Taiwan Semiconductor Industry Ass'n v. United States

Slip Op. 99-57

UNITED STATES COURT OF INTERNATIONAL TRADE

TAIWAN SEMICONDUCTOR
INDUSTRY ASSOCIATION, ET AL.,

Plaintiffs,
BEFORE: Pogue, Judge
and
Court No. 98-05-01460
MOTOROLA, INC.,
Public Version
Plaintiff-Intervenor,

v.

UNITED STATES,

Defendant,

and

MICRON TECHNOLOGY, INC.

Defendant-Intervenor.

[The International Trade Commission’s affirmative material injury
determination is remanded.]

Decided: June 30, 1999

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

Covington & Burling (Harvey M. Applebaum) for Plaintiff-
Intervenor.

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.

OPINION

POGUE, Judge: This action is before the Court on Plaintiffs’
Court No. 98-05-01460 Page 2

motion for judgment on the agency record pursuant to USCIT Rule

56.2. Taiwan Semiconductor Industry Association; Taiwan

Semiconductor Manufacturing Company, Ltd.; Winbond Electronics

Corporation; Alliance Semiconductor Corporation; Galvantech, Inc.;

and Integrated Silicon Solution, Inc. (collectively, "Plaintiffs")

seek review of the final determination of the U.S. International

Trade Commission ("Commission") in 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)("Final

Determination").1 Specifically, Plaintiffs challenge the

Commission’s determination that the industry in the United States

producing static random access memory semiconductors ("SRAMs") is

materially injured by reason of imports from Taiwan that are sold

at less than fair value ("LTFV"). The Court has jurisdiction

pursuant to 28 U.S.C. § 1581(c)(1994).

Background

SRAMs are integrated circuits containing thousands or millions

of cells that allow data to be stored and retrieved at high speeds.

Unlike dynamic random access memory semiconductors ("DRAMs"), SRAMs

are capable of retaining their information without the need for

periodic electrical "refresh," and therefore, they generally

consume less power than DRAMs. Moreover, SRAMs are more complex in

1
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

design than DRAMs and are more difficult to manufacture. SRAMs

come in a variety of sizes, process technologies, classifications,

designs, and access speeds, and have two basic uses, serving as: 1)

main memory in such products as hand-held cellular phones, portable

computers, fax copiers, and modems, and 2) intermediate--or

"cache"--memory in computer systems.

On February 25, 1997, Micron Technology filed a petition with

the Commission and the Department of Commerce alleging that an

industry in the United States was materially injured or threatened

with material injury by reason of LTFV SRAMs imported from Korea

and Taiwan. The Department of Commerce found that the Korean and

Taiwanese SRAMs were being sold in the United States at LTFV. See

Static Random Access Memory Semiconductors From the Republic of

Korea, 63 Fed. Reg. 8,934 (Dep’t Commerce, Feb. 23, 1998)(final

determ.); Static Random Access Memory Semiconductors From Taiwan,

63 Fed. Reg. 8,909, 8,910 (Dep’t Commerce, Feb. 23, 1998)(final

determ.). Thereafter, the Commission made a negative material

injury determination concerning the Korean imports and an

affirmative material injury determination regarding the Taiwanese

imports. See Final Determination at 3.

Only two commissioners participated in the final injury

determination regarding SRAMs from Taiwan. See Final Determination

at 33, n.168. Vice-Chairman Lynn M. Bragg found that the U.S.

industry was materially injured by LTFV imports of SRAMs from

Taiwan, with Chairman Marcia E. Miller dissenting. Vice-Chairman
Court No. 98-05-01460 Page 4

Bragg’s decision was deemed to be an affirmative determination of

the Commission pursuant to section 771(11) of the Tariff Act of

1930, as amended, 19 U.S.C. § 1677(11)(1994). Thus, hereafter, the

Court will simply refer to Vice-Chairman Bragg’s decision as the

Commission’s determination.

In sum, the Commission found that a price collapse caused

material injury to the U.S. SRAM industry, and that "the subject

imports from Taiwan contributed to and exacerbated the price

collapse to a significant degree[.]" Final Determination at 37.

Standard of Review

In reviewing the Commission’s determination, the Court must

sustain a final 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)(1994).

Discussion

A. Material Injury "By Reason Of" LTFV Imports

The statute directs the Commission to "make a final

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

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

imports[.]" 19 U.S.C. § 1673d(b)(1994). In Gerald Metals, Inc. v.

United States, 132 F.3d 716 (Fed. Cir. 1997), the Court of Appeals

for the Federal Circuit ("Federal Circuit") held that the "by

reason of" standard "mandates a showing of causal--not merely
Court No. 98-05-01460 Page 5

temporal--connection between the [subject imports] and the material

injury." 132 F.3d at 720. The 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.

In examining the causal nexus between the subject imports and

the material injury, the Commission is required by 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 like domestic products, and 3) the impact of [the subject]

imports on domestic producers of like products." USX Corp. v.

