, therefore, that this court
must consider the issue anew. Nachi Mem. 9 (emphasis added) (“Thus, even though the Federal
Circuit has found the practice of zeroing a reasonable application, it has been silent as to whether
zeroing is the correct application of the statute, and this Court must answer that question as a
matter of first impression.”). Nachi argues, further, that Commerce’s interpretation of the statute
to allow zeroing in administrative reviews merits no deference because it is an inconsistent
interpretation of the same language that applies in investigations, in which Commerce no longer
applies zeroing. Nachi Mem. 10.
Other plaintiffs urge the court to consider the effect of decisions of the World Trade
Organization (“WTO”) holding zeroing impermissible under the WTO-related obligations of the
United States. JTEKT Mem. 37-38; NPB Mem. 20-21; NTN Mem. 4-8. They cite statements by
the United States that the United States intends to comply with its WTO obligations, JTEKT
Mem. 38; NPB Mem. 21-22; NTN Mem. 5-8, and challenge what they view as failure by the
United States to implement certain adverse WTO decisions, NPB Mem. 22; NTN Mem. 8-9;
Nachi Mem. 6-9. NTN urges the court to “take this opportunity to hold that the United States
has, in fact, repudiated the practice of zeroing and to disallow its use in this review.” NTN
Mem. 8. Similarly, Aisin argues that because Commerce “acknowledged the fault of its zeroing
methodology by agreeing to change its practice in investigations,” Commerce should implement
the decision of the WTO “by eliminating zeroing in the context of this administrative review.”
Mem. of Law of Pls. Aisin Seiki Co., Ltd. & Aisin Holdings of Am., Inc. in Supp. of Rule 56.2
Mot. for J. on the Agency R. 12-13 (“Aisin Mem.”); see also JTEKT Mem. 37-38. JTEKT and
Consol. Court No. 07-00377 Page 10
NPB urge the court to remand the Final Results to allow Commerce to consider implementing a
WTO decision adverse to zeroing. JTEKT Mem. 39; NPB Mem. 22.
The Court of Appeals, in various circumstances, previously has upheld the Department’s
use of zeroing in administrative reviews. SKF USA Inc. v. United States, 630 F.3d 1365, 1375
(Fed. Cir. 2011) (“SKF II”); Koyo Seiko Co. v. United States, 551 F.3d 1286, 1290-91 (Fed. Cir.
2008) (“Koyo III”); NSK Ltd. v. United States, 510 F.3d 1375, 1379-80 (Fed. Cir. 2007).
Drawing a factual distinction with prior holdings, the Court of Appeals recently held that the
final results of an administrative review in which zeroing was used must be remanded to direct
Commerce to explain its interpreting the language of 19 U.S.C. § 1677(35) inconsistently with
respect to the use of zeroing in investigations and the use of zeroing in administrative reviews.
Dongbu Steel Co. v. United States, 635 F.3d 1363, 1371-73 (Fed. Cir. 2011). Basing its holding
on the lack of a satisfactory explanation, the Court of Appeals held that the judgment of the
Court of International Trade affirming the use of zeroing in the administrative review at issue in
that case must be set aside. The Court of Appeals reasoned that “[a]lthough 19 U.S.C.
§ 1677(35) is ambiguous with respect to zeroing and Commerce plays an important role in
resolving this gap in the statute, Commerce’s discretion is not absolute” and concluded that
“Commerce must provide an explanation for why the statutory language supports its inconsistent
interpretation.” Id. at 1372. The Court of Appeals commented that “[i]t may be that Commerce
cannot justify using opposite interpretations of 19 U.S.C. § 1677(35) in investigations and in
administrative reviews.” Id. at 1373. The court concludes a remand is appropriate in this case to
direct Commerce to provide the explanation contemplated by the Court of Appeals in Dongbu.
On remand, the court will direct Commerce to reconsider and modify its decision to apply
Consol. Court No. 07-00377 Page 11
zeroing in AFBs 17 or, alternatively, to set forth an explanation of how the language of the
statute as applied to the zeroing issue may be construed in one way with respect to investigations
and the opposite way with respect to administrative reviews.
Referring to a Federal Register notice published late last year by the Department on the
discontinuation of zeroing in administrative reviews, NTN moves for a stay of this case pending
a final notice of the Department’s decision to eliminate zeroing in administrative reviews, or,
alternatively, the opportunity to submit additional briefing on the zeroing issue. NTN Mot. to
Stay 1-2 (citing Antidumping Proceedings: Calculation of the Weighted Average Dumping
Margin and Assessment Rate in Certain Antidumping Proceedings, 75 Fed. Reg. 81,533
(Dec. 28, 2010) (“Proposal”). Defendant and defendant-intervenor oppose this motion. Def.’s
Opp’n to Mot. to Stay; The Timken Co.’s Opp’n to NTN’s Mot. for Stay, or, Alternatively,
Further Briefing. In the notice on which NTN grounds its motion, Commerce proposes certain
changes to the method by which it calculates weighted-average margins in periodic and sunset
reviews, in response to adverse WTO decisions concluding that zeroing is contrary to the WTO
Antidumping Agreement. Proposal, 75 Fed. Reg. at 81,534-35. With respect to periodic
reviews, the Department proposes to “modify its methodology for calculating weighted average
margins of dumping and assessment rates to provide offsets for non dumped comparisons while
using monthly average-to-average comparisons in reviews in a manner that parallels the WTO-
consistent methodology the Department currently applies in original investigations.” Id.
at 81,534. Commerce proposes to amend its regulations, codified at 19 C.F.R. § 351.414, to
change its preference from the use of average-to-transaction comparisons in periodic reviews to
the use of monthly average-to-average comparisons. Id. at 81,534-35.
Consol. Court No. 07-00377 Page 12
Because the court is remanding for further explanation the Department’s decision to apply
the zeroing methodology in AFBs 17, the court sees no need for the stay sought by NTN. And
because the parties will have the opportunity to comment on the results the Department issues in
response to the remand, the court does not perceive the need for other, separate briefing on the
zeroing issue at this time. For these reasons, the court will deny NTN’s motion for a stay or,
alternatively, for additional briefing, and it also will deny as moot NTN’s motion for leave to file
a reply to defendant’s and defendant-intervenor’s opposition to that motion.
Additionally, the court will deny Timken’s motion to vacate the preliminary injunction of
the liquidation of entries with respect to Nachi. That motion is premised on Timken’s argument
that the Court of Appeals consistently has upheld the Department’s use of zeroing in
administrative reviews. Timken Mot. 1, 4. As discussed above, the Court of Appeals in
Dongbu, viewing the Department’s statutory construction as inadequately explained, has now
held that a judgment affirming the final results of an administrative review in which zeroing was
applied must be set aside.
B. The Application of the Model-Match Methodology in these Administrative Reviews
To determine a dumping margin, Commerce compares the U.S. price of the subject
merchandise with the price of comparable merchandise (the “foreign like product”) in the home
market. 19 U.S.C. § 1677b (2006). Commerce first attempts to match sales of the subject
merchandise with sales of merchandise in the “home” market (i.e., the actual home market or
another comparison market) that is “identical” to the subject merchandise. 19 U.S.C.
§ 1677(16)(A) (2006). In the absence of identical merchandise, Commerce attempts to match a
sale of subject merchandise in the United States with a home market sale of similar merchandise.
Consol. Court No. 07-00377 Page 13
See id. § 1677(16)(B)-(C). If Commerce finds no sales of similar merchandise in the home
market, Commerce will determine normal value based on the constructed value of the subject
merchandise. Id. § 1677b(a)(4).
For the first fourteen administrative reviews of the subject merchandise, Commerce
identified similar merchandise using a model-match methodology (the “family” model-match
methodology) in which it compared bearings according to eight characteristics. Issues &
Decision Mem. for the Antidumping Duty Admin. Reviews of Ball Bearings & Parts Thereof from
France, Germany, Italy, Japan, Singapore, & the United Kingdom for the Period of Review
May 1, 2003, through April 30, 2004, 19-26 (Sept. 16, 2005) (“AFBs 15 Decision Mem.”).
Commerce grouped in the same “family” the bearings that matched according to those eight
characteristics for purposes of determining a foreign like product. Id. In the fifteenth
administrative reviews of the bearings orders (“AFBs 15”), Commerce adopted the current
methodology (“new model-match methodology”), in which Commerce applies a multi-step
process. Id.; see Ball Bearings & Parts Thereof from France, Germany, Italy, Japan, Singapore,
& the United Kingdom: Final Results of Antidumping Duty Admin. Reviews, 70 Fed. Reg.
54,711, 54,712 (Sept. 16, 2005) (“AFBs 15 Final Results”). Commerce applied this new model-
match methodology in the AFBs 17 reviews. Decision Mem. 14-20, 25-27.
In the new model-match methodology, Commerce matches a ball bearing model sold in
the United States to one sold in the home market if the bearings are alike in each of four
characteristics: load direction, bearing design, number of rows of rolling elements, and precision
rating. AFBs 15 Decision Mem. 19. For bearing design, Commerce recognized seven ball
bearing design types in the AFBs 17 reviews: angular contact, self-aligning, deep groove, integral
Consol. Court No. 07-00377 Page 14
shaft, thrust ball, housed, and insert. Decision Mem. 60. For bearings that are identical with
respect to the first four characteristics, Commerce identifies the most appropriate home market
ball bearing model according to four additional, quantitative characteristics: load rating, outer
diameter, inner diameter, and width. AFBs 15 Decision Mem. 19. In matching bearings
according to the four quantitative characteristics, Commerce excludes any potential matches in
which the sum of the deviations for those four quantitative characteristics exceeds 40%. Id.
