Taiwan Semiconductor Industry Ass'n v. United States

Slip Op. 00-37
UNITED STATES COURT OF INTERNATIONAL TRADE

TAIWAN SEMICONDUCTOR
INDUSTRY ASSOCIATION, ET AL.,

Plaintiffs,

and BEFORE: Pogue, Judge

MOTOROLA, INC., Court No. 98-05-01460

Plaintiff-Intervenor,

v.

UNITED STATES,

Defendant,

and

Micron Technology, Inc.

Defendant-Intervenor.

[The International Trade Commission’s determination on remand is
remanded.]

Decided: April 11, 2000

White & Case, LLP (Christopher F. Corr, Richard G. King, and Amy
E. Farrell) for Plaintiffs.

Lyn M. Schlitt, General Counsel; James A. Toupin, Deputy General
Counsel; Michael Diehl, Office of the General Counsel, U.S.
International Trade Commission, for Defendant.

Hale and Dorr LLP (Gilbert B. Kaplan, Michael D. Esch, Paul W.
Jameson, and Cris R. Revaz) for Defendant-Intervenor.
Court No. 98-05-01460 Page 2

OPINION

POGUE, Judge: On June 30, 1999, the Court remanded this matter

to the U.S. International Trade Commission ("Commission"). See

Taiwan Semiconductor Indus. Ass’n v. United States, 23 CIT , 59

F. Supp. 2d 1324 (1999)("Taiwan I").1 In that decision, the Court

reviewed Plaintiffs’ USCIT Rule 56.2 motion for judgment on the

agency record challenging the Commission’s final determination that

the industry in the United States producing static random access

memory semiconductors ("SRAMs") was materially injured by reason of

imports from Taiwan that were sold at less than fair value

("LTFV"). See id.

The Commission found in its final determination that "[t]he

domestic industry’s financial troubles [were] due in significant

part to the price depressing effects of the subject imports from

Taiwan on the domestic like product[.]" Static Random Access

Memory Semiconductors from the Republic of Korea and Taiwan, Inv.

Nos. 731-TA-761 & 762 (Final)(List 2, Doc. 395)(Apr. 9, 1998) at 37

("Final Determination").2 The Commission, however, did not

1
Familiarity with the Court’s previous decision is presumed.
2
List 1 consists of the documents within the public portion
of the record made before the Commission. List 2 consists of the
documents within the confidential portion of the same record.
Court No. 98-05-01460 Page 3

adequately explain how it avoided attributing to the subject

imports the harmful effects from other known sources of injury;

therefore, the Court remanded the determination to the Commission

for reconsideration consistent with the Court’s opinion. See

Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1336. On remand, the

Commission again determines that the domestic industry was

materially injured by reason of LTFV imports of SRAMs from Taiwan.

See Commission’s Determ. on Remand (List 2, Doc. 406)(Aug. 30,

1999) at 1 ("Remand Determination").

In reviewing the Commission’s remand determination, this Court

is presented with the following issues: (1) whether the procedure

the Commission followed on remand was lawful; and (2) whether the

Commission’s remand determination that the domestic industry was

materially injured by reason of LTFV imports of SRAMs from Taiwan

is supported by substantial evidence and otherwise in accordance

with law.

Discussion

1. Did the Commission conduct its remand proceedings in
accordance with law?

Antidumping proceedings, including the Commission’s injury

determination under 19 U.S.C. § 1673d(b)(1994), "are investigatory
Court No. 98-05-01460 Page 4

in nature[,]" rather than adjudicatory in nature. See Statement of

Administrative Action, H.R. Doc. No. 316, 103rd Cong., 2nd Sess.

(1994), reprinted in Uruguay Round Agreements Act, Legislative

History, Vol. VI, at 892 ("SAA"); see also Grupo Industrial Camesa

v. United States, 18 CIT 461, 463, 853 F. Supp. 440, 442-43 (1994),

aff’d, 85 F.3d 1577 (Fed. Cir. 1996). As such, the provisions of

the Administrative Procedure Act ("APA") do not apply to the

Commission’s injury investigation. Cf. GSA, S.R.L. v. United

States, 24 CIT , , 77 F. Supp. 2d 1349, 1359 (1999); see also

19 U.S.C. § 1677c(b)(1994)("The [Commission’s] hearing shall not be

subject to the provisions of [5 U.S.C. §§ 551 et seq.], or to [5

U.S.C. § 702].").

After completing an investigation, the six commissioners

comprising the Commission, see 19 U.S.C. § 1330(a)(1994), vote on

whether the domestic industry has been injured by reason of the

subject imports. "If the Commissioners voting on [an injury]

determination . . . are evenly divided as to whether the

determination should be affirmative or negative, the Commission

shall be deemed to have made an affirmative determination." 19

U.S.C. § 1677(11)(1994). "[T]he Commission may function

notwithstanding vacancies." 19 U.S.C. § 1330(c)(6).

At the time of the original final determination regarding
Court No. 98-05-01460 Page 5

SRAMs from Taiwan, the Commission was only composed of three

members: Chairman Miller, Vice Chairman Bragg, and Commissioner

Crawford. See Final Determination at 3 n.1. Vice Chairman Bragg

found that the U.S. industry was materially injured by reason of

LTFV imports of SRAMs from Taiwan, with Chairman Miller dissenting.

See id. at 33 n.168. Commissioner Crawford, apparently, had

recused herself. See id. Thus, Vice Chairman Bragg’s decision

constituted an affirmative determination of the Commission pursuant

to 19 U.S.C. § 1677(11), and the publication of the Commission’s

final determination was entitled "Views of the Commission." See

Final Determination at 3. Accordingly, when the Court remanded, it

ordered the Commission to reconsider its affirmative determination,

without directing the remand to Vice Chairman Bragg alone. See

Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1336.

By the time of the remand, three new members had been

appointed to the Commission: Commissioner Askey, Commissioner

Koplan, and Commissioner Hillman. In addition, then Vice Chairman

Bragg had become Chairman, and then Chairman Miller had become Vice

Chairman. Although the Commission was therefore composed of the

full six commissioners, only Chairman Bragg prepared views on

remand. See Remand Determination at 1 n.1. "The Commission, with

Commissioner Crawford not participating, submit[ted] Chairman
Court No. 98-05-01460 Page 6

Bragg’s remand views to the Court[] as its ’Views on Remand[.]’"

Id.; see also Action Jacket Approval Record, Pls.’ Resp. to Remand

Views, Ex. 1. Moreover, "[b]ecause Vice Chairman Miller’s

[dissent] was unaffected by the Court’s remand order, she did not

take part in this remand proceeding." See Remand Determination at

1 n.1.

Plaintiffs now argue that "[t]he remand determination was not

an institutional response, and therefore it was unlawful." Pls.’

Resp. to Remand Views at 2. According to Plaintiffs, the remand

determination only represents the views of Chairman Bragg, rather

than the views of the Commission as an institution. See id. at 9.

Because the applicable statute, case law, and this Court’s remand

order all compel an institutional response, Plaintiffs maintain,

all eligible commissioners should have participated in the

determination on remand. See id. at 2. Plaintiffs assert that

Vice Chairman Miller, Commissioner Koplan, Commissioner Askey, and

Commissioner Hillman did not participate in the remand proceeding.

See id. at 2.3

3
Plaintiffs do not appear to challenge Commissioner
Crawford’s non-participation. See Pls.’ Resp. to Remand Views at
2. The original and remand determinations merely indicate that
Commissioner Crawford did not participate in both decisions
without explaining why she was excused. See Final Determination
at 33 n.168; Remand Determination at 1 n.1. Nevertheless, both
Court No. 98-05-01460 Page 7

The plain language of the statute indicates that remands from

this court are indeed made to the Commission as a whole: "If the

final disposition of an action brought under this section is not in

harmony with the published determination of . . . the Commission,

the matter shall be remanded to the . . . Commission . . . for

disposition consistent with the final disposition of the court."

19 U.S.C. § 1516a(c)(3)(1994).

Likewise, this court has recognized the general rule that,

where possible, all sitting commissioners should participate in a

remand made to the Commission. See Trent Tube Div. v. United

States, 14 CIT 780, 784, 752 F. Supp. 468, 472 (1990)("[R]emands to

the Commission ordering explanations of the views of individual

members require an ’institutional response’ irrespective of the

makeup of the Commission’s membership at the time it receives

remand instructions."), aff’d, 975 F.2d 807, 814 (Fed. Cir.

