Timken Co. v. United States

Slip Op. 03-45

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
___________________________________
:
THE TIMKEN COMPANY, :
:
Plaintiff, :
:
v. :
:
UNITED STATES, :
:
Defendant, :
: Court No.
and : 00-08-00386
:
NSK LTD. and NSK CORPORATION; :
NTN BEARING CORPORATION OF :
AMERICA, NTN BOWER CORPORATION, :
AMERICAN NTN BEARING MANUFACTURING :
CORPORATION and NTN CORPORATION; :
KOYO SEIKO CO., LTD. and KOYO :
CORPORATION OF U.S.A. :
:
Defendant-Intervenors. :
___________________________________:

Plaintiff, The Timken Company (“Timken”), moves pursuant to
USCIT R. 56.2 for judgment upon the agency record challenging
certain aspects of the United States International Trade
Commission’s (“ITC” or “Commission”) final determination in Certain
Bearings From China, France, Germany, Hungary, Italy, Japan,
Romania, Singapore, Sweden, and the United Kingdom, 65 Fed. Reg.
39,925 (June 22, 2000), in which the ITC found that revocation of
the antidumping finding (ITC Inv. No. AA-1921-143) and order (ITC
Inv. No. 731-TA-343) on tapered roller bearings (“TRBs”) from Japan
“would not be likely to lead to continuation or recurrence of
material injury to an industry in the United States within a
reasonably foreseeable time.” Specifically, Timken contends, inter
alia, that the ITC failed to: (1) incorporate the information and
findings drawn by the ITC in its prior material injury
determinations; (2) properly assess the importance of Japanese
investment in the domestic industry; (3) consider the likely effect
of revocation on the entire domestic industry; (4) adequately
investigate the TRB capacity utilization rates of Japanese
producers; (5) properly assess the likelihood of price underselling
before revoking the order; (6) support its finding with respect to
Court No. 00-08-00386 Page 2

the domestic industry’s vulnerability or the likelihood of
continued material injury upon revocation of the order; and (7)
consider the relevant economic factors in the sunset review within
the context of the business cycle. The complete views of the ITC
were published in Certain Bearings From China, France, Germany,
Hungary, Italy, Japan, Romania, Singapore, Sweden, and the United
Kingdom (“Final Determination”), Invs. Nos. AA-1921-143, 731-TA-
341, 731-TA-343-345, 731-TA-391-397, and 731-TA-399 (Review), USITC
Pub. 3309 (June 2000).

Held: Timken’s motion for judgment on the agency record is
granted in part and denied in part. Case remanded to the ITC for
further explanation and investigation consistent with this opinion.

[Timken’s 56.2 motion is granted in part and denied in part. Case
remanded.]

April 24, 2003

Stewart and Stewart (Terence P. Stewart, William A. Fennell
and Amy S. Dwyer) for The Timkem Company, plaintiff.

Lyn M. Schlitt, General Counsel, Office of the General
Counsel, United States International Trade Commission (Marc A.
Bernstein and Mary Jane Alves), for the United States, defendant.

Crowell & Moring LLP (Robert A. Lipstein, Matthew P. Jaffe,
Grace W. Lawson) for NSK Ltd. and NSK Corporation, defendant-
intervenors.

Barnes, Richardson & Colburn (Donald J. Unger, Kazumune V.
Kano and Wm. Randolph Rucker) for NTN Bearing Corporation of
America, NTN Bower Corporation, American NTN Bearing Manufacturing
Corporation and NTN Corporation, defendant-intervenors.

Sidley Austin Brown & Wood LLP (Neil R. Ellis and Maria T.
DiGiulian) for Koyo Seiko Co., Ltd. and Koyo Corporation of U.S.A.,
defendant-intervenors.

OPINION

TSOUCALAS, Senior Judge: Plaintiff, The Timken Company

(“Timken”), moves pursuant to USCIT R. 56.2 for judgment upon the
Court No. 00-08-00386 Page 3

agency record challenging certain aspects of the United States

International Trade Commission’s (“ITC” or “Commission”) final

determination in Certain Bearings From China, France, Germany,

Hungary, Italy, Japan, Romania, Singapore, Sweden, and the United

Kingdom, 65 Fed. Reg. 39,925 (June 22, 2000), in which the ITC

found that revocation of the antidumping finding (ITC Inv. No. AA-

1921-143) and order (ITC Inv. No. 731-TA-343) on tapered roller

bearings (“TRBs”) from Japan “would not be likely to lead to

continuation or recurrence of material injury to an industry in the

United States within a reasonably foreseeable time.” Specifically,

Timken contends, inter alia, that the ITC failed to: (1)

incorporate the information and findings drawn by the ITC in its

prior material injury determinations; (2) properly assess the

importance of Japanese investment in the domestic industry; (3)

consider the likely effect of revocation on the entire domestic

industry; (4) adequately investigate the TRBs capacity utilization

rates of Japanese producers; (5) properly assess the likelihood of

price underselling before revoking the order; (6) support its

finding with respect to the domestic industry’s vulnerability or

the likelihood of continued material injury upon revocation of the

order; and (7) consider the relevant economic factors in the sunset

review within the context of the business cycle. The complete

views of the ITC were published in Certain Bearings From China,

France, Germany, Hungary, Italy, Japan, Romania, Singapore, Sweden,
Court No. 00-08-00386 Page 4

and the United Kingdom (“Final Determination”), Invs. Nos. AA-1921-

143, 731-TA-341, 731-TA-343-345, 731-TA-391-397, and 731-TA-399

(Review), USITC Pub. 3309 (June 2000).1

Background

On January 23, 1975, the ITC determined that a domestic

industry was likely to be injured as a result of Japanese TRBs

imported into the United States that were likely to be sold at less

than fair value (“LTFV”). See Tapered Roller Bearings and Certain

Components Thereof From Japan, Inv. No. AA-1921-143, USITC Pub. 714

at 2 (Jan. 1975). A dumping finding was published in the Federal

Register, see 41 Fed. Reg. 34,975 (Aug. 18, 1976), and on August

10, 1981, the United States Department of Commerce (“Commerce”)

specified that the order was to be limited to TRBs, four inches or

less in outside diameter and components thereof, and excluded

unfinished components. See Clarification of Scope of Antidumping

Finding of Tapered Roller Bearings and Certain Components Thereof

From Japan, 46 Fed. Reg. 40,550 (Aug. 10, 1981). The ITC made a

further material injury determination with respect to TRBs not

1
During the issuance of this determination, the Commission
was comprised of Chairman Koplan, Vice Chairman Okun and
Commissioners Bragg, Miller, Hillman and Askey. Vice Chairman
Okun, however, did not participate in the review. See Final
Determination, USITC Pub. 3309 at 1. The ITC’s Final Determination
is readily accessible on the internet at http://www.usitc.gov/wais/
reports/arc/w3309.htm. Pagination throughout this opinion is
matched to the official internet publication.
Court No. 00-08-00386 Page 5

subject to the 1976 finding and, accordingly, Commerce published an

antidumping duty order on TRBs from Japan on October 6, 1987.2 See

Antidumping Duty Order on Tapered Roller Bearings and Parts

Thereof, Finished and Unfinished, From Japan (“Antidumping Duty

Order”), 52 Fed. Reg. 37,352 (October 6, 1987).

On April 1, 1999, the Commission issued notice of its five-

year (“sunset”) reviews concerning antidumping duty orders on

certain bearings, including TRBs from Japan, to determine whether

revocation of the orders would be likely to lead to continuation or

recurrence of material injury. See Certain Bearings From China,

France, Germany, Hungary, Italy, Japan, Romania, Singapore, Sweden,

and the United Kingdom, 64 Fed. Reg. 15,783 (April 1, 1999). On

July 2, 1999, the Commission determined that it would conduct full

reviews.3 See Certain Bearings From China, France, Germany,

Hungary, Italy, Japan, Romania, Singapore, Sweden, and the United

Kingdom, 64 Fed. Reg. 38,471 (July 16, 1999). Notice regarding

2
The 1987 Order covered TRBs defined under the Tariff
Schedules of the United States (“TSUS”) “item numbers 680.30 and
680.39; flange, take-up cartridge, and hanger units incorporating
[TRBs], . . . classified under TSUS item number 681.10; and tapered
roller housings (except pillow blocks) incorporating tapered
rollers, with or without spindles, whether or not for automotive
use, and . . . classified under TSUS item 692.32 . . . .”
Antidumping Duty Order, 52 Fed. Reg. at 37,352.
3
In a five-year review, the ITC may conduct a full review,
which includes a public hearing, issuance of questionnaires and
other procedures, or an expedited review not encompassing such
procedures. See 19 C.F.R. §§ 207.60(b)–(c) & 207.62(c)–(d) (1999).
Court No. 00-08-00386 Page 6

scheduling and a public hearing was published on August 27, 1999,

see Certain Bearings from China, France, Germany, Hungary, Italy,

Japan, Romania, Singapore, Sweden, and the United Kingdom, 64 Fed.

