Mitsubishi Elec. Corp. v. US

• Decision Date: 31 October 1988
• Docket Number: Court No. 85-12-01858.
• Citation: 700 F. Supp. 538,12 CIT 1025
• Parties: MITSUBISHI ELECTRIC CORPORATION, et al., Plaintiffs, v. UNITED STATES, Defendant, and Motorola, Inc., Defendant-Intervenor.
• Court: U.S. Court of International Trade

700 F. Supp. 538

12 CIT 1025

MITSUBISHI ELECTRIC CORPORATION, et al., Plaintiffs, v. UNITED STATES, Defendant and Motorola, Inc., Defendant-Intervenor.

Court No. 85-12-01858.

United States Court of International Trade.

October 31, 1988.

COPYRIGHT MATERIAL OMITTED

Baker & McKenzie, Thomas P. Ondeck and B. Thomas Peele, Washington, D.C., for plaintiff Mitsubishi Elec. Corp.

Paul, Weiss, Rifkind, Wharton & Garrison, Robert E. Montgomery, Jr., Linda N. Valenstein and George Kleinfeld, Washington, D.C., for plaintiffs NEC Corp. and NEC America, Inc.

Wilmer, Cutler & Pickering, John D. Greenwald, Robert C. Cassidy, Jr. and C. Loring Jetton, Jr., Washington, D.C., for plaintiff OKI Elec. Industry Co., Ltd.

Weil, Gotshal & Manges, A. Paul Victor, Charles H. Bayar, New York City, and Jeffrey P. Bialos, Washington, D.C., for plaintiffs Matsushita Communication Indus. Co., Ltd., Matsushita Communication Corp. of America and Panasonic Indus. Co., Div. of Matsushita Elec. Corp. of America.

John R. Bolton, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Sheila N. Ziff, Douglas A. Riggs, Gen. Counsel, M. Jean Anderson, Chief Counsel for Intern. Trade Office of the Deputy Chief Counsel for Import Admin., U.S. Dept. of Commerce (Eileen P. Shannon, of counsel), and Michael P. Mabile, Asst. Gen. Counsel, U.S. Intern. Trade Com'n, Washington, D.C., (Judith M. Czako, of counsel), for defendant.

Covington & Burling, Harvey M. Applebaum, Paul G. Gaston, Sonya D. Winner, Washington, D.C., and David F. Hixson, of counsel, for defendant-intervenor Motorola, Inc.

OPINION AND ORDER

CARMAN, Judge:

This consolidated action concerns five separately filed actions before the Court: Mitsubishi Electric Corp. v. United States, Court Nos. 85-12-01858 and 86-01-00113; NEC Corporation and NEC America, Inc. v. United States, Court No. 86-01-00100; OKI Electric Industry Co., Ltd. v. United States, Court No. 86-01-00099; and Matsushita Communication Industrial Co., Ltd., et al. v. United States, Court No. 86-01-00088. Motorola, Inc. has entered as defendant-intervenor. All of the actions involve appeals from the following administrative proceedings: (1) the final determination of the Department of Commerce, International Trade Administration (ITA) entitled Cellular Mobile Telephones and Subassemblies From Japan; Final Determination of Sales at Less Than Fair Value, 50 Fed.Reg. 45,447 (1985) (hereinafter AD Final Determination); (2) the final determination of the International Trade Commission (ITC) entitled Cellular Mobile Telephones and Subassemblies Thereof From Japan, USITC Pub. No. 1786, 50 Fed.Reg. 51,467 (1985); and the ITA's antidumping duty order entitled Antidumping Duty Order: Cellular Mobile Telephones and Subassemblies From Japan, 50 Fed.Reg. 51,724 (1985).

Two common questions of law involved in these consolidated actions concern:

(a) Whether the ITA's final determination of sales at less than fair value, (AD Final Determination, 50 Fed.Reg. 45,447 (1985)), to the extent that it encompassed certain CMT subassemblies and found they were being sold in the United States at less than fair value, was unsupported by substantial evidence on the record, arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law; and

(b) Whether the final determination of material injury issued by the ITC (Cellular Mobile Telephones and Subassemblies Thereof From Japan, USITC Pub. No. 1786, 50 Fed.Reg. 51,467 (1985)), to the extent that it held that an industry or industries in the United States were materially injured by reason of imports of CMTs and CMT subassemblies was unsupported by substantial evidence on the record, arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law.

See, Joint Motion For Consolidation at 2-3, Mitsubishi Electric Corp. v. United States, Consolidated Court No. 85-12-01858. The Court holds that the determinations by the ITA are supported by substantial evidence on the record and are in accordance with law, but remands the determination of the ITC for further findings in accordance with this decision.