1992)("[The CIT] was free, within reasonable limits, to set the

parameters of the remand, which required an institutional response

irrespective of flux in the Commission’s membership.");

Metallverken Nederland B.V. v. United States, 14 CIT 481, 490, 744

Plaintiffs and Defendant appear to agree that she had validly
recused herself and was therefore ineligible. See Pls.’ Resp. to
Remand Views at 2-3; Def.’s Resp. to Cmts. on Remand
Determination at 3.
Court No. 98-05-01460 Page 8

F. Supp. 281, 288 (1990)(recognizing that remands are generally to

the Commission as a whole)(citing 19 U.S.C. § 1516a(c)(3)(1988));

Asociacion Colombiana de Exportadores de Flores v. United States,

12 CIT 1174, 1176 n.2, 704 F. Supp. 1068, 1070 n.2

(1988)("[R]emands are made to the [Commission], not to the

individual commissioners. Where possible all commissioners should

participate in remand determinations."); USX Corp. v. United

States, 12 CIT 844, 845, 698 F. Supp. 234, 236 n.3

(1988)(indicating that a newly-appointed commissioner, not on the

Commission at the time of the original decision, should have

participated in the remand because "remand is made to the entire

Commission[;] [t]he Commission, rather than individual

commissioners, acts"); SCM Corp. v. United States, 2 CIT 1, 7, 519

F. Supp. 911, 915 (1981)("Clearly, the Commission, like this Court,

is a continuing institution, regardless of changes in its

membership.").

In addition, although the Court has the authority to remand

the individual views of specific commissioners, see, e.g., Nippon

Steel Corp. v. United States, 19 CIT 827, 827-28 (1995); Bando

Chemical Indus., Ltd. v. United States, 16 CIT 133, 137, 787 F.

Supp. 224, 227 (1992), aff’d, 26 F.3d 139 (Fed. Cir. 1994), in this

case, the Court ordered "the Commission" to reconsider its
Court No. 98-05-01460 Page 9

affirmative determination, instead of remanding the determination

to Chairman Bragg, the author of the Commission’s original majority

determination, alone. See Taiwan I, 23 CIT at , 59 F. Supp. 2d

at 1336. To be sure, the Court could have more specifically

instructed that its remand was directed to the entire Commission.

See Citrosuco Paulista, S.A. v. United States, 12 CIT 1196, 1231,

704 F. Supp. 1075, 1103 (1988)("This remand is directed to the

entire Commission, and not just individual commissioners.")(citing

Asociacion Colombiana, 12 CIT at 1176 n.2, 704 F. Supp. at 1070

n.2). Nevertheless, this Court has the authority to construe its

own remand order. See Laitram Corp. v. NEC Corp., 115 F.3d 947,

950-51 (Fed. Cir. 1997)(citing In re Sanford Fork & Tool Co., 160

U.S. 247, 256 (1895)).

Therefore, based on the relevant statutory provision, the case

law, and the Court’s remand order in Taiwan I, the Court agrees

with Plaintiffs that all eligible commissioners should have

participated in the remand. To prevail, however, Plaintiffs must

still satisfy their burden of demonstrating to the Court that all

the eligible commissioners did not meaningfully participate in the

remand.

The presumption of regularity supporting the acts of agency

officials mandates that, "in the absence of clear evidence to the
Court No. 98-05-01460 Page 10

contrary, courts presume that they have properly discharged their

official duties." United States v. Chemical Foundation, Inc., 272

U.S. 1, 14-15 (1926). Consistent with this principle, in United

States v. Morgan, 313 U.S. 409, 422 (1941), the Supreme Court held

that courts cannot probe the extent of an agency official’s

consideration and understanding of an issue in making a decision.

Subsequently, the Supreme Court has qualified Morgan to the limited

extent that a court may probe an agency official’s thought

processes if the challenger makes a "strong showing of bad faith or

improper behavior" on the part of the agency official, and the

agency has supplied the basis of its decision in formal findings.

See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402,

420 (1971).

In applying these principles, federal courts have consistently

recognized that challengers must satisfy a high burden in order to

rebut the presumption that agency officials have adequately

considered the issues in making a final decision, including their

reading and understanding of the record evidence. See, e.g.,

Franklin Savings Ass’n v. Ryan, 922 F.2d 209, 211 (4th Cir.

1991)("Since Morgan, federal courts have consistently held that,

absent ’extraordinary circumstances,’ a government decision-maker

will not be compelled to testify about his mental processes in
Court No. 98-05-01460 Page 11

reaching a decision, ’including the manner and extent of his study

of the record[.]’")(citations omitted); Nat’l Small Shipments

Traffic Conference, Inc. v. ICC, 725 F.2d 1442, 1450 (D.C. Cir.

1984)("Because of the strong presumption of regularity in

administrative proceedings, reviewing courts will not normally

entertain procedural challenges that members of the body

inadequately considered the issues before reaching a final

decision[.]"); Nat’l Nutritional Foods Ass’n v. FDA, 491 F.2d 1141,

1144-46 (2d Cir. 1974); Grupo Industrial Camesa, 18 CIT at 463-64,

853 F. Supp. at 443.

Here, while the record does warrant concern, Plaintiffs have

not made the clear showing of misconduct required to rebut the

presumption of regularity. To prove that no commissioners other

than Chairman Bragg meaningfully participated in the remand,

Plaintiffs point to a footnote of the remand determination and to

the Commission Action Jacket Approval Record. See Pls.’ Resp. to

Remand Views at 10-11 (citing Remand Determination at 1 n.1 and

Action Jacket Approval Record, Ex. 1 to Pls.’ Resp. to Remand

Views).

The remand determination footnote states,

The views of Chairman Bragg comprised the Commission’s
determination in this investigation. The Commission,
with Commissioner Crawford not participating, submits
Court No. 98-05-01460 Page 12

Chairman Bragg’s remand views to the Court, as its "Views
on Remand" providing further explanation of the
Commission’s original determination in response to the
Court’s decision. Vice Chairman Miller reaffirms her
negative views in this investigation. Because Vice
Chairman Miller’s negative determination was unaffected
by this Court’s remand order, she did not take part in
this remand proceeding.

Remand Determination at 1 n.1.

Interpreting this footnote, Plaintiffs argue that the remand

determination did not constitute an institutional response from the

full Commission because Chairman Bragg alone prepared remand views.

See Pls.’ Resp. to Remand Views at 9-10. It is not necessary,

however, for each commissioner to participate in drafting the

decision or to submit individual views. Rather, the statute merely

requires a single, written determination from the Commission,

leaving to each commissioner’s discretion whether to prepare

separate or dissenting views. See 19 U.S.C. §§ 1673d(d),

1677(7)(B); cf. H.R. Rep. No. 96-317, 96th Cong., 1st Sess. at 46

(1979)("[T]he Committee [on Ways and Means] intends that the

[Commission] determination, as well as any dissenting or separate

views of the individual Commissioners, be specific in its statement

of findings of fact and conclusions of law."). Accordingly, it is

appropriate for commissioners to adopt one another’s views. Cf.

Hannibal Indus., Inc. v. United States, 13 CIT 202, 203, 710 F.
Court No. 98-05-01460 Page 13

Supp. 332, 334 (1989)("On remand, the Chairman adopted the Vice

Chairman’s views on causation and her finding of no material

injury.").

The remand determination footnote states, "The Commission,

with Commissioner Crawford not participating, submits Chairman

Bragg’s remand views to the Court, as its ’Views on Remand[.]’"

Remand Determination at 1 n.1 (emphasis added). In this light, it

appears that newly-appointed commissioners Askey, Koplan, and

Hillman adopted Chairman Bragg’s remand views. Employing the

presumption of regularity in agency decision making, the Court

presumes that commissioners Askey, Koplan, and Hillman would not

have chosen to adopt Chairman Bragg’s views as the views of the

Commission without an adequate consideration of the issues and the

record evidence. Therefore, they presumably participated in the

remand determination.

At the same time, the remand determination footnote states

that Vice Chairman Miller reaffirmed her dissent. See id. The

last sentence of the footnote, however, calls Vice Chairman

Miller’s participation into question, as it states that "she did

not take part in this remand proceeding." Id. Nevertheless, this

tension in language does not clearly indicate that Vice Chairman

Miller did not participate in the remand. Employing the
Court No. 98-05-01460 Page 14

presumption of regularity in interpreting the entire footnote, we

conclude that Miller’s continued dissent constituted participation,

as it indicates that she considered the merits of the decision.

Therefore, reviewing the remand determination footnote, the Court

must presume that Vice Chairman Miller meaningfully took part in

the remand proceeding.

Similarly, the Commission Action Jacket Approval Record does

not undermine the presumption that all eligible commissioners

meaningfully participated in the remand determination. The Action

Jacket Approval Record is simply a sheet of paper indicating that

each commissioner, with the exception of Commissioner Crawford,

approved the remand views drafted by Chairman Bragg. See Action

Jacket Approval Record, Pls.’ Resp. to Remand Views, Ex. 1.

Plaintiffs argue,

The vote sheet shows that neither Vice Chairman Miller
nor any of the other three qualified sitting
Commissioners adopted the remand determination as their
own or reviewed the record evidence to respond to the
Court’s Order, let alone participated in any analysis on
remand. The vote sheet shows that the other
Commissioners merely approved of the procedural maneuver
whereby only one Commissioner’s views were submitted in
response to the Court’s remand Order.

