Slip Op. 03-73 UNITED STATE S COURT OF INTERNATI ONAL TRAD E

__________________________________________ THE COMMITTEE FOR FAIR BEAM : IMPORTS, ET AL., :

Plaintiffs, : v. : Ct. No. 02-00531 UNITED STATE S, and THE UNITED STATES INTERNATIONAL : Public Version TRADE COMMISSION, :

Defendants , : and : SALZGITTER AG STAHL UND TECHNOLOGIE, ET AL., :

Defendant-Interve nors. :

__________________________________________ [Plaintiffs’ Motion for Judgment upon an Agency Record is denied.]

Decided: June 27, 2003 Wiley Rein &

Fielding LLP, Charles Owen Verrill, Jr., Alan H. Price, (John R. Shane), Daniel B. Pickard, for Plain

tiffs. Lyn M. Schlitt, General Counsel, Office of Gener al Counsel, United States International Trade Commission, James M. Lyons, Deputy Genera l Counsel, (Marc A. Bernstein) , for De fendant s. DeKieffer &Horgan , (J. Kevin Horgan), Marc E. M ontalbine, Merritt R. Blakeslee, Wakako O

. Takatori, for Defendant-I ntervenor Salzgitter AG Stahl und Technologie. Shearman &Sterling, Jeffrey M. Winton, ( Christopher M. Ryan) , for Defendant-I ntervenors Stahlwerk Thuringen Gmbh, TradeARBED , Inc., ProfilARBED, S.A., and Ac eralia Corporacion Siderurgica, S.A.Ct. No. 02-00531 Page 2

1 This opinion cites to the version of this document included in Administra tive Record, List 2, Doc. No. 170. OPINION

BARZILAY, JUDGE: I. I NTRODUCTI ON Plaintiffs, The Committee for Fair Beam I mports and its individual members, Nucor Corpora tion, Nuc or-Yama

to Steel Com

pany , and TXI

Chaparr al Steel Company , (colle ctively “Fair Beam” or “domestic industry ”) challenge the final neg ative material injury a nd the final negative threat of material injury determinations of the United States Interna tional Trade Commission (“ITC” or “Commission”), set forth in Certain Structural Steel Beams from China, Germany, Luxembourg, Russia, South Africa, Spain and Taiwan , Invs. Nos. 731-TA-935-936 and 938-942 (Final), USITC Pub. No. 3522 (June 2002) ( “Final Det erminatio n” or “Beams II ”) 1 and made pursuant to 19 U.S.C. §§ 1671d(b) and 1673d(b) (1999). This court has jurisdiction pursuant to 19 U.S.C. § 1516a(a)(1) and 28 U.S.C. § 1581(c). For the re asons outlined below, Fair Beam’s USCI T R. 56.2 Motion for Judgment upon an Agency Record is denied.

II. B ACKGROUND A. Procedural History

. On May 23, 2001, the domestic industry filed petitions with the United States Department of Commer

ce (“Co mmerce” ) and the Commission w

hich led t o investigations by

bothCt. No. 02-00531 Page 3

2 The subject of this investigation is “doubly -symmetric shape s, whether hot-or coldrolled, drawn, extruded, formed or finished, having at lea st one dimension of at least 80 mm (3.2 inches or more), whether of carbon or alloy (other than stainless) steel, and whether or not drilled, punched, notched, painted, coated, or clad.” E.g., Notice of Final Determination of Sales at Less than Fair Value: Structural Steel Beams from the People’s Republic of China , 67 Fed. Reg. 35,479 (May

20, 2002). The court notes that no scope or domestic like product issues are raised in this appeal.

3 Initially , Italy

was also investigated. However, upon a finding of no dumping by Commerce , the I TC discont inued its in

vestiga tion of I talian str uctural beams. F or the sa

me reason, one company

from the People’s Republic of China was eliminated from the investigation. The cour t further notes tha t no cumula

tion issues

are ra ised in this

appeal.

4 “ ITC Hearing Tr. ” will signify the tra nscript of this administrative hearing, portions of whic h are inclu ded i n tab5 of Pl ainti ffs’ Appe ndix. concerning structural steel beams of c ertain specifications 2 im po rt ed fr om Ch in a, Ge rm an y, Luxembourg, Russia, South Africa, Spain, and Taiwa n (“subject countries” or “respondents”). 3 Preliminary results wer

e issued by the Commission on July 16, 2001, a nd by Commerce, on December 28, 2001. I

n May 2002, Commerce issued its final de terminations. See 67 Fed. Reg. 35,479 - 35,490 & 35,497. A hearing was held be fore the Commission on May 15, 2002. 4 Notice of the Commission’s final determination was published in the Federal Reg ister on June 27, 2002. See 67 Fed. Reg. 43,340. A panel of five Commissioners found no prese nt material injury from subject imports. One Commissioner, howeve r, dissented from the panel’s negative de te rm in at io n w it h r eg ar d t o t hr ea t o f m at er ia l i nj ur y. B. The product and the U.S. market

. Structural steel beams are load-bearing support members in the construction of large steel structures, such as buildings, bridges, towers, pre -fabricated homes, ships, and equipment. Demand for structural beams fluctuates in tandem with construction activity which in turn tracksCt. No. 02-00531 Page 4

5 Construct

ion compa

nies are the ultima

te users of the fin ished pro duct.

6 There is a three to five month “lead time” for subjec t imports whereas the lead time for domestic beams is shorter, Final Determination at 23, although not by “ very much,” ITC Hearing Tr. at 26 (te stimony of domest

ic execut ive). Or ders for beams ar e there fore ne cessar

ily a functi on of per

ceptions of futur e demand and not of

curren t demand c onditions.

7 Price comes before all else under normal c ircumstances according to testimony offered at the administrative hearing. See ITC Hearing Tr. at 49 (“Pr ice is the defining factor in determining who receives the order .”). The ITC in the Final Determination , howeve r, paid virtually no heed to

this infor mation be cause of

its implicit

finding that in a ti

me of supp ly shortage, purchasers are

willing to pay more to c ircumvent the domestic unavailability of the product – which determination is more fully explained below. In connection with the price variabl e, the co

urt also notes that a

t the admin

istrative hearing at least one respondent witness aggrega te U.S. economic activity. Certain Structural Steel Beams from China, Germany, Luxembourg, Russia, South Africa, Spain, and Taiwan , Staff Re port to the

Commission on Inv s. Nos. 731-TA-935-936 and 938-942 (Final) at I -6 & II -10 (June 3, 2002) (“ Staff Repo rt ”) in Administra tive Record, List 2, Doc. No. 169. I n the U.S. market, there are two ty pes of purchasers of structural steel beams: distributors (or servic e centers) and end users (or fabricators). 5 Id. at II -1. Imported product is mostly sold to distributors; end users, however, typically buy from domestic suppliers. Distributors kee p inventories while end users do not. Domestic mills charge the same price to both distributors and end users. I n the event an end user buys from a distributor, it acc ordingly pa ys a highe

r price. Purchasers rank domestic product superior in availa bility and deliv ery

time 6 to imported product, but inferior in price. Id. at II -13. On the other hand, domestic and imported product are per ceived to be comparable in product quality and consistency . Purchasers of structural steel beams report e valuating factors such as price, q uality , and ava

ilability in deter mining whether to

purchas e domestic

or importe d beams and rank these factors in a descending order of importance. 7 Id. at II -12.Ct. No. 02-00531 Page 5

denoted respondents as price takers. See id. at 199-20 0. In other words, res

pondents n

ormally peg their price to that of the market lea der, Nucor, a domestic producer. I n this period, however, because Chaparral Steel, another domestic produc er, “was play ing a little bit havoc with the market,” Chaparral Steel’s price was ma tched. Id. at 200.

8 Potential long-run substitutes for structural steel beams include reinforc ed concrete, structural tubing or wood. Staff Repo rt at II -10 & 11. The Staff Repo rt also indicated that “building design ty

pically prec edes construction and material purchases by months or even years,” which period can be termed “the long -run” in this context. Id. at II -11.

9 The Staff Repo rt estimate d that for every one perc ent incr

ease in U .S. price , domestic produce rs could i ncreas e shipmen

ts either by one or two

percen t, as oppos ed to ten or twenty percent by

subject countries. Staff Repo rt at II -17. The short-term price elasticity of U.S. demand for structural steel beams is low reflecting lack of substitutes for steel beams in construction, especially after the design phase of construction is complete. Id. at II-9. I n other w ords, onc e the qua ntity of beams request ed is set, later pr ice var iation will

have no or little ef

fect. 8 On the supply side, the price elasticity of domestic supply is lower than that of the subject countries’ supply. Staff Repo rt at II -16 & 17. That is, subject countries can respond to price chang es in the U .S. marke t faster than dome stic prod

ucers c an in ter

ms of incr

easing shipments to the U.S. market. 9 The price elasticity of supply is dependent on excess ca pacity, ability

to shift producti on or alte

r capac ity, inventor

ies, and a vailabili ty o f alternate mark

ets. The r elativel y greater flexibility of

the subject countries is partially due to the existence of home markets and alterna te export ma

rkets fr om which they

are abl e to diver

t product s to the U.S . market with relative ease. The largest share of cost in the production of structural steel beams is that of steel scrap, the raw material from which beams are produced. Id. at V-I . Thus, the supply of beams is tied toCt. No. 02-00531 Page 6

10 Durin g this perio d of in vesti gation , scrap prices increa sed th rougho ut 19 99, re achin g a peak in January 2000, and f ollowed a general declining tr end for the rest of the period, arriving at a low in November 2001. Staff Repo rt at V-1.