United states, 11 CIT 82, 84, 655 F. Supp. 487, 489 (1987).2

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).3 See U.S. Steel Group v. United States, 96 F.3d 1352,

2
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)(1994).
3
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
Court No. 98-05-01460 Page 6

consumption in the United States, is significant.
(ii) Price

In evaluating the effect of imports of such
merchandise
on prices, the Commission shall consider whether
(I) there has been significant price
underselling
by the imported merchandise 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 to
(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
Court No. 98-05-01460 Page 7

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")("A

determination of injury . . . shall . . . involve an objective

examination of both (a) the volume of the dumped imports and the

effect of the dumped imports on prices in the domestic market for

like products, and (b) the consequent impact of these imports on

domestic producers of such products.").

More specifically, the statute directs the Commission to

evaluate: 1) whether the volume of the subject imports is

significant; 2) whether price underselling by the subject imports

is significant and whether domestic price depression or suppression

caused by the subject imports is significant; and 3) the impact on

the domestic industry. See 19 U.S.C. § 1677(7)(C). In assessing

the third factor, impact, the Commission evaluates the bearing of

the volume and price effects on the domestic industry, see, e.g.,

develop a
derivative or more advanced version of the
domestic like product, and
(V) in a proceeding under subtitle B[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 affected industry.
19 U.S.C. § 1677(7)(C).
Court No. 98-05-01460 Page 8

Timken Co. v. United States, 20 CIT 76, 89, 913 F. Supp. 580, 591

(1996), and routinely determines whether the adverse impact is

significant as well. See, e.g., Angus Chemical Co. v. United

States, 140 F.3d 1478, 1482 (Fed. Cir. 1998).

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

impact of the subject imports on the domestic industry are

significant,4 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." Gerald Metals, Inc. v.

United States, 22 CIT , 27 F. Supp.2d 1351, 1355 (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);5 cf. U.S. Steel Group v. United States, 18 CIT 1190, 1211-

12, 873 F. Supp. 673, 694 (1994)(declining to extend the causation

test propagated by the court in British Steel Corp. v. United

States, 8 CIT 86, 593 F. Supp. 504 (1984), which held that "[t]he

4
The Court notes that the presence or absence of any factor
is not dispositive to a finding of material injury. See 19
U.S.C. § 1677(7)(E)(ii). Moreover, 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).
5
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, 22 CIT ,
slip op. 98-56 (April 28, 1998). This Court then sustained the
Commission’s subsequent remand determination in Gerald Metals, 22
CIT , 27 F. Supp.2d 1351 (1998).
Court No. 98-05-01460 Page 9

statute’s causation prerequisite to an affirmative determination is

satisfied if the . . . imports contribute, even minimally, to the

conditions of the domestic industry[.]" 8 CIT at 96, 593 F. Supp.

at 413), aff’d, 96 F.3d 1352 (Fed. Cir. 1996). But see Grupo

Industrial Camesa v. United States, 18 CIT 461, 465, 853 F. Supp.

440, 444 (1994)(relying on British Steel’s minimal contribution

test), aff’d, 85 F.3d 1577 (Fed. Cir. 1996); Pasco Terminals, Inc.

v. United States, 83 Cust. Ct. 65, 88, 477 F. Supp. 201, 220-21

(1979)(holding that it was sufficient that the subject imports

"contributed to the general depression of prices and to market

disruption"), aff’d, 634 F.2d 610 (C.C.P.A. 1980).6

6
The Federal Circuit’s opinion in Gerald Metals was not en
banc. The Court recognizes the general rule that, where there is
"an apparent conflict in statements of Federal Circuit law, the
earlier statement prevails unless or until it has been overruled
in banc [sic]." YBM Magnex, Inc. v. Int’l Trade Comm’n, 145 F.3d
1317, 1319 n.2 (Fed. Cir. 1998)(citation omitted). Nevertheless,
while the Federal Circuit in Camesa and its predecessor in Pasco
affirmed lower court decisions that applied a minimal
contribution requirement, neither court itself expressed an
endorsement of such a standard. See Camesa, 85 F.3d 1577; Pasco,
634 F.2d 610. In fact, in Camesa, the Federal Circuit implies
the opposite. See Camesa, 85 F.3d at 1581 (stating that "the
Commission must determine that imported merchandise which is
being sold . . . at less than fair value is materially injuring
. . . [the] domestic industry")(emphasis added). While a
Federal Circuit decision that is not en banc cannot change the
law as established in prior rulings, "[s]ubsequent panel opinions
may elaborate and refine and thus advance the evolution of judge-
made law[.]" YBM Magnex, 145 F.3d at 1319 n.2. The Federal
Circuit in Gerald Metals clarified that "the statute requires
adequate evidence to show that the harm occurred ’by reason of’
the LTFV imports, not by reason of a minimal or tangential
contribution to material harm caused by LTFV goods." Gerald
Metals, 132 F.3d at 722.
Moreover, the Court must be guided by language in the
Statement of Administrative Action to the Uruguay Round
Agreements Act directing the Commission to "examine other factors
Court No. 98-05-01460 Page 10

