morning mate to support my name is michael shore from arnold and porter and i'm appearing today on behalf of the german respondents and their challenge to the march two thousand and six i p c c sunset review first  address the commission's elated injury determination specifically its conclusion that relative prices in the u s and other markets created quote some incentive and quote for producers in the foresight that countries  to produce and export more of their products to the united states in order to use more fully their available second i'll address the commission's likely adverse impact i mean for germany and with respect to the price incentive analysis our point is a simple one neither the analysis used nor the evidence relied upon are capable of supporting the commission's conclusion that there was any price incentive for german and other subject producers problems first the starting point for any price incentive analysis must be the u s price the commission expects the subject producers to receive that's not what the commission used the commission analysis using the higher us producer prices it's as if the commission found that there was an incentive to produce at a dollar a pound and included that that for the subject producers would sell at eighty cents the analysis cannot support the conclusion put another way there is an internal inconsistency but that between the commission's volume analysis at page twenty six thirty nine of the and this and its price effects analysis at page twenty six forty there is no evidence that the lower price levels that commission found would be necessary for german and other subject producers to increase their exports to the united states where feasible there is no evidence that it would be profitable there is no evidence that they could recover the we are except for two exceptions we are not really arguing that there is no evidence supporting the commission's findings rather we're saying take the factual finding they made there's no rational connection between that factual finding and the clue that a producer in germany has an incentive to export to the us due to us price levels unless one first attracts the us import duty and the freight cost the commission had the data to do so and did not the third problem is that in looking at prices in brazil in china specifically the commission did not use prices received by the subject producers i've been waiting for two years now for someone to explain to me the basis for the commission's reasoning that when us follows because brazili producers so brass in the closed position market at a lower price than us producer sell in the us market that somehow creates an incentive for a producer in germany or france to export more to the u s that was the commission's logic haven't explained it in a brief the c i t ignored the issue entirely and it makes no sense unless a german producer selling to brazil at those prices now cannot draw any and cent of conclusion the exact same problem exists with the commission analysis of pricing data for china the commission relied upon the dumb prices one u s producer charged in china and ignored in pylea all of the evidence of the prices that the german and other subject producers were receiving which were much as to europe and germany the domestic industry and the german industry witnesses earth agreed that prices were higher in europe than in the united states there is no evidentiary support no evidence jewellery for the commission's finding on page strange rate differences european fabrication prices were higher to the extent any price incentive existed it was for german and other so good producers to produce and sell more brass in their backyard in their local markets and  definition hold the commission's incentive binding to be unsupported by substantial evidence i'll turn now to the likely discernible adverse impact finding for germany the first point is that the inadequacy of the commission's incentive analysis as part of its cumulated injury determination has implications for its likely adverse impact analysis for german the c i key held both in this case it's not enough that they have the physical ability to do so there must be some incentive to do so is the difference between a likely expanded and a possible standard but the commission made no incentive findings specific to germany indeed with higher prices available in germany and europe applying the commission's own incentive analysis one can only include conclude that there was no incentive to produce and some more to the united states but to aspects of the commission or shift from other markets isn't enough you have to show that there are some incentives to the subject producers to do so it's not enough to just have physical ability wasn't there some statement or would export  states the german producers villain specifically and its affiliate in the united states said that what they would like to do is to produce a higher quality product than was a valid in the us a small party that they at prices under selling us producer sizes they said that they can't sell at current prices they can't recover their variable costs in doing so they could only sell at a price premium that can't support a conclusion that they would sell it under some prices are ver over two years for maybe five to eighty seven vehemence exports to the united states dropped precipitously affair where this case was even filed so there is no linkage between the drop off and  and the order or the filing of the case our position is that those were independent events even the commission and its brief says that one of the reasons imports dropped off before the order was filed was because u s demand started to decline well if that's true look at what was happening to us commander in the period of the commission's current investigation u s demand was dropping again during this period so are you that the increase was due to exchange rates or their view that it was due to demand either case it had nothing to do with the order and looking at what exchange rates are doing currently and what demand is doing currently that would suggest if it's following the earlier trends that imports would decline not increase the two aspects of the commission sustainable adverse impact analysis that particular attention by the court are first the commission's export running station finding and second its reliance upon twenty year old factors we talked about the twenty year old factors soft focus on the exploration fine this is not a factor mentioned anywhere in the statute nor is it one that this report is previous examine and so far as we can determine but the striking feature of the commission's analysis here is it is not tethered at all the u s market there is no basis for the commission's promise that because german producers export primarily in their backyard to europe that they're likely to export to the united states commission's analysis  to differentiate among