Pls.’ Resp. to Remand Views at 10. Plaintiffs, however, make

inferences that this Court will not make. Rather, absent hard

evidence to the contrary, the Court must presume that the
Court No. 98-05-01460 Page 15

commissioners would not have approved submitting to the Court the

remand views prepared by Chairman Bragg without an understanding of

the determination’s merits.4

The Court recognizes that Vice Chairman Miller wrote on the

vote sheet, "I note for the record that I would have preferred an

institutional response to this remand." Action Jacket Approval

Record, Pls.’ Resp. to Remand Views, Ex. 1 (emphasis added). This

statement does raise flags. Nevertheless, considered in

conjunction with the remand determination’s pronouncement that the

Commission submitted Chairman Bragg’s views as the Commission’s

"Views on Remand" and with each commissioner’s recorded approval on

the vote sheet, Vice Chairman Miller’s statement does not rise to

the level of "a clear showing of misconduct or wrongdoing"

necessary to override the presumption of regularity. See Franklin

Savings Ass’n, 922 F.2d at 211.

On this record, it is not clear that the Commission on remand

4
The Court notes that the Action Jacket Approval Record
indicates that Vice Chairman Miller also approved the remand
views drafted by Chairman Bragg. This seems inconsistent with
the remand determination’s indication that Miller maintained her
dissent. See Remand Determination at 1 n.1. Interpreting the
evidence as a whole, however, the Court must presume that Vice
Chairman Miller approved submitting to the Court the remand views
of Chairman Bragg as the Commission’s remand determination
because the draft noted her dissent. Seen in this light, there
is no inconsistency.
Court No. 98-05-01460 Page 16

did not conduct a formal re-vote on the merits. It may be that

Plaintiffs’ concerns are justified, and that the deliberations did

not include all of the sitting Commissioners as contemplated by the

statute. But the Court will not presume misconduct based on

suspicion alone. The evidence does not clearly show that the full

Commission did not meaningfully participate in the remand in

accordance with 19 U.S.C. § 1516a(c)(3), the case law, and this

Court’s remand order.5 Finally, we note that, because we are

5
Plaintiffs offer additional arguments in support of their
belief that the Commission’s proceedings on remand violated the
spirit of the Court’s remand order. See Pls.’ Resp. to Remand
Views at 11-14. In reviewing Plaintiffs’ arguments, the Court
notes that "[t]he Commission has broad discretion in fashioning
its procedures." Metallverken, 14 CIT at 490, 744 F. Supp. at
288 (citing FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 143
(1940)). Moreover, as discussed above, the presumption of
regularity dictates that, "in the absence of clear evidence to
the contrary, courts presume that [agency officials] have
properly discharged their official duties." Chemical Foundation,
272 U.S. at 14-15.
Plaintiffs first argue that the Commission failed to provide
public notice of its remand proceeding. See Pls.’ Resp. to
Remand Views at 11. Such notice was unnecessary, however, as the
Court’s previous opinion notified the parties of the remand. See
Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1336-37.
Plaintiffs next argue that the Commission failed to "offer
interested parties an opportunity to be heard[.]" Pls.’ Resp. to
Remand Views at 11. As mentioned above, however, antidumping
proceedings are investigatory, rather than adjudicatory, in
nature. See SAA at 892; see also NEC Corp. v. United States, 21
CIT 933, 948-49, 978 F. Supp. 314, 329 (1997). Accordingly, the
Commission permissibly interprets its role in conducting an
investigation as fact-finding. See U.S. Int’l Trade Comm’n,
Guidelines for Hearings, Pub. 3183, at 1 (Mar. 1999). In
Court No. 98-05-01460 Page 17

remanding the decision for the reasons explained below, Plaintiffs

will, in any event, be afforded the full Commission’s

reconsideration of the merits of the injury determination.

2. Is the Commission’s remand determination supported by
substantial evidence and otherwise in accordance with law?

The Court must sustain the Commission’s remand determination

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).

A. Background

The statute directs the Commission to "make a final

remanding this matter, the Court did not order the Commission to
reopen the record for the gathering of further evidence. See
Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1336-37. Therefore,
it was within the Commission’s discretion not to solicit further
comments from interested parties on remand.
Finally, Plaintiffs argue that the Commission improperly
refused to permit briefs and exhibits that Plaintiffs had
previously submitted to this Court to be added to the record of
the remand proceeding. See Pls.’ Views on Remand at 11, 12-13.
As noted, however, the Court did not instruct the Commission to
reopen the record. Moreover, Plaintiffs’ case briefs presumably
contained arguments that the Commission had already heard. See
28 U.S.C. § 2637(d)(requiring the exhaustion of administrative
remedies). Lastly, because the exhibits Plaintiffs presented at
oral argument before this Court on May 26, 1999, were merely
charts constructed using data already on the record, it was
within the Commission’s discretion to decide whether to receive
them. See Maine Potato Council v. United States, 9 CIT 293, 300,
613 F. Supp. 1237, 1244 (1985)("It is within the Commission’s
discretion to make reasonable interpretations of the
evidence[.]").
Court No. 98-05-01460 Page 18

determination of whether . . . an industry in the United States .

. . is materially injured . . . by reason of [the subject]

imports[.]" 19 U.S.C. § 1673d(b). "The term ’material injury’

means harm which is not inconsequential, immaterial, or

unimportant." 19 U.S.C. § 1677(7)(A). Moreover, the "by reason

of" language "mandates a showing of causal--not merely temporal--

connection between the [subject imports] and the material injury."

Gerald Metals, Inc. v. United States, 132 F.3d 716, 720 (Fed. Cir.

1997). In turn, the causation standard "requires adequate evidence

to show that the harm occurred ’by reason of’ the [subject]

imports, not by reason of a minimal or tangential contribution to

material harm[.]" Id. at 722.6

In examining "whether [the subject] imports have caused

6
Following the Federal Circuit’s decision in Gerald Metals,
132 F.3d 716, this Court ordered the Commission to reconsider its
affirmative material injury determination concerning imports of
pure magnesium from the Ukraine. See Gerald Metals, Inc. v.
United States, 22 CIT , 8 F. Supp. 2d 861 (1998). This Court
then sustained the Commission’s subsequent remand determination.
See Gerald Metals, Inc. v. United States, 22 CIT , 27 F. Supp.
2d 1351 (1998), appeal dismissed for appellant’s failure to
prosecute in accordance with Federal Circuit Rule 31(a), No. 99-
1166 (Fed. Cir. Apr. 16, 1999). Although in Gerald Metals the
Federal Circuit and this Court interpreted the statute as it
existed prior to the enactment of the Uruguay Round Agreements
Act ("URAA") on January 1, 1995, the "by reason of" standard
articulated therein applies to the amended statute. See Taiwan
I, 23 CIT at , 27 F. Supp. 2d at 1329.
Court No. 98-05-01460 Page 19

material injury to a domestic industry," the Commission is required

under 19 U.S.C. § 1677(7)(B) to consider three factors: (1) the

volume of the subject imports; (2) the effect of the subject

imports on prices of domestic like products; and (3) the impact of

the subject imports on domestic producers of like products.7 Id.

at 719. The Commission evaluates the volume and price effects of

the subject imports and their consequent impact on the domestic

industry by applying the standards set forth in 19 U.S.C. §

1677(7)(C).8 See U.S. Steel Group v. United States, 96 F.3d 1352,

7
In addition, the Commission "may consider such other
economic factors as are relevant to the determination regarding
whether there is material injury by reason of imports." 19
U.S.C. § 1677(7)(B)(ii).
8
The relevant portions state:

(i) Volume

In evaluating the volume of imports of
merchandise, the Commission shall consider whether
the volume of imports of the merchandise, or any
increase in that volume, either in absolute terms
or relative to production or consumption in the
United States, is significant.

(ii) Price

In evaluating the effect of imports of such
merchandise on prices, the Commission shall
consider whetherB
(I) there has been significant price
underselling by the imported merchandise
Court No. 98-05-01460 Page 20

as compared with the price of like
products of the United States, and
(II) the effect of imports of such
merchandise otherwise depresses prices to
a significant degree or prevents price
increases, which otherwise would have
occurred, to a significant degree.

(iii) Impact on affected domestic industry

In examining the impact required to be considered
under subparagraph (B)(i)(III), the Commission
shall evaluate all relevant economic factors which
have a bearing on the state of the industry in the
United States, including, but not limited toB
(I) actual and potential decline in
output, sales, market share, profits,
productivity, return on investments, and
utilization of capacity,
(II) factors affecting domestic prices,
(III) actual and potential negative
effects on cash flow, inventories,
employment, wages, growth, ability to
raise capital, and investment,
(IV) actual and potential negative
effects on the existing development and
production efforts of the domestic
industry, including efforts to develop a
derivative or more advanced version of
the domestic like product, and
(V) in a proceeding under [19 U.S.C. §§
1673-1673h], the magnitude of the margin
of dumping.

The Commission shall evaluate all relevant
economic factors described in this clause within
the context of the business cycle and conditions
of competition that are distinctive to the
Court No. 98-05-01460 Page 21

1360 (Fed. Cir. 1996); see also Agreement on Implementation of

Article VI of the General Agreement on Tariffs and Trade 1994

(Antidumping) at Art. 3.1 ("Antidumping Agreement").