Reg. 46,949-50 (August 27, 1999), and the hearing, allowing all

interested parties to comment, was held on March 21, 2000. See

Final Determination, USITC Pub. 3309 at 2.

The Commission made a final determination regarding the effect

of revoking the antidumping duty order on TRBs from Japan in June

2000, and concluded that lifting the order would not likely lead to

continuation or recurrence of material injury to any domestic

industry within the reasonably foreseeable future.4 Timken

advances several challenges to the Commission’s negative

determination, and contends that the finding was unsupported by

substantial evidence or otherwise contrary to law because of its

reliance on, inter alia, illogical reasoning, incomplete record

evidence and incorrect conclusions regarding price underselling.

4
Commissioner Miller issued a separate and dissenting
opinion. See generally Final Determination, USITC Pub. 3309,
Separate and Dissenting Views of Commissioner Marcia E. Miller at
83. The remaining three commissioners (Askey, Bragg and Hillman)
and Chairman Koplan voted in favor of revocation. Commissioner
Bragg clarified her negative determination via footnotes added to
the ITC’s opinion and expounded separate views in another opinion
regarding cumulation (which is not at issue in the case at bar).
See Final Determination, USITC Pub. 3309 at 45 n.310. Commissioner
Askey also issued a separate opinion regarding her negative
determination. See generally Final Determination, USITC Pub. 3309,
Concurring and Dissenting Views of Commissioner Thelma J. Askey
(“Askey’s Views”) at 1.
Court No. 00-08-00386 Page 7

See Mem. P. & A. Supp. Timken’s Mot. J. Agency R. (“Timken’s Mem.”)

at 55. The ITC and defendant-intervenors, NSK Ltd. and NSK

Corporation (“NSK”), NTN Bearing Corporation of America, NTN Bower

Corporation, American NTN Bearing Manufacturing Corporation and NTN

Corporation (“NTN”), and Koyo Seiko Co., Ltd. and Koyo Corporation

of U.S.A. (“Koyo”), oppose Timken’s claims.

Jurisdiction

The Court has jurisdiction over this matter pursuant to 19

U.S.C. § 1516a(a)(2)(A)(i)(I) (2000) and 28 U.S.C. § 1581(c)

(2000).

Standard of Review

The Court will uphold the Commission’s final determination in

a full five-year sunset review unless it is “unsupported by

substantial evidence on the record, or otherwise not in accordance

with law.” 19 U.S.C. § 1516a(b)(1)(B)(i) (1994); see NTN Bearing

Corp. of America v. United States, 24 CIT 385, 389-90, 104 F. Supp.

2d 110, 115-16 (2000)(detailing the Court’s standard of review for

agency determinations). “‘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.’” Matsushita

Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed. Cir.

1984)(quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229
Court No. 00-08-00386 Page 8

(1938)). “[T]he possibility of drawing two inconsistent

conclusions from the [same] evidence does not” preclude the Court

from holding that the agency finding is supported by substantial

evidence. Consolo v. Federal Mar. Comm’n, 383 U.S. 607, 620

(1966). An agency determination will not be “overturned merely

because the plaintiff ‘is able to produce evidence . . . in support

of its own contentions and in opposition to the evidence supporting

the agency’s determination.’” Torrington Co. v. United States, 14

CIT 507, 514, 745 F. Supp. 718, 723 (1990)(internal citation

omitted), aff’d, 938 F.2d 1276 (Fed. Cir. 1991).

Discussion

I. Statutory Background

In a five-year review, the ITC determines whether revocation

of an antidumping duty order would likely “lead to continuation or

recurrence of dumping . . . [and] material injury.” 19 U.S.C. §

1675(c)(1) (1994). The Statement of Administrative Action (“SAA”)5

5
The SAA represents “an authoritative expression by the
Administration concerning its views regarding the interpretation
and application of the Uruguay Round agreements.” H.R. Doc. No.
103-316, at 656 (1994), reprinted in 1994 U.S.C.C.A.N. 4040. “It
is the expectation of the Congress that future Administrations will
observe and apply the interpretations and commitments set out in
this Statement.” Id.; see also 19 U.S.C. § 3512(d) (1994) (“The
statement of administrative action approved by the Congress . . .
shall be regarded as an authoritative expression by the United
States concerning the interpretation and application of the Uruguay
Round Agreements and this Act in any judicial proceeding in which
(continued...)
Court No. 00-08-00386 Page 9

clarifies that the standard applied to determine whether it is

“likely” that material injury will continue or recur is different

from the standards applied in material injury or threat of material

injury determinations. See H.R. Doc. No. 103-465, at 883 (1994),

reprinted in 1994 U.S.C.C.A.N. at 4209. Specifically, “under the

likelihood standard, the Commission will engage in a counter-

factual analysis: it must decide the likely impact in the

reasonably foreseeable future . . . [due to] revocation” of an

antidumping order. H.R. Doc. No. 103-465, at 883-84, reprinted in

1994 U.S.C.C.A.N. at 4209.

In its 19 U.S.C. § 1675a(a)(1) determination, the Commission

continuously considers “the likely volume, price effect, and impact

of imports of the subject merchandise on the industry if the order

is revoked . . . .” 19 U.S.C. § 1675a(a)(1) (1994). Title 19 of

the United States Code also states that the Commission shall

consider:

(A) its prior injury determinations, including the
volume, price effect, and impact of imports of the
subject merchandise on the industry before the order was
issued . . . ,

(B) whether any improvement in the state of the
industry is related to the order . . . ,

(C) whether the industry is vulnerable to material

(...continued)
a question arises concerning such interpretation or application.”)
Court No. 00-08-00386 Page 10

injury if the order is revoked . . . , and

(D) in an antidumping proceeding under [19 U.S.C.
§ 1675(c)] . . . , the findings of the administering
authority regarding duty absorption under [19 U.S.C. §
1675(a)(4)] . . . .

19 U.S.C. § 1675a(a)(1)(A)-(D) (1994). Guidance regarding the

basis for the Commission’s determination is also provided in 19

U.S.C. § 1675a(a)(5) (1994). In pertinent part, the statute reads

that:

[t]he presence or absence of any factor which the
Commission is required to consider under [19 U.S.C. §
1675a] shall not necessarily give decisive guidance with
respect to the Commission’s determination of whether
material injury is likely to continue or recur within a
reasonably foreseeable time if the order is revoked . .
. . In making that determination, the Commission shall
consider that the effects of revocation . . . may not be
imminent, but may manifest themselves only over a longer
period of time.

19 U.S.C. § 1675a(a)(5). The SAA adds that although the Commission

must consider all factors listed in 19 U.S.C. § 1675a(a)(1)(A)-(D),

“no one factor is necessarily dispositive.” H.R. Doc. No. 103-465,

at 886, reprinted in 1994 U.S.C.C.A.N. at 4211.

II. Commission Findings

In the case at bar, the ITC voted 4 to 1 that revoking the

antidumping duty order on TRBs from Japan would not likely lead to

continuation or recurrence of material injury to any domestic

industry within a reasonably foreseeable time. To determine

whether TRBs from Japan compete with each other and with domestic
Court No. 00-08-00386 Page 11

like products, the ITC generally considers four factors, which

include:

(1) the degree of fungibility between the imports from
different countries and between imports and the domestic
like product, including consideration of specific
costumer requirements and other quality related
questions; (2) the presence of sales or offers to sell in
the same geographical markets of imports from different
countries and the domestic like product; (3) the
existence of common or similar channels of distribution
for imports from different countries and the domestic
like product; and (4) whether the imports are
simultaneously present in the market.

Final Determination, USITC Pub. 3309 at 17 n.112 (referencing

Wieland Werke, AG v. United States, 13 CIT 561, 563, 718 F. Supp.