Finally, in matching a bearing sold in the United States with a comparison market bearing,
Commerce applies a “difference-in-merchandise adjustment” (“DIFMER” adjustment) for any
difference in the variable cost of manufacturing and excludes any potential matches for which the
DIFMER adjustment would exceed 20% were the match to have been made. See Decision
Mem. 17 (“Because we applied our normal methodology of disregarding potential matches with a
difference-in-merchandise adjustment of greater than 20 percent, we regard all the matches we
actually made to be approximately equal in commercial value.”); Imp. Admin. Policy
Bulletin 92.2 (July 29, 1992), http://ia.ita.doc.gov/policy/index.html (last visited May 5, 2011).
Several plaintiffs challenge the Department’s decision to apply the new model-match
methodology in AFBs 17 instead of the old family methodology. Certain plaintiffs challenge
specifics of the application of the methodology in the AFBs 17 reviews, including the
Department’s alleged failure to provide an adequate mechanism to contest inappropriate matches,
the Department’s rejection of proposed additional bearing design types, and individual matches
that the Department made in AFBs 17.
1. Decision to Change the Model-Match Methodology
In responding to arguments challenging the new model match methodology made during
Consol. Court No. 07-00377 Page 15
the reviews, Commerce cited in the Decision Memorandum the reasoning it stated in AFBs 15, in
which it first applied the new methodology. Decision Mem. 14. Among the Department’s
reasons are that the new methodology reflects statutory preferences for using price-to-price
comparisons, as opposed to constructed value, and for identifying the foreign like product by
selecting the single most similar product. Id. Commerce further explained that the new
methodology enables Commerce to use technological developments, i.e., automation, to
effectuate more matches and is more similar to the Department’s normal model-match practice as
applied to products generally. Id.
JTEKT, NPB, NSK, NTN, and Nachi challenge, on a number of grounds, the
Department’s decision to apply the new methodology rather than the previous family
methodology. JTEKT argues that Commerce failed to present compelling reasons for the
change. JTEKT Mem. 17-18. NTN contends that the family methodology serves as a
benchmark against which Commerce must assess the new methodology. NTN Mem. 18-24.
Similarly, NSK argues that to change its model-match methodology, Commerce must provide a
reasoned analysis, which “in this context requires Commerce to demonstrate that its new
methodology will result in a more accurate dumping margin calculation.” NSK Mem. 13; see
NSK Reply 2-4. Addressing Commerce’s claim that the new methodology allows more price-to-
price comparisons, JTEKT, NPB, and NSK argue that the new methodology compares dissimilar
merchandise and increases the number of comparisons only by adopting less exacting model
match requirements. JTEKT Mem. 20; NPB Mem. 17; NSK Mem. 18. JTEKT adds that
Commerce’s rationale contradicts conclusions in past administrative reviews and that
Commerce’s interpretation of the statute is contrary to congressional intent. JTEKT
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Mem. 20-24. JTEKT argues, further, that advanced technology does not justify a change in the
model-match methodology. JTEKT 27-29. JTEKT, NPB, NSK, and NTN argue generally that
Commerce failed to provide substantial record evidence in support of its reasons for changing the
model-match methodology. JTEKT Mem. 18, 25-27; NPB Mem. 16-17; NSK Mem. 12-13;
NTN Mem. 20-24.
The Court of Appeals has upheld the Department’s decision to discontinue the family
methodology in favor of a version of the new model-match methodology that, in essential
features, was the same as the methodology applied in AFBs 17, concluding that “we have
specifically affirmed changes to the model-match methodologies by Commerce where
reasonable.” SKF USA, Inc. v. United States, 537 F.3d. 1373, 1380 (“SKF I”). Plaintiffs argue,
in effect, that as to AFBs 17, Commerce must meet a standard more stringent than this.
The Court of Appeals previously rejected arguments similar to those advanced by
plaintiffs in this case, noting that “this statute ‘is silent with respect to the methodology that
Commerce must use to match a U.S. product with a suitable home-market product.’” SKF I,
537 F.3d at 1379 (quoting Koyo Seiko Co. v. United States, 66 F.3d 1204, 1209 (Fed. Cir. 1995)
(“Koyo I”)). Concluding that “Congress has granted Commerce considerable discretion to
fashion the methodology used to determine what constitutes ‘foreign like product’ under the
statute,” the Court of Appeals deferred to the Department’s choice of methodology as a
reasonable construction of the antidumping statute. Id. (citing Pesquera Mares Australes Ltda. v.
United States, 266 F.3d 1372, 1384 (Fed. Cir. 2001) (“Pesquera Mares”), which cites, in turn,
Koyo I, 66 F.3d at 1209). The Court of Appeals concluded that Commerce was reasonable in
seeking to improve accuracy, to select a model that would yield more price-to-price comparisons,
Consol. Court No. 07-00377 Page 17
and to capitalize on technological advances that enable implementation of a more accurate
methodology. Id. at 1380.
NSK argues that in Koyo Seiko Co., Ltd. v. United States, 31 CIT 1512, 516 F. Supp.
2d 1323 (2007) (“Koyo II”), the Court of International Trade erred in sustaining the Department’s
use of the new model-match methodology. NSK Mem. 20-22. However, the Court of Appeals
affirmed Koyo II in sustaining the use of the methodology. Koyo III, 551 F.3d at 1290 (citing
SKF I, 537 F.3d at 1379-80). NSK argues, further, that certain of the matches made under the
new methodology were of merchandise deemed dissimilar under the prior family model-match
methodology and that Commerce failed to explain how merchandise previously found to be
dissimilar is now similar. NSK Mem. 21. This argument fails to convince the court that
shortcomings in the Department’s explanation require a remand for a further explanation or a
change in the methodology. One of the Department’s stated reasons for making the change was
that the new model-match methodology, on average, will produce more matches and less reliance
on constructed value when compared to the predecessor. Decision Mem. 14. It does not logically
follow that matches not recognized under the family methodology are necessarily so dissimilar as
to be impermissible under the statute. See 19 U.S.C. § 1677(16)(B), (C).
NPB argues that it detrimentally relied on the family model-match methodology by taking
that methodology into account in pricing its products, which resulted in an average antidumping
margin of 2.97% for the last six sets of administrative reviews that occurred under the family
model-match methodology. NPB Mem. 17-19 (citing Shikoku Chemicals Corp. v. United States,
16 CIT 382, 387-89, 795 F. Supp. 417, 421-22 (1992). NPB further argues that because
Commerce did not reveal the new methodology until the Final Results of the fifteenth
Consol. Court No. 07-00377 Page 18
administrative reviews, five months into the POR for the current administrative reviews, NPB
could not timely adjust its pricing structure. NPB Mem. 19. NPB claims that as a result its
margin increased from 3.38% in the fourteenth administrative review to an average of 22.77% for
the fifteenth through seventeenth administrative reviews (including the 26.89% margin in
AFBs 17). NPB Mem. 19.
In rejecting a similar argument by NPB regarding the final results for the immediately
preceding review, the Court of International Trade observed that Commerce had determined that
NPB sold at dumped prices for three periods of review, e.g., for the POR beginning May 1, 2003,
a margin of 15.51%; for the POR beginning May 1, 2002, a margin of 3.37%; and for the POR
beginning May 1, 2001, a margin of 4.82%. JTEKT Corp. v. United States, 33 CIT __, __,
675 F. Supp. 2d 1206, 1221 (2009) (“JTEKT I”). Here also, NPB’s reliance argument is
unconvincing. The fact that the average of NPB’s margins in recent reviews has been higher than
they were under the previous methodology, when the margins were neither zero nor de minimis,
is not a sufficient ground upon which the court may overturn the Department’s model-match
methodology as applied to NPB in AFBs 17.
NTN also raises an argument directed to the timing of the methodological change,
claiming that under the Administrative Procedure Act (“APA”), 5 U.S.C. § 553(d), Commerce
was required to notify affected parties of the new methodology at least thirty days prior to the
effective date and was not permitted to apply the new methodology retroactively.4 NTN
4
The Administrative Procedure Act (“APA”) provides, in pertinent part, that
(d) [t]he required publication or service of a substantive rule shall be made not
less than 30 days before its effective date, except
(1) a substantive rule which grants or recognizes an exemption or relieves
(continued...)
Consol. Court No. 07-00377 Page 19
Mem. 13-17. In making this argument, however, NTN acknowledges that Commerce provided
notice that it would apply a new model-match methodology two reviews ago (i.e., in the fifteenth
administrative reviews) and that Commerce published a memorandum on May 6, 2005,
providing the criteria for the new model-match methodology. NTN Mem. 14-15. The period of
review at issue began on May 1, 2005. Final Results, 72 Fed. Reg. at 58,053. NTN states that
“respondents had no way of knowing the final form of the new methodology and the effect it
would have on entries already made during the seventeenth period of review” and contends that it
could not have known the effect of the new methodology until the publication of the final results
of AFBs 15 on September 12, 2005, which was several months into the period of review for
AFBs 17. NTN Mem. 15; Final Results, 72 Fed. Reg. at 58,053. The court finds no violation of
the 30-day effective date requirement in the APA. “‘Changes in methodology, like all other
antidumping review determinations, permissibly involve retroactive effect.’” SKF I, 537 F.3d
at 1379 (quoting Koyo II, 31 CIT at 1520, 516 F. Supp. 2d at 1334). NTN cites Rhone Poulenc,
Inc. v. United States, 14 CIT 364, 738 F. Supp. 541 (1990), in support of its argument of
defective notice, NTN Mem. 13-14. This too is unconvincing. That case is neither binding
precedent nor on point. It concerned the effective date of a regulation, not the application of a
methodology in an antidumping duty administrative review.