"Thus, after assessing whether the volume, price effects, and

impact of the subject imports on the domestic industry are

significant, the statutory ’by reason of’ language implicitly

requires the Commission to ’determine whether these factors as a

whole indicate that the [subject] imports themselves made a

material contribution to the injury.’"9 Taiwan I, 23 CIT at ,

59 F. Supp. 2d at 1327-28 (quoting Gerald Metals, 22 CIT at , 27

F. Supp. 2d at 1355); see also 19 U.S.C. § 1673d(b)(1).

Accordingly, "the Commission must examine other factors to ensure

that it is not attributing injury from other sources to the subject

imports." SAA at 851-52.10

affected industry.

19 U.S.C. § 1677(7)(C).
9
The presence or absence of any factor is not necessarily
dispositive to a finding of material injury. See 19 U.S.C. §
1677(7)(E)(ii). The Commission has discretion to weigh the
significance of each factor in light of the circumstances. See
Iwatsu Electric Co., Ltd. v. United States, 15 CIT 44, 49, 758 F.
Supp. 1506, 1510-11 (1991).
10
In its remand determination, the Commission suggests that
the non-attribution requirement is satisfied by assuring that the
injurious effects ascribed to the subject imports are not
Court No. 98-05-01460 Page 22

"effects entirely caused" by other factors. Remand Determination
at 9 n.34. In making this assertion, the Commission quotes an
isolated sentence from the GATT 1947 Panel Report in the
Norwegian Salmon case. See Imposition of Anti-dumping Duties on
Imports of Fresh and Chilled Atlantic Salmon from Norway, Apr.
27, 1994, GATT B.I.S.D. (41st Supp.) at 423 ("Norwegian Salmon").
The SAA endorses Norwegian Salmon as illustrative of a proper
causation analysis. See SAA at 851.
Without more, however, a reliance on this isolated statement
from Norwegian Salmon is misplaced. First, the GATT Panel’s
statement that it could not find that the Commission "had
attributed to the Norwegian imports effects entirely caused by"
other factors was made in direct response to Norway’s argument
that "any material injury to the [United States] Atlantic salmon
industry . . . was caused by factors other than imports from
Norway[.]" Norwegian Salmon at 423 (emphases added).
Second, this interpretation of the SAA’s non-attribution
requirement could render the statutory "by reason of" language
meaningless. The statute’s "by reason of" language indicates
that the Commission cannot satisfy "its burden of proof by
showing that the LTFV goods themselves contributed only minimally
or tangentially to the material harm." Gerald Metals, 132 F.3d
at 722 (emphasis added). To conclude that non-attribution merely
requires the Commission to ensure that it does not attribute to
the subject imports injury caused entirely by other factors,
however, could allow the Commission to violate this language
because overall injury to a domestic industry is often caused by
a variety of factors. As explained by this Court,

Frequently, several events--each of which is a
necessary antecedent and has an appreciable effect--
contribute to overall injury to an industry. In some
cases, another event may have such a predominant effect
in producing the harm as to make the effect of the LTFV
imports insignificant and, therefore, to prevent the
LTFV imports from being a material factor. (This is
not to say, however, that there may not be more than
one material factor to injury.) In addition, even if
no contributing factors independently have a
predominant effect, their combined effect may dilute
the effect of the LTFV imports, preventing the LTFV
Court No. 98-05-01460 Page 23

In reviewing the Commission’s original determination, the

Court could not discern how the Commission ensured that it did not

attribute the harmful effects from other recognized factors to the

subject imports. See Taiwan I, 23 CIT at , 59 F. Supp. 2d at

1335-36. Therefore, the Court remanded the Commission’s

affirmative injury determination for "reconsideration consistent

with this Court’s opinion." Id. at , 59 F. Supp. 2d at 1336.

On remand, the Commission again determines that the industry in the

United States producing SRAMs was materially injured by reason of

imports of SRAMs from Taiwan that the Department of Commerce found

were sold at LTFV. See Remand Determination at 1.

B. Volume Effects

The statute requires the Commission to determine "whether the

imports from being a material factor. The statute
requires that the Commission determine whether the LTFV
imports themselves made a material contribution to the
injury suffered by the domestic industry.

Gerald Metals, 22 CIT at , 27 F. Supp. 2d at 1355 n.8.
"That the injurious effects from other sources may be
greater than the effect of the subject imports is not
determinative, [however,] so long as the Commission reasonably
finds that the subject imports’ contribution to the overall harm
is material." Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1330-
31. "[T]he Commission need not weigh (i.e., determine which is
greater or lesser) causes in complying with the ’by reason of’
standard." Id. at , 59 F. Supp. 2d at 1331.
Court No. 98-05-01460 Page 24

volume of [the subject imports], or any increase in that volume,

either in absolute terms or relative to production or consumption

in the United States, is significant." 19 U.S.C. §

1677(7)(C)(i)(emphasis added). "’This language when read in

conjunction with the legislative history indicates that disjunctive

language was chosen to signify congressional intent that the agency

be given broad discretion to analyze import volume in the context

of the industry concerned.’" USX Corp., 12 CIT at 848, 698 F.

Supp. at 238 (1988)(quoting Copperweld Corp. v. United States, 12

CIT 148, 167, 682 F. Supp. 552, 570 (1988)); see also S. Rep. No.

96-249, 96th Cong., 1st Sess. at 88 (1979).

In its original determination, the Commission evaluated the

significance of the subject imports’ volume in both absolute and

relative terms, without indicating whether its determination relied

upon both findings. See Final Determination at 33-34. In Taiwan

I, the Court sustained the Commission’s finding that the subject

imports’ nearly threefold increase in absolute volume was

significant. See Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1331.

The Court could not, however, "sustain the Commission’s additional

conclusion that the subject imports’ increase relative to U.S.

consumption was significant." Id. The record evidence indicated

that non-subject imports of SRAMs greatly exceeded the imports of
Court No. 98-05-01460 Page 25

Taiwanese SRAMs in terms of both absolute and relative increases in

volume11 and were recognized by the Commission as a potential source

of injury to the domestic industry. See id. at , 59 F. Supp.

2d at 1331-32. Therefore, "without an explanation of how the

relatively small volume of Taiwanese imports was significant given

the dominant presence of non-subject imports," the Court could not

sustain the Commission’s additional conclusion that the subject

imports’ increase relative to U.S. consumption was significant.

Id. at , 59 F. Supp. 2d at 1332.

On remand, the Commission clarifies that its determination was

not dependent on its finding of relative significance; rather, its

finding that the absolute increase in subject imports was

significant alone supported its determination regarding the volume

factor. See Remand Determination at 5. As mentioned, the Court

previously held that substantial evidence supported the

Commission’s conclusion that the absolute increase in imports of

Taiwanese SRAMs was significant. See Taiwan I, 23 CIT at , 59

F. Supp. 2d at 1331. Therefore, recognizing that the Commission

has discretion to analyze the volume of subject imports in either

11
Throughout the period of investigation, non-subject
imports maintained a much higher U.S. market share than Taiwanese
imports. See Staff Report (List 2, Doc. 34) at IV-9, Table IV-4
("Staff Report").
Court No. 98-05-01460 Page 26

an absolute or relative sense, the Court sustains the Commission’s

conclusion that the overall volume of subject imports was

significant as supported by substantial evidence.12

12
Because substantial evidence supports the Commission’s
conclusion that the volume of the subject imports was significant
based on its determination regarding absolute volume alone, the
Court need not address the Commission’s additional determination
regarding the imports’ relative volume. Nevertheless, the Court
notes an argument raised by the Commission on remand in
connection with the Court’s prior instruction for the Commission
to explain "how the relatively small volume of Taiwanese imports
was significant given the dominant presence of non-subject
imports[.]" Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1332.
Addressing the Court’s instruction, the Commission states,

The Norwegian Salmon panel holds that there is "not . .
. a requirement that imports from third countries not
subject to investigation be considered as part of an
examination of the significance of an increase in the
volume of imports from a country whose imports [are]
the subject of an anti-dumping duty investigation."

Remand Determination at 4 (citing Norwegian Salmon at 406).
Thus, the Commission argues that a comparison of the respective
volumes of the Taiwanese and non-subject imports was not required
to evaluate the significance of the Taiwanese imports’ relative
volume.
If the Commission evaluates the significance of the subject
imports without regard to causation, such a comparison may indeed
not be necessary. Cf. Angus Chemical, 140 F.3d 1478, 1485 (Fed.
Cir. 1998)(indicating that, under a two-step method of causation,
the statutory factors of 19 U.S.C. § 1677(7)(B) may be evaluated
before conducting "the additional analytical step of determining
the precise causal connection between the imports and any
perceived harm to the industry"). But see Taiwan I, 23 CIT at
, 59 F. Supp. 2d at 1332 n.12.
In determining the ultimate issue of causation, however, it
may be necessary to consider large volumes of non-subject
imports. The SAA specifically endorses the causation standard
Court No. 98-05-01460 Page 27

C. Price Effects

1. Introduction

The statute provides that, in evaluating the effect of the

subject imports on domestic prices,

[T]he Commission shall consider whether--(I) there has
been significant price underselling by the imported
merchandise as compared with the price of domestic like
products of the United States, and (II) the effect of
imports of such merchandise otherwise depresses prices to
a significant degree or prevents price increases, which
otherwise would have occurred, to a significant degree.

