Slip Op. 05-64
United States Court of International Trade
SIDERCA, S.A.I.C.,
Plaintiff,
v. Before: Pogue, Judge
UNITED STATES, Court No. 01-00603
Defendant,
and
UNITED STATES STEEL CORP.,
Defendant-Intervenor.
[Plaintiff’s motion for judgment on the agency record is denied.
The Court sustains the International Trade Commission’s sunset
review determination.]
Decided: June 9, 2005
White & Case, LLP (David P. Houlihan, Gregory J. Spak, Richard J.
Burke, Lyle B. Vander Schaaf, Joanna M. Ritcey-Donohue) for
Plaintiff.
James M. Lyons, Acting General Counsel, Peter L. Sultan, Attorney
Advisor, United States International Trade Commission, for
Defendant.
Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer,
John J. Mangan, James C. Hecht, Stephen P. Vaughn) for Defendant-
Intervenor.
OPINION
Pogue, Judge: Plaintiff, Siderca S.A.I.C. (“Siderca”),
challenges the remand determination of Defendant, the U.S.
International Trade Commission (“the ITC”), in the sunset review of
Court No. 01-00603 Page 2
antidumping orders on certain standard, line, and pressure pipe
(“SLP”) from Argentina, Brazil, Germany, and Italy. Plaintiff
alleges that aspects of the ITC’s determination are unsupported by
law or substantial record evidence.
BACKGROUND
In August of 1995, pursuant to the ITC’s finding that U.S.
producers of SLP were being materially injured by competition from
dumped imports, the United States Department of Commerce imposed
antidumping orders on SLP from Argentina, Brazil, Germany, and
Italy. See Certain Small Diameter Seamless Carbon and Alloy Steel
Standard, Line and Pressure Pipe from Argentina, 60 Fed. Reg.
39,708 (Dep’t Commerce Aug. 3, 1995) (notice of antidumping duty
order), Certain Small Diameter Seamless Carbon and Alloy Steel
Standard, Line and Pressure Pipe from Brazil, 60 Fed. Reg. 39,707
(Dep’t Commerce Aug 3, 1995) (notice of antidumping duty order and
amended final determination), Certain Small Diameter Seamless
Carbon and Alloy Steel Standard, Line and Pressure Pipe from
Germany, 60 Fed. Reg. 39,704 (Dep’t Commerce Aug. 3, 1995) (notice
of antidumping duty order and amended final determination), Certain
Small Diameter Seamless Carbon and Alloy Steel Standard, Line and
Pressure Pipe from Italy, 60 Fed. Reg. 39,705 (Dep’t Commerce Aug.
3, 1995) (notice of antidumping duty order). Five years later,
pursuant to 19 U.S.C. § 1675(c) (2000), the ITC instituted a sunset
Court No. 01-00603 Page 3
review to determine whether revocation of the antidumping orders
would likely lead to the recurrence of material injury to U.S. SLP
producers within a reasonably foreseeable period of time. See 19
U.S.C. § 1675a(a)(1)1; Seamless Pipe from Argentina, Brazil,
Germany, and Italy, 65 Fed. Reg. 41,090 (ITC July 3, 2000)
(institution of five-year reviews concerning the countervailing
duty and antidumping duty orders on seamless pipe from Argentina,
Brazil, Germany, and Italy). The ITC cumulated the volume and
effect of imported SLP from three of the four reviewed countries;
having so done, the ITC found that these cumulated imports would
likely cause recurrence of material injury to U.S. SLP producers
within a reasonably foreseeable time. See Certain Seamless Carbon
and Alloy Steel Standard, Line, and Pressure Pipe from Argentina,
Brazil, Germany and Italy, Investigations Nos. 701-TA-362 and 731-
TA-707-710 (Review) (July 2001), CR List 2, Doc. 78 at 30
(“Commission’s Views”).
Plaintiff, an Argentine producer of SLP, challenged these
determinations before the Court. The Court upheld the ITC’s
1
Title 19 U.S.C. § 1675a(a)(1) states, in part:
(1) In general.
In a [sunset review], the Commission shall determine whether
revocation of an order, or termination of a suspended
investigation, would be likely to lead to continuation or
recurrence of material injury within a reasonably foreseeable
time. The Commission shall consider the likely volume, price
effect, and impact of imports of the subject merchandise on the
industry if the order is revoked or the suspended investigation
is terminated.
Court No. 01-00603 Page 4
cumulation determination, but remanded its finding that revocation
of the order would likely cause recurrence of material injury
within a reasonably foreseeable time.2 Specifically, the Court
remanded the determination so that the agency could (1) explain how
it understood and applied the statutory term “likely” in making its
determination, (2) address whether certain aspects of its “likely
volume” determination were in accordance with law and supported by
substantial evidence, (3) address whether certain aspects of its
“likely price effects” determination were supported by substantial
evidence, (4) address record evidence suggesting that the domestic
industry might not be vulnerable to injury upon revocation of the
antidumping order on subject producers’ SLP. On remand, the ITC
again found likely the recurrence of material injury to the
domestic industry in the event of revocation of the antidumping
order. Plaintiff now challenges that remand determination.
STANDARD OF REVIEW
The Court reviews the ITC’s determinations in sunset reviews
to ascertain whether they are “unsupported by substantial evidence
on the record, or otherwise not in accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i); see also 19 U.S.C. § 1516a(a)(2)(B)(iii).