4
(...continued)
a restriction;
(2) interpretative rules and statements of policy; or
(3) as otherwise provided by the agency for good cause found and
published with the rule.
5 U.S.C. § 553(d).
Consol. Court No. 07-00377 Page 20
NTN also argues that Commerce, in changing the model-match methodology and
redefining “foreign like product,” set forth a substantive rule subject to the notice-and-comment
rulemaking procedures of the APA, 5 U.S.C. § 553. NTN Mem. 9-13; NTN Reply 3. In support
of its argument, NTN cites Parkdale Int’l, Ltd. v. United States, 31 CIT __, __, 508 F. Supp. 2d
1338, 1357 (2007), Alaska Prof’l Hunters Ass’n v. Fed. Aviation Admin., 177 F.3d 1030 (D.C.
Cir. 1999), and Shell Offshore Inc. v. Babbitt, 238 F.3d 622 (5th Cir. 2001). NTN Mem. 10-13.
None of these cases holds that Commerce must conduct a APA rulemaking procedure to change
a model-match methodology applied in its antidumping proceedings. As discussed above,
“Commerce need only show that its methodology is permissible under the statute and that it had
good reasons for the new methodology.” Huvis Corp. v. United States, 570 F.3d 1347, 1353
(Fed. Cir. 2009). In SKF I and Koyo III, the Court of Appeals held that Commerce had provided
adequate reasoning for changing the methodology, and the court finds in this case no independent
basis to conclude that the change resulted in procedural unfairness.
In summary, the court concludes that the Department’s decision to continue applying in
AFBs 17 the new model-match methodology, in essentially the form found permissible in
previous decisions of the Court of Appeals, must be sustained on review.
2. Differences in Commercial Value and Commercial Use
Plaintiffs also challenge particular aspects of the new model-match methodology. Asahi
and JTEKT contend that the methodology, despite the DIFMER adjustment and DIFMER limit,
unlawfully compares merchandise with different commercial values. JTEKT argues that the
DIFMER does not account adequately for differences in commercial value, JTEKT Mem. 26, and
Asahi contends that Commerce failed to consider whether bearings in Japan and bearings in the
Consol. Court No. 07-00377 Page 21
United States were approximately equal in commercial value when Commerce compared high
temperature bearings to standard bearings, Asahi Mem. 3, 5, 8.
Commerce applies the DIFMER adjustment under a general presumption that differences
in the variable cost of manufacturing will be reflected in the marketplace. See Decision Mem. 17
(“Because we applied our normal methodology of disregarding potential matches with a
difference-in-merchandise adjustment of greater than 20 percent, we regard all the matches we
actually made to be approximately equal in commercial value.”). The Court of Appeals affirmed
the new methodology, including the 20% DIFMER limit and the price adjustment for the amount
of the DIFMER, as a reasonable interpretation of the statute, which in 19 U.S.C.
§ 1677(16)(B)(iii) requires that matched sales be of merchandise “approximately equal in
commercial value.” Koyo III, 551 F.3d at 1286, 1291-92, aff’g Koyo II, 31 CIT at 1525, 516 F.
Supp. 2d at 1338 (rejecting the argument that Commerce must apply a difference-in-merchandise
adjustment smaller than 20% and explaining that the DIFMER adjustment accounted for value
distortions). The statute, in requiring that the merchandise being compared be “approximately”
equal in value, allows the Department discretion that was not exceeded by the design of the new
model-match methodology. See 19 U.S.C. § 1677(16)(B)(iii). Nor, in the alternative, have
plaintiffs identified an instance in which the application of the new methodology in AFBs 17
yielded a match that exceeded the 20% DIFMER limit.
Asahi and JTEKT also argue that the new methodology permits matches of bearing
models that have different commercial uses. JTEKT Mem. 26; Asahi Mem. 3, 5, 8-10. JTEKT
maintains that Commerce’s “new methodology results in comparisons of bearing models that
have strikingly different uses, contrary to the statutory requirement that ‘foreign like product’ be
Consol. Court No. 07-00377 Page 22
merchandise ‘like’ the U.S. product ‘in the purposes for which used.’” JTEKT Mem. 35
(quoting 19 U.S.C. § 1677(16)(B)(ii), (C)(ii)). Asahi advances a similar statutory argument.
Asahi Mem. 3, 5-10. JTEKT argues that Commerce’s statement that the specific application is
not dispositive contradicts the statute. JTEKT Mem. 35.
As the court explained in JTEKT Corp. v. United States, 34 CIT __, __, 717 F. Supp. 2d
1322 (2010) (“JTEKT II”), “[w]hen read according to plain meaning, the statute allows
Commerce more discretion than JTEKT’s argument would acknowledge. . . . Congress did not
go so far as to require that the foreign like product and the subject merchandise be manufactured
for, or suitable for, the identical purpose or application.” JTEKT II, 34 CIT at __, 717 F. Supp.
2d at 1334 (citing 19 U.S.C. § 1677(16)(C)(ii)). Commerce concluded in the Decision
Memorandum that “it is the rolling element that is dispositive as to whether a bearing can be
considered similar with respect to the component material or materials and in the purposes for
which bearings are used.” Decision Mem. 16. In discussing the scope of the Department’s
discretion in identifying the foreign like product in bearing cases, the Decision Memorandum
correctly relies on Koyo I for the principle that home market bearing models need not be
“‘technically substitutable, purchased by the same type of customers, or applied to the same end
use as the U.S. model.’” Id. (quoting Koyo I, 66 F.3d at 1210).
In summary, the court rejects the arguments JTEKT and Asahi advance in support of their
general challenge to the new model-match methodology, including those JTEKT and Asahi base
specifically on the Department’s adopting a methodology that matches models with different
commercial uses or values.
Consol. Court No. 07-00377 Page 23
3. Sum of the Deviations
NSK argues that Commerce should set the allowable sum-of-the-deviations (“sumdev”)
to zero or a sum smaller than the current 40% and that doing so would be more consistent with
the prior family methodology. NSK Mem. 19 (stating that “to the extent that the revised
methodology allows matches of dissimilar merchandise, using a smaller cap would result in
fewer dissimilar matches” and that “the ‘zero deviation’ is less of a step backward than the
methodology Commerce selected”); NSK Reply 5-7. The Court of Appeals in SKF I, however,
addressed the lawfulness of this aspect of the Department’s methodology:
although the new methodology allows up to a 40 percent total deviation in
dimensions and load rating, the methodology yields more accurate results because
it matches the most similar product rather than merely pooling several models that
matched as to eight characteristics but could vary significantly in price or cost,
due to differences in materials for certain components or added features.
SKF I, 537 F.3d at 1379. In evaluating the new methodology, the court does not view the 40%
sumdev limit in isolation. For example, even where two bearings differ in width by the
maximum 40% and where the other three quantitative physical characteristics (inner diameter,
outer diameter, and loading rating) are identical, it is reasonable to presume that the additional
material and processing needed to make the wider bearing will be reflected in the variable cost of
manufacturing, and if that difference exceeds 20%, Commerce will decline to make the match.
Noting that the 40% sumdev limit was a “total deviation in dimensions and load rating,” the
Court of Appeals concluded that the methodology was a reasonable interpretation of the statute.
SKF I, 537 F.3d at 1379. The record in AFBs 17 does not permit the court to reach a different
conclusion in this case. A smaller sumdev limit could be expected to result in matches of
bearings that, viewed in the aggregate, are more similar than the matches resulting from the new
Consol. Court No. 07-00377 Page 24
methodology, but it would do so by generating fewer matches, with the need to resort more often
to constructed value. Balancing these competing considerations, Commerce was within its
discretion in making the methodological choice to adopt a 40% cap.
4. Challenges to Individual Matches of Bearing Models
JTEKT, NPB, NSK, and Asahi claim that the Department’s model-match methodology
produced inappropriate matches that are contrary to the statutory criteria set out in 19 U.S.C.
§ 1677(16)(B) for determining the foreign like product. JTEKT Mem. 34-35; NPB Mem. 8,
12-13, 15; NSK Reply 8; Asahi Mem. 5. Except for one of the matches contested by JTEKT, for
which JTEKT submitted supplemental information that the Department excluded from the
administrative record, the court concludes that Commerce acted lawfully in making the
individually contested matches.
a. Matches Claimed Inappropriate by JTEKT
JTEKT claims that the new model-match methodology resulted in fourteen statutorily
impermissible matches in AFBs 17, arguing that “the two models being compared had markedly
different applications, commercial markets, and performance capabilities.” JTEKT Mem. 35.