19 U.S.C. § 1677(7)(C)(ii).

The Court previously sustained as supported by substantial

evidence the Commission’s conclusion that there was significant

price underselling by the Taiwanese imports. See Taiwan I, 23 CIT

employed in Norwegian Salmon. See SAA at 851. In the sentence
immediately following the Commission’s above quote, the GATT
panel states, "A consideration of the volume of imports from . .
. third countries might be relevant for the purpose of
determining the existence of a causal relationship between the
allegedly dumped imports under investigation and material injury
to a domestic industry." Norwegian Salmon at 406. Moreover, the
Antidumping Agreement explicitly states,

The authorities shall also examine any known factors
other than the dumped imports which at the same time
are injuring the domestic industry, and the injuries
caused by these other factors must not be attributed to
the dumped imports. Factors which may be relevant in
this respect include . . . the volume and prices of
imports not sold at dumping prices . . . .

Antidumping Agreement at ¶ 3.5 (emphasis added).
Court No. 98-05-01460 Page 28

at , 59 F. Supp. 2d at 1333. The Court could not, however,

sustain the Commission’s conclusion that the Taiwanese imports had

significant price depressing effects during 1996 and 1997 as

supported by substantial evidence.13 See id. at , 59 F. Supp.

2d at 1333-36.

First, the Court expressed concern that "the Commission found

that the subject imports had significant price depressing effects

despite the fact that the record indicate[d] that during 1996 and

1997 the majority of the Taiwanese imports oversold the domestic

product." Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1333. The

Commission collected price information for six SRAM products,

designating them products 1 through 6. Newer Taiwanese products 1

and 2, which accounted for less than 25% of Taiwanese imports in

1996 and less than 33% in 1997, significantly undersold the

equivalent domestic products during 1996 and 1997. See Staff

Report at V-6 to V-8, Tables V-1 and V-2. Older Taiwanese products

3 and 5, however, accounted for over 50% of Taiwanese imports in

1996 and over 67% in 1997, and generally oversold the equivalent

13
The years 1994 through 1997 encompass the period of
investigation. Nevertheless, the Commission permissibly focuses
on the more recent 1996-97 period in evaluating the causal
effects of the subject imports. See, e.g., Chr. Bjelland
Seafoods A/S v. United States, 19 CIT 35, 48 (1995).
Court No. 98-05-01460 Page 29

domestic products during those years. See id. at V-9 to V-10,

Table V-3, and at V-13 to V-14, Table V-5.

Second, the Court could not discern how the Commission ensured

that it did not attribute the harmful effects from other recognized

sources of price depression in the U.S. SRAM market to the subject

imports. See Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1335-36;

see also SAA at 851-52. In the original determination, the

Commission acknowledged that a learning curve, oversupply, and non-

subject imports also had price depressing effects on the prices of

domestic SRAMs. See Final Determination at 35, 37. Yet the

Commission simply concluded that the subject imports themselves had

significant price depressing effects without explaining the basis

for that conclusion, despite the extensive evidence of these other

known sources of price depression. See Taiwan I, 23 CIT at , 59

F. Supp. 2d at 1336.

The Commission’s remand determination attempts to address the

Court’s concerns.

2. Analysis

a) Price Depressing Effects of Taiwanese SRAM Imports

On remand, the Commission continues to focus on the newer

products 1 and 2, but now offers a more thorough explanation of

their unique importance. See Remand Determination at 12-13. The
Court No. 98-05-01460 Page 30

Commission explains that "the health of the industry depends upon

its success in new products" because, "in the initial period of

selling a more advanced version or new generation of a product,

firms enjoy a price premium." Id. (citing Final Determination at

22). Therefore, the Commission reasons, the substantial

underselling by Taiwanese imports in newer products 1 and 2 took on

even greater importance because it impaired the domestic industry’s

ability to charge expected premium prices. See id.

Regarding product 1, the Commission states, "In the first nine

months after the entry of Taiwan imports into the market for

Product 1 [in April of 1995], the Taiwan price fell to about half

of its original value, maintaining a margin generally about 40

percent below the U.S. price." Id. (citing Staff Report at V-6 to

V-7, Table V-1). Over the course of the following three months,

the Commission elaborates, the price declines of Taiwanese product

1 became "even more radical," falling to less than one-third of its

December 1995 unit price in February 1996. See id. at 12-13

(citing Staff Report at V-6 to V-7, Table V-1). Throughout this

overall period, "[d]omestic prices fell precipitously." Id. at 13

(citing Staff Report at V-6 to V-7, Table V-1). The record

supports the Commission’s assertions regarding the pricing of

product 1. See Staff Report at V-6 to V-7, Table V-1. Therefore,
Court No. 98-05-01460 Page 31

based on the record, a reasonable mind could conclude, as did the

Commission, that the significant underselling of Taiwanese product

1 depressed U.S. prices.

The Commission characterizes the pricing of Taiwanese product

2 as "even more stark[.]" Remand Determination at 13. The

Commission notes that Taiwanese imports of product 2 entered the

United States two months after the U.S. industry had introduced the

product and "at a price that was one-seventh the domestic product

price." Id. (citing Staff Report at V-8, Table V-2). The domestic

product price fell by almost two-thirds during the following three

months and "declined further by the end [of 1997]." Id. (citing

Staff Report at V-8, Table V-2). Throughout this period, the

Commission continues, Taiwanese product 2 consistently undersold

the domestic product. Id. (citing Staff Report at V-8, Table V-2).

The record supports these assertions. See Staff Report at V-8,

Table V-2. Therefore, based on the record, a reasonable decision

maker could conclude, as did the Commission, that the significant

underselling of Taiwanese product 2 depressed U.S. prices.

In addition, the Commission explains on remand that the more

established Taiwanese products 3 and 5 also had price depressing

effects, despite the fact that these products exhibited "mixed
Court No. 98-05-01460 Page 32

overselling and underselling in 1996-97."14 See Remand

Determination at 14-15. Addressing product 3, the Commission

explains, citing another investigation, "’in a commodity market

characterized by intense price-based competition, a mixed pattern

of under- and overselling is to be expected; such a pattern,

together with increasing volume of subject imports, indicates that

subject imports played a substantial role in the price declines .

. . .’" Id. at 15 (citing Certain Stainless Steel Plate from

Belgium, Canada, Italy, Korea, South Africa, and Taiwan, Inv. Nos.

701-TA-376, 377, and 379 (Final) and Inv. Nos. 731-TA-788-793

(Final), USITC Pub. 3188, at 19 (May 1999)).

Applying this observation to the current case, the Commission

concludes that Taiwanese product 3 had price depressing effects

because its volume increased and it "undersold the domestic product

in between one-quarter and one-third of comparisons" in 1996-97.

Id. at 15 (citing Staff Report at V-9, Table V-3). The record,

however, also supports the opposite conclusion. Margins of

Taiwanese overselling and underselling in product 3 fluctuated

14
Taiwanese product 3 oversold the domestic product 3 in
seven months of 1996 and in ten months of 1997. See Staff Report
at V-10, Table V-3. Taiwanese product 5 oversold the domestic
product 5 in seven months of 1996 and in eight months of 1997.
See id. at V-14, Table V-5.
Court No. 98-05-01460 Page 33

substantially over 1996 and 1997, yet domestic product 3 prices

declined fairly steadily and consistently over this period. See

Staff Report at V-10, Table V-3. Thus, an analysis of the causal

nexus between Taiwanese pricing of product 3 and the domestic

product 3 price declines requires an interpretation of the

evidence. The Commission has "discretion to make reasonable

judgments and inferences in interpreting evidence[.]" Chung Ling

Co., Ltd. v. United States, 16 CIT 843, 846, 805 F. Supp. 56, 61

(1992)(citing Maine Potato Council, 9 CIT at 300, 613 F. Supp. at

1244).

Moreover, we need not belabor whether substantial evidence

supports the Commission’s conclusion regarding the effects of

Taiwanese product 3; the Commission’s explanation of Taiwanese

product 5's effects adequately addresses the Court’s previous

concern regarding the Commission’s finding of significant price

depressing effects despite the fact that the majority of the

Taiwanese imports oversold the domestic product during 1996-97.

Regarding product 5, the Commission explains, "In analyzing

the effects of subject imports on domestic prices of Product 5,

confirmed lost revenue findings are more probative than

underselling." Remand Determination at 15. The Commission points

out that a "substantial number of lost revenue allegations for
Court No. 98-05-01460 Page 34

[product 5] were confirmed[,]" dating from the fourth quarter of

1995 through 1997. Id. at 15-16 (citing Staff Report at V-24 to V-

28, Table V-8). Based on the evidence of confirmed lost revenue

allegations, the Commission concludes that U.S. producers had to

"significantly lower[] their prices to avoid losing sales to

[Taiwanese product 5]." Id. at 16. Also with regard to product 5,

the Commission notes "that there is no possibility of false

attribution of [price] effects where allegations of losses due to

Taiwan imports have been confirmed." Id.