2
Siderca, S.A.I.C. v. United States, 28 CIT __, 350 F. Supp.
2d 1223, 1243 (2004). Familiarity with this opinion is presumed.
Court No. 01-00603 Page 5
DISCUSSION
Plaintiff challenges the ITC’s determinations on all four
issues upon which the Court predicated its remand order. The Court
will address the issues in turn.
1. The “Likely” Standard.
In its earlier opinion, the Court found that the ITC’s
determination did not indicate fidelity to the plain meaning of the
statutory term “likely.” That term is the fulcrum upon which most
of the determinations that the agency is required to make in a
sunset review turn. For example, the ITC must determine whether
material injury is “likely” to continue or recur. See 19 U.S.C. §
1675a(a)(1).
Various opinions of the Court have held that the term “likely”
should be interpreted to mean “probable,” or, to put it another
way, “more likely than not.” See, e.g., A.G. der Dillinger
Huttenwerke v. United States, 26 CIT 1091, 1101 n.14 (2002)
(explaining that in a countervailing duty sunset review, to satisfy
a “likely” standard, a thing must be shown to be “probable,” or
“more likely than not”); Usinor Industeel, S.A. v United States, 26
CIT 367, 474-75 (2002) (“Usinor I”), Usinor Industeel, S.A. v
United States, 26 CIT 1402, 1403-04 (2002), affirmed after remand
at 112 Fed. Appx. 59 (Fed. Cir. 2004) (rejecting argument that
“likely” means something between “possible” and “probable”). In
Court No. 01-00603 Page 6
light of previous cases dealing with contemporaneous reviews
finding that the ITC may have employed the wrong standard,
contemporaneous statements by the ITC arguing for or advancing a
“possible,” rather than a “probable” standard, and the lack of
discussion of the issue in the determination itself, the Court
directed the agency on remand to indicate what standard it had
actually used, and if the standard used was incorrect, to revisit
its determinations accordingly.
In its remand determination, the ITC states “[i]n our original
views in these reviews we applied a ‘likely’ standard that is
consistent with how the Court has defined that term in [its opinion
remanding the original views] as well as in prior opinions
addressing this issue.” Views of the Commission on Remand, CR List
2, Doc. No. 147R at 5 (“Remand Determ.”). The Court will accept
this statement as an assertion that the evidence amassed and cited
by the agency is such as to meet or surpass the burden under the
“probable” standard. Therefore, at this juncture, the only way in
which the agency’s statement can be measured is by the sum of
record evidence that the agency provides as the rationale for its
determinations here.
2. The likely volume analysis.
In evaluating whether material injury is likely to recur, the
Court No. 01-00603 Page 7
ITC is statutorily required to evaluate three factors and to
determine whether they support a finding that revocation would lead
to material injury in a “reasonably foreseeable” period of time.
See 19 U.S.C. § 1675a(a)(1). The first factor concerns the likely
volume of subject imports in the event of revocation. This factor
itself has four non-exclusive sub-factors: (1) any likely increase
in the production capacity or existing unused production capacity
in the exporting country; (2) existing inventories of the subject
merchandise; or likely increases in inventories; (3) the existence
of barriers to the importation of such merchandise into countries
other than the United States; and (4) the potential for product-
shifting if production facilities in the foreign country, which can
be used to produce the subject merchandise, are currently being
used to produce other products. See 19 U.S.C. § 1675a(a)(2). In
its pre-remand determination, the ITC appears to have considered
two additional subfactors, for a total of six subfactors: (5) the
extent to which the exporting countries’ SLP production was export-
driven; and (6) the international business affiliations of the
manufacturers in the exporting countries. See Commission’s Views,
CR List 2, Doc. No. 78 at 25-27. In its prior opinion, the Court
found that the ITC’s evidence on the six subfactors was “minimal at
best,” but particularly remanded the ITC’s evaluation of the
product-shifting subfactor and the international business
affiliation subfactor, finding that the ITC appeared to rely
Court No. 01-00603 Page 8
heavily on both, that the ITC’s product-shifting analysis was not
in accordance with law, and that its reliance on business
affiliations was unsupported by substantial evidence. Siderca,
S.A.I.C., 28 CIT at __, 350 F. Supp. 2d at 1238. The Court will
address the ITC’s remand discussion of the two subfactors in turn.
i. Product-shifting.
The product-shifting subfactor directs the ITC to consider the
potential for product-shifting “if production facilities in the
foreign country, which can be used to produce the subject
merchandise, are currently being used to produce other products.”
19 U.S.C. § 1675a(a)(2)(D). In its pre-remand determination, the
ITC found that the potential for product-shifting was such as to
support a determination that the likely volume would be so great as
to cause recurrence of material injury. The ITC rested this
finding on the fact that subject producers reported that product-
shifting was physically possible; i.e, it was possible to adjust
machines being used to produce other products so as to produce SLP.
See Commission’s Views, CR List 2, Doc. No. 78 at 24. The Court
found, however, that such physical possibility was only the
prerequisite for a positive finding as to the product-shifting
subfactor, and that the ITC must also find that such shifting would
Court No. 01-00603 Page 9
make economic sense for the subject producers.3 The Court
therefore remanded this issue to the ITC. Siderca, S.A.I.C., 28
CIT at __, 350 F. Supp. 2d at 1237-38 (2004). On remand, the
ITC again attempts to show that the potential for product-shifting
is great enough to support a finding that the likely price effects
of revocation will be such as to cause material injury to recur.