"Therefore, proper adherence to the causation analysis

incorporated in the statute prevents the Commission from finding

material injury by reason of [the subject] imports where their

contribution to the overall harm is de minimis (e.g., minimal or

tangential)." Gerald Metals, 22 CIT at , 27 F. Supp.2d at

1356.7

Although in Gerald Metals this Court specifically interpreted

the statute as it existed prior to the enactment of the Uruguay

Round Agreements Act ("URAA") on January 1, 1995, this Court has

to ensure that it is not attributing injury from other sources to
the subject imports." 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 852
("SAA"). See discussion infra pp. 10-11.
The SAA represents "an authoritative expression by the
Administration concerning its views regarding the
interpretation and application of the Uruguay Round
agreements . . . ." SAA at 656. "[I]t is the expectation
of the Congress that future Administrations will observe and
apply the interpretations and commitments set out in this
Statement." Id. (quoted in Delverde, SrL v. United States,
21 CIT , , 989 F. Supp. 218, 229-30 n.18 (1997)).
7
The Court here is not endorsing a "magic words analysis."
It is a well recognized principle of administrative law that "[a]
court may ’uphold [an agency’s] decision of less than ideal
clarity if the agency’s path may reasonably be discerned.’"
Ceramica Regiomontana, S.A. v. United States, 5 Fed. Cir. (T) 77,
78, 810 F.2d 1137, 1139 (1987)(quoting Bowman Transp. Inc. v.
Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 286 (1974)).
Moreover, the Court notes that the antidumping statute on its
face does not compel a single method for analyzing causation, so
long as its requirements are met. See Gerald Metals, 22 CIT at
, 27 F. Supp.2d at 1357. Rather, while the Commission does
not need to articulate a causation standard, the Court must
nevertheless be able to reasonably discern that the Commission
applied the "by reason of" analysis mandated by the statute. Cf.
Trent Tube Div. v. United States, 14 CIT 386, 398-99, 741 F.
Supp. 921, 932 (1990), aff’d, 975 F.2d 807, 814 (Fed. Cir. 1992).
Court No. 98-05-01460 Page 11

deemed that the "by reason of" standard articulated therein is

applicable to the amended statute. See NEC Corp. v. Dep’t of

Commerce, 22 CIT , , 36 F. Supp.2d 380, 391-93 (1998); Goss

Graphics System, Inc. v. United States, 22 CIT , , 33 F.

Supp.2d 1082, 1089-90 (1998), appeal docketed, No. 99-1150 (Fed.

Cir. Dec. 11, 1998). The URAA did not change the relevant

statutory language, and the Statement of Administrative Action to

the URAA expressly states that the causation analysis under the old

statute is consistent with the URAA. See SAA at 851. Therefore,

the "by reason of" standard applies under the URAA.

Moreover, the plain language of the SAA is consistent with

this Court’s holding in Gerald Metals that the Commission must

determine whether the statutory factors as a whole indicate that

the subject imports themselves made a material contribution to the

overall injury. See SAA at 851-52. The SAA clarifies that "the

Commission must examine other factors to ensure that it is not

attributing injury from other sources to the subject imports." Id.

(emphasis added).

This new language mirrors the Antidumping Agreement as revised

during the Uruguay Round of GATT negotiations.8 The previous

8
The previous legislative history to the U.S. antidumping
statute also acknowledged that the Commission would consider
other sources of injury, but was somewhat softer in tone. See S.
Rep. No. 96-249, 96th Cong., 1st Sess. at 75 ("Of course, in
examining the overall injury to a domestic industry, the
[Commission] will consider information which indicates that harm
is caused by factors other than the less-than-fair-value
imports."); H. Rep. No. 96-317, 96th Cong., 1st Sess. at 47 ("Of
course, in examining the overall injury being experienced by a
Court No. 98-05-01460 Page 12

antidumping agreement, finalized during the Tokyo Round, stated,

"There may be other factors which at the same time are injuring the

industry, and the injuries caused by other factors must not be

attributed to the dumped imports." Agreement on Implementation of

Article VI of the General Agreement on Tariffs and Trade (Revised

Antidumping Code)(1980) at Art 3.4. The current antidumping

agreement more specifically directs that, when evaluating the

volume effects, price effects, and impact of the subject imports,

"[t]he 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." Antidumping Agreement at

Art. 3.5 (emphasis added).9

domestic industry, the [Commission] will take into account
evidence presented to it which demonstrates that the harm
attributed by the petitioner to the . . . dumped imports is
attributable to such other factors.").
9
The Court notes that, in this regard, "the Commission need
not isolate the injury caused by other factors from injury caused
by unfair imports[,]" so long as it conducts an examination
sufficient "to ensure that it is not attributing injury from
other sources to the subject imports." SAA at 851-52. The GATT
1947 Panel Report in the Norwegian Salmon case, which the SAA
endorses as illustrative of a proper causation analysis, sheds
light on what is meant by "isolat[ing] the injury caused by other
factors." See GATT Committee on Anti-dumping Practices,
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 421-23 (1994) ("Norwegian Salmon"). In Norwegian
Salmon, the GATT panel indicated that the Commission need not
identify the precise extent of injury caused by other factors
(i.e., isolate the injury caused by other factors) in fulfilling
the requirement not to attribute injuries caused by other factors
to the subject imports. See id.
Court No. 98-05-01460 Page 13

The Defendant makes two arguments concerning the application

of this Court’s opinion in Gerald Metals that merit attention.