different export markets which may have different supply and imaginations it's interesting that in the price incentive analysis the commission does look at individual markets and recognizes that different markets are subject to different conditions but on  export orientation finding it takes the position that exports are exports islamics are export into one country even though it may be in your backyard to france that makes it more likely you would export the united states i submit there is no evidence supporting that in fact given the exchange rate situation and conditions in the u s the u s was suffering from the climate prices decline in demand overcapacity and import competition from non subject imports it was not an attractive market to german producers that had better opportunities in germany in europe and in asia thank you please the court analysis was volume was very thorough considering both statutory and several other non statutory factors that made the volume the in the case of no discernible adverse impact of the spectrum of brass products and that they say higher price the price premium simply means that they're pricing at what the market price of that higher quality product is we don't know exactly  higher price than some other brass products not at the higher price higher price than the domestic product that will be displacing more over the fact that there will be domestic product this place scope of the order and within any any product that comes before the commission there's generally a range of of qualities and range of prices the suggestion that they will be starting more doesn't mean they will not be underselling the domestic product that they intend to replace ability to to create new merchandise to ship in the event of revocation whether by excess capacity current inventories or  products shifting which was not an issue of the scares the commission address those two considerations found that there was significant five before the order was in place and that there's an effect at excess capacity factors that the opponents did not not moreover in addition to those the statutory factors the commission found that there was a large share of current shipments from the four countries work to export markets mr schorr claims the export orientation of these producers is irrelevant of course it's relevant they were exporting large volumes when they were exporting to the united states they're no longer exporting to the united states but they're still exporting a lot so it's not as if they have ceased exporting altogether they simply ceased exporting to the united states mr schorr also focuses on the commission's findings westmont the commission based that on several several factors that there were significant impediments to to entry into the united states not the case for many other countries that the data showed that there was some instances in which the u s price was higher than other markets instances which were the same instances in which there were lower the fact that there's mixed data is a fairly nuanced and qualified finding suggesting as the commission reason we found that the volume of imports was likely to increase somewhat in relation to the price alternatives and other market specific that we had was that which was submitted by the petitioners in this case and that that which we relied on the consideration of brazil that he objects to is that was the only other non european price that we had besides china we looked at that we considered all of the data together it's not relevant whether this particular producer is shipping to brazil we don't know if the other three countries are facts shipping to brazil if that's a factor that's relevant is all we submit claim that even though germany was the largest source of imports in the original investigation and even though the statute requires us to consider the volume prior to the prior to the orders being going into effect opponents claim that we should have considered this because they were leaving the market anyway well as we explained they declined during the period of investigation they increased initially because demand increased then they declined in part because the investigation was underway the commission made that finding and the notion that they've they've dropped to nearly nothing simply because they were going to anyway is is is absurd in the face of the constant and regular effect of orders which is very often the subject producers exit the market because they're i'm able to to  producer in the original investigation with a ten ten point six share of the u s market compared with france three point six italy one percent of japan two point eight percent so that the  there is no evidence to support the commission on various issues so simply not correct let me start with the question of incentive he continually says there's no motive there's no beast and it's simply an ability for pure ability for them to sell based on  is there an economic incentive let alone is there a profit maximizing economic incentive if you would ask this court to read in ride doesn't the statute do that precisely because you're dealing with dumping here you're dealing with behavior where where the in for the poor producer is generally selling at a low cost for local market prices so you're dealing with a wage and high definition where the producer generally doesn't act in a profit maximizing way and indeed on dumping is often all about so being able to say gee my prices right now aren't high enough to make to make money which is all basically they were trying to do at a discrete point in time doesn't really tell you very much but let me go back to the the likelihood point number one i would cite express statements by german producers that they will export to the u s market in addition to some of the some of this is confidential so i would just refer you to the joint appendix at fifteen thirty six to fifteen thirty nine fourteen forty two and three thousand one where you'll find some of those statements the second is expressed statements by u s purchasers that they will buy dumped imports from germany and other countries that revocation of curse they ask the purchasers what will happen if the if this order is revoked and the  purchaser said gee we'd love to have some of those low priced imports back in the country and if they come in we're going to look to offshore and that's at j a sixteen zero six to zero seven and twenty five fifty one to twenty five fifty four the commission also looked at the between the land and the german producer here you have a related party in the us that is a real roller that needs to have an input product the very product which the dumping order is being asked to be removed there's incentive right there wouldn't it prefer to source from its parent than from its competitor in the united states sure of course when that's what the commission found the export orientation of the industry mr schorr says it doesn't