To this end, the ITC refers the Court to a series of tables
representing the subject producers’ overall capacity, production,
and capacity utilization for the years of the POR. Remand Determ.,
CR List 2, Doc. No. 147R at 9. The tables reveal that each
producer concentrated on a different part of the market: Argentina
– small-diameter pipe, Brazil – large-diameter SLP, Germany – other
large diameter pipe. See Certain Seamless Carbon and Alloy Steel
Standard, Line and Pressure Pipe from Argentina, Brazil, Germany,
and Italy, Staff Report to the Commission on Investigations Nos.
701-TA-362 and 731-TA-707-710 (Review), CR List 2, Doc. No. 76 at
Tables IV-4, IV-6, & IV-8 (May 24, 2001) (“Staff Report”). The
3
While the ITC provided evidence to support the notion that
prices for SLP are generally higher in the U.S. than elsewhere,
the Court found that this fact alone was not sufficient to
support a finding that product-shifting was economically
rational. Siderca, S.A.I.C., 28 CIT at __ n.16, 350 F. Supp. 2d
at 1237 n.16 (CIT Oct. 27, 2004). The Court noted that in
response to an ITC query directly on point, the majority of the
foreign producers indicated that they could not product-shift “in
response to a relative price change” for SLP vis-a-vis other
products because it was not economically feasible. See id. The
ITC responds to this statement in its remand determination. See
infra note 7.
Court No. 01-00603 Page 10
data also indicate that overall capacity remained constant during
the POR,4 that capacity utilization was generally high, and that
overall production remained fairly steady except for 1999, when
total production fell drastically for all subject producers. Id.
Finally, the data shows that the amount of each product
manufactured by each producer – SLP, oil country tubular goods
(“OCTG”), mechanical tubing, etc. – varied from year to year. Id.
The ITC’s efforts to use this evidence to show past product-
shifting require the Court to review the meaning of the term
“product-shifting.” Title 19 § U.S.C 1675a(a)(2)(D) directs the
ITC to consider “the potential for product-shifting if production
facilities in the foreign country, which can be used to produce the
subject merchandise, are currently being used to produce other
products.” While the Court’s prior opinion in this case did not
explicitly state an interpretation of the term “product-shifting”
as it occurs in this provision, the Court’s understanding has been
that product-shifting cannot occur unless machinery or facilities
dedicated to the production of a certain good are rededicated to
the production of subject merchandise. This understanding is
grounded in the idea that the term “product-shifting” is framed and
defined by its context: because the provision references
“facilities . . . currently being used to produce other products,”
4
While Argentina and Brazil’s overall capacity remained the
same, Germany’s overall production capacity declined slightly
during the POR.
Court No. 01-00603 Page 11
and “which can be used to produce the subject merchandise,”
“product-shifting” must refer to using these otherwise-occupied
facilities to produce subject merchandise.
It is clear that while the ITC’s proffered evidence of varying
product-mix is not incompatible with changing the use of machinery
so as to produce SLP, the evidence does not clearly show the
occurrence or likely occurrence of rededication of facilities,
rather than mere fluctuations in capacity utilization amongst
already adapted facilities. The ITC has not indicated what the
subject producers’ capacity to produce each of their products was
each year; thus, it is impossible to know what capacity was
“dedicated” to a given product only to be later reassigned.5 While
5
The ITC takes issue in its supplemental briefing with the
Court’s use of the word “dedicated” to describe machinery used to
produce a particular product. The ITC points out that the statute
requires only that the ITC look at actual use of machinery that
could be used to produce subject-merchandise in producing other
products; not at whether machinery is “formally devoted” to the
production of non-subject merchandise. ITC’s Supp. Br. at 1-2.
The Court appreciates the distinction that the ITC is attempting
to make between actual use and “formal dedication” to a
particular use, but, given the facts of this case, it is too nice
a distinction. A machine may be said to be dedicated to the
production of a particular product while it is used to produce
that product alone. It may be readjusted and thus, rededicated to
production of a different product. Depending on the machinery and
the products, this process may be a quick and simple one. Here
it is clear that such rededication is possible because the
foreign producers at issue produce other products on the same
machinery and equipment used to produce SLP. See Siderca
S.A.I.C.’s Response to Foreign Producers’/Exporters’
Questionnaire: Certain Seamless Carbon and Alloy Steel Standard,
Line, and Pressure Pipe from Argentina, Attach. 2 to Letter from
David P. Houlihan & Lyle B. Vander Schaaf, White & Case LLP, to
Christopher Cassie, U.S. Int’l Trade Comm’n, Office of
Court No. 01-00603 Page 12
capacity utilization levels for the subject producers are generally
high, they are not so high that the fluctuations in product-mix
presented here could not be explained by a simple decision to make
more or less of a given product on machines already dedicated to
those products.6 The rededication of machinery, it seems to the
Court, would not be necessary to achieve the production figures
documented by the ITC. The fact that the ITC believes that this
evidence shows product-shifting occurred in the past leads the
Investigations, Re: Certain Seamless Carbon and Alloy Steel
Standard Line, and Pressure Pipe from Argentina et al., Inv. Nos.
