Hannibal Industries, Inc. v. US, Court No. 87-08-00848.

• Decision Date: 17 March 1989
• Docket Number: Court No. 87-08-00848.
• Citation: 710 F. Supp. 332
• Parties: HANNIBAL INDUSTRIES, INC., and Western Tube & Conduit Corp., Plaintiffs, v. UNITED STATES and United States International Trade Commission, Defendants.
• Court: U.S. Court of International Trade

710 F. Supp. 332

HANNIBAL INDUSTRIES, INC., and Western Tube & Conduit Corp., Plaintiffs, v. UNITED STATES and United States International Trade Commission, Defendants.

Court No. 87-08-00848.

United States Court of International Trade.

March 17, 1989.

Schagrin Associates, Roger B. Schagrin, Paul W. Jameson and Mark C. Del Bianco, Washington, D.C., for plaintiffs.

Lyn M. Schlitt, Gen. Counsel, James A. Toupin, Asst. Gen. Counsel, U.S. Intern. Trade Comn, Timothy M. Reif, Washington, D.C., for defendants.

DiCARLO, Judge:

Pursuant to Rule 56.1 of the Rules of this Court, plaintiffs challenge the final negative determination of the United States International Trade Commission (Commission) in Certain Welded Carbon Steel Pipes and Tubes from Taiwan, Inv. No. 731-TA-349 (Final), USITC Pub. 1994 (July 1987). The Commission determined that a United States industry is neither materially injured nor threatened with material injury by reason of less than fair value imports of Taiwanese produced light-walled rectangular pipes and tubing (L-WR).

This Court has jurisdiction under 19 U.S.C. § 1516a(a)(2)(A)(i) and (B)(ii) (Supp. IV 1986) and 28 U.S.C. § 1581(c) (1982). The Court finds that a material injury determination on the effect of dumped imports may not lawfully be based solely on the gross revenue loss to the domestic industry's product line when the record contains sufficient information to make that determination as to the domestic like product. The Court remands to the Commission to determine whether the impact of less than fair value imports on sales of the domestic like product constitutes material injury or threat of material injury and to explain the basis for its determination. The Commission's findings on the foreign producers' capacity and capacity utilization and the Taiwanese self-restraint program are supported by substantial evidence on the record and according to law.

BACKGROUND

Commerce found less than fair value sales of L-WR by Yieh Hsing Enterprise Co., Ltd. (Yieh Hsing), the only Taiwanese producer that exported L-WR to the United States during investigation period from May 1 to October 31, 1986. See Certain Light-Walled Rectangular Welded Carbon Steel Pipes and Tubes From Taiwan; Final Determination of Sales at Less Than Fair Value, 52 Fed.Reg. 20,440 (June 1, 1987).

Shortly before making its final determination, the Commission discovered that other Taiwanese companies had exported L-WR after October 1986, and that these companies may have been largely responsible for an increase in L-WR exports to the United States during the first quarter of 1987. R. 69 at 3-5. The Commission reopened its investigation to identify the other producers and determine their capacity and capacity utilization. R. 79. After this further investigation, all five commissioners found no material injury and three of the commissioners also found no threat of material injury to a domestic industry by reason of dumped L-WR.

In her separate analysis of causation of material injury, the Chairman used a "five factor test" that focused on unfair price discrimination. USITC Pub. 1994 at 29-43. At the Commission's request, the Court remanded this portion of the determination in view of USX Corp. v. United States, 12 CIT ___, 682 F.Supp. 60 (1988), which found that this five-factor test improperly shifted focus of the investigation to an injury by predation standard. See also Maverick Tube Corp. v. United States, 12 CIT ___, 687 F.Supp. 1569 (1988). On remand, the Chairman adopted the Vice Chairman's views on causation and her finding of no material injury.

DISCUSSION

An additional affirmative vote on either material injury or threat would have made this determination affirmative since an affirmative vote on either material injury or threat is treated as a vote that the overall determination should be affirmative. 19 U.S.C. § 1677(11) (1982); 19 C.F.R. § 207.9 (1988).

I. MATERIAL INJURY

In the material injury portion of the determination, the analyses of three of the commissioners are uncontested. Plaintiffs challenge only the Chairman and Vice Chairman's joint causation of material injury analysis. The sole issue is whether the determination may be based on the impact of imports on total gross revenues of the domestic industry where the record permits analysis of the impact of imports on sales of the domestic like product.