In its brief, the Defendant argues that,

This Court’s statement in its Gerald Metals opinion that
the [Commission] must examine whether other factors
"dilute" the effects of [the subject] imports is
consonant with the SAA insofar as the Court means that
the [Commission] should examine whether other factors may
"account for" the harm apparently due to [the subject]
imports. The Court did not state, as Plaintiffs here
urge, that other factors may render the impact of [the
subject] imports insignificant simply because they may be
more important. Such a rule would be directly contrary
to the SAA.

Def.’s Opp’n to Pl.’s Mot. for J. Agency R. ("Def.’s Br.") at 11.

In short, the Defendant argues that the "by reason of" standard

does not require the Commission to weigh the effects of the subject

imports against the effects of other causes of injury. The

Defendant defines the weighing of causes as "determining whether

the injurious effect of the subject imports is greater or lesser

than the injurious effect of other factors[.]" Id. n.8.

As support for its contention, the Defendant notes the SAA’s

citation to page forty-seven of the House Report to the Trade

Agreements Act of 1979. See id. (citing SAA at 885). The report

states that,

The law does not . . . contemplate that injury from [the
subject] imports be weighted against other factors . . .
which may be contributing to overall injury to an
industry. Any such requirement has the undesirable
result of making relief more difficult to obtain for
those industries facing difficulties from a variety of
sources, precisely those industries that are most
vulnerable to subsidized or dumped imports.

H. Rep. No. 96-317, 96th Cong., 1st Sess. at 47 (1979).
Court No. 98-05-01460 Page 14

The House report’s admonition against the weighing of causes

also appears nearly verbatim in the Senate Report to the Trade

Agreements Act of 1979. See S. Rep. No. 96-249, 96th Cong., 1st

Sess. at 74 (1979). As this Court previously noted, the Federal

Circuit declined to endorse that Senate report’s instruction not to

weigh causes. See Gerald Metals, 22 CIT at , 27 F. Supp.2d at

1356, n.8 (citing Gerald Metals, 132 F.3d at 722). The Defendant

argues that, because the SAA specifically refers to the House

Report to the Trade Agreements Act of 1979, the Federal Circuit’s

declining to adopt the 1979 Senate report’s admonition against

weighing causes only applies to pre-URAA cases. See Def.’s Br. at

11 n.8.

The Court first notes that the SAA refers to the 1979 House

report in the section discussing the standard for determining the

likelihood of continuation or recurrence of material injury under

19 U.S.C. § 1675a (1994), not in the section discussing the

material injury determination under 19 U.S.C. § 1673d(b). See SAA

at 885. Moreover, the SAA specifically states that "[t]he

likelihood of continuation or recurrence of material injury

standard is not the same as the standards for material injury and

threat of material injury, although it contains some of the same

elements." See id. at 883.

Furthermore, the "by reason of" standard is consistent with a

requirement not to weigh causes contributing to overall injury. In

Gerald Metals, the Federal Circuit did not specifically contravene
Court No. 98-05-01460 Page 15

the 1979 Senate report’s admonition against weighing causes.

Rather, the court declined to interpret the report as authorizing

an affirmative injury determination supported merely "by reason of

a minimal or tangential contribution to material harm caused by

LTFV goods." Gerald Metals, 132 F.3d at 722. Subsequently, this

Court clarified that the "by reason of" standard requires the

Commission to determine whether the statutory factors as a whole

indicate that the subject imports themselves made a material

contribution to the overall injury. See Gerald Metals, 22 CIT at

, 27 F. Supp.2d at 1355. That the injurious effects from other

sources may be greater than the effect of the subject imports is

not determinative, so long as the Commission reasonably finds that

the subject imports’ contribution to the overall harm is material.

Therefore, the Commission need not weigh (i.e., determine which is

greater or lesser) causes in complying with the "by reason of"

standard.

As noted above, however, it is paramount in this regard that

the Commission "examine other factors to ensure that it is not

attributing injury from other sources to the subject imports." SAA

at 851-52. Especially where the Commission finds one main cause of

injury to the domestic industry, this analysis inherently

necessitates some degree of comparison between the injurious

effects of the subject imports and other unrelated factors because,

in some cases, other sources of injury "may have such a predominant

effect in producing the harm as to . . . prevent the [subject]
Court No. 98-05-01460 Page 16

imports from being a material factor." See Gerald Metals, 22 CIT

at , 27 F. Supp.2d at 1356 n.8.10

Finally, Gerald Metals is not, as the Defendant contends,

limited to the particular facts of that case. See NEC, 22 CIT at

, 36 F. Supp.2d at 391-93; Goss Graphics System, 22 CIT at ,

33 F. Supp.2d at 1089-90. Gerald Metals clarifies that, in any

case, the Commission must determine whether the statutory factors

as a whole indicate that the subject imports themselves made a

material contribution to the injury to comply with the "by reason

of" standard. See Gerald Metals, 22 CIT at , 27 F. Supp.2d at

1355. Where other sources of injury are known, the Commission must

conduct some examination to ensure that it does not attribute the

harmful effects from the other factors to the subject imports. See

SAA at 852.