701-TA-362 & 731-Ta-707-710 (Review), CR List 2, Doc. No. 79 at
Question II-6 (Mar. 19, 2001); Vallourec & Mannesman Tubes SA’s
Response to Foreign Producers’/Exporters’ Questionnaire: Certain
Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe
from Germany, CR List 2, Doc. No. 82 at Question II-6 (Mar. 19,
2001) (Vallourec & Mannesman Tubes SA, although headquartered in
France, produces SLP in Germany and Brazil, and exports SLP from
those facilities).
6
The ITC notes in its remand determination that the subject
producers’ method of reporting capacity was suspect, and appears
to be based on sales or production, rather than available
facilities. See Remand Determ., CR List 2, Doc. No. 147R at 11.
The fact that Siderca calculated its capacity as based on its
sales or production, rather than on the number of facilities
dedicated to the production of each good, suggests that its
production of other products was integrated with its SLP
production. Moreover, it was reasonable for Commerce to rely on
Siderca’s own reporting, assuming that such reporting would
present the Plaintiff’s practices in the light most favorable to
it. Finally, the ITC notes that high fixed costs in the SLP
industry require both subject and domestic producers to keep
their mills working at high levels. Id. It would appear, then,
that even if the subject producers’ method of reporting capacity
might be suspect, their capacity utilization must necessarily be
high, as is reflected in the record compiled by the ITC. See
Staff Report, CR List 2, Doc. No. 76 at Tables IV-4, IV-6, & IV-
8.
Court No. 01-00603 Page 13
Court to believe that the ITC’s interpretation of product-shifting
refers to nothing other than subject producers’ ability to vary
product mix, regardless of whether this varying mix relies on
actual rededication of machinery, or whether it simply reflects
varying capacity utilization on dedicated lines.
While it appears to the Court that the ITC is mistaken in this
belief, it also appears to the Court that the agency nevertheless
has provided sufficient evidence to show that rededication of
machinery would be likely in this case. In its prior opinion, the
Court asked the ITC to show that product-shifting would be
“potentially a rational economic option” for the subject producers
in light of revocation of the antidumping order. Siderca,
S.A.I.C., 28 CIT at __, 350 F. Supp. 2d at 1238. Accordingly, the
ITC must show that if the U.S. market were attractive enough that
subject producers would want to take advantage of it, a rational
option for doing so would be to shift production away from less
profitable lines and into SLP.
Thus, the necessary elements to this proof are (a) strong U.S.
demand and high U.S. price such that the market is attractive (b)
subject producers having shown themselves responsive to market
pressures in the past, (c) subject producers’ physical ability to
rededicate machinery, (d) factors counseling that product-shifting
away from less profitable products would be an attractive option
for entering the U.S. market. The Court finds that the ITC has
Court No. 01-00603 Page 14
shown all of these factors.
First, the ITC established in its earlier determination that
the price in the U.S. is high, and that there is some consensus
that demand will remain strong for the foreseeable future. See
Commission’s Views, CR List 2, Doc. No. 78 at 24-25; Staff Report,
CR List 2, Doc. No. 76 at Pages V-17 to V-18. Second, the ITC has
directed the Court, on remand, to evidence showing that subject
producers have varied their production in the past, ostensibly in
response to market changes. Thus, subject producers have shown
themselves willing and able to react to changing market conditions.
See Remand Determ., CR List 2, Doc. No. 147R at 9; Staff Report, CR
List 2, Doc. No. 76 at Tables IV-4, IV-6, & IV-8. Third, subject
producers appear to be physically capable of rededication of
machinery. While the majority of subject producers reported, in
their questionnaire responses, that it would not be economically
feasible for them to product-shift, See Siderca, S.A.I.C., 28 CIT
at __ n.16, 350 F. Supp. 2d at 1237 n.16, none of them reported
that they were not physically able to do so. As the ITC reasonably
points out here, their responses should be taken to an extent as
“self-serving.”7 See Remand Determ., CR List 2, Doc. No. 147R at
7
In particular, the ITC reviews Plaintiff’s response to the
question of whether it could product-shift in response to
relative price changes. See Remand Determ., CR List 2, Doc. No.
147R at 12. Plaintiff checked the box for “No,” and then
explained its position by stating that its business strategy,
which sought to establish long-term contracts, offering a
complete range of products to consumers, made it unlikely that it
Court No. 01-00603 Page 15
12. Fourth, the ITC also determined that there is an antidumping
order in place on OCTG, another high-priced product which subject
producers make, and in which Plaintiff specializes. The ITC
therefore determined that because of the antidumping order on OCTG,
there would be an extra incentive to transfer production away from
OCTG toward SLP in order to take advantage of the newly opened
market for the latter good. See Commission’s Views, CR List 2, Doc.
No. 78 at 25 n.151.8 Moreover, on remand, in its discussion of
would be able to shift production in response to the opening of
the U.S. market. See Siderca S.A.I.C.’s Response to Foreign
Producers’/Exporters’ Questionnaire: Certain Seamless Carbon and
Alloy Steel Standard, Line, and Pressure Pipe from Argentina,
Attach. 2 to Letter from David P. Houlihan & Lyle B. Vander
Schaaf, White & Case LLP, to Christopher Cassie, U.S. Int’l Trade
Comm’n, Office of Investigations, Re: Certain Seamless Carbon and
Alloy Steel Standard, Line, and Pressure Pipe from Argentina et
al., Inv. Nos. 701-TA-362 & 731-TA-707-710 (Review), CR List 2,
Doc. No. 79 at Question II-9 (Mar. 19, 2001). The ITC notes,
however, that as it found, and the Court recognized, a
significant portion of Plaintiff’s sales of all goods are not
bound to any contracts. See Remand Determ., CR List 2, Doc. No.