11 In the Final Determination , the ITC observed that domestic produce rs on occasion deviated from list prices. Final Determination at 26 n.100. the price of steel scrap. 10 It has also been deter mined that in offers domestic producers use price lists wher eas sale s of subje ct imports are on a transaction-by

-transa ction bas is, price

and quan tity being d etermine d by

the then e

xisting mar

ket condi tions. 11 Staff Repo rt at V-7. C. The ITC’s findings in the Final Determination

. In the Final Determination , the ITC evaluated the pre vailing market conditions during the period of investigation (“POI ”). See Final Determination at 17-21. Consulting Census Bureau statistics, the ITC determined that nonresidential construction ac tivity in the United States, which is an indicator of U.S. demand for structural steel beams, incre ased from 1999 to 2000 and declined in 2001. Using its own questionnaires and official Commerce import statistics, the I TC further observed that apparent U.S. consumption of steel bea ms rose from 4.96 million short tons in 1999 to 6.23 million in 2000, and then declined to 4.81 million in 2001. The ITC next noted that the domestic industry experienced supply diff

iculties during 19 99 an d t he fi rs t h al f o f 2 00 0. Th e IT C b as ed th is fi nd in g o n q ue st io nn ai re re sp on se s o f f or tyfive purchasers, eighteen of which (sixteen of thirty-one distributors) re presented that they

either
were pu t on “allo cation”

during t his time pe

riod by domestic p

roducer s or were otherwis e unable to meet their requirements from domestic suppliers. The ITC further noted questionnaire responses of the largest domestic producer s which confirmed that purchasers were “allocated aCt. No. 02-00531 Page 7

12 Th es e d om es ti c p ro du ce rs , N uc or -Y am at o a nd TX I, t og et he r p ro du ce d a pp ro xi ma te ly [[ ]] of domestic structural steel beams in 2001. Staff Repo rt at III-2. The Staff Repo rt further pointed ou

t that Nuc or denie d putting its Berk eley plant cus tomers on

“alloca tion” and that a Northwestern Steel & Wire Company witness testified that this domestic producer, which eventually we

nt out of business, “was begging f or orders” during this time. Staff Repo rt at II -2 n.3.

13 Another piece of evidence supporting the existence of domestic shortage during the POI is the obser vation tha t the “av erage

lead time ” for domestic pro ducers’ deliver y increase d in 2000 from its 1999 level. Staff Repo rt at II-2 n.4; Final Determination at 18. The court addit ional ly notes t hat co unsel for Fai r Beam al l but conced ed the presen ce of a s uppl y shortage at oral argument before this court. Oral Arg. Tr. at 9:16-17 (“there was clearly a shortage”). portion of producti on based

on historic al levels

of purchases” in

applica ble produ cts. 12 Staff Report at II -2. The ITC also refe renced news articles in trade publications which re ported a domestic supply shortag e in this time period. 13 The ITC’s finding of dome stic supply shortage was informed by a

n additional observation that imports of structural steel beams from Japan became subject to a June 2000 antidumping duty order, a

nd imports of structural steel beams from Korea beca me subject to antidumping and countervailing duty

orders in August 2000. Finally, the I

TC noted the changes to domestic production during the POI . Two new domestic m

ills (Nuc or and TX

I) be came ope

rationa l during 1999 with a

third (Ste el Dy

namics, Inc.) expected to become

operational in 2002. On the other hand, another domestic firm (Northwestern Steel & Wire Company ) completely shut down its opera tions in May 2001. i. Subject import volumes

. In a material injury

investigation, the statute requires the Commission to determine whether a domestic industry “(i) is materially injure d, or (ii) is threatened with material injury

. . . by reason of

imports.” 19 U.S.C. § 1673d(b)(1). The statute defines “material injury ” as “harmCt. No. 02-00531 Page 8

which is not inconsequential, immaterial, or unimportant.” § 1677(7)(A). I n making a material injury determination, the statute first re quires the ITC to consider the “volume” of subject imports already de

termined to be sold at less-than-fair value. § 1677(7)(B )(i)(I). I n particular, the ITC shall consider whether the volume of subject imports (or any change therein) in either absolute or relative terms is “significant” during the POI. § 1677(7)(C)(i). In the Final Determination , the I TC observ ed that th e volume o f subjec t imports r ose from 331,436 short tons in 1999 to 772,809 in 2000, and then fell to 300,150 in 2001 (to a level lower than its 1999 level). Final Determination at 21. The value (as opposed to quantity ) of subject imports followed a similar curve. These numbers repre sented a market penetration by subject im

ports of 6 .7% in 1999 , 12.4% in 2 000, and 6 .2% in 2001 . The I TC linked the rise in U.S. market penetration of subject imports to its finding that the domestic industry was experiencing supply

difficulties. Accounting for the gap in time betwe en order placement and deliver y, t he I TC noted that chang es in volume of subje ct imports trailed t he domest

ic supply conditions, with the domestic shortage and its subsequent alleviation responsible for the rise a nd in par t fo r th e la ter fal l o f su bj ect im por ts dur in g th e PO I. Id. at 23. Before the I TC, the domestic industry had arg ued that the increase in demand during 2000 was “re latively

modest,” and ther efore t he domest

ic industr y c ould satisf

y “ real” d emand wit

h their supplies – which argument was an attempt to dispute the domestic shortag e finding of the ITC. T he I TC respon

ded by noting that instea

d of conte mporane ous deman

d conditions, perceptions about future demand are wha t stimulate orders. Id. at 22. As evidence of purchasers’ expectations of strong future de mand during the POI, the I TC cited testimony by

oneCt. No. 02-00531 Page 9

fabricator and the predictions of a trade publication, which incidentally also re ported “major concerns about steel availability .” Id. at 22-23. In the ITC’s scenario of events, expected strong demand a nd limited d

omestic su

pply led to an i

ncreas e in purchases of

subject im

ports (especially

by distributors). The I

TC further acknowledged that by the third quarter of 2000, the domestic s

upply situation i

mproved a

nd, afte r import vo lumes had

reache d their pe ak in Aug ust 2000, orders for subject imports began to fall. Id. at 23. Further, the ITC re

marked that subject import volumes started to fall “well before” the filing of the May

2001 petition that initiated the present investigation. Id. at 23-24. Consistent with this observation, the ITC pronounced that the filing of the petition had “limited” impact on the decline of subject import volumes in 2001 and, accordingly , the ITC did not “reduce the weight ” accor ded to the 2001 data . The I TC finally conclude d that re solution of domestic shortag es couple d with dec line in de mand led t

o a decli ne in subje ct import q

uantities in this period. After thus accounting both for the upward move ment of subject import volumes from 1999 to 2000 and their decline from 2000 to 2001, the ITC we nt on to say: “[I ]n light of the foregoing conditions of competition and the lack of pr ice effects discussed below, we find that the volume of subject imports is not significant.” Id. at 24.

ii. Price effects. The statute also requires the I TC to consider the “effect of imports . . . on prices in the United States for domestic like products.” § 1677(7)(B)(i)( II). In particular, the I TC is required to analy ze whethe

r “ther e has bee n signif icant pr ice unde rselling ” of impor

ts compar ed withCt. No. 02-00531 Page 10

14 Despite the domestic industry’s objec tions, the ITC used actual sale price s rather than list prices in comparisons because this method was the Commission’s customary practice and because the record established that domestic produc ers on occasion deviated from list prices. Final Determination at 26 n.100 (citing Fair Beam’s Pre hearing Brief befor

e the agency

). domestic products and whether “the effec t of imports . . . otherwise depresses prices to a significant degree or pr

events price increases, which otherwise w ould have occurred, to a significant degree.” § 1677( 7)(C)(ii)(I) & (II ). Comparing domestic prices with subject import prices, the ITC first found that prices of subject imports reflected “a mixed pattern of overselling a nd underselling” the domestic product during the POI. Final Determination at 25. I n partic ular, sub ject impor

ts unders old the domestic product in 90 of 147 quarterly comparisons. Id. ; Staff Repo rt at V-17 & V-18. The I TC noted that product 1, a type of

structural steel beams (wide-flange beams of 8 to 14 inches), experien ced the “ most intens e” compe

tition bec ause it wa s the most w idely sold and a

dditionall y had the most complete pricing data from the subject countrie s. Final Determination at 26. Isola ting the price in formation for this p roduct, t he I TC observ ed that pr

ices of product 1 exhibited 22 occasions of underselling and 32 occasions of overse lling. To estimate underselling more accurately , the ITC also conducted a sec ond comparison which incorporated the differing delivery times of subject imports and domestic product. In this comparison, the incidence of under selli ng for p roduc t 1 in crease d to 2 7 and t hat of overs elli ng decre ased t o 25. E ven th ough in this insta

nce unde rselling occurr ed more f requent ly than overs elling, the I TC never theless emphasized that “still more tonnage was oversold.” 14 Id. at 26 n.10 0; Staff Repo rt at V-9 & V10. While also acknowledging that other products under inve stigation exhibited greaterCt. No. 02-00531 Page 11

15 The pre mium is due t

o some non-

price c onsidera

tions, such as domes tic produ cers’ geographical proximity

. See ITC Hearing Tr. at 200. Testimony was also pre sented to the effect that the premium was exacerbated in recent y ears due to strong dollar. See id. at 204. incidenc e of unde

rselling , the I TC noted that the domestic pro duct was typ ically sold at a premium, the existence of which was established at the administrative hearing by testimony

of four domestic industry witnesses (a lso characterizing the premium of $10 to $40 per ton as “small”) and one respondents witness (adding that the pr emium could more than double in a “very weak market”). 15 Final Determination at 25 n.98 ; ITC Hearin g Tr. at 232. The ITC attributed the more frequent occurrenc e of underselling (as opposed to overselling ) to the premi um. Th e ITC addi tion ally obse rved t hat su bject impo rts co ntin ued to increa se even thou gh some subject import prices were higher than domestic pr ice levels. Final Determination at 27. The ITC concluded that “[t]hese factors all serve to diminish the significance of the underselling that was observed.” Id. Next, the I

TC noted that in 2000 t

he volume

of imports

was at its highest level whe

n both domestic and subject import prices were highest. Prices of subject imports sharply rose f rom 1999 to their peak in 2000 and declined in 2001, following a trend similar to that of subject import volumes. Id. ; Staff Repo rt at V-9 to V-16. The ITC thus pronounce d that “factors other than comp etition fr

om subjec t imports we

re resp onsible f

or price movement

of the domesticall

y produced product.” Final Determination at 27. I n identify ing dome stic short

ages a s the likel

y culprit, the ITC observed that “[p]rice incre ases are a natural function of supply shortages.” Id . at 28. The ITC further noted that onc e the domestic supply shortag e was alleviated, prices alongCt. No. 02-00531 Page 12

16 Fair Beam submitted to the I TC the conclusions of an econometric model which predicted that subject imports affected prices with a nine month lag. See Final Determination at 29 n.107. T

he I TC found that the mod el faile d becau se it did no t take into accoun t chang es in domestic supply capabilities. To rebut the pr edictions of the model the ITC cited testimony from industry play

ers to the effect that price competition occurs whe n an order is placed. with subject imports declined. According to the I TC, “the sharp decline in prices observed du ri ng 20 01 ca nn ot be a f un ct io n o f t ha t ye ar ’s su bj ec t i mp or t v ol um es , w hi ch de cl in ed sh ar pl y, [and it] also cannot be a function of subject imports entering the U.S. market in 2000 at rising prices that were sometimes above those for the domestically produced product.” Id . The reason for the f all in pric e, the ITC deter mined, wa s the mises timation of the 2001 d

emand (w hich in fact declined from its 2000 level) by purchasers who placed their orders e arlier and the
consequential ri se in distr ibutors’ i nventori es – which can als o be termed as an “ oversupp ly” in the mark et. 16 Id . at 28-29. The I TC ended i

ts price e ffects a

naly sis by stating that: We cannot conclude that the record indicates that either the inventory overhang or the resulting price declines were the function of the subject imports. High and increasing subject import price s during the portion of 2000 when subject import volumes increased cannot explain subsequent price declines. Nor, in light of the subject import pricing and volume patterns, can there be any ne

xus between the subje ct imports

and busine ss decisions by steel ser vice ce nters to in

crease purchases that proved, in retrospect, to be wrong . We consequently conc lude that the subject imports did not have significant price-depressing or -suppressing effects. Id. at 29-30. iii. Impact

. The last component of a material injury determination is the analysis of the impac t ofCt. No. 02-00531 Page 13

17 Beside s volume, price, a nd impact , the I TC “may

[also] consi der such

other ec onomic factors as are relevant to the dete rmination regarding whether there is material injury

by reason of imports.” § 1677(7)(B)(ii).