10
In this regard, the Court again notes the SAA’s
endorsement of Norwegian Salmon. See SAA at 851. In that case,
the Commission had found that, "’[a]lthough other factors may
have contributed, the decline in U.S. prices for Atlantic salmon
in 1988 and 1989 was due in large part to oversupply in the U.S.
market.’" Norwegian Salmon at 423. In reviewing the Commission’s
determination, the GATT panel held that,

When the amount of the increase in absolute import
volume from Norway from 1987 to 1989 was compared to
the amount of the increase in absolute import volume
from other supplying countries, it could not . . .
reasonably be found that the [Commission] had
attributed to the Norwegian imports effects entirely
caused from other supplying countries.

Id. (emphasis added). As was necessary under the circumstances,
the Commission compared the volumes of the subject imports and
non-subject imports in examining whether it had attributed injury
from the non-subject imports to the subject imports.
Court No. 98-05-01460 Page 17

B. Volume Effects

In analyzing causation, the statute requires the Commission to

determine, among other things, "whether the 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). Here, the Commission

found that the absolute increase in volume of SRAMs from Taiwan in

the United States was "nearly threefold[,]" and therefore,

significant. See Final Determination at 33-34. Substantial

evidence supports the Commission’s conclusion. See Staff Report at

IV-7, Table IV-3.

The Court cannot, however, without more, sustain the

Commission’s additional conclusion that the subject imports’

increase relative to U.S. consumption was significant. First, as

U.S. consumption also increased during the period of investigation,

the subject imports’ increase relative to U.S. consumption was

relatively small. See id. at IV-7, Table IV-3. From 1994 to 1997,

the period of investigation, the subject imports’ market share

increased by just over 2%. See id. at IV-9, Table IV-4.

Non-subject imports of SRAMs, however, in terms of both

absolute and relative increases in volume, greatly exceeded the

imports of Taiwanese SRAMs.11 See id. at IV-7, Table IV-3, and at

IV-9, Table IV-4. Moreover, the non-subject imports were

11
The non-subject imports include both non-subject Korean
imports and third-country imports.
Court No. 98-05-01460 Page 18

recognized as a potential source of injury to the domestic

industry. See Final Determination at 23-24. Although the

Commission did not discuss the substantial presence of the non-

subject imports in its discussion of the Taiwanese imports’ volume

effects, it did acknowledge their "growing volume" in its analysis

of the impact of the subject imports. See id. at 37.

The Court recognizes that the Commission has discretion to

weigh the significance of each factor in light of the

circumstances. See Iwatsu, 15 CIT at 49, 758 F. Supp. at 1510-11.

Nevertheless, without an explanation of how the relatively small

volume of Taiwanese imports was significant given the dominant

presence of non-subject imports, the Court cannot review the

Commission’s implicit determination that it did not attribute

injury from the non-subject imports to the subject imports. See

SAA at 851-52; see also Norwegian Salmon at 408 (finding that the

Commission did not commit errors of fact because it "consider[ed]

all information and . . . explain[ed] why [contradictory] data

. . . did not detract from a finding of a significant increase in

the volume of imports"). Thus, it appears that the Commission

"failed to articulate a ’rational connection between the facts

found and the choice made.’" Bando Chemical Industries, Ltd. v.

United States, 16 CIT 133, 136, 787 F. Supp. 224, 227

(1992)(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).
Court No. 98-05-01460 Page 19

Therefore, the Court cannot conclude that the Commission’s

determination that the increase in volume of the subject imports

was significant is supported by substantial evidence absent an

explanation of how they are significant in light of the dominant

presence of non-subject imports.12

C. Price Effects

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 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).

12
The Defendant argues that "[t]he statute does not direct
the [Commission] to evaluate the significance of the volume of
subject imports relative to the volume of non-subject imports."
Def.’s Br. at 14. The plain language of the statute, however,
instructs the Commission to consider whether the volume of the
subject imports is significant either in absolute or relative
terms. 19 U.S.C. § 1677(7)(C)(i). Here, the Commission
considered both. In evaluating the relative significance of the
subject imports, the statute instructs the Commission to consider
their volume "relative to production or consumption in the United
States[.]" 19 U.S.C. § 1677(7)(C)(i)(emphasis added). Where
non-subject imports are consumed in the United States, they
inherently comprise a portion of consumption in the United
States. Moreover, in Norwegian Salmon, the panel specifically
compared the volume of the subject imports relative to the volume
of the non-subject imports. See Norwegian Salmon at 423. The
need to explain the significance of the subject imports’ volume
in light of a substantially greater volume of non-subject imports
is especially acute where, as here, the non-subject imports are a
potential source of the injury. See Final Determination at 23-
24.
Court No. 98-05-01460 Page 20

The Commission first noted that, in the SRAM market, "price is

a critical factor in purchasing decisions." Final Determination at

34. The Commission further explained that,

In such a market, significant underselling by significant
and increasing volumes of imports can have a dramatic
effect on prices for the domestic like product. The
record in this investigation demonstrates that the large
and increasing volume of LTFV imports from Taiwan
undersold the domestic like product in 161 of 213, or 76
percent of possible price comparisons, at average
underselling margins of 21.5 percent. While some of the
underselling turned to overselling during 1996 and 1997
for products 3 and 5,13 Taiwanese imports consistently
undersold the domestic product in products 1 and 2.
These more recently developed products accounted for a
significant percentage of Taiwanese shipments during the
latter part of the period of investigation.