FACTS

Defendant-intervenor Motorola, Inc. (Motorola) filed an antidumping petition with the ITA and the ITC alleging that Japanese-manufactured cellular mobile telephones (CMTs), mobile transceivers and subassemblies imported as "kits" were being sold or likely to be sold at less than fair value (LTFV) in the United States, in contravention of 19 U.S.C. § 1673(1), and that a domestic industry had been materially injured, was threatened with material injury, and establishment of the industry was being materially retarded by imports of the merchandise.

The petition, Cellular Mobile Telephones and Subassemblies Thereof From Japan (petition), described the class or kind of merchandise to be covered under the petition as follows:

The class or kind of merchandise covered by this petition is all cellular mobile telephones manufactured in Japan, plus all mobile transceivers or kits of components and subassemblies manufactured in Japan for use in final assembly of cellular mobile telephones.

* * * * * *

This petition also covers cellular mobile telephone transceivers sold alone and collections of cellular mobile telephone subassemblies ("kits"). The inclusion of mobile transceivers and kits in an antidumping order is essential to prevent the Japanese manufacturers from avoiding the impact of any final relief issued in this proceeding by simply importing mobile transceivers or kits containing most of the necessary subassemblies or components into the United States for final assembly and testing. Wherever this petition refers to cellular mobile telephones imported from Japan, those products should be understood to include also cellular mobile telephones made primarily using kits or mobile transceivers imported from Japan.

Administrative Record, Doc. No. 1 at 10-12, Cellular Mobile Telephones and Subassemblies Thereof From Japan, (Case No. A-558-405) (hereinafter Rec.Doc.).¹

In the petition, Motorola supplied the purported tariff classification of the merchandise to be investigated by the ITA. Plaintiff submitted its request for relief be applied to the merchandise classified as follows:

D. Tariff Classification

Cellular mobile telephones probably should be imported under tariff classification TSUS 685.2943, which is merely a catch-all or clean-up classification. Transceivers, kits or subassemblies for such telephones probably should be imported under the same TSUS classification or perhaps under TSUS 685.2325, 685.2476, 685.2940. 685.2970, or 685.2976. However, because cellular telephones did not exist when the present tariff classifications were created, and because the breadth and ambiguity of the existing tariff classifications may allow these products to enter without chal- lenge under numerous different classifications, it is essential that any relief provided in this proceeding apply not only to imports under specific TSUS numbers, but also generally to any cellular mobile telephones, and to any transceivers, kits or subassemblies for cellular mobile telephones, whatever the tariff classification of such products.

Rec.Doc. 1 at 12-13 (emphasis added).

The petition also contained an explanation of the extent of Motorola's intent to include CMT subassemblies within the scope of the ITA investigation. The following sets forth Motorola's reasoning:

Apparently recognizing that their prices are at less than fair value, but nevertheless determined to charge such prices, several Japanese manufacturers have made preliminary plans to circumvent the law by creating the facade of manufacturing cellular mobile telephones in the United States; when in fact that `manufacturing' uses kits (collections of key components) or mobile transceivers (containing roughly 80% of the cellular mobile telephone's electronics) that are made in Japan.

Even if the final assembly of the pieces of an OKI, Matsushita, NEC or Kokusai mobile telephone occurs in the U.S., those telephones are in reality manufactured in Japan, where they are conceived, financed, designed, engineered, and supervised and where their major subassemblies and components are designed and produced. The administration and ownership of the manufacturing effort, and the research, design, development and creation of components is the heart of the industry. To prevent a clear evasion of the antidumping law by the Japanese, it is essential that not only cellular mobile telephones, but also kits and mobile transceivers for cellular mobile telephones be covered by antidumping protection.

* * * * * *

... The inclusion of mobile transceivers and kits in an antidumping order is essential to prevent the Japanese manufacturers from avoiding the impact of any final relief issued in this proceeding by simply importing mobile transceivers or kits containing most of the necessary subassemblies or components into the United States for final assembly and testing.

Id. at 6-7, 11. The petition also contained a reference to a citation from an economic journal published in Japan which stated why some Japanese manufacturers of CMTs (specifically OKI, Matsushita, Mitsubishi, and NEC) were deciding to or considering the idea of trying to import subassembly pieces of CMTs into the United States to avoid antidumping charges on complete CMTs. See id. at 11 n. 1, App. K, Car Telephone: Sales Battle Intensifies in Europe, U.S., June 29, 1984, Nihon Keizai Shimbun.

The petition also set forth allegations that "dumping margins of 50% are common, with some margins as high as 100%." Id. at 6. Motorola stated in the petition that bargain prices of CMTs would exist at a level of two thousand (2,000) dollars or less while Japanese manufacturers offered CMTs at a level of one thousand (1,000) dollars or less. See id. at 17, 41. Motorola also contended in its petition losses of fifty (50) million...