make any difference import export oriented we're not export oriented to the united states yes that's true right now because the dumping workers and place but the very fact that germany is an export oriented country it's hugely relevant look at the statistics that are before you in this record you will see that germany germany has increased exports over the period of review hitting some of its highest levels in the most recent time right when commission was looking at this case it was really getting increasingly export oriented in two thousand port interim two thousand and five that's when it was getting higher and what about the united states well sure it wasn't selling there during the review period so with the dumping order and the dumping order at this time was sixteen percent it was a pretty hefty order it was an exclusionary you're on it doesn't keep them out of the market but it require price discipline at that level and they didn't want to commerce department they had many opportunities to do that over the years were never able to show that they could sell fairly so they lost the next point i would say is the large and open nature of the us market he basically says you know it doesn't matter us is just another market out there you know it was not another market out here look at the date on the record a j two twenty two thirty six and twenty six thirty five to thirty nine you'll see how big the us market is out there and what the commission also found is there's no structural impediments it's very common knowledge he was one of the most open markets in the world you can sell here versus china or somewhere else guess what everybody in his brother wants to come here or you know it so that that's what they did before the order was imposed and that's what i reason no incentive to sell but that members of the domestic industry testified on this record and this is that james eighteen seventeen eighteen twenty six nineteen twenty nine in one thousand thirty that when you are running a brass mill there is every incentive in the world to maximize your utilization of your capacity to promote efficiencies and to reduce your fixed cost because you can spread them over a bigger volume it's just a matter of good business sense and if there was an opportunity to sell sure that's exactly what they would do and i guess that brings me to my part to my final point which is it's not so much that we're talking about whether the length and the other german producers or for that matter the french and italian and japanese producers that are not mentioned very also subject to this case in this decision it's not so much whether they're going to ship product from one country to another it's a matter of whether all that excess unused capacity that sitting there i know that isn't being sold somewhere else right now is going to come into the united states when the order goes away that's the only change here and a sunset review was all about a status quo change something changes in the market the only thing that's going to change from what's going on right at this point is you're going to goes away so for him to say gee we'd rather sell in germany we'd rather sell in europe or somewhere else because we could get better prices if people knew that they'd be doing that right now ok and they are doing that they're doing what they can but even given the present situation that they faced they had all this excess capacity still so if the if the only change that happens is the order comes away and now you have a big attractive u s market no impediments and no sixteen percent duty that's a very big incentive to sell here so i would suggest to the court that if you're looking at all sure this case is about the specific challenges we raised to specific findings and conclusions of the commission made this can and maybe it would help inventing story and rewrite the commission's decision and point to evidence that would support different reasoning that may be but that's not the decision that commission made you can basically ignore almost every argument she made since it's nowhere found in the commission's decision the notion that because you are dumping your selling below cost or selling a price is you know a market that's not in the commission's decision and it's not even true because of commerce this practice of zeroing it means that there were simply some sales in the u s market that were priced at lower than in the u s market in deep feelings dumping margin original investigation was three point eight one percent that almost assuredly means that without zeroing the home market prices on average for the us prices on average were much higher than the home market prices she said that human was never able to price fairly well that's certainly not true it's not the u s the england and german producers were selling very little to china and it declined over the period to review so the size of the market alone doesn't show that german producers are going to export their that's not what happened let's look at about she likes to point to the fact that they have all this excess capacity let's look at the u s industry the u s industry during this period was operating at sixty to seventy percent capacity right aren't they using all their excess capacity to export to china the largest market in the world or other markets because they didn't get the same prices all right so price matters it's not just capacity and the question that the commission keeps avoiding answers is why if prices are higher in germany and prices are higher in europe which they don't dispute and didn't dispute today and can't dispute in their brief why would feel and take all this excess capacity and export to the united states where prices are lower it doesn't make any sense they haven't answered the basic question of why this capacity that isn't being used would suddenly be put to use to get lower prices than are available somewhere else that's the heart of our case and that's the question that they keep avoiding the notion that there is this that  said that there was on that they would export to the united states of that's enough because that will displace some share of the u s market that is not on the commission made the finding the commission made in this case is that the discernible adverse impact would result from a higher volume had underselling ices and that the price affects were critical you can't disengage that to the commission made no finding that additional volumes at prices higher than the prices prevailing in the us for that and that's what we argued we didn't say that they'd be higher prices then lower quality products we would say we will sell the same product that our customers are currently buying in the u s from us producers and give them a higher quality product of that price and to customers form a custom of ours in the u s market and its side and everything said that they would buy from us a product that they're buying from the u s in