Id. at 34-35.

The record confirms that the subject imports undersold the

domestic SRAMs in 161 of 213 comparisons by an average margin of

21.5%. See Staff Report at V-20. Therefore, substantial evidence

supports the conclusion that there was significant price

underselling by the Taiwanese imports.

Without more, however, the Court cannot sustain the

Commission’s finding of a causal nexus between the underselling by

Taiwanese SRAMs and the domestic price declines. In sum, the

Commission concluded that price declines in 1996 and 1997 were the

main source of injury to the domestic industry, and that the

subject imports contributed to the depression of domestic prices to

a significant degree. See Final Determination at 35, 37. The

13
The Commission collected price information for six SRAM
products, designating them products 1 through 6.
Court No. 98-05-01460 Page 21

price declines, however, were also attributed to other known

factors, the effects of which were not adequately explained by the

Commission. See id.

The Court first notes that the Commission found that the

subject imports had significant price depressing effects despite

the fact that the record indicates that during 1996 and 1997 the

majority of the Taiwanese imports oversold the domestic product.

As indicated in the above quote, the Commission emphasized the

underselling during 1996-1997 by Taiwanese products 1 and 2. See

id. at 35. Moreover, the Commission found that products 1 and 2

"accounted for a significant percentage of Taiwanese shipments

during the latter part of the period of investigation." Id.

According to the Commission, "Product 1 accounted for [less than

25] percent of Taiwanese shipments in 1996 and [about 10] percent

in 1997, and product 2 accounted for [roughly 20] percent of

Taiwanese shipments in 1997." Id. at 35 n.177 (citing Staff Report

at VI-7, Table IV-3, and at V-6 to V-8, Tables V-1 and V-2).

At oral argument on May 26, 1999, the parties explained how

the percentage shares of Taiwanese subject imports were calculated

for each of Taiwanese products 1 through 6 from tables in the Staff

Report. Tables V-1 through V-6 of the Staff Report provide the

respective quantities of Taiwanese products 1 through 6 for each

year of the period of investigation in terms of units.14 Meanwhile,

14
A unit refers to one SRAM, a single semiconductor chip.
See Staff Report at I-7.
Court No. 98-05-01460 Page 22

Table IV-3 of the Staff Report indicates the Taiwanese imports’

total volume for each year of the period of investigation expressed

in terms of billions of bits.15

As explained at oral argument, the Commission performed two

steps to calculate from record evidence the respective percentages

of total Taiwanese imports for each product. First, the Commission

converted the respective quantities of Taiwanese products 1 through

6, provided in Tables V-1 through V-6 for each year of the period

of investigation, from units to billions of bits. Next, the

Commission divided the yearly amount for each product obtained

above by the yearly total--in terms of billions of bits--for all

Taiwanese subject imports given in Table IV-3. Therefore, the

Commission calculated the respective percentages of total Taiwanese

subject imports that each of products 1 through 6 constituted for

each year of the period of investigation in terms of billions of

bits.16

15
SRAM size is measured in terms of density, expressed as
the number of storage cells, or bits, contained in a single chip.
See Staff Report at I-7. SRAM products 1 through 6 vary in terms
of their densities. Products 1, 3, and 4 each contain 1,048,576
bits. See id. at I-7 n.15 and V-5. A single SRAM of product 2
contains 2,097,152 bits, and products 5 and 6 each contain
262,144 bits. See id.
16
The Court notes, however, that the data from Table IV-3
and Tables V-1 through V-6 do not correspond. Specifically, the
amounts for products 1 through 6 from Tables V-1 through V-6,
when added together to arrive at the yearly totals and converted
to billions of bits, do not equal the yearly totals given in
Table IV-3. Therefore, when the Commission divided each
individual product’s quantity from Tables V-1 through V-6 by the
total Taiwanese imports from Table IV-3, it calculated inaccurate
percentages. For example, Defendant’s Exhibit 2, a chart
Court No. 98-05-01460 Page 23

It is not self-evident to the Court, however, that the

Commission’s decision to analyze products 1 through 6 in terms of

billions of bits in calculating the products’ respective

percentages of total Taiwanese imports is reasonable. The

Commission itself defined SRAMs as follows: "SRAMs are integrated

circuits containing thousands or millions of cells that allow data

to be stored and retrieved at high speeds. SRAMs vary by access

speed (the time required to access data, measured in nanoseconds),

density (the number of storage cells), and power consumption."

Final Determination at 5.

