Nippon Steel Corp. v. U.S.

• Decision Date: 09 August 2002
• Docket Number: Court No. 00-09-00479.,Slip Op. 02-86.
• Citation: 223 F.Supp.2d 1349
• Parties: NIPPON STEEL CORPORATION, NKK Corporation, Kawasaki Steel Corporation and Toyo Kohan Co., Ltd., Plaintiffs, v. UNITED STATES, Defendant, Weirton Steel Corporation, Defendant-Intervenor.
• Court: U.S. Court of International Trade

223 F.Supp.2d 1349

NIPPON STEEL CORPORATION, NKK Corporation, Kawasaki Steel Corporation and Toyo Kohan Co., Ltd., Plaintiffs, v. UNITED STATES, Defendant Weirton Steel Corporation, Defendant-Intervenor.

Slip Op. 02-86.

Court No. 00-09-00479.

United States Court of International Trade.

August 9, 2002.

Willkie Farr & Gallagher, Washington, DC (William H. Barringer, James P. Durling, Daniel L. Porter, Sean M. Thornton, Karl von Shriltz) for plaintiffs.

Lyn M. Schlitt, Office of General Counsel, James M. Lyons, Deputy General Counsel, U.S. International Trade Commission (Laurent M. deWinter), for defendant.

Schagrin Associates (Roger B. Schagrin), for defendant-intervenor.

OPINION

RESTANI, Judge.

This matter comes before the court as a result of the court's decision in Nippon Steel Corp. v. United States, 182 F.Supp.2d 1330 (CIT 2001) ("Nippon I"), in which the final affirmative injury determination of the International Trade Commission (the "Commission") in Tin- and Chromium-Coated Steel Sheet From Japan, 65 Fed. Reg. 50005, USITC Pub. 3300, Inv. No. 731-TA-860 (final determ.) (Aug.2000) (hereinafter "Final Determination") was remanded. Although the court found the Commission's subsidiary conclusions with respect to subject import volume supported, at least minimally, by substantial evidence, the court ordered the Commission to reevaluate its analysis of the effect of subject imports on domestic pricing, as well as its conclusions with respect to causation. Nippon Steel Corporation, NKK Corporation, Kawasaki Steel Corporation, and Toyo Kohan Co., Ltd., (collectively "Nippon" or "Plaintiffs"), respondents in the underlying investigation, contest the Commission's March 4, 2002 affirmative injury determination pursuant to remand ("Redetermination") on the grounds that the Commission's analysis of price effects and causation remain unsupported by substantial evidence.¹

JURISDICTION AND STANDARD OF REVIEW

The Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (1994). The court will uphold the Commission's determination in an antidumping investigation unless it is "unsupported by substantial evidence in the administrative record or is otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

OVERVIEW

The crucial question of price effects and ultimate causation of material injury arise in the context of an industry with peculiar conditions of competition. Chairman Koplan in dissent succinctly summarized these conditions, which cannot be seriously disputed by the parties or the Commission majority. He stated as follows:

The following conditions of competition unique to n unique to the U.S. tin plate industry, which were identified in the preliminary determination, are central to my analysis: (1) tin plate is almost always sold in the United States pursuant to annual contracts that establish fixed prices and target volumes; (2) reliable delivery is extremely important to the purchasers — the domestic can making [industry] — because food must be canned as soon as possible after it reaches the canning facility;² (3) the purchasers have consolidated and are now highly concentrated (the six largest purchasers account for more than three-quarters of apparent domestic consumption); (4) several of the major purchasers operate canning facilities on the grounds of Weirton's mill and commit to buy a minimum volume of steel from Weirton;³ (5) non-subject imports entered the U.S. market in a larger volume than subject imports from Japan during the period of investigation (POI) and non-subject imports occupied a greater market share than did imports from Japan; (6) most domestic producers, including petitioner Weirton, are located either on the East Coast or in the Midwest and focus their sales in regions near their mills; and (7) demand in the canning industry is affected by the harvest of agricultural goods used for canned foods.⁴

Tin- and Chromium-Coated Steel Sheet From Japan, 65 Fed.Reg. 50005, USITC Pub. 3300, Inv. No. 731-TA-860 (final determ.) (Koplan, S., dissenting) (Aug.2000) (footnotes added). The court also notes that the U.S. producers are largely long established integrated steel producers. A new domestic producer of tin-milled products, which is said to have a cost advantage, was present during the POI.