147R at 12; Siderca, S.A.I.C., 28 CIT at __ n.14, 350 F. Supp. 2d
at 1235 n.14.
8
In its prior opinion in this case, the Court noted that
while the ITC claimed that Plaintiff would have a special
incentive for switching production over to SLP, as there is a
U.S. antidumping order in place on Argentine OCTG, it failed to
indicate whether the amount of SLP that would likely supplant
OCTG would be significant. See Siderca, S.A.I.C., 28 CIT at __
n.18, 350 F. Supp. 2d at 1238 n.18. However, it appears to the
Court that the agency has remedied this deficiency on remand.
First, by demonstrating on remand that Plaintiff is responsive to
changing market conditions, the agency has indicated that there
is more than a mere physical possibility of product-shifting.
Second, by pointing to the relative importance of OCTG to
Siderca’s business, the agency furnishes a rationale for product-
shifting given the current order on OCTG. See Remand Determ. at
9 n.36. Because its capacity utilization for all products is
Court No. 01-00603 Page 16
subject producers’ past behaviors, the ITC directs the Court to
charts showing that capacity utilization is generally high among
subject producers. See Remand Determ., CR List 2, Doc. No. 147R at
9; Staff Report, CR List 2, Doc. No. 76 at Tables IV-4, IV-6, & IV-
8. Accordingly, it would appear that the ITC has demonstrated that
upon revocation of the orders, the U.S. market would be an
attractive one: given high capacity utilization rates, ability to
rededicate facilities, and the inability to import other types of
merchandise without facing dumping duties, product-shifting away
from those other types of merchandise and toward SLP is at least
“potentially a rational economic option” for subject producers.
It is true that the agency does not engage in any analysis so
concise as that above. However, the agency provides all the
necessary elements. While the determination is not one of “ideal
clarity,” the agency’s path may still be reasonably discerned,
Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419 U.S. 281,
286 (1974), and sufficient evidence is provided to show what the
Court demanded previously – that product-shifting is at least
potentially economically rational – if not, as the agency tried to
demonstrate, that such shifting has occurred in the past. Thus, the
Court here affirms the agency’s determination regarding product-
high and because OCTG would be subject to a dumping order, were
Siderca to decide to make the attempt to import large quantities
of SLP to the United States, one of the more obvious ways to
accomplish this goal without sacrificing extant SLP production
would be to increase production through product-shifting.
Court No. 01-00603 Page 17
shifting.
ii. Transnational corporate affiliations.
In its prior opinion, the Court found that the ITC gave
weight in its analysis of the likely volume of imports to the
finding that the subject producers’ transnational corporate
affiliations were such as to “enhanc[e] their ability to supply
seamless pipe customers with operations in the United States and
abroad through flexible supply arrangements, including global
contracts.” See Siderca, S.A.I.C., 28 CIT at __, 350 F. Supp. 2d
at 1238 (quoting Commission’s Views, CR List 2, Doc. No. 78 at 26-
27). The ITC supported its reliance on the subject producers’
transnational corporate affiliations with a citation to the Staff
Report, which in turn cited mixed responses on the question of
whether there is “an increasing trend on the part of some end users
toward using global contracts.” Staff Report, CR List 2, Doc. No.
76 at Page V-7. The Court held that this citation did not provide
substantial evidence to support the position that the corporate
affiliations would allow for a greater volume of subject
merchandise to enter the U.S. market, and therefore remanded the
issue for clarification. Siderca, S.A.I.C., 28 CIT at __, 350 F.
Supp. 2d at 1238-39.
On remand, the ITC states that each subject producer is
affiliated with a larger transnational group, and that these
Court No. 01-00603 Page 18
affiliations came into existence after the imposition of the
antidumping order on SLP in 1995. Remand Determ., CR List 2, Doc.
No. 147R at 13-14. The ITC also cites the testimony of several
domestic producers that, as part of these transnational groups, the
subject producers have “the means and distribution networks in
place to start shipping immediately,” and that because the
transnational groups are already selling other products in the
U.S., there would be no lag time upon the revocation of the order
during which subject producers would need to slowly build up
networks and customer contracts. Id. Finally, the ITC notes that
after the order on SLP went into effect, one of the transnational
groups began shipping SLP into the U.S. from France, which is not
covered by the order, rather than from Brazil or Germany. Id.
These additional citations are sufficient to allow the Court
to find that the agency has shown a rational basis “between the
facts found and the choices made.” Burlington Truck Lines Co. v.
United States, 371 U.S. 156, 168 (1962). From the testimony cited
by the ITC on remand, it now becomes apparent that the ITC means to
show that, were the orders lifted, the subject producers could use
the distribution networks, marketing expertise, and customer
contacts of their corporate affiliates already in the United States
to enable their re-entry into the U.S. market at an accelerated
pace. Prior to remand, this was not made clear; while the ITC
stated that global corporate affiliations were “such” as to
Court No. 01-00603 Page 19
support its likely volume analysis, it made no effort to explain
how. The ITC has rectified this problem in its remand
determination.