Specifically, it is not clear to the Court that the true

significance of each product’s relative volume can appropriately be

evaluated in terms of billions of bits, which is a measure only of
density (as distinguished from access speed and power consumption),

instead of in terms of units of SRAMs themselves. As stated by the

Commission, "significant underselling by significant and increasing

volumes of imports can have a dramatic effect on prices for the

domestic like product." Final Determination at 34. SRAMs are

priced and sold by the unit. See Staff Report at V-6 through V-16,

Tables V-1 through V-6, and at V-21 through V-28. By measuring

each product’s relative share of total subject imports in terms of

billions of bits, however, the Commission seemingly evaluates the

presented to the Court at the May 26, 1999, oral argument to
explain the evidentiary data, indicates that product 5
constituted [[ ]] of total Taiwanese subject imports in 1994.
Because this number exceeds 100%, it is impossible.
Court No. 98-05-01460 Page 24

comparative significance of each product’s price effects, to some

degree, in terms of density, rather than in terms of how the

products are priced and shipped--by the unit.17

17
For example, in terms of SRAMs imported, Taiwanese product
5 dwarfed Taiwanese product 2 throughout the period of
investigation. See Staff Report at V-8, Table V-2, and at V-13
to V-14, Table V-5. Product 2, however, contains eight times as
many bits as product 5. Therefore, because the product’s
relative share of total subject imports is assessed in terms of
density, Taiwanese product 2 is attributed greater significance
than it would have been accorded had it been evaluated in terms
of units imported. Where, as here, the Commission chooses to
rely on the price effects of individual products within the
category of subject merchandise, it seems their relative share of
total subject imports should be evaluated in terms of how they
are priced--by the unit--rather than in terms of their size.
Upon calculating each product’s percent share of total
Taiwanese subject imports in terms of units, the record indicates
that product 1 accounted for only about 10% of Taiwanese imports
in 1996 and less than half of that figure in 1997. See Staff
Report at V-6 to V-16, Tables V-1 to V-6. Product 2 accounted
for a negligible percent of Taiwanese imports in 1996 and
approximately 5% in 1997. See id. Their combined share of total
subject imports was roughly 10% in 1996 and fell from that level
in 1997. See id.
Meanwhile, as noted above, products 3 and 5 accounted for
the great majority of the subject imports in 1996 and 1997. See
Staff Report at V-6 to V-16, Tables V-1 to V-6. Based on the
Court’s calculations, products 3 and 5 together accounted for
over 75% of Taiwanese shipments in 1996 and that share increased
further in 1997 in terms of units. See id. Moreover, relative
to total Taiwanese imports, the combined share of products 3 and
5 increased by 5-10% from 1996 to 1997, while the combined share
of products 1 and 2 decreased slightly. See id.
These findings are important because, as the Commission
noted, while Taiwanese products 1 and 2 consistently undersold
the equivalent domestic products during 1996 and 1997, Taiwanese
products 3 and 5 predominantly oversold the equivalent U.S.
products during the same period. See Final Determination at 35;
see also Staff Report at V-20 (explaining that, while the average
margin of underselling for Taiwanese imports over the entire
period of investigation was 21.5%, "results were somewhat
different for products 3 and 5, the largest volume products for
both U.S. producers and Taiwan importers. For these products,
the U.S.-produced product was generally priced higher in 1994 and
1995 but the Taiwan product was generally priced higher in 1996
Court No. 98-05-01460 Page 25

The Court recognizes, however, that "[i]t is within the

Commission’s discretion to make reasonable interpretations of the

evidence and to determine the overall significance of any

particular factor or piece of evidence." Maine Potato Council v.

United States, 9 CIT 293, 300, 613 F. Supp. 1237, 1244 (1985).

Thus, despite the Court’s misgivings, we cannot conclude that it is

clearly unreasonable to measure the Taiwanese products’ respective

shares of total subject imports in terms of billions of bits.

As the Final Determination stands, the Commission found that

products 1 and 2 accounted for less than 25% of Taiwanese shipments

in 1996 and less than 33% in 1997. See Final Determination at 35

n.177. Meanwhile, using the Commission’s methodology, products 3

and 5 accounted for more than 50% of Taiwanese shipments in 1996

and more than 67% in 1997. See Staff Report at IV-7, Table IV-3,

at V-9 and V-10, Table V-3, and at V-13 and V-14, Table V-5. Thus,

using the Commission’s calculations, Taiwanese products 3 and 5,

which generally oversold domestic products 3 and 5 during 1996-

1997, see id. at V-9 and V-10, Table V-3, and at V-13 and V-14,

and 1997."), and at V-6 to V-16, Tables V-1 to V-6.
The Commission noted that the domestic "prices for SRAMs
increased during the first half of 1995, then generally declined
during the remainder of the period of investigation." Final
Determination at 35. The subject imports, however, generally
followed reverse trends. During 1994 and 1995, units of
Taiwanese SRAMs predominantly undersold the domestic product, yet
largely oversold the domestic product during the latter part of
the investigation. See Staff Report at V-6 to V-16, Tables V-1
to V-6. Thus, when each product’s relative share of total
subject imports is evaluated in terms of units, the record
appears to contradict the finding of a causal connection between
the prices of Taiwanese imports and the domestic product.
Court No. 98-05-01460 Page 26

Table V-5, constituted the majority of Taiwanese shipments during

1996-1997.