The record indicates that only one U.S. SRAM producer made the

lost revenue allegations concerning Taiwanese product 5. See Staff

Report at V-24 to V-28, Table V-8. Moreover, all but one of the

confirmed lost revenue allegations involved the same purchaser.

See id. Nevertheless, the confirmed lost revenue allegations are

at least reasonably indicative of price depression; in each case,

the U.S. producer lowered its initial price to avoid losing a sale

to Taiwanese imports of product 5. See id.

Accordingly, substantial evidence supports the conclusion that

the subject imports as a whole generally had price depressing

effects. The precise issue, however, is whether the price

depressing effects were "significant." See 19 U.S.C. §

1677(7)(C)(ii).
Court No. 98-05-01460 Page 35

b) Other Sources of Price Depression

In examining causation, the Commission must not attribute the

harmful effects from other sources of injury to the subject

imports. See SAA at 851-52. The Commission further bases its

remand determination that the subject imports themselves had

significant price depressing effects on its explanation of how it

ensured that it did not attribute the price effects from the other

recognized factors (i.e., the learning curve, non-subject imports,

and the 1996-97 oversupply) to the subject imports.

i) The Learning Curve

The learning curve is the phenomenon by which a firm’s

manufacturing costs, and hence its prices, decrease as it becomes

more efficient in production. See Final Determination at 22. The

record indicates that "SRAM prices historically show a pattern of

steep price declines as the products move along market and

production life cycles." Staff Report at I-20 and V-1. Addressing

the effect of the learning curve on the domestic prices for newer

products 1 and 2, the Commission states, "Although the Commission

did not adopt a fixed rate for the learning curve, the evidence

before the Commission indicated that this process is more gradual

than the precipitous falls in new-product prices that occurred

during the later part of the POI." Remand Determination at 14.
Court No. 98-05-01460 Page 36

The record evidence concerning the learning curve effect in

the SRAM industry indicates that the price per bit falls

approximately 38% every two years. See Staff Report at V-1; Feb.

18, 1998, Hearing Tr. (List 1, Doc. 252) at 37 ("Hearing Tr.").

Domestic product 1 and 2 price declines over 1996 and 1997 were

indeed faster than this rate. See Staff Report at V-6 to V-8,

Tables V-1 and V-2. Therefore, substantial evidence supports the

Commission’s conclusion that the price depressing effects of the

learning curve did not render the price depressing effects of the

subject imports insignificant. The Commission has adequately

explained how it ensured that it did not attribute the price

depressing effects of the learning curve to the Taiwanese imports.

ii) Non-Subject Imports

Regarding the non-subject imports, the Commission appears to

explain that it did not attribute price depressing effects of non-

subject imports to the Taiwanese imports because the non-subject

imports were not as competitive as the Taiwanese and domestic

product in the U.S. market for fast SRAMs.15 The Commission

explains,

15
By inference, it appears the Commission considers "slow"
SRAMs to be SRAMs of access speeds greater than or equal to 55
nanoseconds ("ns"), while it considers "fast" SRAMs to be those
of access speeds less than or equal to 34 ns.
Court No. 98-05-01460 Page 37

[M]ore than half of the increase by quantity in non[-]
subject imports in 1996-1997 came in imports from
countries whose imports are predominantly concentrated in
slower access speeds. In contrast, Taiwan imports, like
domestic industry shipments, are heavily concentrated in
higher access speeds. Of non[-]subject imports, only
non-subject Korean imports are more concentrated in the
market for fast SRAMs than in the market for slow SRAMs.
Although the record does not indicate exactly in which
SRAM products non[-]subject imports as a whole increased
most, the market share of non-LTFV products from sources
heavily concentrated in the slower range gained market
share . . . from 1995 to 1997. In contrast, the market
share of non-subject Korean imports decreased slightly[.]

Remand Determination at 9 (citing Staff Report at IV-3, Table IV-2,

at I-10, Table I-1, and at IV-9, Table IV-4).16

Based on these findings, the Commission infers that, "in the

part of the market in which the U.S. and Taiwan products

compete[d], non[-]subject imports [did not have a] greater effect

than subject imports." Id. at 9. Instead, "[n]onsubject imports

appear to have had their greatest effects in [the market for slow

16
The non-subject imports as a whole were composed of non-
subject imports from Korea and non-subject imports from all other
countries, particularly Japan. See Staff Report at II-13.
Henceforth, the Court will refer to the non-subject imports from
all other countries as "third source" imports. The record
indicates that, in 1997, 58.4% of non-subject Korean imports were
in the fast range and 43.1% of third source imports were in the
fast range. See Staff Report at I-10, Table I-1. As indicated
in the above quote, the Commission characterizes the third source
imports as "imports from countries whose imports are
predominantly concentrated in slower access speeds." Remand
Determination at 9.
Court No. 98-05-01460 Page 38

SRAMs] in which Taiwan imports compete[d] very little and which

represent[ed] a relatively low portion of shipments by the U.S.

industry." Id. at 9-10. Thus, the Commission suggests that it did

not attribute price depressing effects of non-subject imports to

the Taiwanese imports because the non-subject imports were less

competitive than the Taiwanese product in the U.S. market for fast

SRAMs. See also id. at 10 n.41 ("That non[-]subject imports

excluded subject imports and domestic products from [a part of the

market] would set the stage for more intense competition between

subject imports and domestic product in the part of the market open

to them.") and 17. n.76 (stating that the Commission explained in

its discussion of the relative volume of subject imports how it

ensured "that it was not attributing the price effects of non[-

]subject imports to subject imports").

Although there was no industry consensus on the definitions of

"fast" and "slow" SRAMs, see Staff Report at I-9, the record

adequately supports the Commission’s finding of distinct market

segments for fast and slow SRAMs in the United States,17 see id. at

17
Plaintiffs argue that the Commission cannot legally rely
on its distinct market segment explanation because the Commission
in its original determination had already found no "clear
dividing line" between fast and slow SRAMs in finding a single
"domestic like product" consisting of SRAMs of all access speeds.
See Pls.’ Resp. to Remand Views at 16 (citing Final Determination
Court No. 98-05-01460 Page 39

I-18 ("[I]nterchangeability across SRAMs with different access

speeds can be problematic."). In addition, the record supports the

Commission’s conclusion that the Taiwanese imports and domestic

product were concentrated in the market for faster SRAMs. See id.

at I-10, Table I-1.

The record does not, however, support the Commission’s

apparent finding that non-subject imports were less competitive

than Taiwanese imports in the domestic fast SRAM market. Instead,

the great weight of the record evidence appears to indicate that,

although a substantial portion of non-subject imports were

concentrated in the U.S. market for slower SRAMs, non-subject

imports were also very competitive in the U.S. market for fast

SRAMs.

First, in terms of billions of bits, there were more than

twice as many non-subject imports of fast SRAMs as a whole than

at 10). It is permissible, however, for the Commission to
consider the importance of distinct market segments as a
condition of competition in its analysis of causation despite a
finding of a single domestic like product under 19 U.S.C. §
1677(10). See Bic Corp. v. United States, 21 CIT 448, 452-54,
964 F. Supp. 391, 397-98 (1997); R-M Indus., Inc. v. United
States, 18 CIT 219, 226 n.9, 848 F. Supp. 204, 210 n.9 (1994).
Indeed, an analysis of market segments plays an important role in
the causation context because "the more fungible two products
are, the more likely underselling by one will affect the price of
another." Bic Corp., 21 CIT at 456, 964 F. Supp. at 400.
Court No. 98-05-01460 Page 40

Taiwanese fast SRAM imports in 1997. See Staff Report at I-10,

Table I-1, and at IV-7, Table IV-3. The absolute volume in 1997 of

third source fast SRAMs alone was much greater than those from

Taiwan. See id. Moreover, in the fastest category of SRAMs

(access speeds of 14 ns or less), there were more than three times

as many non-subject imports as Taiwanese imports. See id.

Finally, in 1997, fast non-subject Korean imports constituted 69.7%

of total non-subject Korean imports by value, while fast third

source imports constituted 75.2% of total third source imports by

value. See id. at I-10, Table I-1.

In addition, the record indicates that non-subject imports,

particularly third source, were dominant in cache memory uses--

functions that utilize fast SRAMs. See id. at I-11. For instance,

non-subject imports were dominant in the market for cache memory in

personal computers ("PCs"), "[o]ne of the largest end uses for

SRAMs[.]" Id. at II-3. According to the Staff Report,

"competition in much of the PC cache market [is limited] to those

SRAM suppliers selected by Intel." Id. In turn, Intel purchased

over 90% of its SRAMs from Japanese and non-subject Korean sources

in 1997. See id.; see also id. at II-13. Thus, the record

indicates that non-subject imports were very competitive in the
Court No. 98-05-01460 Page 41

U.S. market for PC cache memory,18 a market that chiefly utilized

SRAMs of the fastest category in 1997. See id. at I-13, Table I-2.