JTEKT contests matches of bearings that it claims “have strikingly different uses, contrary to the
statutory requirement that ‘foreign like product’ be merchandise ‘like’ the U.S. product ‘in the
purposes for which used.’” Id. (quoting 19 U.S.C. §§ 1677(16)(B)(ii), (C)(ii)). JTEKT also
challenges the Department’s decision to reject as untimely certain factual information on the
bearings involved in those matches; JTEKT had offered that information after the publication of
the Preliminary Results, by which time the regulatory deadline for submission of factual
information already had passed. Id. at 29-34. Further, JTEKT objects that “the Department
Consol. Court No. 07-00377 Page 25
failed to analyze the evidence of specific mismatches placed on the record by JTEKT and
dismissed the identified mismatches with a one-sentence assertion that they were not
inappropriate in light of the Department’s statutory interpretation.” Id. at 34 (citing Decision
Mem. at 23-24). According to JTEKT, “there is no record evidence to support the Department’s
conclusion to include these specific matches in its calculation of JTEKT's dumping margin.” Id.
at 36. JTEKT urges a remand ordering Commerce to recalculate JTEKT’s margin without
relying on the contested matches and to establish a procedure for evaluating inappropriate
matches in subsequent administrative reviews. Id. at 37; JTEKT Reply 3-4.
For details on the matches it contests, JTEKT directs the court to exhibits in the case brief
it submitted during the review, which address in detail only three of those matches. JTEKT
Mem. 35 (citing Japan-Specific Case Brief of Respondents JTEKT Corp. (formerly known as
Koyo Seiko Co., Ltd.) & Koyo Corp. of U.S.A., exhibits 1-2, (Sept. 7, 2007) (Admin. R. Doc.
No. 515) (“Revised Japan-Specific Case Brief”). JTEKT’s first contested match compared a
“custom designed” U.S. bearing with a home market “standard ‘off-the-shelf’ model that has
general application.” Revised Japan-Specific Case Brief, exhibit 1, 1. The U.S. bearing, which
underwent a form of special processing that the home market bearing did not, was significantly
narrower. Id. JTEKT argued below, and again here, that “matching these two models ignores
the significant difference in their technical characteristics and commercial value.” Id. JTEKT
argues that the two models satisfied the sumdev and DIFMER limitations “simply because they
happen to have similar costs,” with the higher processing costs of the wider home market model
counterbalanced by the costs of the special processing necessary for the U.S. model. Id. at
Consol. Court No. 07-00377 Page 26
exhibit 1, 2. The court concludes that JTEKT has failed to make the case that this match is
impermissible under 19 U.S.C. § 1677(16).
The differences relied upon by JTEKT, i.e., that one of the bearings is custom designed
and the other is “off the shelf,” that they differ significantly as to width, and that one underwent a
special type of processing, are addressed generally by the sumdev, the DIFMER limit, and the
DIFMER adjustment. JTEKT offers no convincing argument as to why the differences in
“technical characteristics,” i.e., the differences in width and in the processing, preclude a
reasonable match despite the sumdev and DIFMER. JTEKT’s arguments grounded in the
difference in commercial value also fail to persuade the court. The DIFMER adjustment, as
discussed supra, presumes that differences in the variable cost of manufacturing will be reflected
in the marketplace, a presumption that the court does not view as unreasonable when coupled
with the 20% DIFMER limit and adjustment.
The court has examined the additional information excluded by Commerce that relates to
the first match challenged by JTEKT. See Letter from Office Dir. to Sidley Austin LLP (Aug. 31,
2007) (Admin. R. Doc. No. 507); Mem. of P. & A. in Supp. of Mot. of Pls. JTEKT Corp. &
Koyo Corp. of U.S.A. for J. on the Agency R. (Conf. Version), exhibit C, Japan-Specific Case
Brief of Respondents JTEKT Corp. (formerly known as Koyo Seiko Co., Ltd.) & Koyo Corp. of
U.S.A., exhibit 1, 1-3 (July 9, 2007) (“Unredacted Japan-Specific Case Brief”). That
information, had it been included in the record, would not have changed the court’s decision.
The most significant item of additional information concerns use: the two bearings are intended
for use in different types of machines. See Unredacted Japan-Specific Case Brief, exhibit 1, 1-3.
Again, the statute requires that the foreign like product be “like” the subject merchandise in “the
Consol. Court No. 07-00377 Page 27
purposes for which used”; it does not require that the like product and the subject merchandise be
suitable for exactly the same use. See 19 U.S.C. § 1677(16)(B)(2).
For almost identical reasons, JTEKT’s objection to the second match is also
unpersuasive. JTEKT argued below, and again here, that the home market model “is of a
standard design that is listed in Koyo’s catalogues” while the U.S. model “was specially designed
to satisfy the requirements of the customer’s specific application.” Revised Japan-Specific Case
Brief, exhibit 1, 3. The two bearings differed with respect to load rating, but not enough to cause
the match to be rejected under the sumdev. See id. The difference in load rating resulted because
the U.S. model had a longer life span due to a different manufacturing process, and the home
market model had a physical feature missing from the U.S. model. JTEKT objects that these two
differences offset one another with respect to the DIFMER and, as a result, the cost of
manufacturing the U.S. model “happens to be similar” to the cost of producing the home market
model. Id. at exhibit 1, 4. The physical differences relied upon by JTEKT are addressed
generally, but adequately, by the sumdev and the DIFMER, and under the latter Commerce did
not err in concluding that the two models of bearings being compared were “approximately equal
in commercial value” as required by statute. See 19 U.S.C. § 1677(16).
The information Commerce excluded from the record as untimely, which is in the
unredacted version of JTEKT’s case brief, is not sufficient to change the court’s conclusion as to
this second match. See Unredacted Japan-Specific Case Brief, exhibit 1, 4-6. According to that
information, the two bearings are used in different types of machines and are physically different
in that “the internal geometry differs as a result of the number and size of the balls used in the
Consol. Court No. 07-00377 Page 28
two models” and in that the U.S. model underwent a special process and includes a feature not
present in the home market model. See id. at exhibit 1, 4.
In the third match it contests, JTEKT argues that the Department unlawfully matched two
bearings with “substantially different” physical characteristics and costs of manufacturing that
“differ significantly” due to a special process applied to the U.S. model. Revised Japan-Specific
Case Brief, exhibit 1, 6. The difference in manufacturing cost is insufficient to disallow the
match under the DIFMER limit. This and the other information provided in JTEKT’s
resubmitted case brief do not establish an unreasonable match.
With respect to the third contested match as well as the first two, the court has examined
the factual information JTEKT attempted to place on the record in its originally-submitted,
unredacted case brief, which information Commerce rejected as untimely. See Unredacted
Japan-Specific Case Brief, exhibit 1, 7-9. That information raises a question as to whether the
model-match methodology was correctly applied in this instance. The Department is required to
match the bearing sold in the United States with a home market sale of a bearing of the same
design type. See Decision Mem. 60; 19 U.S.C. § 1677(16)(B). The data JTEKT originally
submitted in its questionnaire response appears to show the two bearings to be of the same design
type. See Letter from Sidley Austin LLP to Laurie Parkhill, Section C (“U.S Sales”), 9 (Sept. 28,
2006) (Admin. R. Doc. No. 182) (“JTEKT Questionnaire Response”). The information the
Department required JTEKT to redact from its resubmitted case brief, however, suggests that this
is not the case. See Unredacted Japan-Specific Case Brief, exhibit 1, 7-9. There is no discussion
of this issue in the Decision Memorandum, which concludes generally that none of the matches
JTEKT identified was inappropriate and that the characteristics on which JTEKT based its
Consol. Court No. 07-00377 Page 29
arguments were extraneous to the new model-match methodology, as well as the prior family
model-match methodology. Decision Mem. 23-24. It is not clear from the Decision
Memorandum or the record as a whole that the Department has adopted a general policy under
which it will refuse, or must refuse, to exercise discretion to consider new information on a
specific model match submitted with the case brief even though that new information suggests a
possible misapplication of the methodology due to a mistake of fact. If Commerce decided to
apply so prejudicial a policy as that in refusing to consider JTEKT’s challenge to this particular
model match, it did so without the compelling justification that such a decision would seem to
require. Nor is there presented in the Decision Memorandum a reason why Commerce could not
have addressed, in the time remaining in the reviews, a match that possibly was impermissible
under the new model-match methodology. The court, therefore, will order Commerce to
examine on remand its decision rejecting the challenge JTEKT makes to the third match.
JTEKT described the remaining eleven matches it contests in a single exhibit to its case
brief. See Revised Japan-Specific Case Brief, exhibit 2. The information in that exhibit
indicates that each of the eleven matches satisfied the requirements of the model-match
methodology.5 See id. The court’s examination of this information reveals no ground on which
the court could conclude that the matches were unreasonable.
Based on the record as a whole, the court does not agree with JTEKT’s general
characterization that “the Department failed to analyze the evidence of specific mismatches
placed on the record by JTEKT and dismissed the identified mismatches with a one-sentence
assertion that they were not inappropriate in light of the Department’s statutory interpretation.”
5
All information in this exhibit was submitted timely.