50, 52 (1989) (stating the factors considered by the ITC in a prior

final determination)). However, since sunset reviews are

prospective in nature, the ITC also considers additional

“significant conditions of competition that are likely to prevail

if the orders [on TRBs from Japan] are revoked.” Final

Determination, USITC Pub. 3309 at 18.

A. Likely Volume of Subject Imports

In the ITC’s Final Determination, the Commission found that

TRBs from Japan have significantly decreased since the imposition

of the 1987 Order, and attributed the decrease mainly to the

expansion of Japanese producers’ facilities within the United

States. See Final Determination, USITC Pub. 3309 at 31. According

to the ITC, this substantial investment in domestic TRB production
Court No. 00-08-00386 Page 12

facilities indicates that foreign producers are “committed to their

U.S. operations and import to complement, rather than displace,

their U.S. production.” Id. The Final Determination indicates

that a review of the record does not lead the Commission to the

conclusion that Japanese producers will alter their focus on

strengthening their U.S. facilities in the reasonably foreseeable

future. See id. Instead, the data representing almost all TRB

production in Japan indicates that Japan has “extremely high”

capacity utilization rates. See id. Moreover, since “machinery

and equipment needed for TRB production are highly specialized and

generally dedicated to TRBs, there is little potential that

Japanese producers would shift production in Japan from other types

of bearings to TRBs.”6 Id. at 31-32. Finally, since Japanese TRB

producers inventory-to-shipment ratios were low and Japanese TRB

producers were not predominantly “export-oriented,” the ITC

determined that Japan was not likely to increase the volume of its

TRB imports to the United States if the 1987 Order were revoked.

6
Commissioner Bragg adds in a footnote that specific
Japanese TRB producers, which have established a physical presence
in the United States, will probably not engage in export behavior
that will harm the monetary interests of their United States
facilities. However, Commissioner Bragg notes that this
rationalization of production within a family of affiliated
companies, in and of itself, does not indicate the likely behavior
of Japanese imports as a whole in the event of revocation. See
Final Determination, USITC Pub. 3309 at 31 n.204.
Court No. 00-08-00386 Page 13

See id. 31-32.7

B. Likely Price Effects of Subject Imports

In 1975, the ITC determined that TRBs, four inches and under,

from Japan were sold in the United States for LTFV, and that the

“LTFV margins were a material factor in the margins of underselling

by the Japanese producers.” Final Determination, USITC Pub. 3309

at 32. Later, in 1987, the ITC found that “the value of cumulated

subject imports was increasing at a time of decreasing shipments by

domestic producers[,] and that underselling by cumulated subject

imports at a time of declining U.S. prices was fairly consistent.”

Id.

The Final Determination at issue in the case at bar, however,

was predicated on pricing data that shows “infrequent underselling

by Japanese TRB imports . . . for the lower volume sales. The more

7
Commissioner Askey cumulated the volume of subject
imports from China and Japan and concluded a significant increase
in subject imports (that is, TRBs from China and Japan) is unlikely
in the event of revocation of the antidumping orders. See Final
Determination, USITC Pub. 3309, Askey’s Views at 10. Commissioner
Askey based her views on the record, which indicates, inter alia,
that: (1) little available, unused capacity in Japan (or
alternatively, existence of high capacity utilization rates); (2)
Japanese and Chinese TRB producers ship the majority of their TRBs
to their home markets; (3) lack of incentive for Japanese to alter
their shipping habits; (4) the domestic industry does not have
sufficient capacity to fully serve the United States market; and
(5) subject imports lost market share after issuance of the 1987
Order that was later gained by non-subject imports. See id. at 10-
12.
Court No. 00-08-00386 Page 14

significant pricing data, for high-volume sales, show consistent

overselling by Japanese imports, at significant margins of

overselling.” Id. (emphasis added). Accordingly, the ITC

concluded that revocation of the antidumping order is unlikely to

lead to any significant underselling, and that “subject imports

from Japan would not be likely to depress or suppress U.S. prices

to any significant degree. In particular, with high capacity

utilization and commitments to third-country markets, the Japanese

producers do not have an incentive to price aggressively to gain

additional U.S. market share.” Id. at 33.8

C. Likely Impact of Subject Imports

In 1975, the ITC acknowledged a deterioration in the domestic

TRB industry, and made an affirmative material injury determination

due to the market penetration of the TRB industry by Japanese

producers and underselling of Japanese imports. See Final

Determination, USITC Pub. 3309 at 33. In the Final Determination,

the ITC found an improvement in the domestic TRB industry since the

1987 Order and concluded that the United States industry is not

currently vulnerable. The Commission found that:

8
Commissioner Askey generally agreed with the ITC majority
views, and adds that domestic prices are likely to rise in the
foreseeable future, given expectations of increased demand, high
capacity utilization levels of the United States TRB industry and
the domestic markets’ inability to meet such rising demand. See
Final Determination, USITC Pub. 3309, Askey’s Views at 10-18.
Court No. 00-08-00386 Page 15

[t]he TRB market is expanding; apparent consumption
increased by 7.3 percent from 1997 to 1998 and was up
about 1.6 percent in interim 1999 compared to interim
1998. The industry is highly concentrated and
profitable. The domestic industry’s market share has
increased to the level held during the original 1987
investigation as capacity and capacity utilization
increased substantially. Because of the absence of
significant likely volume and price effects, [the
Commission found] that revocation of the antidumping
finding and order on TRB imports from Japan would not be
likely to impact significantly the domestic industry’s
output, sales, market share, profits, or return on
investment.

Id. at 33 (footnote in original omitted).

III. Analysis

A. Original Investigation

1. Contentions of the Parties

Timken argues that the Final Determination is unsupported by

substantial evidence and otherwise not in accordance with law

because, inter alia, the ITC failed to consider the information

obtained and conclusions drawn by the Commission in prior injury

determinations. See Timken’s Mem. at 75-92. According to Timken,

19 U.S.C. § 1675a(a)(1)(A) clearly instructs the Commission to

consider findings from the original investigation “as a source of

highly probative evidence.” Id. at 76. In its moving brief,

Timken points to the record supporting the original 1976 Finding

and 1987 Order (collectively “original investigations”) and

explains that dumping by Japanese TRB producers caused the original
Court No. 00-08-00386 Page 16

deterioration of the domestic TRB market. See id. at 21-24.

According to Timken, “Japanese TRB producers continue to be

formidable competitors in the U.S. market[,]” id. at 24, and since

TRBs are “fully interchangeable” commodities, regardless of place

of production, the competition between TRB markets is primarily

price-based. See id. at 25-26. Timken speculates that any

revocation of orders currently in place will likely lead to the

recurrence of material injury, and references Commerce’s prior

revocation of an order on TRBs imported by NTN to prove that

subsequent dumping of TRBs in the United States was a result of

such revocation. See id. at 22.

Timken also states that continued dumping, despite the 1987

Order, “has reduced industry revenues to such a degree that Timken

. . . has been unable to earn its cost of capital[9] for almost the

past twenty years. Timken has lost [a substantial amount] in

operating profits from 1996 to . . . [1999] due to lost volume and

prices reduced to meet competition from dumped imports.” Id. at

39-40. According to Timken, adequate explanations were not

provided for the inconsistent conclusions drawn by the ITC in its

Final Determination, when compared to those drawn in the 1987

determination, regarding volume, including: (1) increased

9
Timken defines cost of capital as “the minimum rate of
return demanded by shareholders and lenders.” See Timken’s Mem. at
37.
Court No. 00-08-00386 Page 17

investment in U.S. facilities; (2) high capacity utilization rates;

(3) low inventory-to-shipment ratios; (4) product shifting; and (5)

market orientation. See id. at 78-92. Timken contends that such

lack of consistency and explanation renders the Commission’s

determination arbitrary. Generally, Timken argues that revocation

of the order will lead to an increase in dumped Japanese imports of

the subject merchandise and the ultimate depression of domestic TRB

prices within two years. See id. at 45.

The ITC argues that Timken “fundamentally misconstrues” the

Commission’s statutory requirements regarding five-year reviews.

