Ak Steel Corp. v. U.S. Int'l Trade Comm'n
| Decision Date | 23 November 2016 |
| Docket Number | Slip Op. 16 - 108,Consolidated Court No. 14-00220 |
| Parties | AK STEEL CORPORATION, ALLEGHENY LUDLUM, LLC d/b/a ATI FLAT ROLLED PRODUCTS, and UNITED STEELWORKERS, Plaintiffs, v. UNITED STATES INTERNATIONAL TRADE COMMISSION, Defendant, -and- THYSSENKRUPP ELECTRICAL STEEL GmbH, ABB INC., NIPPON STEEL & SUMITOMO METAL CORPORATION, and JFE STEEL CORPORATION, Intervenor-Defendants. |
| Court | U.S. Court of International Trade |
PUBLIC VERSION
Opinion & Order[Plaintiffs' motion for judgment on agency record, contesting negative material-injury determinations based thereon, denied; action dismissed.]
David A. Hartquist, John M. Herrmann, Grace W. Kim, and Benjamin Blase Caryl, Kelley Drye & Warren LLP, Washington, D.C., for the plaintiffs.
Dominic L. Bianchi, General Counsel, Andrea C. Casson, Assistant General Counsel for Litigation, and Rhonda M. Hughes, Attorney-Advisor, Office of General Counsel, U.S. International Trade Commission, Washington, D.C., for the defendant.
J. Kevin Horgan and Marc E. Montalbine, deKieffer & Horgan, PLLC, Washington, D.C., for intervenor-defendant ThyssenKrupp Electrical Steel GmbH.
John D. Greenwald and Ulrika K. Swanson, Cassidy Levy Kent (USA) LLP, Washington, D.C., for intervenor-defendant ABB Inc.
Donald Harrison, Gibson, Dunn & Crutcher LLP, Washington, D.C., for intervenor-defendant Nippon Steel & Sumitomo Metal Corporation.
Robert Huey, Gregory Husisian, David Hickerson, and Morgan J. West, Foley Lardner LLP, Washington, D.C., for intervenor-defendant JFE Steel Corporation.
AQUILINO, Senior Judge: This consolidated action challenges the final negative determinations of the United States International Trade Commission ("ITC" or "Commission") that imported grain oriented electrical steel ("GOES") did not materially injure, or threaten material injury to, the U.S. domestic industry. See GOES From Germany, Japan, and Poland, Inv. Nos. 731-TA-1233, -1234, -1236 (USITC Pub. 4491, Sept. 2014), and GOES From China, Czech Republic, South Korea, and Russia, Inv. Nos. 701-TA-505 and 731-TA-1231, -1232, -1235, -1237 (USITC Pub. 4500, Nov. 2014), published respectively at 79 Fed.Reg. 54744 (Sept. 12, 2014) and 79 Fed.Reg. 66739 (Nov. 10, 2014), as further articulated in Confidential Views of the Commission ("Views") and ITC Final Proprietary Staff Report dated August 14, 2014 (incorporating revisions of Aug. 20, 2014) ("Staff Report").
According to the agency record developed, that domestic industry is comprised of two manufacturers, AK Steel Corporation and Allegheny Ludlum, LLC, which have filed complaints in this consolidated action pursuant to 19 U.S.C. §1516a(a)(2)(A)(i)(I) and (B)(ii) and 28 U.S.C. §1581(c) along with the United Steelworkers. Together as parties plaintiff, they have interposed a motion for judgment on that record in accordance with USCIT Rule 56.2.
The papers filed in support of that motion (and in opposition thereto) show that GOES is a flat-rolled alloy steel product with a chemistry that facilitates the formation of large grains during production that align uniformly in the rolling direction (lengthwise) of steel sheet. Such grains enable the steel to conduct a magnetic field with a high degree of efficiency, relative to other steels.
GOES is particularly suitable for the manufacture of cores for transformers used in connection with the generation and transmission of electricity. It is produced with different levels of "permeability", i.e., the degree of efficiency with which the steel can conduct a magnetic field.
"Conventional" grades of GOES have smaller, but less precisely oriented, grains. They are typically referred to by grades established by the American Iron and Steel Institute that range from M-2 to M-6, with M-2 being the thinnest gauge (0.007 inches or 0.18 millimeters ("mm")) and most efficient material, and M-6 being the thickest gauge (0.0138 inches or 0.35 mm) and least efficient.
"High-permeability" GOES has larger, more precisely oriented, grains that result in greater efficiencies (lower operating losses) relative to conventional grades. High-permeability GOES may also be subjected to certain surface treatments (known as domain refining) that further enhance efficiency.