Both dissenters found evidence of no price effects due to subject imports, based on the manner of price negotiation and setting, and the seemingly incontrovertible evidence that domestic reliability problems were a tremendous concern to the purchasers. The majority cites no evidence that can sustain its opposite conclusion.

Further, upon review of the Redetermination, the court finds that the Commission has failed to comply with the court's instructions in Nippon I, and either conceded, or failed to contest evidence that leads inexorably to a finding that subject imports have not caused material harm to the domestic industry.

The Commission failed to follow the court's instructions on selection and compilation of data. First, it maintained a particular purchaser's separate facilities and product types in disaggregated form. Second, the Commission ignored the court's directive to justify limiting the range of price comparisons to only those instances in which sales were ultimately made from both Japanese and U.S. suppliers. Lastly, at times it relied solely on underselling data for one year.

In its analysis of underselling, the Commission ignored explanatory information provided by large purchasers where: (1) Silgan cited quality and service as being its two most important purchasing priorities and explained that unique manufacturing capabilities led to its decision to purchase from some off-shore sources; (2) Crown stated that it based its purchases of Japanese imports on quality considerations; and (3) the Commission failed to determine the extent to which purchasers' measurements of determinative price differentials are borne out by the purchasing histories of these purchasers.

Furthermore, in regard to the correlation between subject imports and pricing, the Commission: (1) failed to address Nippon's contention that a large purchaser — [ ] — paid increasing domestic prices at the same time it increased its purchases of subject imports; (2) failed to address the correlation between the introduction of subject import by another purchaser [ ] in 1999 and the subsequent rise in domestic prices between 1999 and 2000; (3) addressed another purchaser's [ ] ability to secure price decreases from its domestic suppliers, yet conceded that nonsubject import volume largely accounted for the price decline; and (4) failed to address the lack of correlation between Silgan's purchases of subject imports and pricing, where Nippon specifically cited Silgan as evidence of a lack of correlation. Lastly, the Commission failed to assess the extent of the domestic lead-time price premium in relation to the underselling margin.

The Commission failed to take into account relevant market factors in determining price sensitivity. First, it conceded that factors such as quality and service are generally ranked higher than price by purchasers, yet concluded that the market is characterized by a high degree of price sensitivity. Furthermore, the Commission asserted that quality and reliability are important only for the purpose of qualifying suppliers, yet failed to rebut the assertion that purchasers ranked price as a low consideration in choosing among qualified purchasers.

The Commission failed to adequately address Nippon's contention that negotiations run on separate tracks according to different procedures and criteria. In its analysis, the Commission: (1) failed to support its conclusion that purchasers reallocate volume following the conclusion of price negotiations; (2) conceded that the existence of supply agreements cuts against the finding that competition from subject imports impacted domestic prices; (3) conceded that delivery time issues operate to limit the absolute amount of the domestic market that imports could obtain, yet failed to evaluate purchaser perceptions with respect to the domestic industry's lead-time advantage as an explanation for keeping negotiations on separate tracks with volume allocated among domestic versus foreign producers; and (4) conceded that Weirton was unable to submit any documents indicating that it set its prices with reference to foreign importers, and provided insubstantial justification for Weirton's failure to give such support.

In its lost sale analysis, the Commission relied on a lost sale allegation, where it ignored evidence on the record undermining the likelihood that a significant sale was lost for price reasons. Also, the Commission inadequately responded to the court's concerns regarding whether on-time performance and quality concerns were the predominant cause of harm to the domestic TCCSS industry. The Commission: (1) failed to cite the sources of its individual purchaser volume data throughout its analysis; (2) appeared to use numbers from Table TCCSS-1, for its analysis of purchaser BWAY, while for the remaining purchasers it inexplicably appeared to use figures from tables in the Staff Report that conflict with Table TCCSS-1; (3) supported its position with "trends" over two year periods of time, which ignore that the full set of data indicates that there had been no clear trend at all; and (4) never accounted for the year 2000, and at times limited its analysis to the change from 1998 to 1999.

The Commission inadequately responded to the court's concerns regarding whether non-subject imports were the predominant cause of harm to the domestic TCCSS industry. It apparently conceded that non-subject import volume prevails over subject imports industry wide, and failed to provide sufficient evidence that there is a correlation between subject import volume and harm to the domestic industry on the West Coast where subject imports are...