See Mem. Def. ITC Opp. Pl.’s Rule 56.2 Mot. J. Agency R. (“ITC’s

Mem.) at 24-26. The ITC contends that 19 U.S.C. § 1675a(a)

“directs the Commission to consider a broad range of factors[, in

addition to the original investigations,] to determine whether

revocation of an order would be likely to lead to continuation or

recurrence of material injury within a reasonably foreseeable

time.” Id. at 24 (emphasis added). Accordingly, the ITC considers

Timken’s arguments, that the Final Determination is not supported

by substantial evidence or in accordance with law, unpersuasive

because they hinge on one isolated factor, namely, the original

determination. See id. at 24-28. Furthermore, the ITC considers

the original determination not dispositive because “[t]here are

fundamental differences between the Commission’s examination of the
Court No. 00-08-00386 Page 18

likelihood of continuation or recurrence of material injury in

five-year reviews and its examination of material injury or threat

of material injury by reason of subject imports in original

antidumping duty investigations.” Id. at 26. Specifically, since

the Commission’s analysis in five-year reviews is counter-factual

and prospective, and because the United States Code does not

explicitly instruct the Commission to distinguish its original

investigation findings, the ITC is merely obligated to “take into

account” its prior injury determination, and consider such a

finding “just one of many factors” in its determination. See id.

at 26-28.

The ITC also denies Timken’s contention that it completely

disregarded the results of its original determination. “Timken

[improperly] []characterizes the Commission’s volume findings in

the original investigation . . . [since] the Commission cumulated

subject imports from Japan with subject imports from” five other

countries. Id. at 29 (citation omitted). According to the ITC,

this distinction is of particular importance because Timken

attempts to compare volume data specific to Japan from the original

investigation with volume data on Japan from the sunset review.

See id. at 30. The ITC views this practice as “comparing apples to

oranges,” and considers the 1986 Japan-specific volume data

discussed by the Commission in the five-year review as not being
Court No. 00-08-00386 Page 19

the basis for the original affirmative determination. See id.

Furthermore, the ITC argues that the data discussed by Timken in

its moving brief was not even relied on in the original

determination, and that no statutory requirement exists mandating

the Commission to consider findings never made in the original

investigation. See id. at 31.

NTN, Koyo and NSK generally agree with the Commission that the

Final Determination is supported by substantial evidence and in

accordance with law. Koyo adds that Timken “ignores the fact that

Congress has set forth a variety of factors the Commission must

take into account [in a sunset review], only one of which is the

original determination.” Mem. Koyo Resp. Timken’s Mot. J. Agency

R. (“Koyo’s Mem.”) at 23. Moreover, Koyo argues that since the

original investigation, significant changes have occurred in the

TRB industry that were considered by the Commission in the Final

Determination. See id. at 23-24.

2. Analysis

Duty absorption findings regarding TRBs from Japan were made

in the 1995-96 and 1997-98 administrative reviews of the subject

imports. See App. Mem. NSK Opp’n Timken’s Rule 56.2 Mot. J. Agency

R. app. 2, at TRB-I-7. The United States Code directs the ITC to

conduct a sunset review five years after the publication of an

antidumping duty order or prior sunset review. See 19 U.S.C. §
Court No. 00-08-00386 Page 20

1675(c)(1) (1994). In a sunset review, the ITC determines “whether

revocation of an order . . . would be likely to lead to

continuation or recurrence of material injury within a reasonably

foreseeable time.” 19 U.S.C. § 1675a(a)(1). Such a determination

takes into account the likely volume, price effect and impact of

the subject imports if the order were revoked. See id. The ITC is

also directed to consider various additional factors when making

its determination, including: (1) prior injury determinations; (2)

any improvement in the subject industry relating to the issuance of

an antidumping duty order; and (3) the subject industry’s

vulnerability to material injury if the order is revoked. See id.;

see also H.R. Conf. Rep. No. 98-1156, at 9, 17b (1984), reprinted

in 1984 U.S.C.C.A.N. 5220, 5291-300 (determination of threat

requires careful review of current, identifiable trends in the

subject industry); American Permac, Inc. v. United States, 831 F.2d

269, 273-74 (1987); Matsushita, 750 F.2d at 932.

Although Timken is correct in asserting that the antidumping

statute directs the Commission to take into account its prior

injury determination in a sunset review, findings from the original

investigations are by no means dispositive. See H.R. Doc. No. 103-

465, at 886, reprinted in 1994 U.S.C.C.A.N. 4210-11 (stating that

in a sunset review, no one factor is dispositive); see also 19

U.S.C. § 1675a(a)(5) (stating that the presence or absence of any
Court No. 00-08-00386 Page 21

one factor shall not necessarily give decisive guidance with

respect to the Commission’s sunset review determination). The

parties to this action do not dispute that the Commission is

required to consider its prior injury determination in its sunset

review. The SAA clarifies the importance of taking into account

the periods of review prior to the issuance of an antidumping

finding or order. See H.R. Doc. No. 103-465, at 884, reprinted in

1994 U.S.C.C.A.N. 4209. According to the SAA, “[i]f the Commission

finds that pre-order . . . conditions are likely to recur, it is

reasonable to conclude that there is likelihood of continuation or

recurrence of injury.” Id. However, neither the statute nor its

legislative history directs the ITC to distinguish every factor of

its original investigation findings from those made in a sunset

review determination.

The ITC did not disregard findings from its original

investigations, but rather cited to such findings in the

administrative record at issue in this case. See Final

Determination, USITC Pub. 3309 at 31-33. The Commission discussed

its negative determination in terms of the likely volume, price

effects and impact of subject imports while incorporating and

distinguishing various aspects of the original investigation, where

appropriate. See id. For example, the Commission explained, inter

alia, that: (1) subject imports from Japan have decreased since the
Court No. 00-08-00386 Page 22

1987 Order; (2) Japanese investment in domestic TRB producing

facilities has steadily increased in the last 25 years; and (3)

there has been a general improvement in the domestic TRB industry

since the 1987 investigation. See id.

In its moving brief, Timken isolates factor after factor from

the original investigation and argues that the ITC drew an

incorrect conclusion with regard to such factors in its sunset

review determination. However, in its analysis, Timken fails to

account for changes of conditions of competition that occurred

between the time the order was imposed and the five-year review,

such as significant increases in Japanese investment to domestic

TRB producing affiliates. Compare Timken’s Mem. at 75-92, with

Final Determination, USITC Pub. 3309 at 24-26, 38 (stating that the

Commission’s analysis is based on current conditions of

competition. Accordingly, Timken did not consider “whether injury

is imminent, given the status quo.” H.R. Doc. No. 103-465, at 883,

reprinted in 1994 U.S.C.C.A.N. 4209. Timken’s arguments regarding

the original investigation actually concern how the Commission is

to weigh the findings from the original investigations in its

sunset review determination. It is well established that it is

the agency’s function to weigh the evidence and, therefore, this

Court cannot substitute conclusions that are reasonable and

supported by substantial evidence drawn by the Commission after
Court No. 00-08-00386 Page 23

review of the record, with those presented by Timken. See

Torrington Co. v. United States, 16 CIT 220, 226, 790 F. Supp.

1161, 1169 (1992), aff’d mem., 991 F.2d 809 (Fed. Cir. 1993); see

also Coalition for Preservation of Am. Brake Drum & Rotor

Aftermarket Mfrs. v. United States, 22 CIT 520, 529-30, 15 F. Supp.

2d 918, 927 (1998). Therefore, the Court rejects the conclusions

drawn by Timken regarding the Commission’s failure to consider

findings from the original investigation in its sunset review

determination.

B. Japanese Investment in U.S. Facilities

1. Contentions of the Parties

In its moving brief, Timken contends that the Commission made

an illogical determination that Japanese producers are committed to

their domestic TRB facilities and unlikely “to alter their current

focus on U.S. TRB production in the reasonably foreseeable future.”

Final Determination, USITC Pub. 3309 at 31; see Timken’s Mem. at

57-75. Timken begins its argument by presenting a syllogism, which

it claims the Commission’s Final Determination was based, and finds

error in the syllogism’s conclusion that Japanese producers will

not increase imports to undercut the rest of the United States

industry in order to protect their domestic interests.10 See id.