18 Here, the ITC’s c onsideration of dumping margins was limited to a listing of amended dumping margins for companies in subject countries. Final Determination at 30 n.110. The Final Determination ’s consideration of dumping margins is, however, not on re view before the court because it was not raised. su bj ec t i mp or ts so ld at le ss -t ha n- fa ir va lu e o n t he do me st ic in du st ry. 17 The I TC is statut orily required to consider “all relevant economic f actors” that bear on “the business cy cle and condition s of compe

tition” in t

he industr y, i ncluding chang es in outpu

t, sales, inventor

ies, capacity utilization, market share, employment, wag es, productivity, profits, cash f low, return on investment, ability to raise capital, and R&D. § 1677(7)(C)(iii). In addition, the 1994 amendments to the statute now require the I TC to consider the size of dumping margins determined in an anti-dumping investigation. 18 § 1677(7)(C)(iii)(V); The Uruguay Round Agreements Act, Statement of Administrative Action (“SAA” ) at 850, reprinted in 1994 U.S.C.C.A.N. at 4040, 4184. No single factor is dispositive. See § 1677(7)(E)(ii) (“The presence or absence of a

ny factor which the Commission is required to evaluate under subparagraph (C) . . . shall not necessar ily give de cisive guidance” to a material injury determination). In the Final Determination , the ITC observed that appar ent U.S. consumption of structural steel beams, domestic output indicators (such as capacity , capacity utilization, production, and U.S. shipments), domestic sales revenues (including per unit sale s values, the domestic industry’s opera ting income and margins), employ ment indicators (such as number of workers, productivity, hours worked, and wages paid) – all followed a pattern of increase fromCt. No. 02-00531 Page 14

1999 to 2000 and decline from 2000 to 2001. Final Determination at 31-34; Staff Repo rt at V I2. In contrast, t he ITC found that domestic p roducers’ inv entories, h ourly wages, and R&D steadily increa sed, and industry ca pital expenditures decreased from 1999 to 2001. More significantly, the

ITC determined that the domestic industry ’s market share (as measured by domestic o

utput’s sh are in U. S. consump tion), de spite a “ modest” d

ecline in 2000, was

actually higher in 2001 tha

n it was in 1 999 (spec ifically , 81.1% in 1 999, 79.8%

in 2000, a

nd 90.3% in 2001). Final Determination at 31-32. Thus, the ITC dubbed the 2000 loss of marke t share by the domestic industry a “tempor ary phenome

non.” Id. at 32. The I TC conclu

ded that d omestic in

dustry ’s overa

ll perfor mance imp

roved fr om 1999 to 2000, whe

n imports w ere at their pea k, and tha t none of t

he components that l ed to dec line in performance from 2000 to 2001 were a result of the increase in imports. Id. at 33. The ITC attributed the decline in prices of the 2000-2001 period to increa sing supply and de clining demand for this period. Accordingly , the ITC determined that “the subjec t imports did not have a significant adverse impact on the domestic structural stee l beams industry.” Id. at 34.

iv. Threat of material injury. The statute also protects the domestic industry from a threat of material injury (as opposed to

a prese nt materi al injury

) on acc ount of imp orts sold a t less-tha n-fair value in th e U.S. market. To be able to conclude that the domestic industry is thus threatened, the ITC must find whether “further dumped or subsidized imports are imminent and whether mate rial injury by reason of imports would occur unless an order is issued.” § 1677(7)( F)(ii). The ITC is requir

ed to evaluate the threat factors outlined in section 1677(7)(F )(i).Ct. No. 02-00531 Page 15

19 Here, the ITC noted outstanding antidumping duty order

s against Russia by Kor

ea and Taiwan and against South Africa by Australia. See Final Determination at 37 n.141. In the Final Determination , the ITC first looked at subject import volume and market penetration, emphasizing that, even though increa sing in the beginning of the POI , both variables exhibited a sharp decline at the end of the POI

. Final Determination at 36. The ITC found “no current shortages of domestic supply and no likelihood of shortages in the imminent future.” Id. In c onnection with this f

inding, t he I TC stresse d that TXI

had solve d its proble

ms at its Petersburg mill and a new Steel Dy namics, Inc. mill was in the works. Furthe r, although the subject c ountries

project ed an inc rease i n imports in

both 2002 a

nd 2003, th e projections fell short of their peak in 2000. Id. at 37. The subject countries had ready markets at home and abroad, and that, although there was some “ ability to shift exports from other markets to the United States,” it was “unlikely that subjec t imports [would] increase to significant levels,” given the decline in subject imports in 2001. 19 Id. Capacity utilization in the subject countries persiste d at high

levels du ring the POI, a nd furthe r incre ases in bo th capac ity a nd capa city utilization were ant

icipated in 2002 and 2003; the

ITC th us found that there

was no ind

ication in the record of an “imminent” increase in subjec t volumes. Moreover, subject countries presented testimony (by one of the ir executi

ves) re butting t he conte ntion that a

n impendin

g incre ase in subject imports was likely. Id. at 38 n.14 2; ITC Hearing Tr. at 201-202. The ITC additionally

pointed to the lack of any significant price effects in the POI and predicted that such would continue in the imminent future. Final Determination at 38. With
respect to subject countrie s’ invent ories, th e IT C observe d that des pite an increase

in inventories, not all of the inventoried beams were suitable for sale in the United States be cause they did notCt. No. 02-00531 Page 16

conform to the U.S. standard. Moreover, even thoug h other products which could be substituted for structural steel beams in production were subject to U.S. safe guards tariffs (as in the case of hot-rolled bar) – with the implication that more structural steel beams could be produc ed –, the ITC maintained that “[n]evertheless, as previously noted, we do not believe that the presence or potentia l for add itional pr oductive capaci ty in the subje ct countr

ies is like ly to

lead to substantially increase d imports.” Id. at 39. Finally, the I

TC decided that the domestic industry wa s not in a “vulnerable state” because the industry

remained “profitable overall” despite var iable performances of individual producers and was also “chara cterized by the re cent and imminent expansion of capacity at new and efficient production facilities.” Id. The ITC concluded: Accordingly , we find that material injury by reason of

subject imports will not occu r abs ent is suan ce of

antid umpin g or ders aga inst t he su bjec t impo rts. W e therefore conclude that the domestic structural stee l beams industry is not threate ned with ma

terial in jury by r eason of the subje ct imports

.

Id. III. D ISCU SSI ON The court must uphold the Commission’s determinations unless they are unsuppor ted by substantial evidence on the record, or otherwise not in ac cordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence is “such relevant evidence as a re asonable mind might accept as adequate to support a conclusion.” Consol. Edison Co. of New York v. NLRB , 305 U.S. 197, 229 (1938).Ct. No. 02-00531 Page 17

20 This dete

rmination was subse quently

adopted w

ith respe ct to Kore a by

virtue of almost identica l administr

ative re cords in b oth case s. See Certain Structural Steel Beams from Korea , Invs . No s. 7 01- TA- 401 and 731 -TA -85 4 (F in al) , US ITC P ub. No. 332 6 (A ugu st 200 0). In Beams I materia

l injury and thre at of mate

rial injur y de terminat ions were not unanim

ous, with three Commissioners finding material injury and the other three finding threat of mate rial injury. A. T HE ITC IS UND ER N O OBL IGAT ION TO FOLLO W ITS PR IOR FA CTU AL D ETER MIN ATIO NS IN SUBS EQUENT I NVESTI GATION S . Parties’ arguments. Fair Beam charg es that determinations made in the Final Determination (which F air Beam de notes as Beams II

) are “factually

and logically

inconsistent with the underlying r ecord” and also with an earlier I TC decision, Certain Structural Steel Beams from Japan , Inv. No. 731- TA-853 (Final), USITC Pub. No. 3308 (June 2000) (“ Beams I ”) in Pls.’ App. tab 3. See Pls.’ Br. at 8. In Beams I

, the ITC found that the domestic industry was materially injure d or threatened with material injury by

reason of structural steel beams imported from Japan. 20 Beams I at 3. Fair Beam makes this argume nt by focusing

on the language found in a re cent United States Court of International Trade case, Usinor v. United States , Slip Op. 02-70 (July 19, 2002) (“ Usinor ”). The Usinor court, w hile ack nowledging that

“each i njury or invest igation is sui generis , involving a unique combination and interaction of many economic variables,” emphasized that the ITC “may not disregard previous findings of a g eneral nature that bear directly upon the cur

rent review.” Usinor at 39 (quotation omitted). In Usinor , the issue was whether the ITC ca

n assert in one case that the countries in the European U nion (“EU”) were “export oriented,” poised to export to the United States, after having found in an ea rlier case that the primary mar

keting focus of one European country was the European market. Id. at 38-39.Ct. No. 02-00531 Page 18

According to Usinor , the “observations regarding EU markets [were] general in nature a nd [did] not depend on the specific products at issue.” Id. at 39-40. The Usinor court ac cordingly ordered the ITC to suffic iently explain its contradictory positions. Basing its argument on Usinor , Fair Beam contends that observations on “g eneral market dy namics” are sufficiently

