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
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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