Moreover, the record indicates that the U.S. market for

workstations and servers chiefly utilized SRAMs of the fastest

category in 1997. See id.; see also id. at II-4 ("Workstations and

servers also consume a large amount of SRAM, and account for a

large percentage of the value of SRAM sales. These applications

use very high-end, high-speed SRAMs[.]") and at II-13. Addressing

the sources of products in this market segment, the record states,

"This segment is predominantly supplied by SRAMs produced in the

United States and non-subject imports, particularly from Japan,

although importers of SRAMs from Taiwan reported some shipments in

this category." Id. at II-4; see also id. at II-13. By value,

37.4% of U.S. SRAM shipments in 1997 were used in workstations and

servers, the largest end-use for domestic SRAMs by value. See id.

In contrast, only 1.4% of Taiwanese SRAMs by value were employed in

workstations and servers in the U.S. market in 1997. See id. at

II-2. Thus, the record indicates that non-subject imports were

more competitive than the Taiwanese imports in the domestic

18
Meanwhile, 22.2% of Taiwanese imports by value were used
as PC cache memory in 1997. See Staff Report at II-2, Table II-
1.
Court No. 98-05-01460 Page 42

industry’s greatest end-use market by value, a market that utilized

SRAMs of the fastest category. See also id. at II-9 and at II-12

("Imports from Taiwan are used in a smaller range of end uses than

U.S.-produced SRAMs.").

By contrast, Taiwanese imports by value were concentrated in

the U.S. market for modems and telecommunications applications in

1997, see id. at II-2, Table II-1, end-uses that primarily employ

SRAMs of the next fastest speed category (access speeds of 15-34

ns), see id. at I-13, Table I-2. Even in the 15-34 ns access speed

range, however, the non-subject imports maintained a greater

absolute volume in the U.S. market than the Taiwanese imports. See

id. at I-10, Table I-1, and at IV-7, Table IV-3.

Finally, the record’s discussion of substitution elasticities

also demonstrates that non-subject imports were competitive in the

U.S. market segment for fast SRAMs. The substitution elasticity

"reflects how easily purchasers switch from the U.S. product to the

subject product (or vice versa) when prices change." Staff Report

at II-15 n.29. The record indicates that non-subject, domestic,

and Taiwanese SRAMs were all within the same range of

substitutability with one another, see id. at II-15 and at II-15

n.30; therefore, the record indicates that they were all fungible

with one another. This evidence further undermines the
Court No. 98-05-01460 Page 43

Commission’s distinct market segment finding.

The Court presumes the Commission considered all of the

evidence in the record. See Nat’l Ass’n of Mirror Mfrs. v. United

States, 12 CIT 771, 779, 696 F. Supp. 642, 648 (1988).

Nevertheless, without more, the Court cannot conclude that the

record as a whole supports the Commission’s apparent finding on

remand that non-subject imports were not significantly competitive

in the market segment in which domestic and Taiwanese SRAMs were

concentrated. While the Commission has "discretion to make

reasonable judgments and inferences in interpreting evidence[,]"

Chung Ling, 16 CIT at 846, 805 F. Supp. at 61, it must nevertheless

"examine the relevant data and articulate a satisfactory

explanation for its action . . . [,]" Motor Vehicle Mfg. Ass’n v.

State Farm Mutual Auto Ins. Co., 463 U.S. 29, 43 (1983). Absent

greater explanation, it appears that the Commission "failed to

articulate a ’rational connection between the facts found and the

choice made.’" Bando Chemical, 16 CIT at 136, 787 F. Supp. at 227

(quoting Bowman Transp., Inc. v. Arkansas-Best Freight System,

Inc., 419 U.S. 281, 285 (1974)), aff’d, 26 F.3d 139 (Fed. Cir.

1994).

More specifically, the record also supports the conclusion

that non-subject imports had price depressing effects on domestic
Court No. 98-05-01460 Page 44

prices for newer products 1 and 2, the very products for which the

Commission emphasizes underselling by Taiwanese imports.19 See

Remand Determination at 12. The record indicates that non-subject

Korean imports also undersold the domestic product in products 1

and 2.20 See Prehearing Staff Report (List 2, Doc. 11) at V-5 to

19
In its original determination, the Commission explained
the importance of new SRAM products as follows:

[T]he SRAM market is characterized by the frequent
introduction of more advanced versions or generations
of the domestic like product, which then tend to
replace existing products. The first producer to
market a superior product . . . often enjoys favorable
pricing for a certain period. As other producers enter
the market and production efficiencies are achieved,
however, prices are driven down, and the product in
question changes in character from a high value-added
product to a commodity-type product.

Final Determination at 21-22; see also Staff Report at I-20.
20
Regarding product 1, the record indicates that the
producer of non-subject Korean imports was the first firm to
introduce the product in the United States. See Prehearing Staff
Report at V-5, Table V-1. U.S. firms marketed product 1
domestically four months later; Taiwanese firms marketed product
1 in the United States five months later. See id. That a Korean
firm was the first to market product 1 in the United States
suggests that that firm was the one that could have reasonably
expected to receive a price premium. Moreover, the non-subject
Korean imports entered the U.S. market at a price lower than the
introductory Taiwanese product 1 price and less than one-half of
the introductory domestic price. See id. Although Taiwanese
product 1 subsequently undersold non-subject Korean product 1 in
1996 and 1997, non-subject Korean imports of product 1
substantially outsold the U.S. and Taiwanese product in terms of
volume during these years. See id. at V-5 to V-6, Table V-1.
As explained by the Commission, prices are driven down from
Court No. 98-05-01460 Page 45

V-6, Table V-1, and at V-7, Table V-2 ("Prehearing Staff Report").

Addressing the underselling by the non-subject Korean imports,

the Commission states, "[W]here price comparisons for comparable

speed products are available, they show that Taiwan imports

generally undersold non[-]subject imports." Remand Determination

at 10 (citing Prehearing Staff Report at V-5 to V-6, Table V-1, and

at V-7, Table V-2). The record does indicate that the Taiwanese

imports undersold the domestic product by greater margins than the

non-subject Korean imports. See Prehearing Staff Report at V-5 to

V-6, Table V-1, and at V-7, Table V-2. From this evidence, the

Commission concludes that the Taiwanese imports "tended to put

downward price pressure on both the domestic industry and those

non[-]subject imports with which they competed." Remand

Determination at 10.

The Commission has "discretion to make reasonable judgments

the price premium level as additional suppliers enter the market.
See Final Determination at 22. Consistent with this theory, the
record shows that the sharpest relative price decline in the U.S.
price for product 2 occurred immediately after the introduction
of non-subject Korean product 2. See Prehearing Staff Report at
V-7, Table V-2. In contrast, the relative price declines in U.S.
product 2 during the prior two months--when it only competed with
Taiwanese versions of product 2--were not nearly as great. See
id. The non-subject Korean imports also consistently undersold
U.S. product 2, although by lesser margins than the Taiwanese
product. See id.
Court No. 98-05-01460 Page 46

and inferences in interpreting evidence[.]" Chung Ling, 16 CIT at

846, 805 F. Supp. at 61. The Commission makes this conclusion,

however, in the context of its apparent finding that non-subject

imports were less competitive in the fast SRAM market segment in

which domestic shipments and Taiwanese imports were concentrated.

See Remand Determination at 9-10. As discussed above, the Court

cannot sustain that finding absent greater explanation. Therefore,

inasmuch as the Commission’s determination that the subject imports

had significant price depressing effects relies on its market

segment finding, as explained, the Court cannot sustain this

determination.21

21
For instance, the Commission characterizes third source
imports--those primarily from Japan--as "non-LTFV products from
sources heavily concentrated in the slower [SRAM] range[.]"
Remand Determination at 9. Yet, although the record does not
contain pricing data for third source imports, it does indicate
that these imports were very competitive, if not more competitive
than the Taiwanese imports, in the market for SRAMs selling at
premium prices. For example, regarding the U.S. market for SRAMs
utilized in workstations and servers, the Staff Report states,

Workstations and servers also consume a large amount of
SRAM, and account for a large percentage of the value
of SRAM sales. These applications use very high-end,
high-speed SRAMs that sell for premium prices. This
segment is predominantly supplied by SRAMs produced in
the United States and non-subject imports, particularly
from Japan, although importers of SRAMs from Taiwan
reported some shipments in this category.

Staff Report at II-4 (emphasis added); see also id. at II-13
Court No. 98-05-01460 Page 47

iii) Oversupply

As the Commission points out, demand for SRAMs is a derived

demand and thus not price responsive (i.e., demand for SRAMs is

inelastic). See Remand Determination at 6; see also Staff Report

at II-5 to II-6. Thus, decreasing shifts in supply will tend to

lead to price increases, while increasing shifts in supply will

tend to lead to price decreases. Primarily because the U.S.

industry had misforecast demand, the U.S. SRAM market experienced

undersupply during 1995 and oversupply during 1996 and 1997. See

Staff Report at V-3. Correspondingly, domestic SRAM prices "peaked

in 1995" and "declined significantly" beginning in 1996. See id.