“of a general nature.” Pls.’ Br. at 9. Fa ir Beam adds that “Beams I and Beams II

involved t

he same
pr od uc t, th e s am e d om es ti c p ro du ce rs , t he sa me vo lu me tr en ds , t he sa me ma ni fe st at io n o f i nj ur y, in overlapping periods of investigation.” Id. On the other hand, the ITC empha sizes the sui gener is nature of injury inve stigations. See Def.’s Br. at 8. ITC cites prior cases of this Court which rejected the argument, among others, that the ITC was require d to use the same volume and price analy sis in subsequent investigations for the same product. See id. at 9 (citation omitted). The ITC stresses the differe nce between “agency

practic e,” whic

h would ha

ve prec edentia

l value, a nd case- specific determinations, which would not. See id. at 10 (citing Ranchers-Cattlemen Action Legal Foundation v. United States , 23 CIT 861, 884-85, 74 F. Supp. 2d 1353, 1374 (1999)). The I TC concludes that because Beams I or Beams II ’s factual determinations are not “of a genera l nature” under Usinor , but based on specific facts, Beams II need not have followed Beams I

. See id. at 10-11. The ITC arg

ues in the alternative that even assuming such fac tual determinations are “of a general nature,” the “ ITC acts in accorda nce with law when it either follows or distinguishes such determinations.” Id. at 11 (citation omitted). The ITC points to footnote 105 in Beams II , where the Commissi oners re

jected the argu

ment that Beams I would have any precedential bearing onCt. No. 02-00531 Page 19

21 The court questions this argument. I t can find no indication in Usinor that the Usinor court was engage d in statutory construction with respec t to the “export oriented” nature of the EU. the present investigation and further indicated that, in any event, the two investigations were factually diff

erent. For the I TC, footnote 105 serves to distinguish the Beams II investigation from the Beams I in ve st ig at io n s uf fi ci en tl y. The arguments of Defendant- Intervenors Stahlwerk Thur ingen Gmbh et al. (“Stahlwerk”) and Salzgitter AG Stahl und Technologie (“Salzgitter”) center on the rejection of Fair B eam’s Usinor analysis. Specifica lly, Stahlwerk arg

ues that the determinations of Beams II concerning volume, price, and impact are not “of a g eneral nature,” but fact-spec ific. See Stahlwerk’s Br. at 7-8. Stahl

werk pr esents a doomsday

scenar io in which , were the court t o agre e with Fa

ir Beam , the I TC would su

bsequen tly b e requir

ed to cons ider “hu

ndreds” of its prior deter

minations i

n every inve stigation in search of consistency

. Id. at 9. Salzgitter adds that the Usinor court clearly adhered to the familiar standard of substantial evidence and that the plaintiff in Usinor was challenging the I TC’s construction of a statute, not fact fin dings. 21 See Salzgitter Br. at 6. Comparative

Analysis of

Beams I and the F

inal Deter

mination (or Be

ams II)

. An agency

that engages in formal adjudica tion may not render a

rbitrary a nd inconsistent decisions. See Greater Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C. Cir. 1970), cert. denied, 403 U.S. 92 3 (1971); Chisholm v. Defense Logistics Agency , 656 F.2d 42, 47 (3d Cir. 1981). Should the agency choose to deviate from a practice it consistently employed in the past for the eval uation an d testing of a set o f facts, it must delineate an d give r easons f or itsCt. No. 02-00531 Page 20

22 The ITC in Beams I made a f inding of supply shortag e in the U. S. market in the fou

rth quarter of 1997 and the first two quarters of 1998. Beams I at 10. The ITC further obse rved that subsequent change of policy as to provide adequate guidance to pa rties affected by

its actions and to present the reviewing court with a discer nable basis to judge the discrepancy

. See Sec’y of Agriculture v. United States , 347 U.S. 6 45, 652-5 3 (1954); British Steel PLC v. United States , 127 F.3d 1471, 1475 (Fed. Cir. 1997). At the same time, it is an equally we ll-established proposition that the ITC’s material injury determinations are sui gener is ; that is, the agency ’s findings and determinations are necessarily

confined to a specific period of investigation with its attendant, pec uliar set of circumstances. See U.S. Steel Group v. United States , 18 CIT 1190, 1213, 873 F. Supp. 673, 695 (1994) (quotation omitted). In Beams I , the per iod of inve stigation was from 1997 to 199 9; in Beams II , from 199 9 to 2001. Given the d yna mic natur e of the e conomy, rarel

y w ould circumstances and their multi-faceted interac tions defining a period of material injury investigation exhibit sufficient similarity to those of another per iod. Fair B eam is correct in

that Beams I and II involved the same product, and subject imports were present in the U.S. market at noticeable and incr easing levels in both periods of investig ation. Ye

t the statu te dictat es the ITC to attac

h importan

ce only to those increase s in subject import quantities and to those price effects of the subject imports which are deemed “significant.” § 1677(7)(C)(i) & ( ii). Accordingly , the ITC first acknowledg ed in footnote 105 of the Final Determination that subject imports in Beams I “were entering the U.S. marke t at low and dec lining pr

ices eve n after a period when the domestic i

ndustry was havi ng diff iculty satisfying de

mand.” 22 Final Determination at 28 n.105. In contrast, a finding was made in theCt. No. 02-00531 Page 21

supply shortage

“quickly reve

rsed as subject imports escalated in March 1998 and surg ed thereafter through the first quar ter of 1999,” that “[t]he import surge far exceeded the pr ior shortfa ll in supply

,” and tha t “imports

gained market share at the expense of the domestic industry.” Id. at 11. Fair Beam represe nts that thereby the I

TC in Beams I compared the size of the domestic shortage to the increase in subject imports. Beams II investigation that both subject import volumes and prices were increa sing during the first portion of the POI. Second, the ITC further noted in the Final Determination that “the peak subject import volume and the increase in subject import volume in [Beams I were] sub stantiall y g reater than in [ Beams II ].” Id. As a third observation, the ITC offe red that in Beams I “the subj ect impor ts undersold the domestic like product in the vast majority of pricing comparisons.” Id. (emphas is supplied). In Beams II

, on the other hand, under- and overselling we re approximately of equa l frequency for product 1, the most widely tra ded product among structural steel beams and, e ven though more underselling than overselling occurred for other products, underse lling was mitigated by the pr

ice premium. The ITC finally concluded in the Final Determination that “ [a]s the acc ompany

ing disc ussion indi cates, t

he record in thes e investigations is su bstantial ly different.” Id. The cour t agre es with the

ITC that these

three ob servatio

ns are of crucia l importan

ce to distinguish the underlying factual pattern of Beams II from that of Beams I . In a material injury determination, the

ITC is require d to deter

mine whet

her a ma terial in jury to the dome stic industry (or a thr eat ther eof) oc curred

“by reason o f” subje ct imports that are sold in the

U.S. market at less-than-fair value. § 1671d(b)(1) . That is, the record must support a sufficient nexus between the injury

(or threat of injury

) and subject imports. See Goss Graphics Sys. v. UnitedCt. No. 02-00531 Page 22

23 The domestic supply shortag e may have been partially due

to the exit of Japanese and Korean beams fr om the U.S. market, as the ITC implied, or to a pos itive shif t in demand or to some other cause not easily discernable from the record. I n any eve nt, the “cause” of the domestic shortage is not relevant to the disposition of this case. States , 22 CIT 983, 989-90, 33 F. Supp. 2d 1082, 1089 (1998). Moreove r, “evidence of de minimis (e.g., minimal or tangential) causa tion of injury does not reac h the causation level required under the statute.” Gerald Metals, Inc. v. United States , 132 F.3d 716, 722 (Fed. Cir. 1997), quoted in C

oalition for

the Prese

rvation of Am. Brak

e Drum an d Rotor Afte

rmarket M

frs. v. United States , 22 CIT 520, 523, 15 F. Supp. 2d 918, 922 (1998). I n the Final Determination here, the ITC was unpe

rsuaded by the

argument that aggr

essive price cutting by

the subject countrie s was wha

t allowed subject im

ports to pe

netrate the U.S. ma

rket and subseque ntly cause injury to the dome stic indust

ry . Ins tead, the

ITC a ttributed the rise i n subject import volu

mes to a temporary

domestic supply shortag e observed during this period. The ITC based its finding of dome stic supply shortage on three separate pieces of evidence: questionnaire responses of purcha sers and of domestic producers, and contemporaneous news articles in industry publications. The ITC noted that “[p]rice increase s are a natural function of supply shortages.” Final Determination at 28. The ITC further observe d that subj ect impor t volumes w ere increasing alongsi de price s. Accor

ding to the IT C, the rise i n both the s

ubject imp orts and prices wa s thus a consequence of the domestic s

upply shortage. In Beams II

, the domestic industry was tempora rily unable to satisfy

demand. 23 The domestic p

roducer s’ inabili ty to satisfy demand r

esulted in a supply shortag e or an excess dem and in th e ma rke t. As p urc has ers com pet ed f or f ewe r av ail abl e pr odu cts , pr ice s ro se. InCt. No. 02-00531 Page 23

24 The court notes that in the absence of subject imports the price r ise may have be en higher . Not explic itly

discussin g this pos sibility , the I TC never theless f ound that t

he price effec ts were not significant. I

t should also be noted that non-subject imports (other than Japanese and Korean beams wh

ich left t he marke t due to the

antidumpin

g orde r) also in crease d from 199 9 to 2000. See Final Determination at 23 n.89 ; Staff Repo rt at IV-6 & n.8. This fa ct further undermines the contention that price cutting by subject countries caused the volumes of subject imports to rise. addition, the supply of the domestic industry was relatively

more inelastic than the supply of the subject countries vis a vis the U.S. market. See Staff Report at II -16 & II -17. That is, subject producers could react to a rise in U.S. prices fa ster than their domestic counterparts in terms of increa sing shipment to the U.S. mark

et. As the

subject c ountries

diverte d their g oods to the U.S. market to satisfy excess de

mand, subj ect impor

t quantitie s bega

n to rise a nd, as expe cted, thi s phenomen

on was obs erved a

longside an incre ase in pr

ices. 24 Accord ingly, th e dome stic s horta ge was, more likely than not, re sponsible for the rise in both subject import volumes and prices. In Beams I

, however, prices were dec lining as the subject import volumes were increasing. I

n addition, the ITC found significantly more underselling than overselling the domestic product by subject imports. These two observations serve to show that in Beams I a more immediate connection could have been made be tween subject imports and falling prices. That is, it was likely

that per sistent pr

ice cutti ng by foreig n exporters had led t

o the incr ease in subject import volumes by spurring purchases of imports over the domestic product where a domestic s

upply shortag e by

itself wo uld have r

esulted in an incre ase in pr

ice. Ac cordingly, in Beams I the finding of domestic shortage was not as sig nificant as in the Final Determination here. As urged by

the ITC, this court also notes that in Beams I “[n]othwithstanding theCt. No. 02-00531 Page 24

