Maine Potato Council v. United States

• Decision Date: 27 June 1985
• Docket Number: Court No. 84-1-00141.
• Citation: 613 F. Supp. 1237,9 CIT 293
• Parties: The MAINE POTATO COUNCIL, Plaintiff, v. The UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

613 F. Supp. 1237

9 CIT 293

The MAINE POTATO COUNCIL, Plaintiff, v. The UNITED STATES, Defendant.

Court No. 84-1-00141.

United States Court of International Trade.

June 27, 1985.

COPYRIGHT MATERIAL OMITTED

Heron, Burchette, Ruckert & Rothwell, Washington, D.C. (Thomas A. Rothwell, Jr., James M. Lyons and Alfred G. Scholle) Washington, D.C., for plaintiff.

Lyn M. Schlitt, Gen. Counsel, Michael P. Mabile, Asst. Gen. Counsel, U.S. Intern. Trade Com'n, Washington, D.C., Stephen A. McLaughlin, Washington, D.C., for defendant.

OPINION AND ORDER

RESTANI, Judge.

Plaintiff, the Maine Potato Council, challenges a final determination of the United States International Trade Commission (ITC or Commission) regarding its investigation of fall-harvested round white potatoes from Canada. The Commission, on December 19, 1983, pursuant to § 735(b)(1) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1673d(b)(1) (1982), found that the domestic industry was not suffering from, or threatened with, material injury by reason of imports of fall-harvested round white potatoes from Canada sold at less than fair value (LTFV). Fall-Harvested Round White Potatoes from Canada, Inv. No. 731-TA-124 (Final), USITC Pub. No. 1463 (December 1983); 48 Fed.Reg. 57,381 (December 29, 1983). This negative injury determination followed affirmative findings by the International Trade Administration of the Department of Commerce (ITA) that fall-harvested round white potatoes from Canada were being sold in this country at LTFV. 48 Fed.Reg. 51,669 (November 10, 1983).

Jurisdiction in this action is predicated upon 28 U.S.C. § 1581(c) (1982). This matter is before the court, pursuant to Court of International Trade Rule 56.1, on plaintiff's motion for review of administrative determinations upon the agency record.

For the reasons that follow, the court concludes that some of the ITC's findings are supported by substantial evidence in the administrative record and other findings are remanded for further consideration not inconsistent with this opinion.

I. ITC Findings Regarding the Domestic Fall-Harvested Round White Potato Industry

In a final antidumping investigation, the ITC is required to determine whether:

(A) an industry in the United States —

(i) is materially injured, or

(ii) is threatened with material injury, or

(B) the establishment of an industry in the United States is materially retarded,

by reason of imports of the merchandise with respect to which the administering authority ITA has made an affirmative determination under subsection (a)(1) of this section.

19 U.S.C. § 1673d(b)(1) (1982) (emphasis added). Thus, without both a finding of material injury, or threat thereof, and a finding that such injury was by reason of the subject imports, antidumping relief may not be granted.

The Commission unanimously found that the industry in the United States was not materially injured or threatened with material injury by reason of imports of fall-harvested round white potatoes from Canada at LTFV.¹Fall-Harvested Round White Potatoes from Canada, Inv. No. 731-TA-124 (Final), USITC Pub. No. 1463 at 3 (December 1983) (ITC Opinion). The Commission found that the regional domestic industry was "experiencing material injury, reflected primarily by irregular declines in acreage harvested, a decline in part-time employment, financial losses and difficulty in obtaining financial assistance." ITC Opinion at 3. The Commission explained its conclusion that the Canadian LTFV imports were not a cause of the industry's problems:

An analysis of the price and volume effects of the Canadian imports on the domestic industry indicates that changes in regional domestic production, rather than imports, determine prices of fall-harvested round white potatoes in the U.S. market. A causal link between the imports and the domestic industry's injury is absent since most losses to the industry occurred when imports were lowest and domestic production was highest. Moreover, once in the U.S. market, the volume effect of Canadian potatoes on price was insignificant or non-existent; the increase in domestic production from 1980/81 to 1982/83 was the predominant factor affecting price.

Pricing data further demonstrate that both import and domestic prices rose and fell together, apparently in response to the same changes in domestic production; that prices in the Northeast market were highly correlated with prices in other sections of the country where imports were absent or less concentrated; and that Canadian potatoes did not undersell the domestic product. Also, other factors such as tighter size standards, a perceived higher quality of the Canadian potato and more effective marketing organization among many Canadian growers were found to contribute to the competitiveness of the Canadian product.