The Court notes, however, that the Commission has the

discretion to weigh the significance of each factor in light of the

circumstances. See Iwatsu, 15 CIT at 49, 758 F. Supp. at 1510-11.

It may be reasonable to conclude that the Taiwanese imports had

significant price depressing effects in 1996-1997, despite the fact

the majority of the subject imports generally oversold the domestic

product during that period.

Here, however, the Commission failed to explain how it ensured

that it did not attribute the price depressing effects from other

known factors to the subject imports. While acknowledging that

other factors, such as global oversupply, the learning curve, and

non-subject imports, played roles in the 1996-1997 price declines,18

18
The overall record discusses three other primary potential
sources of the domestic price decline: the learning curve effect,
global oversupply, and the presence of non-subject SRAMs in the
United States. 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; see
also Final Determination at 22.
The record also discusses how the global SRAM market
experienced oversupply during 1996 and 1997. See Staff Report at
II-4 and V-3; Final Determination at 23. All participating
commissioners agreed that the global oversupply contributed to
the domestic price declines. See Final Determination at 23
("SRAM supply expanded and prices fell significantly (falling
below 1994 levels in the second half of 1996 and 1997)."). The
record indicates that the oversupply in SRAMs was due, in part,
to an inaccurate demand forecast. See Staff Report at V-3. In
early 1995, the industry expected demand for SRAMs to increase
dramatically. Consequently, producers invested in developing
Court No. 98-05-01460 Page 27

see Final Determination at 35, the Commission nevertheless

concluded 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 during the

period of investigation." Id. at 37 (emphasis added).

The Commission’s determination, however, was conclusory.

"[T]he orderly functioning of the process of review requires that

the grounds upon which the administrative agency acted be clearly

disclosed and adequately sustained." SEC v. Chenery Corp., 318

U.S. 80, 94 (1943). Although the Commission concluded that the

subject imports themselves caused the domestic price declines to a

more factories and built up their inventories. As the industry
restricted supply, prices rose. By the middle of 1996, however,
it became evident that the industry had greatly overestimated the
future demand for SRAMs. Thus, as new factories came online and
producers sold off inventories, oversupply resulted, causing
price declines. See id.; Final Determination at 23.
Finally, the overall record also indicates that the presence
of non-subject imports in the United States potentially
contributed to the price declines. See Staff Report at II-13
("Non-subject imports, most of which are from Samsung (Korea) and
Japan account for a large share of the U.S. market for SRAMs."),
at IV-7, Table IV-3, and at IV-9, Table IV-4. All participating
commissioners agreed that the presence of non-subject imports was
an important condition of competition in the United States,
stating:

The fifth condition of competition is the presence in
the U.S. market of non-subject imports. The non-
subject imports increased in market share during the
period of investigation and were larger in volume than
the subject imports. . . . Regarding the non-subject
imports from Korea, which are the only non-subject
imports for which pricing data are on the record, they
both undersold and oversold the domestic like product,
but generally were priced lower than the U.S. product.

Final Determination at 23-24.
Court No. 98-05-01460 Page 28

"significant degree," it did not explain the basis for that

conclusion given the extensive evidence of other known sources of

injury. Cf. Norwegian Salmon at 408. Specifically, while the

Commission acknowledged the price depressing effects of the global

oversupply, the learning curve, and the non-subject imports, the

Court cannot discern how it ensured that it did not attribute the

harmful effects from these other factors to the subject imports.

Although the Commission is presumed to have made the requisite

findings, the Court "must have a reviewable, reasoned basis."

Bando Chemical, 16 CIT at 136, 787 F. Supp. at 227 (citing

Asociacion Colombiana de Exportadores de Flores v. United States,

12 CIT 1174, 1177, 704 F. Supp. 1068, 1071 (1988)("In order to

ascertain whether action is arbitrary, . . . reasons for the

choices made among various potentially acceptable alternatives

usually need to be explained.")); see also Burlington Truck Lines,

Inc. v. United States, 371 U.S. 156, 167-68 (1962). Without such

a reasoned basis, the Court is unable to sustain the Commission’s

implicit finding that the other sources of price decline did not

"have such a predominant effect in producing the harm as to . . .

prevent the [subject] imports from being a material factor."

Gerald Metals, 22 CIT at , 27 F. Supp.2d at 1356 n.8.
Court No. 98-05-01460 Page 29

Conclusion

The Commission found 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[.]" Final Determination at 37. The Commission, however,

must not attribute the harmful effects from other sources of injury

to the subject imports and must adequately explain how it ensured

not doing so. Therefore, the Commission’s affirmative

determination is remanded for reconsideration consistent with this

Court’s opinion.

The Commission shall complete its remand determination by
Monday, August 30, 1999; any comments or responses are due by

Wednesday, September 29, 1999; and any rebuttal comments are due by

Thursday, October 14, 1999.

So Ordered.

Donald C. Pogue
Judge

Decided: June 30, 1999
New York, New York