Consol. Court No. 07-00377 Page 30
JTEKT Mem. 34 (citing Decision Mem. 23-24). The Decision Memorandum contains ample
discussion of the reasons why its model-match methodology reached a reasonable result as to all
of the matches JTEKT challenges except for the third match, discussed above, for which the
information excluded from the record raises the factual issue of whether the methodology
was misapplied.
b. Matches Claimed Inappropriate by NPB
NPB argues that it is entitled to relief because of the way Commerce matched bearings in
applying the model-match methodology, citing two examples. NPB Mem. 12-16. According to
NPB, Commerce impermissibly matched housed bearings with unhoused bearings and matched
bearings with collars to bearings without collars. Id. at 14. The court concludes that relief is not
available on this claim because of NPB’s failure to exhaust its administrative remedies in
contesting the specific matches it identifies to the court.
With respect to housed and unhoused bearings, NPB alleges that the Department
incorrectly compared a specific U.S. model, which was an unhoused bearing, to a specific
Japanese model, which was a housed bearing. NPB Mem. 14; see also Letter from Baker &
McKenzie to Sec’y of Commerce 13 (Dec. 8, 2006) (Admin. R. Doc. No. 295) (“NPB
Supplemental Questionnaire”). As NPB correctly points out, the new model-match methodology
does not permit Commerce to match a housed bearing with an unhoused bearing. NPB Mem. 14
(“As Commerce recognized in the 15th administrative review, housed and unhoused bearings had
different design types and should not have been compared” (citation omitted)). Defendant and
defendant-intervenor argue that NPB failed to raise this specific issue in the case brief filed with
Consol. Court No. 07-00377 Page 31
Commerce during the review and therefore failed to exhaust its administrative remedies. Def.
Resp. 15-16; Timken Resp. 34-35.
The Court of International Trade “shall, where appropriate, require the exhaustion of
administrative remedies.” 28 U.S.C. § 2637(d) (2006). Any issues that remain of concern to a
respondent in an administrative review as of the time of the issuance of the preliminary results,
including issues raised prior to that issuance, must be raised in the case brief, which is filed with
the Department within thirty days of the publication of the preliminary results. See 19 C.F.R.
§ 351.309(c)(1)(ii), (c)(2) (2009).6 The court is unable to find in NPB’s case brief an objection to
one or more instances in which Commerce matched a housed bearing model with an unhoused
bearing model and thereby misapplied the model-match methodology. See Case Brief of Nippon
Pillow Block Co. Ltd. & FYH Bearing Units USA, Inc., A-588-804, (July 10, 2007) (Admin. R.
Doc. No. 492) (“NPB Case Brief”). The court must give effect to the regulatory provision and
thereby conclude that NPB, by declining to address this point in its case brief, failed to exhaust
its administrative remedies on any matching of housed and unhoused bearing models that may
have occurred.
NPB submits that the court should recognize the “futility” exception to the exhaustion
requirement, arguing as follows:
It is clear that the identification of specific mismatched models in NPB’s case
brief would have been futile. Commerce has not established a process by which
NPB could raise unreasonable model comparisons. And, in the
15th administrative review where NPB identified a list of unreasonable model
6
The regulation provides that “[t]he case brief must present all arguments that continue in
the submitter’s view to be relevant to the Secretary’s . . . final results, including any arguments
presented before the date of publication of the preliminary determination or preliminary results.”
19 C.F.R. § 351.309(c)(2) (2009).
Consol. Court No. 07-00377 Page 32
comparisons, Commerce did not conduct a comprehensive analysis of the
unreasonable model comparisons.
Reply Br. in Supp. of the Mot. for J. upon the Agency R. Submitted on behalf of Pls. Nippon
Pillow Block Co. Ltd. & FYH Bearing Units USA Inc. 11 (“NPB Reply”). NPB’s futility
argument does not persuade the court. “To show futility, a party must demonstrate that it ‘would
be required to go through obviously useless motions in order to preserve [its] rights.’” Mittal
Steel Point Lisas Ltd. v. United States, 548 F.3d 1375, 1384 (Fed. Cir. 2008) (quoting Corus
Staal BV v. United States, 502 F.3d 1370, 1379 (Fed. Cir. 2007)). NPB has not made a
convincing argument as to why raising in its case brief its objection to the Department’s
matching of a housed bearing with an unhoused bearing would have been obviously useless.
NPB points to no Departmental communication from which the court could discern that
Commerce would have refused to address a respondent’s timely objection that a particular match
was made inconsistently with the model-match methodology.
In alleging a second mismatch, NPB argues that the Department unreasonably compared
bearings with collars to bearings without collars. NPB Mem. 15. Specifically, NPB cites the
matches Commerce made for two bearing models sold in the United States, claiming that
Commerce incorrectly compared two specific U.S. models, identified by model number, to a
specific Japanese model. Id.; see also NPB Supplemental Questionnaire 13. NPB argues that it
was unreasonable for Commerce to match the two U.S. models, which are “cylindrical bore
bearings that are fixed at the shaft using set screws,” to the Japanese model, which is “a
cylindrical bore bearing with an eccentric collar on the outside of the inner ring for locking to the
shaft.” NPB Mem. 15.
Consol. Court No. 07-00377 Page 33
Here also, the court concludes that NPB’s case brief does not exhaust administrative
remedies. The court is unable to find within the case brief a specific objection to the matching of
bearings designed to be secured to shafts with set screws to those designed to be secured to shafts
with eccentric collars. See NPB Case Brief. The court concludes that NPB has not exhausted its
administrative remedies on the issue of Commerce’s matching of the two set-screw bearings to
the eccentric collar bearing.
NPB raises a futility argument with respect to this second contested match. See NPB
Reply 9. Despite some merit in this argument, the court concludes that an exception to the
exhaustion requirement is not warranted here. Absent a change in the model-match
methodology, Commerce would not have considered a specific objection to the matching of
NPB’s bearings that attach to the shaft with set screws with an NPB bearing that attaches by
means of an eccentric collar, and in that sense raising the second contested match in the case
brief would have been futile. As discussed later in this opinion, NPB proposed in a supplemental
questionnaire response that Commerce incorporate into the model-match methodology additional
physical characteristics, including the presence or absence of a collar to attach the bearing to a
shaft. NPB Supplemental Questionnaire 11-13. Although NPB discussed in its case brief certain
physical characteristics of its bearings for the Department to consider in its model-match
methodology, e.g., types of seals and lubricants and construction using ceramic materials, NPB,
curiously, omitted from the discussion in its case brief any reference to incorporating physical
characteristics into the methodology that would preclude matching of collared bearings with
bearings that attach to the shaft by other means, such as set screws. See NPB Case Brief 4. The
shortcoming in NPB’s futility argument as to the matching of the set-screw bearings with the
Consol. Court No. 07-00377 Page 34
collared bearing stems from its failure to raise in its case brief the related issue of the relevant
physical characteristics. The court cannot conclude that it would have been obviously useless for
NPB to have done so. According to the Decision Memorandum, Commerce appears to have
followed a general policy of not considering proposed changes to the model-match methodology
that are raised for the first time in the case brief, Decision Mem. 22, but Commerce did not
specifically state that any such question raised in a supplemental questionnaire response
necessarily would be rejected as untimely.
c. Matches Claimed Inappropriate by NSK
In its Rule 56.2 Motion for Judgment, NSK points to matches generated by the new
methodology that would not have occurred under the family methodology as evidence that the
new methodology impermissibly matches dissimilar merchandise. NSK Mem. 16-18; NSK
Reply 4-7. NSK stated that in its case brief before Commerce “NSK . . . identified specific
examples of egregious dissimilar matches that were the direct result of allowing variance in the
eight characteristics.” NSK Mem. 16 (citing to Case Brief on Behalf of NSK Ltd. & Affiliated
Companies, A-588-804, 3-4, Exhibit 14 (July 9, 2007) (Admin. R. Doc. No. 517) (“NSK Case
Brief”); NSK Reply 4, 8. In its case brief, NSK presented a chart and associated discussion
identifying how the “new model methodology matches a U.S. bearing . . . with three home
models . . . that are significantly different.” NSK Case Brief 3.
Contrary to the implication in NSK’s Rule 56.2 Motion for Judgment, the chart and
discussion in NSK’s case brief do not allege that the identified “egregious dissimilar matches”
actually were made by the Department in AFBs 17. See NSK Mem. 16-18; NSK Case Brief 3-4.
As discussed previously, the model-match methodology is based on a principle of matching a
Consol. Court No. 07-00377 Page 35
bearing model sold in the United States with a single model sold in the comparison market. The
court cannot conclude from NSK’s allegations that this principle was not followed in AFBs 17
with respect to NSK’s subject merchandise. Due to the absence of a specific allegation that the
“egregious dissimilar matches” NSK identifies actually occurred, the court construes the
discussion in NSK’s case brief to be alluding to potential matches that NSK believes would be
permissible under the sumdev and DIFMER, not actual matches the Department made in the
reviews at issue in this case. NSK’s argument reduces to a contention that the new model-match
methodology theoretically could result in matching models under the new methodology that
would have been rejected under the old methodology. For the reasons discussed previously in
this Opinion and Order, the court rejects this argument.
5. Asahi’s Objection to the Matching of Standard Bearings with High-Temperature Bearings
Asahi argues that Commerce impermissibly matched “standard bearings” that Asahi sold
in the United States to “high temperature bearings” that Asahi sold in its home market of Japan.