10
The Court does not agree that the syllogism presented by
Timken accurately reflects the reasoning of the agency. The data
(continued...)
Court No. 00-08-00386 Page 24

Timken also argues that capital investments in foreign-owned,

domestic facilities and presence in the domestic TRB market “did

nothing to deter [Japanese producers] from dumping [TRBs into the

United States market] prior to the [1976 and 1987] orders,

increasing imports, or from continuing dumping after the orders

were put in place.” App. Administrative R. Docs. Cited Timken’s

Mem. Supp. Mot. J. Agency R. app. 7, at 21 n.60. Timken adds that

domestic investment has not been a relevant factor in making the

Commission’s negative determination, with exception to one review

distinguished by Timken.11 See Timken’s Mem. at 65. Timken further

points to a prior investigation where the ITC issued an affirmative

determination when 30 percent of domestic production was “foreign-

owned.” See id. at 65 (citation omitted). In addition, Timken

(...continued)
considered by the ITC when making its final determination is much
too voluminous and complicated to be reduced to a simple syllogism
composed of only three premises. Accordingly, the Court rejects
this argument. However, the Court notes Timken’s observation that
not all Japanese TRB producers have increased investments in
domestic facilities.
11
In this review, the Commission found it reasonable to
infer that one company, which dominated the domestic industry and
was owned by a Japanese parent company that was also parent company
to the competing foreign producer, was not threatened with material
injury by foreign imports from the same foreign producer. See
Timken’s Mem. at 65 (citing 12-Volt Motorcycle Batteries From
Taiwan, Inv. No. 731-TA-238 (Final), USITC Pub. 2213 (Aug. 1989);
see also 12-Volt Motorcycle Batteries From Taiwan, 54 Fed. Reg.
35,089 (Aug. 23, 1989). Timken distinguishes this investigation by
stating that Timken, an independent producer, and not Japanese
manufacturers, was the “dominant U.S. producer.” See Timken’s Mem.
at 65 n.244 (quoting Final Determination, USITC Pub. 3309 at 28.
Court No. 00-08-00386 Page 25

identifies three reviews, two that were issued after the

determination before this Court, which admit that foreign

investment in the domestic market does not conclusively show

injury to be unlikely. See Timken’s Mem. at 67 (referring to

Certain Carbon Steel Products From Australia, Belgium, Brazil,

Canada, Finland, France, Germany, Japan, Korea, Mexico, the

Netherlands, Poland, Romania, Spain, Sweden, Taiwan, and the United

Kingdom, USITC Pub. 3364 (Nov. 2000); Gray Portland Cement and

Cement Clinker From Japan, Mexico, and Venezuela, USITC Pub. 3361

(Oct. 2000)). Generally, Timken characterizes the Commission’s

finding in the Final Determination as inconsistent with other

sunset reviews because the ITC did not weigh several relevant

factors in the same manner in each review. See Timken’s Mem. at

66-75. In addition, Timken argues that the Commission’s

“commitment” finding did not account for the impact of revocation

on the entire domestic industry, but only considered the

prospective effects on NTN and Koyo’s U.S. affiliates. See id. at

58-59.

The ITC rejects Timken’s arguments regarding Japanese TRB

producers’ substantial investment in their U.S. facilities because

they ignore “an important distinction between the original

investigations and the more recent period examined during the five-

year review.” ITC’s Mem. at 32. This distinction deals with the
Court No. 00-08-00386 Page 26

change in volume of TRBs supplied to the United States through

Japanese producers and their U.S. affiliates from the original

investigation and the recent sunset review. See id. (referencing

various confidential data). This data led to the Commission’s

conclusion that Japanese commitment to domestic facilities would

continue and would likely limit the volume of subject imports from

Japan in the reasonably foreseeable future. See id. at 32-33.

[T]he Commission found that Japanese producers
substantially increased their investment in U.S.
production facilities since the original investigations.
The record demonstrated that NTN Bearing Corporation of
America began production in the United States in 1975 and
increased TRB production at various facilities throughout
the United States in 1988, 1990, 1992, 1994, 1998, and
1999. . . . NTN increased capital expenditures in its
U.S. bearings production facilities from . . . 1990 to .
. . 1999. . . . Koyo [substantially] increased its
investments in U.S. facilities from . . . 1986 to . . .
1998. . . . The record also supported the Commission’s
finding that the operation of the U.S. facilities
reflected, at least in part, a trend by large
multinational bearings manufacturers to localize
production facilities in response to customers’ needs and
to allocate production more efficiently.

Id. at 33 (citation and footnote omitted). Japanese producers

characterized their increased investments in U.S. production

facilities as a “larger global strategy to localize production” and

meet demand. Id. at 33 n.25. The Commission, therefore, concluded

that Japanese producers lacked incentive to increase imports of

subject merchandise in the event of revocation

because increased volumes of TRBs from Japan would
adversely affect their U.S. affiliates’ volumes or
prices. . . . [The ITC explained that b]ecause of the
Court No. 00-08-00386 Page 27

industry’s high fixed costs, production facilities
operate[] at high capacity utilization rates in order to
maximize return on investment, and TRB facilities could
not generally be used to make other types of bearings
without expensive retooling. . . . Moreover, a
substantial proportion of TRBs were consumed by large
[original equipment manufacturer (“OEM”)] customers,
particularly in the automotive and construction sectors,
and the record indicated that OEMs often required
certification of facilities, a cumbersome process, and
they were not likely to change suppliers merely on the
basis of price.

Id. at 34.

Responding to Timken’s contentions regarding the Commission’s

inconsistent analyses in numerous antidumping investigations, the

ITC argues that changing conditions in competition often warrants

different outcomes in each investigation. See id. at 35.

Furthermore, unlike a five-year review, the Commission examines

historical data in an original investigation to determine whether

the industry is currently materially injured or under the threat of

material injury. See id. at 36-37. In other words, the

Commission’s analysis is based on “current conditions and

extrapolations of current conditions.” Id. at 38. The ITC points

out that the SAA mandates the Commission to engage in a “counter-

factual analysis” that is prospective in nature when conducting a

five-year review. See id. at 37 (citation omitted). Accordingly,

the ITC argues that it properly examined the likely volume of

subject imports by determining whether Japanese producers are

discouraged from increasing their imports in order to avoid
Court No. 00-08-00386 Page 28

injuring their domestic affiliates. See id. at 37-38. The ITC

considered the record evidence to weigh in the favor of the

conclusion that Japanese TRB producers will not risk harm to their

domestic investments in several five-year reviews. See id. at 38-

41.12

NTN, Koyo and NSK generally support the arguments espoused by

the ITC. NTN adds that the Commission’s determination regarding

Japanese producers’ commitment to their domestic facilities “was

one of many factors used to determine the likely effect of

revocation of the antidumping order on the entire U.S. TRB

industry. This is evidenced by the ITC’s discussion with respect

to the conditions of competition in the TRB industry,” in addition

to the likely volume, price effects and impact of subject imports.

Resp. NTN to Timken’s Jan. 30, 2001 Br. Supp. Mot. J. Agency R.

(“NTN’s Resp.”) at 13. NTN further asserts that the ITC is not

mandated to discuss every piece of record evidence it considered in

support of the final determination, and that the Commission

12
The ITC explains that in the sunset reviews of Color
Picture Tubes From Canada, Japan, Korea and Singapore, Inv. Nos.
731-TA-367-370 (Review), USITC Pub. 3291 (Apr. 2000), Brass Sheet
and Strip from Brazil, Canada, France, Germany, Italy, Japan,
Korea, the Netherlands, and Sweden, Inv. Nos. 731-TA-311-317 & 379-
380 (Review), USITC Pub. 3290 (Apr. 2000), and final determination
of 12-Volt Motorcycle Batteries From Taiwan, USITC Pub. 2213, the
Commission considered the relationship of foreign producers with
their domestic affiliates in determining that an increase in the
volume of subject imports by such foreign producers would be
unlikely. See ITC’s Mem. at 39-40.
Court No. 00-08-00386 Page 29

reviewed the record on a whole and explained its determination

adequately. See id. at 18 (citing Acciai Speciali Terni S.p.A. v.

United States, 24 CIT 1064, 1080-81, 118 F. Supp. 2d 1298, 1313

(2000)).