25 Fair Beam claims that the Final Determination should have addressed Beams I more extensive ly, bey

ond a mer e footnot e. The I TC respon

ds that Beams II did not hav e to disting uish Beams I at all and, assuming that it did, footnote 105 in Beams II constitute s an adeq uate consideration of Beams I

. The court observes that because Fa ir Beam raised Beams I as an “unde rlying th eme” of

its ar gument s befo re the a gency, the ITC was cor rect i n addr essin g Beams I in footnote 105. Final Determination at 28 n.10 5; Altx, Inc. v. United States , 25 CIT __, __, 167 F. Supp. 2d 1353, 1374 (2001) (the agency “must address significant arguments and evidence which seriously undermines its reasoning and conclusions”). I n footnote 105, the ITC first poin ted out tha

t Fair B eam’s Beams I argument called for no “re sponse” as a “legal matter” and, to the extent the argument had merit as a “fac tual matter,” the ITC sufficiently addressed the crucial distinctions between Beams I and II in concluding that the two investigations had substantially different r

ecords. decrease from 1998 levels, the 1999 volume of subject imports repr esent[ed] a 728-percent increase over the 1997 volume.” Beams I at 12. I n contra st, the vol

ume of sub

ject impor

ts in Beams II showed a net decline over the POI . As a parallel observation, the domestic industry gained market share over the POI in Beams II (despite the dip in 2 000) and

lost marke

t share in Beams I . This distinction between Beams I and II lends credence to the assertion that in Beams I subject imports penetrated the market in numbers which went bey ond a temporary

exploitation of a domestic shortage whereas in Beams II the rise in subject import volumes was a “temporary phenomenon.” The court finally observes that subject countries in the two investigations were differe nt, a factor which

play s an espe cially

important

role in a threat d etermina tion. As a r

esult, the cour t finds (a s did the I

TC) that Beams I does not constitute legal precedent for Beams II and the ITC’s consideration of Beams I in footnote 105 of the Final Determination is suffic ient to di st in gu is h t he tw o i nv es ti ga ti on s f ac tu al ly. 25 In a ddition, th e court r

ejects F air Bea

m’s arg ument tha t Beams II ’s factua l find ings concerning “gene

ral market dy

namics” are “of a ge

neral nature” under Usinor . The “general market dynamics”

Fair Beam refers to is pre sumably the statutory framework the I TC is requiredCt. No. 02-00531 Page 25

to follow in every mate

rial injury determination. The re is nothing in the statute or case law that require s the I TC to take

as prec edent an

y pr ior fac tual findi

ng that was reac

hed within

this framework. In Usinor , the finding “of a gener al nature” pertained to a particular a ttitude toward the market of subject producers in question. Specifically , the Usinor court said that the ITC cannot reasonably

claim that European countries are not export-oriented in one ca se and later retract that position without explanation. While Usinor correctly supports the need for consistency in the I

TC’s determinations, as well as the need for reasone d explanation, this court observes that there is no finding in Beams II th at is li ke ly t o b e g ov er ne d b y Usinor . The findings in Beams II are confined to o bservat ions on ec onomic va

riables, which ar

e neces sarily volatile. Fair Beam does not point to any determination in Beams II (or in Beams I ) that bears on particular, persistent attitudes of trading countries which, be cause they persist within a sufficiently short interva

l of time, would arguably have called for the same treatment by the ITC in different investigations undertaken also close in time. I n addition, the fact that similar patterns are observed in different investiga tions with regard to some of the variables does not prec lude a different interpretation of the patterns after viewing the entire economic environment as a w hole. In fact, the statute re quires the ITC to evaluate patter ns in a context, instead of encouraging an analysis of ea

ch piece in isolation. B. T HE ITC’ S FINDIN G RE GAR DING THE SIG NIFICA NCE OF SUB JECT IMPO RT V OLU ME IS SUPP ORTED BY SUBS TANTI AL EVI DENCE AND I S OTHE RWISE IN ACCORDANCE WITH LA W . Parties’ arguments. Fair Beam next argues that the Final Determination ’s findings are unsupported by substantial evidence. Fair Beam continues to compa re the Final Determination to Beams I in thisCt. No. 02-00531 Page 26

26 At the adm

inistrativ e heari

ng an AR BED exec

utive ela borated , “we ne

ver comp letely withdrew from the market.” ITC Hearing Tr. at 199. The ITC appears not to have considered the letter as evidence in its determination on post-petition data. However, c onsistent with the court’s evaluation of contradictory evidence under the substantial evidence standar d, the court defers to the ITC’s trea

tment of the letter in the Final Determination

. portion of its arguments before the court, specif ically with respec

t to similar volume trends found in the two investigations. See Pls.’ Br. at 11. In addition, Fair Be am contends that the Final Determination should have compared the size of the domestic shortage with the size of the increa se in subje ct import volumes as Beams I did. Id. at 12. That subject import volumes exceede d the dome stic short age ma y ha ve meant that the su

rge in s ubject imp orts was n

ot solely due to the domestic supply shortag e. Fair Beam also maintains that the Final Determination should have taken into account the impact of the filing of the petition on subject import volumes. See id. at 13. Fair Beam arg ues that the decrease in subject imports in the later part of the POI may have be en in part due to the petition. Fair Beam points out that [[ ]] importer withdr e w from the market upon the filing of the petition. See id. at 14 (citing Fax from TradeARBED to its customers (da ted June 7, 2001) in Pls.’ App. tab 8 (“As is normal while under [an] investigation we are withdrawing from the market effe ctive immediately.”))

. 26 The ITC counters that, eve n if there was a sharp increase in subjec t import volumes, the statute requires the ITC to conce ntrate on the significance of such incr ease. See Def.’s Br. at 12. The ITC also contends that the Final Determination was correct in not discounting post-petition data because the decrea se in subject import volumes preceded the filing of the petition. See id. at 13. Moreover, the Commissioners did not completely ig nore the petition, but decided that it hadCt. No. 02-00531 Page 27

a “limited” impact. Id. Subject import

volume analy

sis

. There is substantia

l evidenc e on the r

ecord to support th e IT C’s findin

g that th e volume of subject imports wa s not “sig nifican t.” Firs t, as note d earlie

r, there is substan

tial evide nce in the record to support the existence of a domestic supply shortage in the U.S. structural steel beams ma

rket. Sec ond, ther

e is substa

ntial evid ence in t he reco rd to support the ITC’s ana lys is of relationships among economic variables during the POI. Consulting data on both the subject import volumes and supply conditions, the I TC noted that the subject import quantities followed (with a te mporal la g) the d omestic su

pply condition s. Subject

imports sta

rted to inc

rease i n response to the domestic supply shortage in 1999 and declined between 2000 and 2001 when the shortage was shrinking. Moreover, the ITC observed that in the beginning of the POI, purcha sers overestimated future demand for structural stee l beams, and towards the end of the POI , demand either declined or flattened with contraction in economic a ctivity and construction. The I TC pointed to specific sources of information and evidence in support of the se findings in the form of testimony, published

article s, and sta

tistics. On the other hand, Fair Beam ca n point to no evidence in support of its argument that the rise in the subject im

port volumes was “ signific ant.” F air Bea m continue s to enga

ge in what this court considers a fruitless comparison between Beams I and the Final Determination . In addition to what has been explored above, the court notes that, even thoug h the subject import volumes rose and fell (thus demonstrated a similar pattern) in both periods of investig ation, the market penetration by subjec

t imports in the Final Determination was far from its magnitude in Beams I

.Ct. No. 02-00531 Page 28

Fair Beam is additionally concerned that the relative sizes of the domestic shortag e and subject import volumes should have been noted in the Final Determination as they had bee n in Beams I . However, there is nothing in the statute or case law which requires the I TC to compare the size of a shortage, the existence of which has bee n confirmed, with the increase in subject import volu

mes. The s tatute sol ely

mandate s the I TC to consi der the v olume of s

ubject imp orts and assess its significance. See §§ 1677(7 )(B) & (C). Be cause the preci se cours e this ana lys is should take is not specified, the court must defer to reasonable a nd factually supporte d applications of the ITC’s methods. Usinor at 6-7 (“we affirm the ag ency’s f actual determinations so long a s they

are re asonable

and supported by

the rec ord as a w

hole, eve n if there is some evidence that detracts from the ag ency’s c onclusions”) (citingOlympia Indus., Inc. v. United States , 22 CI T 387, 389, 7 F. Supp. 2d 997, 100 0 (1998)) ; BIC Corp. v. United States , 21 CIT 448, 462, 964 F. Supp. 391, 404 (1997) (“because Congre ss has granted the Commission broad discreti on to choo se its methodology , [the cour

t] will not dis turb the Commission’s choice u nless it is unreasonable”) (citation omitted). The court further observes that, as noted above , the Beams I decision is not leg ally binding on the ITC in subsequent investiga tions and, therefore, does not serve as a fr amework for subsequent ITC determinations as far as the size of a domestic shortage or any other factual determination is concerned. Quite the contrary , Beams I and the Final Determination possess sufficient factual differences the most important of which (for our purposes here) is the fact that in Beams I the subject imports continued to persist in the U.S. market far above their levels in the beginning of the period. Had the incr ease in subject imports in Beams I been due to a domes ticCt. No. 02-00531 Page 29

shortag e then pr

esent, th e subsequ

ent decl ine in volu

mes when

the short age dis appear

ed would have been expected to mirror the increase in a pproximate magnitude. More importantly, to the extent the ITC in the Final Determination attributed the rise in subject import volumes to the domestic shortage, the Commissioners properly evaluated and observed the two variables together in finding that they followed a similar curve with a lag. Finally, as urg ed by the I