AK Steel produces both conventional and high-permeability grades. Allegheny Ludlum produces conventional grades and was working in 2013 to develop the capacity to produce high-permeability GOES in commercial quantities. They concurrently filed antidumping- and countervailing- duty petitions with the International Trade Administration, U.S. Department of Commerce ("ITA") and the Commission, alleging that (1) imports of GOES from China, the Czech Republic, Germany, Japan, Korea, Poland and Russia were being sold in the United States at less than fair value; (2) manufacturers, producers or exporters of GOES in China were receiving countervailable subsidies; and (3) such imports were materially injuring and threatening to injure the domestic GOES industry.1
Preliminarily, the Commission determined that there was a reasonable indication that the U.S. industry was materially injured by reason of imports of GOES from the seven subject countries. See GOES from China, Czech Republic, Germany, Japan, Korea, Poland, and Russia, Inv. Nos. 701-TA-505 and 731-TA-1231-1237 (Prelim.), USITC Pub. 4439 (Nov. 2013), PDoc 91. Concurrently, ITA determined that imports of GOES from each of those countries were being sold at "less than fair value" ("LTFV")2 within the meaning of section 733(b) of the Tariff Act of 1930, as amended, 19 U.S.C. §1673b(b).
For the final phase, ITC determined that there had been price underselling of subject merchandise in the United States during the period of investigation ("POI"), which the parties do not dispute, but the Commission's final determination, by a vote of 5 to 1, was that underselling did not have significant adverse price effects during the POI. See Views at 35.
That is, after consideration and analysis of the statutory factors of volume of GOES, domestic and imported, and the price effects of the subject imports, as set forth in their Views, pp. 26-41, the majority of commissioners found that most of the industry's trade, employment, and financial indicators deteriorated over the POI due to a combination of output-related (e g., loss of export shipments, higher unit costs due to less production) and adverse revenue effects (i.e., reduced prices due to lower raw materials costs, unused capacity, and intra-industry competition). See Views at 42-43. They concluded, however, that those conditions were due to the decline in exports, resulting in underutilized capacity and more intense competition over market share, and that subject imports "did not take significant market share away from the domestic industry and also did not have significant price effects". Id. at 42. Because the domestic industry's total capacity remained the same throughout the POI and also because its market share remained essentially stable while domestic shipments increased, ITC did not find the domestic industry to have been materially injured by reason of the subject imports. See id.
Recognizing the existence of potential differences between the industries in the subject countries (especially between Japan and the others), ITC found reasonable overlap of competition among subject imports from all seven, and between subject imports from each country and the domestic like product; therefore, it exercised its discretion to cumulate subject imports from all of them. See id. at 47. Based thereon, it found no threat of material injury by reason of subject imports, as it found no record evidence that the trending increase in subject import volume and market share (and the reasons therefor) would change in the imminent future. It also found no evidence on the record that any increase in subject imports would likely affect the domestic industry adversely in the imminent future, inasmuch as increasing imports had not adversely affected the domestic industry, and that the increasing demand over the POI and the conditions of competition in the U.S. market were unlikely to change appreciably (from the perspective of the time of ITC's investigation). See id. at 48-49.
ITC also found that capacity in the cumulated subject countries, although high both absolutely and relative to apparent U.S. consumption, increased over the POI and was projected to increase further. Unused capacity was greater in interim 2013 than in interim 2014, and was projected to decline further in 2014 and further still in 2015. Production increased over the period and was expected to increase in 2014 and 2015. See id. at 49. The Commission noted that a rather high portion of the aggregate production of GOES in the subject countries was used to meet their respective home markets' demand. Shipments to the home markets increased over the period, which ITC expected to continue to increase. Exports to other markets increased between 2011 and 2013, and were projected to increase in the future as well. The ratio of subject export shipments to the United States as a share of total shipments was steady throughout the period and was projected to remain so in the future.
ITC found that the data indicated the United States is not a principal export market for the cumulated subject industries. In view of the subject industries' projection of increasing shipments to the home markets and exports to other countries and their very limited reliance on the U.S. export market, the Commission found that significantly increased imports of the subject merchandise into the United States were not likely in the then-imminent future. Although ITC recognized that U.S. prices for GOES have been and will likely continue to be higher than prices in other markets, it indicated that this is not a factor that led the subject industries to direct an appreciably larger share of their export shipments to the United States from 2011 to 2013, and there was, at the...
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