2. Analysis

Timken argues that since Japanese investment in the domestic

industry was not a relevant factor in the Commission’s original

determination or in over sixty prior antidumping cases, the ITC’s

current determination that U.S. investment will preclude injury or

threat of material injury in the foreseeable future, is illogical,

unsupported by substantial evidence and otherwise contrary to law.13

See Timken’s Mem. at 55-74. The Court agrees with Timken that it

13
Commissioner Bragg did not rely on this finding in her
analysis, but still concluded that revocation of the order will not
be likely to lead to continuation or recurrence of material injury
in the reasonably foreseeable future. See Final Determination,
USITC Pub. 3309 at 31 n.204. Specifically,
Commissioner Bragg acknowledge[d] that an individual
Japanese TRB producer with an established physical
presence in the United States is unlikely to engage in
export behavior to the detriment of its affiliated U.S.
production operations. . . . [H]owever, such rationali-
zation . . . in and of itself, says nothing about the
likely behavior of Japanese imports as a whole in the
event of revocation, nor does it provide an indication of
the likely impact of Japanese imports on unaffiliated
producers (whether U.S. or foreign-owned) within the
domestic industry.
Id. This finding did not preclude Commissioner Bragg from
concluding that revocation of the order would not be likely to lead
to the continuation or recurrence of material injury in the
reasonably foreseeable future.
Court No. 00-08-00386 Page 30

is anomalous to consider foreign investment in the domestic

industry as a relevant factor in the determination under review,

while failing to consider the same factor in the original

investigation. It is important to note, however, that the ITC’s

final determination was not dependent on one single factor, namely,

foreign investment in the domestic industry, but rather considered

various other conditions. See Final Determination, USITC Pub. 3309

at 21-34 (discussing, inter alia, the general increase in demand

for TRBs, increases in domestic shipments of TRBs in the United

States and abroad, and high capacity utilization rates). Moreover,

the SAA explains that the standard applied to determine whether it

is “likely” that material injury will continue or recur, applicable

in sunset reviews, is different from the standards applied in

material injury or threat of material injury determinations,

applicable in original investigations. See H.R. Doc. 103-465, at

883, reprinted in 1994 U.S.C.C.A.N. at 4209. In a five-year

review, the Commission “engage[s] in a counter-factual analysis” to

determine the likely impact of revocation “in the reasonably

foreseeable future of an important change in the status-quo . . .

.” Id. Similar to other reviews discussed by Timken, the

Commission weighed all of the evidence before it and reasonably

concluded that Japanese producers presently lack incentive to

increase imports of subject merchandise in the reasonably

foreseeable future
Court No. 00-08-00386 Page 31

because increased volumes of TRBs from Japan would
adversely affect their U.S. affiliates’ volumes or
prices. . . . [The ITC explained that b]ecause of the
industry’s high fixed costs, production facilities
operate[] at high capacity utilization rates in order to
maximize return on investment, and TRB facilities could
not generally be used to make other types of bearings
without expensive retooling. . . . Moreover, a
substantial proportion of TRBs were consumed by large OEM
customers, particularly in the automotive and
construction sectors, and the record indicated that OEMs
often required certification of facilities, a cumbersome
process, and they were not likely to change suppliers
merely on the basis of price.

ITC’s Mem. at 34 (citation to administrative record omitted).

Legislative intent makes clear that “a reviewing court is not

barred from setting aside [an agency] decision when it cannot

conscientiously find that the evidence supporting that decision is

substantial, when viewed in the light that the record in its

entirety furnishes, including the body of evidence opposed to the

[agency’s] view.” Universal Camera Corp. v. NLRB, 340 U.S. 474,

488 (1951) (emphasis added); see e.g., Gerald Metals, Inc. v.

United States, 132 F.3d 716, 720 (Fed. Cir. 1997) (clarifying the

standard of review for ITC determinations). Therefore, it was

reasonable for the Commission to review the entire administrative

record and consider foreign investment in the domestic industry as

a factor in its five-year review. However, Timken is correct in

its assertion that the Final Determination does not adequately

explain why an increase in Japanese imports of the subject

merchandise would not injure the remaining United States industry;
Court No. 00-08-00386 Page 32

that is, TRB producers other than those owned by Japanese

companies. Since 19 U.S.C. § 1675a(a)(4) explicitly directs the

Commission to evaluate “the likely impact of imports of the subject

merchandise on the [domestic] industry,” the Court remands the

Final Determination for further explanation.

C. Utilization Rates

1. Contentions of the Parties

Timken also argues that the ITC failed to investigate the

issue of capacity utilization ratios by not inquiring as to “how

Japanese TRB producers had reported their capacit[ies],” Timken’s

Mem. at 94, and not investigating questionable reporting methods of

Japanese TRB producers. See id. 94-95. Timken asserts that

“[c]apacity utilization ratios are based on a plant’s total

production of a particular product[, in this case TRBs,] divided by

[the plant’s] total capacity to produce th[is] product. . . .

[Such] ‘capacity’ can vary depending on” numerous factors. Id. at

97. Although the ITC’s 1987 questionnaire (used to collect data

for the original investigation on TRBs from Japan) requested TRB

producers to give detailed information regarding such various

factors that effect capacity utilization ratios, Timken states that

the Commission did not request any such information in the sunset

review, despite Timken’s repeated warnings to the ITC of the

importance of gathering such information. See id. at 98-100.
Court No. 00-08-00386 Page 33

Timken also asserts that the ITC never requested Japanese TRB

producers to explain their methods of reporting capacity data nor

mandated such producers to explain inherent inconsistencies between

the information supplied to the Commission and other associations.

See id. at 97-109.

The ITC supports its finding that Japanese producers had

extremely high capacity utilization rates during the five-year

period of review, which, according to the Commission, was based on

data supplied by a representative portion of the Japanese TRB

production. According to the ITC, the Commission “used the same

definition of ‘average production capacity’ that it typically

includes in questionnaires it sends to the domestic and foreign

producers in five-year reviews and original investigations.” ITC’s

Mem. at 41. The ITC rejects Timken’s argument regarding the amount

of information that the Commission is required to collect in a

five-year review, and states that “Timken cites no authority in

support of the proposition that a Commission investigation is

inadequate unless the Commission decides to seek every piece of

information a party requests.” Id. at 42. Instead, the ITC

contends that the size and scope of a TRB investigation made it

impractical “for the Commission to collect every piece of

information in the degree of detail requested by [Timken].” Id. at

43. The ITC also considered the additional information supplied by
Court No. 00-08-00386 Page 34

Timken to be of minimal “probative value.”14 See id. at 43-44.

NTN, Koyo and NSK generally support the arguments presented by

the ITC. NTN adds that “Timken ma[d]e[ a] broad assumption that a

production increase based on unused capacity would lead to

increased exports to the U.S.” NTN’s Resp. at 35. Moreover, Koyo

argues that Timken’s argument regarding capacity utilization ratios

focuses on only one of many reasons the Commission found that the

volume of imports from Japan was not likely to increase

significantly after revocation, “and ignores the substantial

changes in the U.S. industry and worldwide competition since th[e]

original determinations.” Koyo’s Resp. at 32.

2. Analysis

“[T]he question of whether the ITC conduc[ted] a thorough . .

. investigation begins with the substantial evidence test, and the

question of whether, in light of the record evidence as a whole,

‘it would have been possible . . .” for the Commission to have

reasonably reached its final determination. Acciai Speciali, 24

14
The ITC contends that “[t]he reporting basis for capacity
utilization was not defined in [Timken’s] secondary [data,] and
Timken expected the Commission to assume that the reporting basis
was the same as that described in a glossary also provided by
Timken that was dated several years earlier.” ITC’s Mem. at 44.
Since Timken’s additional information consisted of this and other
inconsistencies, the ITC determined that it is reasonable to reject
such data and rely only on the information collected by Japanese
producers during the five-year review. See id. at 44.
Court No. 00-08-00386 Page 35

CIT at 1074, 118 F. Supp. 2d at 1307 (citing Allentown Mack Sales

& Serv., Inc. v. NLRB., 522 U.S. 359, 366-67 (1998)). According to

the ITC, the size and scope of the sunset review made it

impractical for the Commission to collect “every piece” of

information in connection with the investigation. See ITC’s Mem.

at 43. The Court recognizes that the size and scope of TRB

investigations may be enormous, but notes that Mitsubishi Elec.

Corp. v. United States, 12 CIT 1025, 1058, 700 F. Supp. 538, 564

(1988), aff’d, 898 F.2d 1577 (Fed. Cir. 1990), clarified that where

the “ITC actively precludes itself from receiving relevant data or

[m]akes no effort to seek relevant [contrary] data . . . then such

actions will be found to be contrary to law.”

The ITC explains that its finding regarding Japanese

producers’ high capacity utilization rates was derived from

questionnaire responses from five TRB producers that were

representative of almost all subject merchandise production in

Japan. See ITC’s Mem. at 41. The ITC further points out that it

rejected secondary information presented by Timken because the

reporting basis used in such data was undefined. See id. at 44.