Asahi Mem. 5. Asahi argues that record evidence establishes that its high temperature bearings
have significant physical differences and different end uses than standard bearings and are not
approximately equal in commercial value to standard bearings. Id. at 10. Specifically, Asahi
argues that its high temperature bearings differ from standard bearings with respect to lubricants,
seals, internal clearances and slingers (i.e., fittings that direct lubrication) and that high
temperature bearings sometimes have hardened, heat-stabilized rings. Id. at 6-8. Asahi argues
that it was impermissible under 19 U.S.C. § 1677(16)(B) for Commerce to match the high
temperature bearings with standard bearings because the former are not like standard bearings in
component materials, particularly lubricants, are adapted for harsh environments and therefore
Consol. Court No. 07-00377 Page 36
are not used for like purposes, and are not approximately equal in commercial value. Id. at 8-10.
Further, Asahi contends that high temperature bearings “sell for a much higher price much more
than the costs would indicate, thus making the difmer adjustment ineffective.” Id. at 8.
In the new model-match methodology, Commerce first matches bearings according to
four physical characteristics. AFBs 15 Decision Mem. 19. As discussed above, Commerce
designated in AFBs 17 seven design types: angular contact, self-aligning, deep groove, integral
shaft, thrust ball, housed bearing, and insert bearing. Decision Mem. 60. According to the
Decision Memorandum, Asahi proposed during the review that Commerce recognize additional
physical characteristics associated with high temperature bearings. Decision Mem. 24.
Commerce rejected that proposal based on a finding that the proposal was made for the first time
in Asahi’s case brief, a finding supported by the record evidence. Id. at 22, 24. Unlike NPB,
Asahi does not argue before the court that Commerce impermissibly rejected its proposal due to
timing. Instead, Asahi makes the general claim that the matching of its standard bearings with its
high temperature bearings was inconsistent with statutory requirements for determining the
foreign like product. The court rejects this claim.
Commerce grounded its decision to apply the model-match methodology in 19 U.S.C.
§ 1677(16)(B). Decision Mem. 14 (“We developed a revised methodology in order to reflect
more accurately the intent of section 771(16)(B) of the Act [19 U.S.C. § 1677(16)(B)] which is to
compare the subject merchandise to the single most-similar comparison-market model.”). As the
court discussed supra, that statutory provision does not require that the foreign like product have
precisely the same component materials and end uses as the subject merchandise. See 19 U.S.C.
§ 1677(16)(B) (referring to merchandise “like” the subject merchandise in “component
Consol. Court No. 07-00377 Page 37
materials” and “in the purposes for which used” (emphasis added)). The provision requires that
the merchandise be “approximately equal in commercial value.” Id. (emphasis added). Asahi’s
general contention that high temperature bearings have higher prices relative to standard bearings
than their costs would indicate does not entitle Asahi to relief on its claim that Commerce
exceeded its statutory authority in matching high temperature bearings with standard bearings.
That the DIFMER adjustment, which is grounded in variable costs of production and not in
prices, does not adjust perfectly for differences in commercial value is not a convincing reason
why the court must reject the new model-match methodology. The Department’s reliance on the
DIFMER limit and DIFMER adjustment, when combined with other features of the model-match
methodology, reasonably effectuate the statutory requirement that the like product be
approximately equal in component value to the subject merchandise. See Koyo I,
66 F.3d at 1209.
Moreover, Commerce has discretion under the statutory language to address unique
physical characteristics of high temperature bearings in its model-match methodology, on a
review-by-review basis, but it also has discretion not to do so where, as here, Asahi has failed to
show that the statute required such a result and also failed to raise the question until its case brief.
Commerce acted reasonably in concluding that the timing of Asahi’s proposal did not allow a full
opportunity to decide whether to make a change to the methodology. As the Department
recognized, such a change would affect the treatment accorded to merchandise of other
respondents.
For both of the reasons discussed above, the court rejects Asahi’s claim that Commerce
acted contrary to 19 U.S.C. § 1677(16)(B) in AFBs 17 by applying the new model-match
Consol. Court No. 07-00377 Page 38
methodology so as to match Asahi’s U.S. sales of standard bearings with high temperature
bearings sold in the home market. However, NPB makes a similar claim that, for reasons
discussed below, Commerce must consider on remand. Should Commerce alter the model-match
methodology as applied in AFBs 17 in response to NPB’s claim, it may consider whether it is
appropriate to apply that change with respect to other plaintiffs in this case.
6. NPB’s Proposed Additional Physical Characteristics for the Model-Match Methodology
As does Asahi, NPB claims that Commerce erred in refusing to incorporate certain
additional physical characteristics into the new model-match methodology for use in determining
matches of similar bearings. NPB Mem. 2, 8, 10. Similar to Asahi’s argument is NPB’s
argument that the model-match methodology as applied in AFBs 17, by ignoring these additional
physical characteristics, impermissibly matched standard bearings that NPB sold in the United
States to high temperature bearings and other specialized bearings that NPB sold in its home
market in Japan. Id. at 10-11. NPB proposed to Commerce, and reiterates in its Rule 56.2
motion, that the model-match methodology, at a minimum, should match bearings according to
types of seals (e.g., standard or heat-proof), types of grease (e.g., standard or heat-proof), ceramic
as opposed to non-ceramic, diameter of a second inner dimension, diameter of a second outer
dimension, diameter of a second width dimension, and diameter of a third width dimension.
Id. at 11.
During the review, Commerce refused to consider the merits of NPB’s argument for
additional physical characteristics, rejecting the argument as having been made too late in the
reviews. Commerce stated in the Decision Memorandum that “as we have stated before, we
welcome interested parties to provide comments on what additional physical characteristics we
Consol. Court No. 07-00377 Page 39
should take into account in our model-matching methodology” but that “the time to make these
suggestions is at the beginning of a review so we can solicit comments from other interested
parties, not in the case brief after we have issued the preliminary results and it is too late in the
conduct of the reviews to analyze and/or implement the suggestions.” Decision Mem. 16.
Commerce based its rejection of NPB’s proposal on a finding of fact that “[n]o interested
party, including NPB, submitted any comments or made any suggestions on the model-matching
methodology in these administrative reviews prior to the case briefs.” Decision Mem. 22.
Commerce found, specifically, that “[a]s it did in AFBs 16, NPB chose to wait until it[]
submitted its case brief to file any comments.” Id. The evidence of record does not support, and
instead contradicts, these findings. NPB asked Commerce to consider additional physical
characteristics in its response to the Department’s supplemental questionnaire, which NPB filed
on December 8, 2006, six months prior to the June 6, 2007 publication of the Preliminary
Results. See NPB Supplemental Questionnaire 10-13. In that response, NPB urged that if
Commerce applied the new model-match methodology in these reviews, it should include
additional characteristics, which “are important and must be taken into account specifically as
factors determining the most similar model.” NPB Supplemental Questionnaire 13. NPB
described several proposed new characteristics: types of seals, types of grease, whether a bearing
is a ceramic or a non-ceramic bearing, inner ring diameters, types of slingers, whether the bearing
is a housed or unhoused bearing, and whether a bearing is collared or uncollared. Id. at 10-13.
The proposal in the supplemental questionnaire response was highly similar to the argument NPB
made in its case brief and reiterates before the court, which advocates additional characteristics
for types of seals, types of grease, whether or not a bearing is ceramic, diameter of a second inner
Consol. Court No. 07-00377 Page 40
dimension, diameter of a second outer dimension, diameter of a second width dimension, and
diameter of a third width dimension. NPB Mem. 11; see NPB Case Brief 4-6.
Implicitly acknowledging Commerce’s erroneous findings as to the timing of NPB’s
proposal, defendant criticizes the timing of that proposal, stating that “[i]nstead of proposing
additional criteria at the beginning of the review, NPB first made its proposal in a December
2006 supplemental questionnaire and later in its administrative case brief, which were submitted,
respectively, five months and 11 months after Commerce’s July 2006 initiation of the underlying
administrative review.” Def. Resp. 12. Commerce, however, based its refusal to consider NPB’s
proposal on its erroneous finding that NPB did not make its proposal until its case brief. See
Decision Mem. 22. Contrary to the premise of defendant’s argument, Commerce never made a
specific finding that it could not consider the merits of NPB’s proposal for additional physical
characteristics, as set forth in the December 8, 2006 supplemental questionnaire response, due to
the date on which the supplemental questionnaire response was filed. Therefore, the court
remands for reconsideration the Department’s decision to reject NPB’s proposal.
7. NTN’s Claim that Commerce Unlawfully Rejected NTN’s Proposal for Additional Ball
Bearing Design Types
As discussed above, in the new model-match methodology Commerce first matches
bearings according to four physical characteristics: load direction, bearing design, number of
rows of rolling elements, and precision rating. AFBs 15 Decision Mem. 19. As also discussed
previously, Commerce designated in AFBs 17 seven design types: angular contact, self-aligning,
deep groove, integral shaft, thrust ball, housed bearing, and insert bearing. Decision Mem. 60.
NTN claims that the group of seven design types designated by Commerce for AFBs 17 “fails to
Consol. Court No. 07-00377 Page 41
account for the variations present in NTN’s bearings” and that as a result Commerce “failed to
fulfill its obligation to match ‘similar’ U.S. and home market models” and “match[ed] physically
and functionally different products.” NTN Mem. 24-25. During the administrative review, NTN
proposed that Commerce adopt numerous additional ball bearing design types “that it used in the
normal course of its business” and reported to Commerce during the reviews. NTN Mem. 24.
Commerce rejected the proposal. Decision Mem. 59-60.