TC, the statute gives it discretion to reduce the weight it ac cords to post-petition data. See § 1677(7)(I). That is, the I TC “may” discount such da ta, with the implication that, where proper, it need not. Id. Here, the ITC obser ved that the decline in subject import volumes preceded the filing of the petition by a sufficient interval. Therefore, the I TC decided that the petition had a “limited” impact on the fall in subject import volumes at the end of the POI. I

nstead of the mere filing of the petition, the ITC determined that the alleviation of domestic s

upply shortag e couple d with wea k demand i

n this per iod contr ibuted to the decre ase in subject im

port volumes. The I

TC’s trea tment of po st-petition data wa s accor dingly reasona ble and supported by the r

ecord. C. T HE ITC’ S DETE RM INAT ION TH AT TH ERE W ERE N O AD VER SE PRIC E EFFEC TS IS SUPP ORTED BY SUBS TANTI AL EVI DENCE AND I S OTHE RWISE IN ACCORDANCE WITH LA W . Parties’ arguments. Fair Beam next challenges the I TC’s determination that the prices of structural steel beams were not suppressed by subject imports. See Pls.’ Br. at 17. In particular, F air Beam takes issue with the Final Determination which found (i) that underselling was not widesprea d, (ii) that underse lling wa s mitigat ed by the prem ium the dome stic prod

uct fetc hes in the market, and (iii) that there was more overselling than unde rselling with respect to product 1. Fair Be amCt. No. 02-00531 Page 30

quotes an other ITC materi al injury

determination whe

re the I TC observ ed that “ in a commo dity market characterized by

intense price-based competition, a mixed pattern of under- and oversel ling is to b e expecte d; such a p attern, togethe r with increasing

volume of

subject im

ports, indicates that subject imports played a substantial role in the price declines in this market.” Certain Stainless Steel Plate from Belgium, Canada, Italy, Korea, South Africa, and Taiwan , USITC Pub. No. 3188 (May 1999) at 19. Fair Beam maintains that when price comparisons were adjusted by

lag time, there was more underselling than overselling for product 1 and that the data from 2000 shows “high margins” of underselling. Pls.’ Br. at 16 . Fai r Be am ne xt questions the ITC’s finding of lack of causation between the increase in the volume of subjec t imports and the subsequent price declines. Id. at 17. Fair Beam emphasizes that a “price war” resulted from the entry

of subject imports to the U.S. market, which, it claims, was ignored by the ITC. Id. at 18. Consistent with its “price war” theory , Fair Beam also rejects the I TC’s observation that because the peak in import volumes coincided with the peak in pr ices, the increa se in both w as due to a shortag e in domes tically

supplied s teel bea

m. For F air Bea

m, this observation ignores the delay ed price effects of subject imports “due to the build-up of inventories.” Id. at 19. Fair Beam arg ues that “subject imports triggered a buy ing spree by service center s, which le d to larg e inventory build-ups , and whic

h ultimate ly c aused a d

omestic price collapse.” Id. at 20. The ITC first arg

ues that the ITC thoroughly considered the record data of under selling. See Def.’s Br. at 16. The ITC pr ovides num

bers in su pport of i ts position t

hat “lar ge qua ntities” of beams were oversold at “substantial margins,” even in 2000. Id. at 18. The ITC urge s thatCt. No. 02-00531 Page 31

27 Contrary to Fa

ir Beam’s assertion, that the I TC in another investigation (that of stainless steel plate) found a mixed pattern of under- and overselling coupled with rising import volumes “significant” for purposes of price effects is not binding on the IT C in a subsequent investigation, as the court noted throughout this opinion regar ding the ITC’s fac

tual determinations. under- and overselling data should be eva luated in context. In particular, the I TC emphasizes that a price war, if any, did not start until the third quarter of 2000, well into the POI. The I TC cites case law to show that “the I TC need not find underselling significant merely because there are more instances of underselling than ove rselling.” Id. (citations omitted). The ITC further points out that in Timken Co. v. United States , the Court upheld the ITC’s conclusion that the price premium for the domestic product mitigated the signif icance of underselling. 20 CIT 76, 87-88, 913 F. Supp. 580, 590 (1996). Price ef fects ana lysis

. The court finds that the ITC’s neg ative determination with respect to the significance of price underselling is supported by substantial evidence in the record. I n the Final Determination , the ITC first enga

ged, as required by

the statute, in a comparison of prices of domestic and imported product. The ITC used the tabulations of domestic a nd import prices contained in the Staff Repo rt . In these price compa risons, employing two slig htly different methodologies, the ITC found a “mixed pattern” of under - and overselling and further noted that, for product 1, the incidences of underselling, despite slightly outnumbering overselling when a lag was incor porat ed, wer e never thele ss les s infr equen t than overs elli ng in t he abs ence of the la g. 27 The ITC additionally

observed that quantity ove rsold was greater than quantity undersold. The ITC
procee ded to att

ribute the admittedl

y f requent occurr ence of underse lling for other products t oCt. No. 02-00531 Page 32

28 The Timken court stated: The Commission concluded that factoring in the price premium for domestic other special quality bars mad e the re latively

small mar

gins of u ndersel ling eve

n less significant. [] Thus, the Commission appropriately examined whether ther e had been "significant price under selling" by

the subject imports. See 19 U.S.C. § 1677(7)(C)(ii)(I). Evide

nce of underselling has been found to be le ss significant where there were price

premiums for domestic products. See Roses, Inc. v. United States , 13 CIT 662, 665-66, 720 F. Supp. 180, 183 (1989) (62 out of 110 instances of underselling found insignificant beca use price premiums for locally -grown roses based on freshness and an ability to supply the flowers on a shor t-term need basis). See also Trent Tube Div., Crucible Materials v. United States , 14 CIT 386, 402, 741 F. Supp. 921, 935 (1990) (consistent underselling given less weig ht based on domestic p

rice pr emium due

to custome

r prefe rences and lead time differences, small volume of imports a consideration), aff'd, 975 F.2d 807 (Fed. Cir.1992). Thus, the Court cannot say tha t the Commission's conclusion was errone ous. the price premium the domestic product commands in the U.S. market. The existence of a pr ice premium for domestic product was supported by testimony from both sides at the administrative hearing. As urged by

the ITC, the court notes that the Timken decision stands for the proposition that the ITC may

discount incidences of underselling on account of this price premium, where appropriate, as this premium mitigates underselling that is observed. Timken , 20 CIT at 87-88, 913 F. Supp. at 589-90. 28 Moreover, the court agree s with the ITC that the “significanc e” of price e ffects does n ot tu rn on a sole f indi ng of mo re ins tances of und ersel ling t han ov ersel ling. The statute also requires the Commission to determine whether “the effe ct of imports . . . otherwis e depre sses pric es to a sig nifican t degre e or pre

vents pri ce incr

eases, w hich othe rwise would have occurred, to a significa nt degree.” § 1677(7)(C)(ii)(I I). The court finds that the ITC’s finding with respec t to this second component of price effects analy sis is supported by theCt. No. 02-00531 Page 33

record. In addition to the elimination of the supply shortage, the I TC in the Final Determination found that the price decline at the end of the POI was a result of weak demand in this period and a rise of distributors’ inventories. The record contains suffic ient evidence to support this finding of the ITC, as well as its implications. I n particular, the record indicates that demand f or structural steel beams rose from 1999 to 2000 and flattened in 2001. Moreove r, testimony and published articles cited in the Final Determination supported the observation that in the beginning of the POI , purchasers had a more rosy outlook on the condition of the economy and the market, which at the end proved to be unwarr anted. The record contained evidenc e of a developing domestic supply shortage in the beginning of the POI and its subsequent resolution. Moreove r, the co urt notes that, as e xplained e arlier, the rise o f subjec t import pr ices from 1999 to 2000 and their subsequent decline in 2001 cannot be ascribed to the similar tra jectory of subjec

t import volu

mes since the introd

uction of subject im

ports into t

he U.S. ma

rket wou ld have le d to a more immediate fall in prices due to ensuing competition. Here, F air Bea

m seems to b e advancing a t ype of “pric e lag”

theory arguin g that, i f subject imports had a delayed impact on prices, the later fall in prices could be a ttributable to the rise in volumes at the beginning of the POI . Fair Beam’s reading of events taking place during this period and their interaction may have some plausibility if a lag in price effects could be properl y a ssumed. H owever , under the substan tial evide nce stan dard, thi s court is c

harge d to uphold the ITC’s reasonable infe rences from facts contained in the rec ord. “It is not within the Court’s domain either to weigh the adequate quality or quantity of the evide

nce for sufficiency

or to reject a finding on grounds of a dif fering interpretation of the rec ord.” Timken Co. v. UnitedCt. No. 02-00531 Page 34

States , 12 CIT 955, 962, 699 F. Supp. 300, 306 (1988), aff’d , 894 F.2d 385 (Fed. Cir. 1990) (citation omitted). In other words, the cour t cannot give effect to alternative the ories advanced by Plaintiffs or acc ord more weight to supporting facts hig hlighted by Plaintiffs, howeve r plausible they may

be, as long as the I TC’s theory of e vents are also reasonable and supported by substantial evidence. Moreover, the ITC did enter tain Fair Beam’s arg

ument that subject imports may have ha d a delay ed impac t on price s and rej ected th e argu ment. Fir st, the ITC found that price s in the U.S

. structural steel beam market are deter mined on the spot when offer and acceptanc e take place (even for the domestic producers). See Final Determination at 26 n.100. Second, the ITC rejected the “price lag ” predictions of Fair Beam’s ec onometric model reasoning that the model was flawed. See id. at 29 n.107. At the end of its price effects analy sis, the ITC announced, “[w]e cannot conclude that the record indicates that either the inventory overhang or the resulting price declines were the function of the subject imports . . . . We consequently conclude that the subject imports did not have significant price-depre ssing or -suppressing effects.” Id. at 29-30. The ITC’s decision wa s informed by its repe ated observations in the Final Determination that the movements or activit y in the U.S. structur

al steel b eam mark

et during the POI were explainable

by f actors w holly unrelated to subject imports with potentially unfair prices. The ITC was c orrect in highlighting that a finding of “significant” price effects necessarily

requires an accompany

ing finding of causal relationship between prices and subject imports.Ct. No. 02-00531 Page 35

D. T HE ITC’ S DETE RM INAT ION TH AT SU BJEC T IMPO RTS H AD N O AD VER SE IMP ACT IS SUPP ORTED BY SUBS TANTI AL EVI DENCE AND I S OTHE RWISE IN ACCORDANCE WITH LA W . Parties’ arguments

. Fair Beam next charges tha t the ITC failed to consider that the domestic industry suffered large losses in sales and revenues. See Pls.’ Br. at 21. Fair Beam arg ues that in the Final Determination , the ITC dismissed this evidence as “ane cdotal,” whereas in Beams I the ITC represented a similar condition as “further evide nce of the negative effe cts of subject imports,” which inconsistency is alleg edly unsupportable unde r Usinor