With this impetus, it is logical to find that the Commission erred

by not inquiring into the basis used by Japanese TRB producers to

report their capacity. Such a distinction is particularly

important since the Court is not aware of any standard industry
Court No. 00-08-00386 Page 36

measure of capacity to produce TRBs. Accordingly, the Court

remands the Final Determination to the ITC for further

investigation.

D. The ITC’s Vulnerability Finding and Other Volume, Price
and Subject Import Findings

1. Contentions of the Parties

Timken argues that the Commission’s findings regarding

vulnerability of the domestic market and the likely continuation of

material injury in the event of revocation are unsupported by

substantial evidence. See Timken’s Mem. at 121. Although Timken

admits that the domestic TRB industry has improved since 1987,

future vulnerability must be assessed “in light of the type of

industry and its current conditions.” Id. at 124. Timken asserts

that the Commission failed to consider information pertaining to

the domestic industry’s return on investments and ability to raise

capital as a result of Japanese producers’ continued dumping when

making its vulnerability finding. See id. at 132. Timken,

therefore, asks this Court to remand the Commission’s Final

Determination in order for the ITC to explain its reasoning with

respect to the domestic market’s vulnerability after revocation,

and justify the rejection of Timken’s arguments, proposed during

the sunset review, with respect to continuation of material injury.

Timken also argues that in the sunset review, the Commission
Court No. 00-08-00386 Page 37

relied on Japanese pricing data covering only a fraction of

Japanese imports. See id. at 114. Such data, therefore, led the

Commission to incorrect conclusions regarding price factors such as

underselling, and ultimately to an erroneous negative

determination. See id. at 115-18.

The ITC argues that its conclusion that the volume of imported

TRBs from Japan was not likely to significantly increase is

supported by substantial evidence. The ITC states that its

conclusion was based on findings relating to Japanese producers’

orientation to home and third-country markets and low inventory to

shipment ratios, and considered the level of difficulty and expense

to Japanese producers who engage in product shifting. See ITC’s

Mem. at 45. According to the ITC, its findings were based on

record evidence, which indicated that:

[(1)] commitments to existing customers and OEM
requirements of certification . . . would likely limit
Japanese producers’ ability to transfer shipments between
markets in the reasonably foreseeable future[; . . . (2)]
there were no known import barriers to Japanese TRB
shipments to third countr[y markets; . . . (3)] Japanese
inventory-to-shipment ratios were low[; . . . and (4)]
shifting production from one type of bearing to another
was difficult and expensive.

Id. at 47. Contrary to Timken’s contention, the ITC also asserts

it properly considered the likely volume effects of TRB imports

from Japan with respect to the entire domestic industry. See id.

at 48.
Court No. 00-08-00386 Page 38

In its final determination, the Commission also reviewed data

collected in the sunset review showing pervasive overselling of the

domestic like product by subject imports from Japan. Along with

this information, the Commission considered findings from the

original investigation and those of Commerce relating to duty

absorption and concluded that TRBs from Japan were not likely to

significantly undersell the domestic like product. See id. at 50.

This finding flowed from the Commission’s conclusion that subject

import volume was not likely to significantly increase since high

capacity utilization and commitments to third-country markets act

as disincentives to Japanese producers who price aggressively to

gain U.S. market share. See id.

The ITC also disagrees with Timken regarding the weight that

is to be placed on evidence presented by parties to the Commission,

and asserts that “it is the agency’s task to weigh the evidence of

record and reach a conclusion based on the facts found.” Id. at 52

(citations omitted). Therefore, the Commission argues that it

reasonably placed “less probative weight” on data presented by

Timken regarding Japanese underselling because such information did

not necessarily involve sales of TRBs imported from Japan, as

opposed to TRBs produced by Japanese domestic affiliates, and the

record indicated that TRB prices in third-country markets versus

the domestic market were “mixed.” See id.
Court No. 00-08-00386 Page 39

Generally, the ITC asserts that record evidence regarding

volume, price and subject imports supports the finding that the

domestic industry was not vulnerable (or alternatively, in a

“weakened state”). See id. at 58-60. According to the Commission,

a small increase in the volume of subject imports from Japan would

not likely suppress or depress domestic prices. See id. at 59.

The ITC also asserts that the Commission “properly took into

consideration the likely effects of revocation on the entire

domestic industry, [and] not merely the likely effects of

revocation on Timken.” Id. at 61.

The ITC responds to Timken’s contentions regarding the pricing

data relied upon in the sunset review by admitting “that the

pricing data represented a small sample of subject imports from

Japan[, but argues that . . .] the thoroughness of the Commission’s

investigation” was not compromised. Id. at 53. However, the ITC

contends that Timken has not adequately demonstrated that the

pricing data collected by the Commission was unrepresentative of

the subject imports. See id. at 54.

The ITC also notes that no specific findings regarding the

business cycle were made in the original determination, and

multiple attempts to collect related business cycle data from the

domestic industry during the five-year review were unfruitful. See

id. at 59-60. According to the ITC, Timken never made any
Court No. 00-08-00386 Page 40

reference to the length of the United States TRB industry’s

business cycle during the five-year review, and is ultimately

precluded from raising the issue pursuant to the doctrine of

exhaustion of administrative remedies. See id. at 59 n.52.

NTN, Koyo and NSK generally argue that the ITC’s findings are

reasonable, supported by substantial evidence and in accordance

with law, and urge the Court to dismiss Timken’s contentions as

unpersuasive and without merit.

2. Analysis

In five-year reviews, the antidumping statute directs Commerce

to revoke “an antidumping duty order or finding, . . . unless . .

. the Commission makes a determination that material injury would

be likely to continue or recur as described in [19 U.S.C. §

1675a(a)] . . . .” 19 U.S.C. § 1675(d)(2) (1994). To determine

whether revocation is likely to lead to the continuation or

recurrence of material injury, 19 U.S.C. § 1675a(a)(1)(B) and (C)

instructs the Commission to consider the current state of the

domestic industry. Moreover, 19 U.S.C. § 1675a(a)(4) (1994)

provides a list of relevant economic factors that the Commission is

to consider in determining the likely impact of imports after

revocation. The list includes, but is not limited to:

(A) likely declines in output, sales, market share,
profits, productivity, return on investments, and
utilization of capacity,
Court No. 00-08-00386 Page 41

(B) likely negative effects on cash flow,
inventories, employment, wages, growth, ability to raise
capital, and investment, and
(C) likely negative effects on the existing
development and production efforts of the industry,
including efforts to develop a derivative or more
advanced version of the domestic like product.

19 U.S.C. § 1675a(a)(4). The statute also clarifies that “[t]he

Commission shall evaluate all relevant economic factors . . .

within the context of the business cycle and the conditions of

competition that are distinctive to the affected industry.” Id.

(emphasis added).

The presence or absence of any factor which the
Commission is required to consider under [19 U.S.C. §
1675a(a)] shall not necessarily give decisive guidance
with respect to the Commission’s determination of whether
material injury is likely to continue or recur within a
reasonably foreseeable time if the order is revoked . .
. . In making that determination, the Commission shall
consider that the effects of revocation . . . may not be
imminent, but may manifest themselves only over a longer
period of time.

19 U.S.C. § 1675a(a)(5).

In making its final determination, the Commission found that

TRBs from Japan have significantly decreased since the imposition

of the 1987 Order. See Final Determination, USITC Pub. 3309 at 31.

This was, in large part, a result of substantial investment in

domestic TRB production facilities by Japanese producers. See id.

The Final Determination also states that the data representing

almost all TRB production in Japan indicates that Japan has

“extremely high” capacity utilization rates. See id. Moreover,
Court No. 00-08-00386 Page 42

since “machinery and equipment needed for TRB production are highly

specialized and generally dedicated to TRBs, there is little

potential that Japanese producers would shift production in Japan

from other types of bearings to TRBs.” Id. at 31-32. Another

factor that the ITC considered in its determination was Japanese

TRB producers’ inventory-to-shipment ratios. Since they were low

and Japanese TRB producers were not predominantly “export-

oriented,” the ITC determined that Japan was not likely to increase

the volume of its TRB imports to the United States if the 1987

Order were revoked. See id.

The Commission also considered the likely price effects of

subject imports in event of revocation. According to the Final

Determination, the evidence showed “infrequent underselling by

Japanese TRB imports . . . for the lower volume sales.” Id. at 32.