Moreover, Plaintiff has not pointed to any contrary record
evidence on this point. Rather, Plaintiff limits its arguments to
the claim that, to the extent subject producers’ global corporate
affiliations indicate that some of these transnational groups have
been importing subject merchandise during the POR from non-subject
country producers, it is unlikely that the lifting of the orders
would create a new influx of imports. See Siderca’s Comments on
ITC’s Views of the Commission on Remand Pursuant to Slip Op. 04-133
at 18 (“Pl.’s Remand Comments”). Plaintiff’s argument goes not to
whether such affiliations could mitigate barriers to entry, but to
whether it would be rational for subject producers’ transnational
affiliates to encourage further shipments into the U.S. However,
the ITC appears to have considered the subject producers’
transnational affiliations simply as a matter of whether, to the
extent that further shipments would occur, barriers to entry (such
as establishing sales offices, advertising, hiring, etc.) would be
mitigated for the subject producers because of their extant
relations with companies already present in the United States.
Finally, Plaintiff’s “rationality” argument ignores the fact that
an increase in imports from the subject producers could be
beneficial to the global firms of which subject producers form a
Court No. 01-00603 Page 20
part. The price of SLP would be driven down, and the global firms
would be in a position to supply the market with extra SLP at the
new, competitive price, whereas it appears that domestic producers
would be hard-pressed to do so.
Accordingly, the Court holds that the ITC’s remand discussion
of global corporate contacts and the record evidence upon which it
is based support the agency’s overall volume finding.
3. The likely price-effects analysis.
The ITC is statutorily required to consider two subfactors in
evaluating the likely price effects. These are (1) whether there
is likely to be significant price underselling by the subject
imports as compared with the domestic like product, and (2) whether
the subject imports are likely to enter the United States at prices
that would have a significant depressing or suppressing effect on
the price of domestic like products. See 19 U.S.C. § 1675a(a)(3).
In its prior opinion, the Court remanded the ITC’s price-effects
analysis so that the agency might reconsider both factors in light
of the remand analysis of likely volume, and because both factors
were independently unsupported by substantial evidence. Siderca,
S.A.I.C., 28 CIT at __, 350 F. Supp. 2d at 1242. The Court will
now consider the ITC’s remand analysis of those two subfactors, in
turn.
Court No. 01-00603 Page 21
i. Likely underselling.
In its determination prior to remand, the ITC based its
analysis of likely underselling on its findings that (1) subject
merchandise had outsold domestic merchandise prior to the
imposition of the antidumping order, and (2) that questionnaire
responses indicated that price was a very important factor in
purchasing decisions in the U.S. market. See Commission’s Views,
CR List 2, Doc. No. 78 at 27-28. The Court found no problem with
the first finding, but remanded on the finding that the
questionnaire responses supported a view that price was an
important factor in purchasing. Siderca, S.A.I.C., 28 CIT at __,
350 F. Supp. 2d at 1242.
In making this finding, the ITC relied on the answers to a
particular question in its purchasers’ questionnaire. See
Commission’s Views, CR List 2, Doc. No. 78 at 27-28. ; see also
Staff Report, CR List 2, Doc. No. 76 at Table II-1. In this
question, the ITC asked purchasers of SLP to list, in order of
importance, the three most important factors affecting the choice
of a supplier of SLP. See, e.g., Company X Purchasers
Questionnaire, CR List 2, Doc. No. 111 at Question III-23 (Feb. 12,
2001). The ITC provided SLP purchasers with a list of example
factors, including “current availability, extension of credit,
prearranged contracts, price, quality of product, range of
Court No. 01-00603 Page 22
supplier’s product line, traditional supplier, etc.” Id. Out of
the nineteen purchasers responding to the question, six rated price
as the number one factor, six rated price as the number two factor,
five rated price as the number three factor, and two did not rate
price as one of the top three factors in making purchasing
decisions. See Staff Report, C.R. List 2, Doc. No 76 at Table II-
1.
The ITC also asked purchasers of SLP another question, in
which purchasers were invited to rank fourteen purchasing factors
as either very important, somewhat important, or not important.
See, e.g., Company X Purchasers Questionnaire, CR List 2, Doc. No.
111 at Question IV-10 (Feb. 12, 2001). The ITC then took note of
how many purchasers noted each factor as “very important.” Five
factors were rated as “very important” more often than price. See
Staff Report, CR List 2, Doc. No. 76 at Page II-13 and Table II-2.
Of the five factors rated more important than price – product
quality, product consistency, reliability of supply, delivery time,
and availability - SLP purchasers indicated that the domestic
product was superior to foreign SLP on delivery time and
availability, as good or better on reliability of supply, and
generally comparable on product consistency and quality. See Staff
Report, CR List 2, Doc. No. 76 at Table II-7.
The Court found that the ITC’s determination did not account
for the fact that while the first survey appeared to show that
Court No. 01-00603 Page 23
price was an important factor in purchasing, the answers to the
second survey appeared to show that price was less important than
a variety of other factors upon which the domestic product was
rated comparable or superior. It therefore remanded the issue to
the ITC for further clarification. Siderca, S.A.I.C., 28 CIT at
__, 350 F. Supp. 2d at 1242.
In its remand determination, the ITC acknowledges that
purchaser responses to the second survey indicated that five
factors had a higher average “importance rating” than price.