No threat of injury was found to exist to the industry, since import penetration has fallen, Canadian inventories are down, and production of round whites in Eastern Canada is not expected to increase.

ITC Opinion at 4.

II. Evidence in the Record Regarding Material Injury by Reason of LTFV Imports

"Material injury" is defined as "harm which is not inconsequential, immaterial, or unimportant." 19 U.S.C. § 1677(7)(A) (1982). The Commission found in this case that data for the domestic industry on regional acreage, employment, and financial condition indicated that potato growers in the Northeastern region have experienced material injury. Specific findings include the following: (1) acreage harvested fell 14.8% during the 5-year period investigated; (2) full and part-time employment fell over 15.0% from 1980/81 to 1982/83; and (3) hours worked by persons engaged in potato operations declined 7.0% from 1980/81 to 1982/83. Available financial data indicated losses to the industry, particularly in 1980 and 1982.²

As indicated previously, the Commission, however, concluded that such injury was not caused or predominantly caused by the LTFV imports. The Commission found that LTFV imports had no measurable effect on domestic prices in the regional market. The Commission noted that when domestic production increased, the average price for Maine potatoes decreased, and vice versa.³ The data showed that imports into the United States market increased when prices in this market were highest, and that losses to the domestic industry were greatest when regional domestic production was high and imports were relatively low.

The Commission also indicated that the volume effect of the LTFV imports on United States prices was insignificant. The Commission noted that in 1980/81 the average wholesale price of round white potatoes in the New York City terminal market increased even though LTFV Canadian imports increased.⁴ In comparison, the price fell between 1981/82 and 1982/83, even though imports into the region fell. In general, price data for domestic and imported potatoes rose and fell together.

Moreover, the Commission found that potato prices in the regional market were highly correlated with prices in United States cities where Canadian imports were absent or less concentrated. The Commission concluded that this suggests that the domestic potato prices were responding to changes in regional domestic production rather than the price of imports.

Price data also demonstrated that Canadian imports generally sold for higher prices than Maine potatoes. Every month from September 1979 to October 1983, Canadian imports sold in the New York City terminal market were higher priced than Maine round white potatoes. Similarly, Boston's prices for the Canadian imports during all but two of these months were higher than for the domestic items. In Philadelphia, three of the four months examined in 1983 also showed Canadian imports selling at higher prices than Maine potatoes. Other data revealed that prices of New Brunswick potatoes tended to be higher than prices of Maine potatoes in January 1983 and that prices for Prince Edward Island potatoes tended to be substantially higher than Maine prices for the same period.

While the Commission stated that fall-harvested round white potatoes from New Brunswick, Canada, and Maine were generally considered equal in quality,⁵ nonprice factors were found to contribute to the competitiveness of the Canadian potatoes. Prince Edward Island potatoes are considered more appealing in appearance because they are grown in a reddish soil, and both Prince Edward Island and New Brunswick potatoes are preferred due to more uniform Canadian size requirements.⁶ Differences in Canadian and U.S. marketing also contributed to the competitiveness of Canadian potatoes.

III. Legality of the Commission's Findings

A. Consideration of LTFV Margins.

Plaintiff challenges the ITC's negative injury determination on several grounds. First, plaintiff complains that the Commission's causation analysis is flawed because the Commission failed to consider the effect of the dumping margins on the domestic industry. Plaintiff asserts that in certain cases the Commission is required to address explicitly the impact of the dumping margin on the domestic industry, and that the instant case falls in that category. Plaintiff, however, fails to offer convincing support for its proposition that the ITC must perform a margins analysis. Plaintiff's only authority is Carbon Steel Wire Rod from Brazil, Belgium, France, and Venezuela, Inv. Nos. 701-TA-148, 149, 150 and 731-TA-88 (Preliminary), 47 Fed.Reg. 13,927 (April 1, 1982). In that case, Commissioner Paula Stern argued that the Commission could make a negative final determination if "dumping has accounted for only a small portion of the margin of underselling...." 47 Fed.Reg. at 13,933. Plaintiff offers no authority in which the Commission has ever considered the margin of dumping in reaching an affirmative final determination. Chairman Alfred E. Eckes in Certain Welded Carbon Steel Pipes and Tubes from the Republic of Korea and Taiwan,...