. Id. at 22. The ITC arg

ues that the Final Determination properly we ighed the lost sales and revenues data. See Def.’s Br. at 22. The ITC arg ues that since the decline in domestic industry performance occurred f

rom 2000 to 2001 when subject imports were declining, a link could not be established between subject imports and alleged lost sales a nd revenues. See id. In addition, the Final Determination found no adverse price effec ts. The combination of these two observations led the ITC to discount as “ane cdotal” the lost sales and revenues data. Salzgitter points out that “the performance of the domestic industry tracked the rise and fall of apparent U.S. consumption.” Salzgitter Br. at 13. Thus, the decline in performance was not a function of imports. Salzgitter emphasizes that at the end of POI, the dome stic industry actually g ained market share (a “historic hig h”). Id. Salzgitter observes that the ITC construe d this phenomenon as imports “filling shortages” and not “displacing domestic production.” Impact analy

sis

. Contrary to Fa

ir Beam’s assertion, the I TC’s analysis involved a re asoned consideration of the los t sales an

d revenu es data b ased on a

n extensive

and deta iled staf f repor t. In a footnoteCt. No. 02-00531 Page 36

to the Final Determination , the ITC observed that beca use there was underselling of subject imports, it was “not surprising that there were some confirme d lost sales and revenues.” Final Determination at 26 n.102. The domestic industry “submitted 27 lost sales and 173 lost reve nue alle gat ions, ” all ege d lost

sale s tota ling $[[ ]] mil lion a

nd al leg ed lo st revenues tot aling $[[ ]] million. Staff Repo rt at V-18 & App. E. In the Staff Repo rt , the ITC staff confirmed or “partially” c onfirmed 17 lost sales allegations of $ 24.1 million and 49 lost revenue allegations of $ 786,411

. Id. at V-18 & V-19. The ITC staff added that a “large numb e r of lost revenues allega tions involv e sales or quotations made after Janua ry 1, 2002” a

nd that “[b ]ecause

of time
constra ints, and b ecause

purchas ers don’ t alway

s keep re cords of

unsucce ssful bids, some purchasers were unable to confirm or deny some spec ific allegations.” Id. at V-19. In the Final Determination , considering the Staff Repo rt , the I TC pronoun ced that “[b]ecau se these allegations concern a period later than that for which the Commission collected pricing data, the record does not indicate whether they are indicative of overall pricing or unde rselling trends.” Final Determination at 26 n.10 2. Moreov er, the I TC stresse d that the

lost sales and reve nue data was “anecdotal” and could not “outweig h the patterns” contained in “the pricing data overall.” Id. The court finds the ITC’s re asons to be sound and consistent with the underly ing record. Further, the ITC is not require d to accord more weight to any factor of impact analysis at the expense of other factors. Specifically, “[n]o factor, standing alone, triggers a per se rule of material injury.” Am. Spring Wire Corp. v. United States , 8 CIT 20, 23, 590 F. Supp. 1273, 1277 (1984) (citation omitted). Accordingly, the fact that the ITC dec ided to de-emphasize confirmed lost sales and revenues data does not detract from its finding of no impact because assigning different weights to different piece s of evidence is fully within the ITC’s discretion.Ct. No. 02-00531 Page 37

The court finally note s that there is substantial evidence on the record in support of the ITC’s finding that subject imports did not adversely impact the domestic industry. As requir ed by the statute, the I

TC in the Final Determination considered “all relevant economic fa ctors . . . within the context of the business cycle and c onditions of competition.” § 1677(7)(C)(iii). In the Final Determination , the ITC noted that over the POI , the domestic industry actually gained market share, that the domestic industry ’s performance was improving as the subject import volumes were increasing, and that the late r retardation in variables designed to mea sure the domestic industry’s “hea

lth” could not be ascribed to subject imports. The court agre es that improvements in the output indicators (and other “health” factors) would likely not have been observed alongside increases in subject import volumes, had subjec t imports had an injurious present effect on the domestic industry . Further, as the I TC stated, the observed decline in output indicators at the end of the POI wa s likely not the result of the rise in subject imports on ac count of the inte

rvening time betw een thes e two eve nts. I t may be that, a s Salzgitte

r recom mends, domestic output fell (as well subject import quantities) along with falling demand for structural steel be ams in this p eriod. F or these reasons and giv en that th e IT C found no “ signific ant” volume and price effects in the POI , the court concludes that the IT C’s no adverse impact finding is supported by the rec ord and is otherwise in accordance with law. E. T HE ITC’ S DETERMINATION OF NO THREAT OF MA TERIAL INJURY IS SUPPORTED BY SUBS TANTI AL EVI DENCE AND I S OTHE RWISE IN ACCORDANCE WITH LA W . Parties’ arguments. In su pport of i ts argu ment that t

he I TC erre d in findin

g no thre at of mate

rial injur y, F air Beam first cites the testimony of a foreign executive who stated that U.S. prices we reCt. No. 02-00531 Page 38

“gorgeous,” and that for

eign producers are able

to “react” quickly

and are profit oriented. Pls.’ Br. at 23. Accord ing to Fair Bea m, th is is evide nce of t he opp ortun isti c natu re of fo reign producers who move quickly to take advantage of price diff erentials across markets. This part of Fair Beam’s arg

ument stresses an inability to learn f rom past lessons. In particular, in Beams I German a nd Spanish

produce rs said the

y w ould not “o

pportunis tically

take adv antage

of shortterm opportunities” and were thereby excluded from that investigation. However, “[w]hat happened next? . . . No sooner was the ink dry” on Beams I , then they retur

ned and took advantage of short-term opportunities. Id. at 24. Fair Beam further points to curre nt excess capacity of

foreign producers. See id. at 2 5. In Beams I , the ITC relied on a similar condition as part of its threa t determination, whereas in the Final Determination , the ITC focused on the existence of mar kets other than the U.S. where foreign producers could sell their products. According to Fair Bea m, the Final Determination ’s focus ignores a number of fac ts. Id. at 26-27. First, th e forei gners d emonstra ted an ab ility

to quick ly penetr ate and shift their expo rts t o the U .S. m arket d uring t he POI. S econd , forei gn produce rs proje cted an i

ncreas e of expor

ts to the U. S. in 2002 a

nd 2003. Th

ird, for eign ca pacity is expecte d to incre ase in the future. Similarly

, Fair B eam also

criticize s the I TC’s fail

ure to assign sufficient importance to increasing foreign inventories. See id. at 27. Because the I TC found that some of the foreign inventories were not suitable for the U.S. market, Fair Beam observe s that “[s]ub

ject for eign pr oducers can mee t home mar

ket dema nd with suc

h inventor

ies, while shifting production to ASTM products,” which are U.S.-market-c ompatible. Id. at 28. Fa ir Beam fu rther po ints out tha

t “the sc ope of the

mercha ndise subj ect to inv estiga tion [was] ne arly identical in Beams I and Beams II. Therefore, assuming there is some mer it to the contentionCt. No. 02-00531 Page 39

regarding differ

ent ASTM standards, it would equally be tr ue for the inventories in both Beams I and Beams II. ” Id. Finally, Fa ir Beam contends that the I TC improperly disreg arded evidence concerning the “vulnerability ” of the domestic industry. See id. at 29. The ITC counters that signif icant increases in imports were not imminent. See Def .’s Br. at 23. The ITC highlig

hts a number of factors. First, the volume of imports was declining at the end of the P OI. Secon d, th e dome stic c apacit y was incre asing. Third , even thou gh forei gn producers projected an increase in imports in 2002 and 2003, the projections were still below 2000 leve ls (the hig

h in volume ). Four

th, fore ign prod

ucers ha d other ma

rkets in w hich to se ll their products. Five, the U.S. prices were traditionally higher (thus, the U.S. prices were not any more “attractive” than they had alway s been). The ITC also arg

ues that the Final Determination prope rly evalu ated ex isti ng forei gn capacity and potential to shift the goods to the United States. The ITC c laims that these two factors are “insufficient to warra nt an affirmative threat determination absent positive evidence showing that increased levels of importation are a ctually imminent.” Id . at 26 (citi ng inter alia BIC , 21 CI T at 464, 9 64 F. Supp . at 405 (“ Conjectur e and spe culation

are not e nough; there must be positive evidence tending to show an intention to increase leve ls of importation.”) (quotation omitted)). The ITC posits that theFinal Determination adequ ately ex plain ed why fore ign producers had no incentive to increase imports to the United States. Among other matters, the Final Determination explained that not all steel beams of foreign production were suitable for U.S. consumption because they did not meet U.S. standards. See id. at 27. The ITC next maintains that the Final Determination sufficiently consider ed the “vulnerability” of

the U.S. industry. See id. at 29. The ITC e mphasizes t

hat the domesticCt. No. 02-00531 Page 40

industry was about to expand capa city and “ne

w and efficient” facilities were a bout to open. The ITC in dicates that while

“vulner ability ” is a pro per factor to con sider in th reat analy sis, it is not

a substitute for statutory criteria

. See id. at 30 ( citi ng NEC Corp. v. Dep’t of Commerce , 23 CIT 987, 999, 83 F. Supp. 2d 1339, 1342-43 (1999)). Stahlwer k argues that su

bject imports were

declinin g at the end of the

POI ( “for six straig ht quarte rs”) an d, there fore, it was reas onable f or the ITC to assume

that such a trend would continue. Stahlwerk Br. at 25- 26. W ith re spect to U.S . pric es bei ng attr activ e for fo reign producers to enter the market in the future, Stahlwer k stresses the price premium, implying that the U.S. prices will alway s be higher. See id. at 26 . W it h r es pe ct to fo re ig n u nu se d c ap ac it y, Stahlwerk ponders why

such capacity

would not prevent subject imports from falling towards the end of POI. See id. at 27. With respect to the domestic industry’s “vulner ability,” Stahlwerk
argue s that the I

TC did cons ider the

industry ’s overa

ll profita bility with “new

and eff icient” m ills in the works and that the ITC was not requir ed to analyze the “

unusually sensitive” nature of the industry to subjec t imports, once the I TC decide d that the

subject im

ports wer e not abou

t to rise significantly. See id. at 28-29. Salzgitter adds that the ITC’s negative threat determination followed logically

from its negative material injury determination. See Salzg itter at 14. Threat Analy

sis

. In a threat of mater

ial injury determination, the I TC must find whether “further dumped or subsidi zed imports

are imminent and w

hether material

injury by r eason of imports wo

uld

occur un less an or der is issu

ed.” § 16 77(7)(F )(ii). The pertinent fac tors outlined in the s tatute for a finding of threat of material injury are: (II ) latent production capacity (or an imminent in cre ase th ere of) in th e su bj ect cou nt rie s, t aki ng i nt o ac cou nt alt ern ati ve e xp ort mar ket s; (III)Ct. No. 02-00531 Page 41

