Suramerica de Aleaciones Laminadas, C.A. v. U.S., s. 93-1579

• Decision Date: 30 December 1994
• Docket Number: Nos. 93-1579,94-1021,s. 93-1579
• Citation: 44 F.3d 978
• Parties: SURAMERICA de ALEACIONES LAMINADAS, C.A., Conductores de Aluminio Del Caroni, C.A., Industria de Conductores Electricos, C.A., and Corporation Venezolana de Guayana, Plaintiffs-Appellees, v. The UNITED STATES, and the United States Department of Commerce, Defendants-Appellees, The United States International Trade Commission, Defendant-Appellant, and Southwire Company, Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 978

44 F.3d 978

16 ITRD 2553

SURAMERICA de ALEACIONES LAMINADAS, C.A., Conductores de Aluminio Del Caroni, C.A., Industria de Conductores Electricos, C.A., and Corporation Venezolana de Guayana, Plaintiffs-Appellees, v. The UNITED STATES, and the United States Department of Commerce, Defendants-Appellees The United States International Trade Commission, Defendant-Appellant and Southwire Company, Defendant-Appellant.

Nos. 93-1579, 94-1021.

United States Court of Appeals Federal Circuit.

Dec. 30, 1994.

Rehearing Denied; Suggestion for Rehearing In Banc Declined

Feb. 10, 1995.

Wendy E. Ackerman, Shearman & Sterling, Washington, DC, argued for plaintiffs-appellees. With her on the brief were Thomas B. Wilner and Thomas A. DiBiase; Of counsel was Jeffrey M. Winton. Claire E. Reade, Arnold & Porter, of counsel.

Stephen McLaughlin, Atty., Office of the Gen. Counsel, U.S. Intern. Trade Com'n, argued for defendants-appellants. With him on the brief were Carol McCue Verratti, Atty., Lyn M. Schlitt, Gen. Counsel and James A. Toupin, Asst. Gen. Counsel. Michael S. Kane, Atty., Dept. of Justice, Washington, DC, Velta A. Melnbrencis and David M. Cohen, Attys. represented the defendants-appellants, the U.S.

Lawrence J. Bogard, McKenna & Cuneo, Washington, DC, argued for defendant-appellant, Southwire Company. With him on the brief was Catherine E. Edmondson.

Before MICHEL, PLAGER, and RADER, Circuit Judges.

RADER, Circuit Judge.

The International Trade Commission (ITC) found that Venezuelan imports of aluminum electrical conductor rod (EC rod) pose a threat of material injury to a domestic industry. The Court of International Trade reversed for lack of substantial evidence supporting the threat finding and remanded. Suramerica de Aleaciones Laminadas, C.A. v. United States, 818 F.Supp. 348 (Ct.Int'l Trade 1993) (Suramerica ). ITC then rescinded its threat finding. The Court of International Trade affirmed. Suramerica de Aleaciones Laminadas, C.A. v. United States, 841 F.Supp. 1220 (Ct.Int'l Trade 1993). Because the record supports these Court of International Trade determinations, this court affirms.

BACKGROUND

EC rod is an intermediate product between primary aluminum and finished aluminum wire and cable. The domestic EC rod industry includes seven producers: Southwire Company; Alcan Aluminum Corporation; Aluminum Company of America (Alcoa); Essex Wire and Cable; Kaiser Aluminum and Chemical Corporation; Noranda Aluminum, Inc.; and Reynolds Metal Company. Several are vertically integrated producers who smelt primary aluminum, convert it into EC rod, and then process EC rod into aluminum wire and cable. Vertically integrated producers make most of the domestic EC rod supply.

Because the major portion of the electric power grid in the United States is complete, the EC rod market primarily supplies rod for repair and replacement of existing power lines across the nation. Suramerica, 818 F.Supp. at 355. Thus, with the completion of the power grid, the market for EC rod is no longer constantly expanding, but has reached a plateau. Due to the shift to a stable market, domestic manufacturers have scaled back their production of EC rod. Id.

A cyclical high in domestic EC rod production occurred in 1984. See Suramerica, 818 F.Supp. at 356. Demand, however, did not continue to rise. With inventories rising and a shift downward in price, the result was a "crash" in the EC rod market shortly after the 1984 high. Id. In response, the domestic industry accelerated downsizing to eliminate excess inventories and reduce supply to match the reduced demand. Id. at 355-56. This action helped return the domestic industry to health. The domestic EC rod industry has remained consistently profitable. Id. at 357.

Appellees Suramerica de Aleaciones Laminadas, C.A. (Sural); Conductores de Aluminio del Caroni, C.A.; and Industria de Conductores Electricos, C.A. (together, the Venezuelan producers or industry) are Venezuelan manufacturers and exporters of EC rod. As domestic production dropped, imports of Venezuelan EC rod increased from 7% of the U.S. market in 1984 to 15% in 1985. Venezuelan imports have accounted for 12-15% of the market since 1985. Sural, which accounts for 90% of all Venezuelan imports, began keeping inventories of imported rod in the United States in 1987. Sural stored 4,000 tons of EC rod in the United States in 1987, and almost 7,500 tons in the first quarter of 1988. By comparison, domestic purchasers bought 346,000 tons of EC rod in 1987.