Accordingly, the ITC concluded that revocation of the antidumping

order is unlikely to lead to any significant underselling, and that

“subject imports from Japan would not be likely to depress or

suppress U.S. prices to any significant degree. In particular,

with high capacity utilization and commitments to third-country

markets, the Japanese producers do not have an incentive to price

aggressively to gain additional U.S. market share.” Id. at 33.

Finally, the Commission considered the likely impact of

subject imports in event of revocation. The ITC found an
Court No. 00-08-00386 Page 43

improvement in the domestic TRB industry since the 1987 Order and

concluded that the United States industry is not currently

vulnerable. The Commission found that:

[t]he TRB market is expanding; apparent consumption
increased by 7.3 percent from 1997 to 1998 and was up
about 1.6 percent in interim 1999 compared to interim
1998. The industry is highly concentrated and
profitable. The domestic industry’s market share has
increased to the level held during the original 1987
investigation as capacity and capacity utilization
increased substantially. Because of the absence of
significant likely volume and price effects, [the
Commission found] that revocation of the antidumping
finding and order on TRB imports from Japan would not be
likely to impact significantly the domestic industry’s
output, sales, market share, profits, or return on
investment.

Id. at 33 (footnote omitted).

The Court rejects those arguments raised by Timken regarding

findings pertaining to the domestic TRB industry’s vulnerability.

The Commission’s conclusions, in this regard, were supported by

substantial evidence and in accordance with law. See 19 U.S.C. §

1516a(b)(1)(B)(i); see also NTN Bearing, 24 CIT at 389-90, 104 F.

Supp. 2d at 115-16 (detailing the Court’s standard of review for

agency determinations). Although the Court agrees with Timken that

it is anomalous for the Commission to rely on Japanese pricing data

covering a small fraction of Japanese imports, Timken has not

convinced the Court that such data was indeed unrepresentative.

See Kern-Liebers USA, Inc. v. United States, 19 CIT 87, 114-15

(1995) (stating that plaintiff failed to demonstrate that pricing
Court No. 00-08-00386 Page 44

data collected by the Commission was unrepresentative, even if

based on a relatively small sample size). However, the

Commission’s findings must consider all relevant economic factors

“within the context of the business cycle and the conditions of

competition that are distinctive to the affected industry.” 19

U.S.C. § 1675a(a)(4) (emphasis added). The purpose of the business

cycle requirement is to allow the Commission to consider whether

different trends in the business cycle mask harm caused by unfair

trading practices. See S. Rep. No. 100-71, 100th Cong., 1st Sess.

115-30 (1987); Chr. Bjelland Seafoods A/S v. United States, 16 CIT

945, 955-56 (1992) (citations omitted).

The ITC argues that Timken is precluded from raising the

business cycle issue pursuant to the doctrine of exhaustion of

administrative remedies. See ITC’s Mem. at 59 n.52. The

exhaustion doctrine requires a party to present its claims to the

relevant administrative agency for the agency’s consideration

before raising these claims to the Court. See Unemployment

Compensation Comm’n of Alaska v. Aragon, 329 U.S. 143, 155 (1946)

(“A reviewing court usurps the agency’s function when it sets aside

the administrative determination upon a ground not theretofore

presented and deprives the [agency] of an opportunity to consider

the matter, make its ruling, and state the reasons for its

action”). There is, however, no absolute requirement of exhaustion
Court No. 00-08-00386 Page 45

in the Court of International Trade in non-classification cases.

See Alhambra Foundry Co. v. United States, 12 CIT 343, 346-47, 685

F. Supp. 1252, 1255-56 (1988). Section 2637(d) of Title 28 directs

that “the Court of International Trade shall, where appropriate,

require the exhaustion of administrative remedies.” By its use of

the phrase “where appropriate,” Congress vested discretion in the

Court to determine the circumstances under which it shall require

the exhaustion of administrative remedies. See Cemex, S.A. v.

United States, 133 F.3d 897, 905 (Fed. Cir. 1998). Therefore,

because of “judicial discretion in not requiring litigants to

exhaust administrative remedies,” the Court is authorized to

determine proper exceptions to the doctrine of exhaustion.

Alhambra Foundry, 12 CIT at 347, 685 F. Supp. at 1256 (citing

Timken Co. v. United States, 10 CIT 86, 93, 630 F. Supp. 1327, 1334

(1986), rev’d in part on other grounds, Koyo Seiko Co. v. United

States, 20 F.3d 1156 (Fed. Cir. 1994)).

The Court exercises its discretion to obviate exhaustion

where: (1) requiring it would be futile, see Rhone Poulenc, S.A. v.

United States, 7 CIT 133, 135, 583 F. Supp. 607, 610 (1984) (in

those cases when “it appears that it would have been futile for

plaintiffs to argue that the agency should not apply its own

regulation”), or would be “inequitable and an insistence of a

useless formality” as in the case where “there is no relief which
Court No. 00-08-00386 Page 46

plaintiff may be granted at the administrative level,” United

States Cane Sugar Refiners’ Ass’n v. Block, 3 CIT 196, 201, 544 F.

Supp. 883, 887 (1982); (2) a subsequent court decision has

interpreted existing law after the administrative determination at

issue was published, and the new decision might have materially

affected the agency’s actions, see Timken, 10 CIT at 93, 630 F.

Supp. at 1334; (3) the question is one of law and does not require

further factual development and, therefore, the court does not

invade the province of the agency by considering the question, see

id.; R.R. Yardmasters of Am. v. Harris, 721 F.2d 1332, 1337-39

(D.C. Cir. 1983); and (4) the plaintiff had no reason to suspect

that the agency would refuse to adhere to clearly applicable

precedent. See Philipp Bros., Inc. v. United States, 10 CIT 76,

79-80, 630 F. Supp. 1317, 1321 (1986).

During the sunset review, the Commission requested information

concerning the business cycle. See Reply Br. Supp. Timken’s Mot.

J. Agency R. at 82; Certain Bearings From China, France, Germany,

Hungary, Italy, Japan, Romania, Singapore, Sweden, and the United

Kingdom, 64 Fed. Reg. at 15,786. It is obvious, then, that the

Commission was on notice of the business cycle requirement and

Timken had no reason to suspect that the Commission would disregard

its statutory mandate. See 19 U.S.C. § 1675a(a)(4); see also

Philipp Bros., 10 CIT at 79-80, 630 F. Supp. at 1321. The purpose
Court No. 00-08-00386 Page 47

behind the doctrine of exhaustion is to prevent courts from

premature involvement in administrative proceedings, and to protect

agencies “from judicial interference until an administrative

decision has been formalized and its effects felt in a concrete way

by the challenging parties.” Abbott Labs. v. Gardner, 387 U.S.

136, 148-49 (1967); see also Public Citizen Health Research Group

v. Comm’r, FDA, 740 F.2d 21, 29 (D.C. Cir. 1984) (pointing out that

the “exhaustion doctrine . . . serv[es] four primary purposes:

[(1)] it ensures that persons do not flout [legally] established

administrative processes . . . ; [(2)] it protects the autonomy of

agency decision-making; [(3)] it aids judicial review by permitting

factual development [of issues relevant to the dispute]; and [(4)]

it serves judicial economy by avoiding [repetitious] administrative

and judicial fact-finding . . .” and by resolving sole claims

without judicial intervention. (Citation omitted)). Therefore,

the Court holds that not only did Timken sufficiently preserve the

issue for consideration by this Court, but that the exhaustion

doctrine is inapplicable to the question of whether the Commission

should have considered relevant factors in the context of the

business cycle. Accordingly, the Court remands the ITC’s Final

Determination for further explanation of the Commission’s findings

in the context of the appropriate business cycle.
Court No. 00-08-00386 Page 48

The Court has considered additional arguments raised by Timken

regarding other volume, price and impact on subject import findings

arrived at by the Commission, and finds that they are without

merit.

CONCLUSION

The Court remands the Final Determination to the ITC to: (a)

explain the likely impact of TRB imports from Japan on the entire

United States TRB industry; (b) further investigate and explain the

basis that Japanese TRB producers used to report their capacity to

produce TRBs to the Commission; and (c) further explain the

Commission’s findings in the context of the TRB business cycle.

____________________________________
NICHOLAS TSOUCALAS
SENIOR JUDGE

Dated: April 24, 2003
New York, New York