In concluding the reviews, Commerce considered NTN’s bearing models “equally similar
in component material or materials for model-matching purposes,” reasoning that all share a ball
as a rolling element and can be classified into one of the seven recognized design types. Id.
at 60. Commerce stated that NTN’s requested “bearing-design designations were, on many
occasions, distinguishable due to a single element of difference or an element of difference that is
not pertinent.” Id. at 61 (citing, as examples, “a different width of inner race or the type of bore,
the type of pillow material (i.e., cast iron vs. steel), the presence or absence of rubber rings or the
presence or absence of a dust cover, etc.”). Commerce further explained that some of NTN’s
requests for separate design type designations “result in differences in product characteristics
such as load direction, load rating, number of rows, etc.,” for which Commerce already accounts
in the new model-matching methodology. Id. (providing an example in which “NTN
differentiates angular-contact bearing models into separate design types based on an angle of
point-of-contact or the number of points-of-contact,” characteristics that Commerce considered
to “correlate directly with the load ratings and physical dimensions as well as, on occasion, the
precision rating of bearings”). Finally, Commerce concluded that a specific application for one
bearing may differ from the specific application of another with which the bearing is matched,
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explaining, as it had in prior administrative reviews, that the function or application of different
bearings, standing alone, did not necessarily warrant a separate design designation because it is
the rolling element that is dispositive as to whether a bearing can be considered similar with
respect to the purposes for which bearings are used. Id.
NTN contends that its “reported design types captured the significant differences between
bearings more accurately than the Department’s design types” and states that it provided “a
description of each design, including the basis on which NTN believed that the design type
described a unique bearing, and drawings and pictures evidencing the differences between
bearings that the Department would otherwise match.” NTN Mem. 25. NTN states that it
provided descriptions of its bearing designs divided into sixteen separate sections, with each
section setting forth a written description using pages from NTN’s materials demonstrating
pictorially the written differences. Id. at 26. According to NTN, Commerce had ample
opportunity to request clarifying information but asked only a single question with respect to
NTN’s design types, i.e., whether NTN had sales of combination bearings incorporating deep-
groove and angular-contact bearings. Id. at 25. NTN specifically takes issue with the fact that
the design types used do not account for bearings with elements of more than one design type.
Id. at 26. NTN offers the example of a bearing unit that incorporates a dust cover, emphasizing
“the reasoning behind separate design types for housed and insert bearings, i.e., each incorporates
an additional part that allows it to be used for a specialized purpose.” Id. at 27. NTN argues that
Commerce is inconsistent in rejecting the dust cover design while allowing a distinction between
housed and insert bearings. Id. Accordingly, NTN asks that the court remand the Final Results
Consol. Court No. 07-00377 Page 43
and instruct Commerce to calculate NTN’s margin using the design types submitted by NTN.
Id. at 28.
Defendant responds that NTN failed to establish several points: that the differences
among design types were “so significant” as to make insufficient the seven design types
designated by Commerce, that Commerce’s DIFMER adjustment could not account for the
differences, and that NTN’s “numerous proposed design types are necessary to [e]nsure matches
of comparable products when Commerce is faced with selecting similar merchandise because
there are no sales of identical merchandise.” Def. Resp. 25.
The Court of Appeals for the Federal Circuit, in Koyo III, addressed a similar issue raised
by NTN in a prior administrative review, holding that “NTN has not demonstrated that
Commerce’s choice of design types, including its adjustments, was unreasonable” and that “even
if Commerce had accepted NTN’s proposals in the past, it was not required to do so in future
reviews.” Koyo III, 551 F.3d at 1292. The Court of International Trade also addressed a similar
issue in JTEKT I, 33 CIT at __, 675 F. Supp. 2d at 1227-29. In JTEKT I, the Court of
International Trade “observe[d] that some of the additional design-type categories proposed by
NTN appear to describe ball bearings that fall within one, and only one, of Commerce’s accepted
design-type categories.” JTEKT I, 33 CIT at __, 675 F. Supp. 2d at 1228. With respect to the
bearings that fell within a single design type, the court affirmed Commerce’s determination. See
Id. at __, 675 F. Supp. 2d at 1228-29. However, with respect to other design types that “appear
to fall within more than one of the Department’s design-type categories,” the court remanded for
Commerce to explain its methodology and reasoning for classifying a bearing in one design type
Consol. Court No. 07-00377 Page 44
as opposed to another. Id. at __, 675 F. Supp. 2d at 1228-29. As it did in its challenge to the
final results of the prior administrative review, NTN raises this specific objection in support of
its claim. See NTN Mem. 26 (“The Department’s design types do not take into account bearings
that contain elements of more than one design type recognized by the Department.”). Commerce,
in this administrative review, did not explain how it categorized bearings that could be classified
according to more than one design type. See Decision Mem. 59-62. Although it might be
supposed that Commerce, in that instance, applies tie breaking rules identical or similar to those
by which it chooses a match from among potential matches of bearings for which design type is
not an issue, Commerce did not address this point in responding to NTN’s argument. Because
Commerce has failed to address NTN’s argument by explaining its treatment of bearings that can
fit within two design types, the court will direct Commerce to resolve this issue upon remand.
C. NSK’s Challenge to the Deduction by Commerce of Certain “Additional Benefit Expenses”
In Determining the Constructed Export Price of NSK’s Subject Merchandise
When determining constructed export price, Commerce must deduct expenses associated
with the sale of subject merchandise from the price at which that subject merchandise is first sold
in the United States to an unaffiliated purchaser if those expenses are incurred by, or for the
account of, the producer, exporter, or the affiliated seller in the United States. 19 U.S.C.
§ 1677a(d)(1) (2006). The regulation states that in establishing CEP, “the Secretary will make
adjustments for expenses associated with commercial activities in the United States that relate to
the sale to an unaffiliated purchaser, no matter where or when paid.” 19 C.F.R. § 351.402(b)
(2009).
Consol. Court No. 07-00377 Page 45
In submitting its data, NSK accounted for its payments to a limited number of employees
in the United States who are Japanese nationals by including the base salary paid and by
excluding the additional benefits paid. NSK Mem. 9-10. NSK explains that for many prior
reviews Commerce accepted NSK’s reporting of salaries exclusive of benefits but then in the
fifteenth administrative review “decided to deduct additional Japanese worker expenses from
CEP.” Id. at 11. NSK argues that the additional benefit expense “arose not because the
individuals in question happened to be located in the United States, but because they happened to
be Japanese nationals.” Id. at 23. NSK maintains that “the Japanese worker benefits at issue did
not arise out of the sale of AFBs in the United States; they arose before the AFB 17 U.S. sales
took place out of NSK’s legal obligation to pay these benefits generally to Japanese nationals”
and that, therefore, the worker benefits constitute general expenses incurred by NSK for all sales
regardless of the location of the purchaser. Id. at 24.
As NSK acknowledges, see NSK Mem. 11, the Court of International Trade previously
has upheld the Department’s determination to deduct from CEP both the base salaries and the
additional benefit expenses in the fifteenth administrative review. The Court of Appeals in
Koyo III affirmed the Court of International Trade’s holding:
The additional benefits NSK paid were expenses incurred for employees whose
work related to United States sales. NSK chose to use Japanese-national
employees in the United States in connection with its sales there. Those benefits
were part of the employees’ compensation that NSK paid. The Court of
International Trade properly concluded that “there is no difference between these
additional benefits and the base salary that NSK has admitted Commerce properly
deducted from the [constructed export price].”
Koyo III, 551 F.3d at 1293 (internal citation omitted), aff’g Koyo II, 31 CIT 1512, 516 F. Supp.
2d 1323. NSK, in its challenge to the Final Results, sets forth as to these administrative reviews
Consol. Court No. 07-00377 Page 46
the same legal issue that was presented in Koyo III. NSK Mem. 11. NSK maintains, however,
that the determination of the issue in this administrative review is unlawful because
[c]ertain benefit expenses NSK incurred in the United States on behalf of
Japanese workers . . . are not specifically related to the United States, nor can they
be traced to any U.S. sales of subject merchandise, because the same benefits are
provided to Japanese workers resident in other countries outside Japan.
Id. at 11-12. NSK argues, further, that
this expense arose not because the individuals in question happened to be located
in the United States, but because they happened to be Japanese nationals. That
is, even before they had left Japan to assist their U.S. colleagues, even before a
single AFB had left the factory in Japan to be sold in the United States, Japanese
law obligated NSK to pay these additional benefits on behalf of these Japanese
nationals.
Id. at 23 (emphasis added). The fact that Japanese law may have required NSK to provide
certain benefits to the Japanese nationals is not relevant to the inquiry of whether these benefit
expenses are deductible from the price at which the merchandise is first sold in the United States.
Commerce, in the Decision Memorandum, explained that based on NSK’s replies in its
questionnaire responses, “there is no dispute that the Japanese workers in question are engaged in
economic activity occurring in the United States and their activities relate to sales to unaffiliated
purchasers in the United States.” Decision Mem. 54. As Commerce recognized, the crux of the
inquiry is whether the workers received the benefits in question, and whether those workers were
supporting sales in the United States of the subject merchandise to unaffiliated purchasers.
Substantial record evidence supports the findings that the workers did receive the benefits at
issue and that the workers were supporting the U.S. sales to unaffiliated purchasers. NSK’s
argument that these benefit “expenses are not specifically related to the United States, nor can
they be traced to any U.S. sales of subject merchandise, because the same benefits are provided
Consol. Court No. 07-00377 Page 47
to Japanese workers resident in other countries outside Japan,” NSK Mem. 11-12, is a non-
sequitur that does not refute Commerce’s factual findings. The court, therefore, will affirm this
aspect of the Final Results.