The Venezuelan producers have spare EC rod production capacity. Limits on the supply of raw materials, however, constrain their ability to increase production. World market aluminum supplies are not an attractive source because EC rod profit margins are low relative to transportation costs. Venezuelan producers cannot afford to purchase primary aluminum abroad and ship it to Venezuela for processing. See Suramerica, 818 F.Supp. at 358-60.

Domestic manufacturer Southwire founded Sural in 1975 as a joint venture with a Venezuelan firm. Southwire helped Sural enter the U.S. market in 1984 and 1985. Southwire itself purchased much of Sural's U.S. imports in 1984-85. Suramerica, 818 F.Supp. at 368. Southwire advised Sural during this period on making sales in the United States. Id. The relationship soured, however, and Southwire sold its interest in Sural in 1985. Id. at 369.

In 1987 Southwire petitioned the International Trade Administration (ITA) and ITC to impose countervailing and antidumping duties on Venezuelan EC rod imports. Id. at 352. ITA determined that the Venezuelan industry enjoyed government subsidies, and sold EC rod in the United States at less than fair value (LTFV). Certain Elec. Conductor Alum. Redraw Rod from Venez., 53 Fed.Reg. 24,763 (Dep't Comm.1988) (final affirmative countervailing duty determination) (Subsidy Report ); Certain Elec. Conductor Alum. Redraw Rod from Venez., 53 Fed.Reg. 24,755 (Dep't Comm.1988) (final determination of sales at LTFV).

ITC then investigated whether Venezuelan imports materially injured or posed a threat of material injury to a domestic industry. As part of its investigation, ITC sent a questionnaire to domestic EC rod industry members and other interested parties. The questionnaire asked each producer to check one of three boxes: supports the petitions; opposes the petitions; or does not want to take a position on the petitions.

None of the industry members checked the support box. One industry member, Alcoa, expressed opposition. Suramerica, 818 F.Supp. at 361. The others refused to take a position. Id. at 363. None have experienced or expect negative effects on their EC rod business from Venezuelan imports. See id. at 366. Other interested parties expressed opposition to the petitions, including General Electric Company, the Aluminum Trade Council, and the Aluminum Brick and Glass Workers Union. Id. at 361.

Some industry members expressed additional views on the petitions in private statements ITC withheld from the Venezuelan producers. In some instances, these additional views clarified a producer's reasons for withholding support from the petitions.

The ITC staff did not compare the prices of EC rod produced by vertically integrated producers with Venezuelan imports. Based on the limited volume of remaining domestic sales, the ITC staff found that Venezuelan rod was cheaper than domestic rod in five of nine quarterly price comparisons, and more expensive in the other four. Suramerica, 818 F.Supp. at 357-58.

Nonetheless ITC found that the domestic industry is vulnerable to EC rod imports. Certain Elec. Conductor Alum. Redraw Rod from Venez., Nos. 701-TA-287, 731-TA-378, 1988 ITC LEXIS 64, at * 13 (Available on WESTLAW FINT-ITC data base) (Int'l Trade Comm'n Aug. 1988) (final determination) (Threat Determination ). ITC also found that Venezuelan imports pose a threat of material injury under the factors specifically enumerated in 19 U.S.C. Sec. 1677(7)(F)(i) (1988). Threat Determination at * 13-21.

The Court of International Trade reversed. Suramericana de Aleaciones Laminadas, C.A. v. United States, 746 F.Supp. 139, 141 (Ct.Int'l Trade 1990). The court reasoned that, without industry support, Southwire did not have standing to bring the petitions "on behalf of" the domestic industry. Id. On appeal, this court held that ITA had discretion to initiate an investigation in response to a petition from an interested party who alleged that it was filed on behalf of an industry, without necessarily determining first that it was affirmatively supported by a majority or some other specified number of the domestic industry. Suramerica de Aleaciones Laminadas, C.A. v. United States, 966 F.2d 660, 667, --- Fed.Cir. (T) ----, ---- (Fed.Cir.1992) (Suramerica-CAFC ).

On remand, the Court of International Trade held on the merits that substantial evidence did not support ITC's threat determination. Suramerica, 818 F.Supp. at 375. The court reasoned that the domestic industry was healthy, and that comparison to 1984 was inappropriate because that year represented a cyclical high for the industry. Id. at 356-57, 370. The court also evaluated the factors enumerated in section 1677(7)(F)(i) for threat determinations, together with other factors such as the lack of domestic industry support and Southwire's past relationship with Sural. Id. at 357-75. The court remanded for ITC to rescind its determination or explain how substantial evidence supports it. Id. at 375.

Southwire and ITC appealed to this court, which dismissed the appeals as unripe. Suramerica de Aleaciones Laminadas, C.A. v. United States, Nos. 93-1337, 93-1350, 1993 US APP LEXIS 14,879 (Fed.Cir. May 26, 1993). ITC then rescinded its threat finding under protest. Certain Elec. Conductor Alum. Redraw Rod from Venez., No. 701-TA-287 (Int'l Trade Comm'n June 2, 1993) (determination on remand). The Court of International Trade affirmed. Suramerica de Aleaciones...