On remand, the Commission continues to acknowledge the oversupply

"caused by the industry’s overestimation of demand" and its price

depressing effects.22 See Remand Determination at 5, 6, and 17.

In the original determination, the Commission recognized the

("Competition between non[-]subject SRAMs and subject imports is
limited in the workstation market due to limited availability of
qualified product for this segment from subject importers.").
22
In Taiwan I, the Court referred to the oversupply
situation as "global oversupply." 23 CIT at , 59 F. Supp. 2d
at 1335. In response, the Commission states on remand that its
"discussion of oversupply was specific to the conditions in the
U.S. market" and did not concern "the level of relative supply
and demand around the world[.]" Remand Determination at 17. The
Court clarifies that it, too, is only concerned with the
oversupply situation in the U.S. market despite its use of the
phrase "global oversupply" in the prior opinion.
Court No. 98-05-01460 Page 48

oversupply situation of 1996-97 as a distinct market force that

caused significant domestic price declines. See Final

Determination at 23, 35, and 37. On remand, the Commission

states, "[T]he record also suggests that global oversupply,

whatever its extent may be, is not an undifferentiated factor whose

influence on the United States market is independent of the

particular importations that actually occur." Remand Determination

at 17. Thus, the Commission apparently continues to conclude that,

despite the oversupply situation, the subject imports themselves

had distinct and significant price depressing effects.

If the Court could sustain the Commission’s determination that

the subject imports themselves had significant price depressing

effects, this inference could be reasonable. As discussed above,

however, see supra pp. 36-46, the Court cannot sustain that

determination inasmuch as it relies on the Commission’s market

segment finding. Because the Commission’s explanation of how it

ensured that it did not attribute the effects of the 1996-97

oversupply period to the Taiwanese imports is tied to its

determination that the Taiwanese imports themselves had significant

price depressing effects, we cannot sustain this explanation at

this time.
Court No. 98-05-01460 Page 49

D. Impact

The statute directs the Commission to examine the consequent

impact of the subject imports on the domestic industry. See 19

U.S.C. § 1677(7)(C)(iii). The Commission must consider "all

relevant economic factors which have a bearing on the state of the

industry in the United States, including but not limited to" those

enumerated. See 19 U.S.C. § 1677(C)(iii); see also supra at n.8.

On remand, the Commission elaborates on its original findings

with regard to the impact factor. See Remand Determination at 18.

As discussed in the original determination, a condition of

competition distinct to the domestic SRAM industry is that it "must

make substantial ongoing investments in the research and

development of new products and process technologies, and make

substantial capital investments to upgrade fabrication equipment

and facilities, in order to maintain competitiveness." Final

Determination at 36. Therefore, the Commission explains, "the

ability of [the domestic] industry to generate income is vital to

its ability to make the ongoing investment necessary to remain

competitive." Remand Determination at 19. For this reason,

although the Commission considered all the factors enumerated in 19

U.S.C. § 1677(7)(C)(iii), it permissibly focused on the U.S.

industry’s operating income, capital expenditures, research and
Court No. 98-05-01460 Page 50

development ("R&D") expenditures.

The record indicates that the domestic industry earned

significantly less operating income in 1996 than in either 1994 or

1995. See Staff Report at VI-7, Table VI-3. In 1997, the industry

suffered operating losses. See id. In its original determination,

the Commission explained that, "[a]s a result of the domestic

industry’s worsening financial condition, it curtailed capital

expenditures in 1997 to a level slightly less than half that of

either 1995 or 1996." Final Determination at 37 (citing Staff

Report at VI-11, Table VI-4). In addition, the Commission pointed

out that "[t]he domestic industry’s [R&D] expenditures also fell

from 1996 to 1997, although the 1997 levels remained higher than in

1994 or 1995." Id. (citing Staff Report at VI-11, Table VI-4). On

remand, the Commission continues to conclude that, because the

industry is heavily dependent on continuing investment, these

economic factors indicate that the U.S. SRAM industry was suffering

present material injury. See Remand Determination at 20.

As the Commission acknowledges, despite the fact that the

domestic industry invested less in capital and R&D in 1997 than the

previous year, it nevertheless invested more in both categories in

1997 than it had in 1994, the beginning of the POI. See Staff

Report at VI-11, Table VI-4. Therefore, it is possible that,
Court No. 98-05-01460 Page 51

rather than investing abnormally low amounts in 1997, the domestic

industry in truth invested abnormally high amounts in 1995-96 due

to its ability to earn substantially more revenue during the

undersupply period of 1994-95. Nonetheless, "the possibility of

drawing two inconsistent conclusions from the evidence does not

prevent an administrative agency’s finding from being supported by

substantial evidence." Consolo v. Federal Maritime Comm’n, 383

U.S. 607, 620 (1966). The record at least reasonably leads to the

conclusion that the domestic industry was suffering material

injury.

The Commission must make a final determination of whether the

domestic industry is materially injured "by reason of" the subject

imports. 19 U.S.C. § 1673d(b)(1). The issue remaining, then, is

whether "’the [subject] imports themselves made a material

contribution to the injury.’" Taiwan I, 23 CIT at , 59 F. Supp.

2d at 1327 (citing Gerald Metals, 22 CIT at , 27 F. Supp. 2d at

1355).

On remand, the Commission first states that the "relationship

between [the confirmed revenue losses for product 5] and industry

operating income [losses] . . . provides perhaps the most direct

possible evidence of the significant effects of subject imports."

Remand Determination at 19. The Commission explains, "For the
Court No. 98-05-01460 Page 52

period 1996-97, the industry’s net operating loss was about $30

million. In virtually the same period, confirmed revenue losses by

U.S. producers to Taiwan imports alone amounted to more than $40

million." Id.

The Commission calculates lost revenues from the equation:

(producer’s initial U.S. price quote - U.S. price quote accepted by

buyer) X (quantity sold).23 Four of the lost revenue allegations

for product 5 had initial price quote dates of "4Q95-1Q97" (i.e.,

the fourth quarter of 1995 through the first quarter of 1997). See

Staff Report at V-27, Table V-8. Domestic prices for product 5,

however, were steadily declining from the fourth quarter of 1995

through the beginning of 1997. See id. at V-13 to V-14, Table V-5.

Moreover, as discussed above, see supra p. 29, other factors were

causing price declines. Consequently, the initial quote for each

4Q95-1Q97 allegation is substantially higher than the accepted

quote, thereby potentially inflating the measurement of revenue

lost due to competition from the subject imports. See id. at V-27,

Table V-8. Combined, the four 4Q95-1Q97 allegations account for

23
For example, assume a U.S. producer initially quotes a
price per unit of $10, but a buyer is able to negotiate the price
down to $5 per unit. Consequently, if the producer sells 20
units to the buyer at the accepted price of $5 per unit, the lost
revenues would equal $100.
Court No. 98-05-01460 Page 53

approximately 94% of all confirmed lost revenue allegations for

product 5. See id.

The Commission concludes that the instances of lost revenues

for product 5 had a significant negative impact on the domestic

industry’s operating income. Absent an explanation of how it was

reasonable to rely on the 4Q95-1Q97 allegations in confirming lost

revenues, however, the Court cannot sustain this conclusion as

supported by substantial evidence.

In addition, the Commission bases its impact determination on

the price depressing effects of the subject imports. The

Commission explains that "the Taiwan underselling had its most

direct influence on U.S. prices and volumes for new products."

Remand Determination at 19. The Commission concludes that the

significant price depressing effects of the subject imports

directly contributed to the domestic industry’s worsening financial

performance in 1996 and 1997. See id. at 19-20. Consequently, the

Commission explains, "The relative inability of the U.S. industry

to gain sales of new products, at expected premium prices, . . .

impair[ed] the U.S. industry’s ability to afford further

investment, since new products should make a disproportionate

contribution to earnings." Id. at 19-20. The Commission concludes

that, because the subject imports significantly contributed to
Court No. 98-05-01460 Page 54

lowering domestic prices levels, the subject imports themselves

made a material contribution to the U.S. industry’s poor financial

condition. See id. at 20-21. As explained above, however, without

more, the Court cannot sustain the Commission’s determination that

the subject imports themselves had significant price depressing

effects. Therefore, we cannot sustain the Commission’s affirmative

injury determination.
Court No. 98-05-01460 Page 55

Conclusion

Absent greater explanation, the Court cannot sustain the

Commission’s determination that the subject imports had significant

price depressing effects inasmuch as the Commission based that

determination on its finding that non-subject imports were less

competitive than the subject imports in the U.S. market for fast

SRAMs. Therefore, the Court cannot sustain the Commission’s

affirmative injury determination. Accordingly, the Commission’s

determination is remanded for reconsideration consistent with this

Court’s opinion. Remand is directed to the entire Commission.

The Commission shall complete its second remand determination

by Friday, May 26, 2000; any comments or responses are due by

Monday, June 12, 2000; and any rebuttal comments are due by

Thursday, June 22, 2000.

Donald C. Pogue
Judge

Dated: April 11, 2000
New York, New York