D. Commerce’s Calculation of CEP for Certain of Aisin’s Subject Merchandise
To determined the weighted-average dumping margin for Aisin in AFBs 17, Commerce
calculated CEP for a large number of Aisin’s sales of ball bearings in the United States by using
cost and sales data for further-manufactured goods, i.e., automotive transmissions. See Decision
Mem. 62-64; Aisin Mem. 2. According to Aisin,
[a]s a consequence of applying the full loss on certain transmissions to an
individual component (i.e., bearing) and treating that amount as “dumping,” the
Department’s calculations resulted in a $2.00 bearing attracting dumping in
excess of $1,000 per unit, i.e., a dumping margin in excess of 50,000 percent,
despite the fact that the vast majority of this loss relates to components other than
bearings.
Aisin Mem. 2. Based on Commerce’s determination of CEP, Commerce calculated a weighted-
average dumping margin of 6.15%. Final Results, 72 Fed. Reg. at 58,054. Aisin claims that the
methodology Commerce applied was unreasonable and yielded an absurd result. Aisin Mem. 11.
Before the court, Commerce requested a voluntary remand “to examine the methodology it used
to calculate Aisin’s sales of certain automotive service parts manufactured in the United States,
incorporating bearings produced in Japan, and sold below the production cost of the automotive
service part.” Def.’s Am. Mot. for Remand 2.
In the First Remand Redetermination, Commerce revised its calculation of CEP for
certain U.S. sales made by Aisin and, as a result, determined a dumping margin of 1.13%,
significantly lower than the 6.15% Commerce had determined in the Final Results. First Remand
Consol. Court No. 07-00377 Page 48
Redetermination 1; Final Results, 72 Fed. Reg. at 58,054. Commerce explained that in situations
where the value added in the United States through further manufacturing (i.e., the manufacture
of automotive transmissions) exceeds substantially the value of the subject merchandise (i.e., ball
bearings), the possibility that the margin may be distorted increases as the proportion of the value
added in the United States becomes extremely large relative to the value of the subject
merchandise. First Remand Redetermination 3-4. Accordingly, Commerce excluded from its
calculation sales for which the margin calculated in AFBs 17 was greater than the production
cost of the imported bearing and for which the finished product was sold at prices below the
production cost of the transmission. Id. at 4. Commerce calculated the weighted-average
dumping margin with data for the remaining sales and then applied that margin to the excluded
sales as well. Id. at 4-5.
Neither Aisin nor Timken took a position in response to the First Remand
Redetermination. Aisin Comments 1; Timken Comments 1. Because the court concludes that
the First Remand Redetermination complies with the Order issued on September 2, 2009 and no
party has stated its opposition to the First Remand Redetermination, the court will affirm the
resolution in the First Remand Redetermination of the CEP of the sales of Aisin’s subject
merchandise as affected by the use of the cost and sales data for the further-manufactured goods.
However, it is premature and unwarranted for the court to affirm the Department’s 1.13%
redetermination of Aisin’s weighted-average dumping margin. Order, Sept. 2, 2009. As did
certain other respondents in the review, Aisin contested the calculation of its weighted-average
dumping margin according to the Department’s zeroing methodology.
Consol. Court No. 07-00377 Page 49
Aisin did not raise the zeroing issue in a comment submission to the Department or to the
court with respect to the First Remand Redetermination. For that reason, the court concludes that
Aisin did not exhaust its administrative remedies as to its challenge to the Department’s use of
zeroing methodology in this litigation. See Mittal Steel Point Lisas Ltd., 548 F.3d at 1383-84
(Fed. Cir. 2008). However, the court also concludes that the recognized exception to the
exhaustion requirement for an intervening judicial decision applies in this circumstance. As the
Supreme Court has stated,
There may always be exceptional cases or particular circumstances which will
prompt a reviewing or appellate court, where injustice might otherwise result, to
consider questions of law which were neither pressed nor passed upon by the
court or administrative agency below.
Hormel v. Helvering, 312 U.S. 552 (1941). The Court of Appeals in Dongbu, drawing a
distinction with its past decisions on zeroing, set aside a judgment affirming the use of zeroing in
the final results of an administrative review. Dongbu Steel Co., 635 F.3d at 1371-73. The Court
of Appeals ordered that a remand was required so that the Department could explain its
interpreting the language of 19 U.S.C. § 1677(35) inconsistently with respect to the use of
zeroing in investigations and the use of zeroing in administrative reviews. Because Aisin’s
comment submission on the First Remand Redetermination was due on January 15, 2010, prior
to the issuance of the opinion in Dongbu on March 31, 2011, the court, exercising its discretion,
waives the exhaustion requirement as to Asahi’s claim contesting the use of zeroing in AFBs 17.
Because the court is remanding for further explanation the Department’s decision to apply its
zeroing methodology in AFBs 17, the court declines to affirm the redetermination of Aisin’s
weighted-average dumping margin.
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III. CONCLUSION
For the reasons discussed in the foregoing, the court will affirm in part, and remand in
part, the Final Results.
ORDER
Upon consideration of all papers and proceedings herein, it is hereby
ORDERED that the final determination of the United States Department of Commerce
(“Commerce” or the “Department”), published as Ball Bearings & Parts Thereof from France,
Germany, Italy, Japan, Singapore, & the United Kingdom: Final Results of Antidumping Duty
Admin. Reviews & Rescission of Review in Part, 72 Fed. Reg. 58,053 (Oct. 12, 2007) (“Final
Results”), be, and hereby is, AFFIRMED IN PART and REMANDED to the Department for
redetermination as provided in this Opinion and Order; it is further
ORDERED that the Rule 56.2 motions for judgment upon the agency record of Asahi
Seiko Co., Ltd. (“Asahi”) and NSK Corporation, NSK Ltd., and NSK Precision America, Inc.
(collectively, “NSK”) be, and hereby are, DENIED; it is further
ORDERED that the Rule 56.2 motions for judgment upon the agency record of Aisin
Seiki Company, Ltd. and Aisin Holdings of America, Inc. (collectively “Aisin”), JTEKT
Corporation, formerly Koyo Seiko Company, Ltd. and Koyo Corporation of U.S.A. (collectively,
“JTEKT”), Nachi Technology, Inc., Nachi-Fujikoshi Corporation, and Nachi America, Inc.
(collectively “Nachi”), FYH Bearing Units USA, Inc. and Nippon Pillow Block Company Ltd.
(collectively, “NPB”), and American NTN Bearing Manufacturing Corp., NTN Bearing
Corporation of America, NTN Bower Corporation, NTN Corporation, NTN Driveshaft, Inc., and
NTN-BCA Corporation (collectively, “NTN”), be, and hereby are, GRANTED IN PART and
DENIED IN PART as provided in this Opinion and Order; it is further
ORDERED that Commerce, on remand, shall (1) reconsider its decision to apply its
zeroing methodology in the Final Results and change that decision or, alternatively, provide an
explanation for its express or implied construing of 19 U.S.C. § 1677(35) inconsistently with
respect to antidumping duty investigations and administrative reviews; (2) reconsider its rejection
of JTEKT’s challenge to the third specific match, as identified in this Opinion and Order, for
which the information that Commerce excluded from the record raises the factual issue of
whether the methodology was misapplied; (3) reconsider its rejection of NPB’s proposal to
include additional physical characteristics in the model-match methodology; and (4) reconsider
NTN’s proposal to incorporate into the model-match methodology additional design-type
categories and explain its rejection of that proposal with respect to individual bearings described
in more than one design type; it is further
Consol. Court No. 07-00377 Page 51
ORDERED that the resolution in the Redetermination Pursuant to Remand (“First
Remand Redetermination”) of the issue of the constructed export price of the sales of Aisin’s
subject merchandise that was affected by the use of the cost and sales data for the further-
manufactured goods be, and hereby is, AFFIRMED; it is further
ORDERED that Commerce shall redetermine the weighted-average dumping margins of
plaintiffs, as appropriate, in complying with this Opinion and Order; it is further
ORDERED that Commerce shall have ninety (90) days from the date of this Opinion and
Order in which to file its redetermination upon remand (“Second Remand Redetermination”),
which shall comply with all directives in this Opinion and Order; it is further
ORDERED that plaintiffs shall have thirty (30) days from the filing of the Second
Remand Redetermination in which to file comments thereon; it is further
ORDERED that defendant and defendant-intervenor The Timken Company (“Timken”)
shall have thirty (30) days from the filing of plaintiffs’ comments to file comments; it is further
ORDERED that defendant-intervenor Timken’s Motion to Vacate Preliminary Injunction
With Respect to Nachi be, and hereby is, DENIED; and it is further
ORDERED that plaintiff NTN’s Motion to Stay Further Proceedings Pending the
Finality of New Antidumping Margin Methodology or, in the Alternative, Motion to Allow
Further Briefing and plaintiff NTN’s Amended Unopposed Motion for Leave to File a Reply to
Defendant’s Opposition to the Motion to Stay be, and hereby are, DENIED.
/s/ Timothy C. Stanceu
Timothy C. Stanceu
Judge
Dated: May 5, 2011
New York, New York