Remand Determ., CR List 2, Doc. No. 147R at 19. However, on the
two factors with the highest average “importance rating” – product
consistency and product quality – both domestic and foreign product
were rated by producers as comparable. Id. This is hardly
surprising, as both must meet the ASTM standards for SLP in order
to be acceptable in the U.S. market. Id. With respect to the
factor with the third highest “importance rating” – reliability of
supply – only six out of thirteen producers indicated that the
domestic product was superior. Id. at 20. Thus, the domestic
product and subject merchandise can be considered to be comparable
or equal on these three factors.
With respect to the two remaining factors that were considered
more important than price – availability and delivery time – the
domestic product was rated as superior to subject merchandise. Id.
Plaintiff appears to have waived any argument that domestic product
Court No. 01-00603 Page 24
enjoys a premium because of this superiority – at least no record
evidence appears to have been proffered to support the idea.
Moreover, The ITC found that the domestic product was generally
ranked as inferior to subject merchandise on the issue of price.
Id. Finally, the ITC found that, of the six purchasers who
ranked “price” as only “somewhat important,” rather than “very
important,” in their responses to the second survey, all six ranked
price as one of the top three factors in making purchasing
decisions in response to the ITC’s first survey. Remand Determ.,
CR List 2, Doc. No. 147R at 20 n.72. The only purchaser to rank
price as “not important” during the second survey ranked price
among its top three purchasing decision factors in responding to
the first survey. Id.
The Court finds that this information cures the deficiencies
of the ITC’s prior determination. The ITC has now squarely
confronted the apparent differences between the two surveys and has
indicated that, even to the extent given respondents’ answers
resulted in some factors being given more weight than price in the
tabulation of the results of the second survey, the first survey
appears to more clearly indicate the real importance of price to
the purchasers. In tandem with the ITC’s earlier finding that the
subject imports outsold domestic product prior to the imposition of
Court No. 01-00603 Page 25
the orders,9 Remand Determ., CR List 2, Doc. No. 147R at 21-22, the
Court holds that the ITC’s underselling analysis appears sufficient
to support a finding of adverse price-effects in the event of
revocation.
ii. Price suppression and depression.
In its discussion of the second subfactor, the ITC notes that
the original investigation found significant “price depressing and
suppressing effects.” See Commission’s Views, CR List 2, Doc. No.
78 at 27. The ITC then notes that given the likely volume of
subject imports, the lower prices for foreign SLP reported by
purchasers, and a record of consistent underselling in the original
investigation, the revocation of the antidumping orders will lead
to exports with likely significant price depressing and suppressing
effects. See id. at 28.
In its prior opinion, the Court found that this finding –that
both price depression and suppression would likely occur – was
insufficiently explained. Siderca, S.A.I.C., 28 CIT at __, n.20,
350 F. Supp. 2d at 1239, n.20.
On remand, the ITC explains that when it stated that it was
9
The ITC also notes that after the imposition of the orders,
purchasers switched away from subject merchandise toward non-
subject imports. See Remand Determ., CR List 2, Doc. No. 147R at
21; Staff Report at IV-1 n. 1. Presumably, these non-subject
imports were more cheaply priced than domestic product, as an
antidumping order was placed on many of the countries from which
they emanated in 1999.
Court No. 01-00603 Page 26
likely that both price suppression and depression would likely
occur in the result of revocation of the orders, it did not mean to
ambiguously imply that both would happen, across the industry,
simultaneously. Rather, it is likely that both would happen, not
across the board and simultaneously, but to various companies as
they individually varied their business strategies in response to
the revocation of the order. Remand Determ., CR List 2, Doc. No.
147R at 22-23. This is to say, it is likely that, given the
likelihood of significant underselling by subject imports, some
domestic producers would lower their prices, and some would refrain
from raising their prices in the future. Id. Various companies
might employ each strategy in turn. Id. If demand for SLP in the
U.S. market remains strong, price suppression would be more likely;
if demand is weak, depression would more likely occur. Id.
The ITC notes that, in its determination in the original
investigation of SLP from subject producers’ countries, it found
that there had been varying reactions of suppression and depression
in response to competition from subject producers’ imports. Id. at
23. The ITC argues that this fact supports its determination that
in the event that the orders are lifted, there will be variable
price effects across the market. The ITC states that it believes
that, given that the U.S. price for SLP was increasing toward the
end of the POR, suppression would be the most likely first response
to the revocation of the orders, followed by depression as imports
Court No. 01-00603 Page 27
become established in the market. Id. at 24.
The Court finds that this explanation is sufficient to meet
the ITC’s burden to show a “rational basis” between the facts found
and the choices made. The remand determination makes clear the
ITC’s position on the question of suppression and depression.
4. Likely Impact of Subject Imports.
The ITC’s findings on the likely impact of subject imports
necessarily rest on its findings that the likely volume of imports
is such as will have an impact, and the likely price effects such
as to disrupt the U.S. industry. The Court in its prior opinion
also specifically asked the ITC to address whether the ITC’s likely
impact analysis properly accounted for apparent indicators of “new-
found strength” in the U.S. SLP industry. Siderca, S.A.I.C., 28
CIT at __, 350 F. Supp. 2d at 1243.