The Chairman and Vice Chairman found that the domestic industry consists of producers of L-WR, who also produce other products. They calculated the additional revenue the domestic industry would have received if they had gained all of the sales that went to Taiwanese imports. That additional revenue was calculated to be 4.1 percent of the industry's 1986 L-WR shipments, and 1.3 percent of the industry's total sales, including products other than L-WR. The Chairman and Vice Chairman concluded that they did not believe "that a maximum gross revenue loss of less than 1.3 percent is material injury within the meaning of the controlling statutes." USITC Pub. 1994, at 85-86. They thus evaluated the injury to producers of L-WR by looking at those producers' entire production instead of that part that was affected by imports. Plaintiffs allege this is the first time that any Commissioner has made an injury determination dependent on the relationship between a company's total production and revenue losses attributable to imports of the product under investigation.

It is incumbent on the Commission to assess the effect of dumped imports in relation to United States production of a like product if available data permit separate identification of production

in terms of such criteria as the production process or the producer's profits. If the domestic production of the like product has no separate identity in terms of such criteria, then the effect of the ... dumped imports shall be assessed by the examination of the production of the narrowest group or range of products, which includes a like product, for which the necessary information can be provided.

19 U.S.C. § 1677(4)(D) (1982). "Like product" refers to "a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to ... investigation...." 19 U.S.C. § 1677(10) (1982); see Citrosuco Paulista, S.A. v. United States, 12 CIT ___, 704 F.Supp. 1075, 1081 (1988); Asociacion Colombiana de Exportadores de Flores v. United States, 12 CIT ___, 693 F.Supp. 1165, 1169 (1988). The narrowest group or range of products which includes a like product is referred to as the "product line." 19 U.S.C. § 1677(10) (1982). The product-line provision is an exception to the general rule that the Commission is to examine the impact of dumped imports with respect to relevant economic factors relating to a like product. 19 U.S.C. § 1677(4)(D) (1982); see Mitsubishi Elec. Corp. v. United States, 12 CIT ___, 700 F.Supp. 538, 563 (1988).

The Chairman and Vice Chairman decided the investigation warranted a product-line analysis of the domestic industry's financial condition because (1) separate identification of profits and the production process was allegedly impossible based on the available data, (2) the ease of converting production from L-WR to other types of pipe and tubing, and (3) a product-line analysis was consistent with prior L-WR investigations.

Plaintiffs do not dispute that in analyzing the financial condition of the domestic industry, the Commission may examine profits, productivity, employment, cash flow, capacity utilization, and other relevant economic factors according to the entire establishment producing a like-product. 19 U.S.C. § 1677(4)(D) (1982). "Congress did not intend to require the Commission to obtain separate data on every enumerated economic factor; rather, it directed the Commission to obtain such data, where possible, as allows it to make `a reasonably separate consideration.'" Kenda Rubber Indus. Co. v. United States, 10 CIT 120, 125, 630 F.Supp. 354, 357-58 (1986). The issue here, however, is not whether the Commission is required to obtain separate data, but rather whether the Commission is required to consider separate data it actually has.

While the Commission had economic information on producers' profits, investment return, cash flow, ability to raise capital, and investment on only a product-line basis, separate data were available on output, sales revenue, market share, capacity utilization, inventories, employment and wages that pertained only to L-WR. See Conf.R. 9. The Chairman and Vice Chairman had sufficient information to calculate the additional revenue the domestic industry would have received if they had gained all of the sales that went to Taiwanese imports, which was 4.1 percent of the value of the industry's 1986 L-WR shipments, and 1.3 percent of the industry's total sales, including products other than L-WR. USITC Pub.1994, at 85. Although they had sufficient information to calculate a figure of 4.1 percent of the value of L-WR shipments, the Chairman and Vice Chairman based their material injury determination on the 1.3 percent revenue loss to total production of L-WR and other products.

Under the Chairman and Vice Chairman's analysis, the grant or denial of import relief depends on the extent to which L-WR is made in the same domestic facilities as other products. This approach differentiates between (1) firms for whom L-WR is a large percentage of total production and revenue and firms for whom it is a small percentage, and (2) firms who are able to diversify production from L-WR and firms who are less capable of doing so. The definition of "like product" should not be "interpreted in such a fashion as to prevent consideration of an industry adversely affected by the imports under investigation." S.Rep. No. 249, 96th Cong., 1st Sess. 90-91, reprinted in 1979 U.S. Code Cong. & Admin.News 381, 476-77.

Since the Chairman and Vice Chairman had sufficient...