Pursuant to statute, in addition to evaluating the likely
volume and price effects of subject imports in the event of
revocation, the ITC must also examine the likely impact of such
imports on domestic producers. See 19 U.S.C. § 1675a(a)(4). In its
initial, pre-remand determination, the ITC found that the domestic
SLP industry’s financial condition improved after the imposition of
the antidumping orders in 1995, but substantial losses were
sustained in 1999. See Commission’s Views, CR List 2, Doc. No. 78
Court No. 01-00603 Page 28
at 28-29.10 The industry recovered somewhat in 2000. Id. at 29.
However, between 1995 and 2000, the domestic industry’s U.S.
shipments, capacity to produce, capacity utilization, and actual
production all declined. Id.
At the same time, the Court found that the record appeared to
show that apparent U.S. consumption of SLP increased significantly
in 2000 and that industry prognostications indicate that the market
will continue to grow. See Commission’s Views, CR List 2, Doc. No.
78 at 29 n.180. Respondent domestic SLP firms indicated that they
were commissioning new operations, and that operating margins were
increasing despite parallel increases in raw material costs.
Moreover, antidumping orders were placed on SLP imports from the
Czech Republic, Japan, Romania, and South Africa. Id.
While the ITC’s determination made some attempt to explain
away these developments, its analysis was not sufficient to provide
a reasonable basis for discounting them. Therefore, the Court
remanded the likely impact analysis to the agency for a fuller
discussion of why improving industry indicators did not affect the
10
The Court notes that 1999 appears to have been a bad year
for seamless pipe manufacturers globally. Subject producers’
actual production of seamless pipe and capacity utilization
slumped in 1999, only to recover markedly in 2000. See Staff
Report, CR List 2, Doc. No. 76 at Tables IV-4, IV-6, and IV-8.
Total shipments were also smaller than in previous years,
although for the Brazilian producer, shipments in 1999 were
slightly higher than in 1998, albeit far below shipments in 1997.
See Staff Report, CR List 2, Doc. No. 76 at Tables IV-3, IV-5,
and IV-7.
Court No. 01-00603 Page 29
ITC’s determination. See Siderca, S.A.I.C., 28 CIT at __, 350 F.
Supp. 2d at 1243.
On remand, the ITC explains that while the industry’s progress
in the year 2000 was very good, it was only so as compared to its
state in 1999, a year in which SLP producers around the world
suffered. Remand Determ., CR List 2, Doc. No. 147R at 27. While
compared to 1999, the 2000 figures were excellent, they showed that
the industry was in many respects even weaker than it had been in
1995, the year that the antidumping orders on SLP from subject
producers went into effect. Id. For example, production levels,
market share, domestic shipments, and net sales were all lower in
2000 than they had been in 1995 and industry’s 2000 operating
income was not sufficient to cover 1999's losses. Id.
Furthermore, U.S. SLP consumption in 2000 was barely higher than it
had been in 1995, and prognostications for the future were mixed.
Id. at 28. Finally, the ITC notes that the imposition of dumping
orders on SLP from countries other than subject producers during
the POR is evidence that the domestic industry remained vulnerable
to import competition during that time. Id. at 29.
There is, of course, as Plaintiff argues, record evidence
suggesting a sunnier picture for the industry. Operating income in
2000 was the second highest yearly operating income since 1992.
See Staff Report, C.R. List 2, Doc. No. 76 at Table I-1. Certain
indicators, such as end-of-year inventories, were very good. Id.
Court No. 01-00603 Page 30
Some indicators suggested that U.S. demand was likely to remain
strong. See Pl.’s Remand Comments at 26. In point of fact, the
record evidence for each view of the industry – as either
vulnerable to material injury or strong enough to withstand import
competition, even from possibly dumped imports – is strong enough
that prior to the remand, the Commissioners split 3-3 on the issue.
See Commission’s Views, C.R. List 2, Doc. No. 78 at 29 n.180.
Such a split in the evidence, however, is not fatal to the
ITC’s determination. It is well-established that there may be
substantial evidence on an administrative record to support two
inconsistent determinations. Consolo v. Fed. Mar. Comm’n, 383 U.S.
607, 620 (1966) (citation omitted). Substantial evidence, after
all, need only be“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) (citations omitted). Reasonable
minds may differ. The Court finds that the ITC’s remand discussion
of the likely impact of subject imports adequately explains why
the ITC found that the industry would be adversely impacted by the
lifting of the orders, despite the existence of positive industry
indicators. Here, as opposed to its pre-remand determination, the
ITC has squarely stated why it feels that those indicators belie
the turbulent recent history of the domestic SLP producers, which
faced major losses in 1999 and which were harmed by imports from
non-market producers. Moreover, even if Plaintiff is correct in
Court No. 01-00603 Page 31
stating that demand for SLP is likely to remain strong, it is not
at all certain that, given the industry’s recent history, U.S.
producers would be in a position to capture much of that demand if
they were faced with competition from subject producers.
Accordingly, the Court holds that the ITC’s analysis of the
likely impact of subject imports is supported by substantial
evidence.
CONCLUSION
The Court affirms the ITC’s use of the term “likely” as
applied throughout its remand determination. The Court likewise
affirms the agency’s findings on the likely volume, price effects,
and impact of subject imports in the event of revocation of the
antidumping orders on SLP from Argentina, Brazil, and Germany.
/s/ Donald C. Pogue
Donald C. Pogue
Judge
Dated: June 9, 2005
New York, New York