29 As stated

by t he I TC, the sta

tutory factor s (I)

and (VI I) a re not re levant to

this investigation and, therefore, not considered in this opinion. See Final Determination at 35 n.130. “significant” increase in volume or mar ket penetration of subject imports indicating “likelihood of substantially increa sed imports;” (IV) likely “significant” suppression of price as to lead to a n increase in future demand for imports; (V) inventories; (V I) ability of subject countries to shift producti on to subje ct merchandise; ( VII I) “ actual a

nd potenti al nega

tive eff ects” on the domes tic industry’s development; and (I X) “any other demonstrable adverse trends that indicate the probabil ity t

hat ther e is likely to be mate

rial injur y by reason o f” subje ct imports

. 29 § 1677(7)(F)(i). The I TC must evaluate the statutory fa ctors “as a whole” in making a threa t determination. § 1677(7)(F)(ii). No such f actor wi ll “nece ssarily

give de cisive g

uidance with respect to the determination.” Id. Moreover, the statute specifies that a threat dete rmination cannot be based on a “mere conjec ture or supposition.” Id. Becau se sectio n 1677(7) (F)(i)directs the ITC to consider all releva nt economic factors in a threat investigation, the I TC has “no discretion in this matter.” Suramerica de Aleaciones Laminadas, C.A. v. United States , 44 F.3d 978, 984 (Fed. Cir. 1994); § 1677(7)(F)(i) (providing that the ITC “shall” consider a ll relevant economic factors). The court agrees with the I TC and Defendant-I

ntervenors that there is substantial evidence in the record to support the Final Determination ’s negative threat of material injury determination. A threat of material injury determination necessarily involves a prediction of the future. By

warning that a “mere conjec ture” is not enough to sustain an affirmative threat determination and

by o utlining non-discretiona

ry factor s to be eva

luated, t he statute aims to limit hypothesizing that naturally accompanies such a prediction. The Commissioner who dissentedCt. No. 02-00531 Page 42

from the negativ e threa

t determi nation of the I TC pointed

out that the

outlook of

the U.S. structural steel beam industry at the end of the POI was somew hat mixed. See Separate and Dissenting Views of Commissioner Lynn M. Bragg, Certain Structural Steel Beams from China, Germany, Italy, Luxembourg, Russia, South Africa, Spain, and Taiwan, Invs. No. 731-TA-935- 942 (July 2002) at 6 in Administrative Record, List 2, Doc. No. 171. The dissenting Commissioner especially noted among conditions adverse to the domestic industry’ s health: the substantial decline in the domestic industry’s oper ating income, declining domestic capital stock and rest ricted a ccess to capital, domestic s tart-up o perations that ar

e espec ially

vulnera ble to competitive forces, weak U.S. demand and incre asing domestic inventories, increasing cost/price ratio indicating dampening profits, capac ity increase s in subject countries (especially in China), subject c ountries ’ alleg edly demonstr

ated ea se to shift

producti on to U.S.- market- compatib le product, domestic prices that persisted at higher leve ls than prices abroad, projected shipment increases by

the subject countries, and projected capac ity utilization increases in the subject countries. See id. at 6-8. The court notes, however, that these arg uably unfavor

able facts regarding

the existence of a threa t were e valuate d by

the major

ity o f the Commis sioners a nd rejected. The

ITC’ s duty

in making a threat of material injury determination is to evaluate the non-discretionary statutory factors. The statute, inter alia , requires the ITC to conduct re newed analy ses of subject import volumes and price effects reg arding threat of material injury . In particular, the I TC shall examine whether there has been a “sig nificant” increase in subject import volumes during the POI such that their continuin

g futur e prese nce in the U.S. mark

et is “like ly”

and whet her subje ct imports are “likely

” to depress prices as to increase future demand for imports. See § 1677(7)(F)(i)(III) &Ct. No. 02-00531 Page 43

30 There is a suggestion in the rec ord that an improvement in price at the very end of the POI took place as domestic produce rs responded to the onset of this investigation by increasing prices. See Purc

hasers’ Q uestionna ires at 13 Question II I-31 in Pls.’ App. tab 11. (IV). Accor

dingly, the I

TC observed that at the end of the POI , both subject import volumes and prices were declining. I

n connection with its earlier finding that a domestic shortag e was responsible for the rise in the subject import volumes, the IT C determined that “there was no likelihood of shortages in the imminent future” and, therefore , a similar rise in subject import volumes was not likely to occur in the f uture. Final Determination at 36. As u rged by F air Beam, the subject countrie s demonstr ated an a bility to shift shi

pment to the

U.S. mark

et with relative ease; however, give n that the subject countries’ shipments to the United States increased

as a res ponse to a

tempora ry domestic shortag e during the POI and subje ct imports

left the U .S. market once the shortag e was re solved, the IT C further predict ed that a “signif icant” in crease in subject imports was “unlikely.” Further, faced with declining pr ices at the end of the POI, the I TC could not but observe that imports were not likely to be spurr ed by favor

able prices. Even though U.S. prices rema ined higher than prices elsewhere at the end of the POI, this was g enerally so a nd, therefore, this factor was not likely to encoura ge further imports in this specific period. I n addition, as urged by

the ITC counsel during ora

l argument, the pertinent comparison is not that the U.S. prices remaine d higher than prices abroad at the e nd of the POI, as expected, but that the U.S. prices we re for the most part lower in 2001 than they ha d been in 2000. 30 Oral Arg. Tr

. 34:5-21. Moreover, the ITC found no “significant” volume and price ef fects for the POI and a sserted that there was no indication that these phenomena were likely to change in the imminent future. With respect to subject countries’ production capacity, the ITC noted that, even though a nCt. No. 02-00531 Page 44

31 By mer ely mandating

that the ITC consider “inventories of subject merchandise,” § 1677(7)(F)(i)(V), the statute is not clear a bout whether the domestic industry’ s inventories are also to be considered. The I TC in the Final Determination nevertheless considered the level of domestic inventories during the POI a nd observed that although increasing “ in absolute terms,” domestic i

nventori es decli

ned “re lative to i

mports an d U.S. shipments of imp orts from 1999 to 2000.” Final Determination at 38. “I n 2001, the se invent

ories de clined f

rom 2000 le

vels in absolute terms but were greater in relative terms than in either 1999 or 2000. However, the ra tios of inventories to imports and to shipments of imports were at extremely low levels throughout the period of investigation.” Id.

32 Implicit in this observation is the consideration of the statutory factor (VII

I). § 1677(7)(F)(i) (requiring c onsideration of “actual and potential negative e ffects” of imports on the domestic industry’s development). increa se had be en proje cted, the re was no indicat

ion that su

ch an inc rease would manif

est itself as an imminent increase in subject import volumes. Final Determination at 37. As required by the statute, the ITC further indicate d that subject countries had alternate markets at home or abroad to expend their capacity . With respect to subject countries’ inventories, the IT C noted an increase during the POI , but also observed that not all structural beams inventories abroad wer e suitable for sale in the U.S. market by virtue of failing to satisfy the U.S. standard. 31 Id. at 38. With respect to the domestic industry’s production ca pacity, the I

TC pointed out that “new and efficient” facilities had already been completed or were about to be completed. 32 Id. at 38-39. All of these determinations concerning the statutory factors, provided for in section 1677(7)(F)(i)(II), (V) and (V I), were ba sed on the detailed Staff Repo rt and testimony presented at the administrative hearing. Fair B eam also

charg es that the

ITC di d not consi der the “ vulnera bility ” of the d omestic industry . The cou

rt notes, however , that the consider ation of “ vulnera bility ” of the d omesticCt. No. 02-00531 Page 45

33 The “vulnerability”

language appea

rs in the legislative history of the Uruguay

Round Agreements Act. See SAA at 885 (“In material injury determinations, the Commission consider s, in addit ion to impor

ts, other factor s that may

be contr ibuting t o overal l injury . While these factors, in some cases, may account for the injury

to the domestic industry, they also may demonstr ate that a n industry is facing difficul ties from a variety o f source s and is vul nerable to dumped or subsidized imports.”).

34 The NEC court stated: In a threat deter

mination, "vulnerability ana lysis" is appropriate

and relevant to consider as "among othe r relevant economic factors." [] 19 U.S.C. § 1677(7)(F)(i) (1994). Underly ing vulnerability a

nalysis is the principle that the foreign indus try must "take the do mestic ind ustry as [it] f inds it. " Hosiden Corp. v. Advanced Display Mfrs. of Am., 85 F.3d 1561, 1569 (Fed.Cir.1996) (quoting Iwatsu Elec. Co. v. U

nited State

s, 15 CIT 44, 57, 758 F.Supp. 1506, 1518 (1991)). In Goss Graph ics, the Court endorsed the use of "vulnerability analysis," so long as "the Commission did not substitute its finding of vulnerability for consider ation of the statu tory criteria." Goss Graphics [ v. United States , 22 CIT 983, 100 4, 33 F. Supp. 2d 1082, 1101 (1998)]. Accordingly , an affirmative threat determination based solely on a f

inding of vulnerability c oupled with the presence of statutory factors would be the kind of temporal connection disapproved of in Gerald Metals [, 132 F.3d at 716.] Yet the "by re ason of" standard is met if the Commission can articulate a causal connection between the thr eat of injury to the domestic industry and the subject imports themselves, while a voiding attributing the threat from non-import factors to threat from subject imports. See Goss Graphics , []33 F.Supp. 2d at 1103 (affir ming the Commission' s conclus ion that, "[t]he vulnerability of the industry in combination with the adverse trends of increased subject imports and the small number of pending sale s created the threat of material injury." ). industry is not spec ifically

provided for in the statute a s part of

the requ ired ana lys is. 33 While it is proper for the ITC to consider “vulnerability” a

mong “relevant economic factors,” § 1677(7)(F)(i), it cannot be the sole basis of an a ffirmative threat determination in the presence of other statutory cr

iteria that have not been fulfilled. See NEC , 23 CIT at 999, 83 F. Supp. 2d at 1342-43. 34 Moreover, the ITC in the Final Determination did consider the “vulnerability ” of the domestic industry in indicating that despite va rying pe rformances of individual play ers, the domestic industry remained “ profitable overall.” Final Determination at 39. The views of theCt. No. 02-00531 Page 46

dissenting

Commissione

r bring to the atte

ntion of th e court a

number of

argua bly unfavor able conditions surrounding the domestic industry in this period, e specially towar ds the end of the POI, making it vulnerable to dumped imports. A dec line in domestic industry’s sales reve nues and oper ating income in th e 2000-2 001 perio d was also acknowl edged

by t he I TC panel i

n its impact determination. Final Determination at 33. There, the ITC dete rmined that the declining trends were not due to subject imports, but at least in part ascribable to a de cline in demand. As the statute requires a causal link between a thre at of material injury f inding and subject imports, § 1673d(b)(1), and as the record establishes a number of favorable conditions pertaining to the domestic industry, the court ca nnot say that the majority of the Commissioners’ treatment of the domestic industry’s adverse trends was unreasonable and fac tually unsupportable.

IV. C ONCLUSI ON In light of the fore going, the court sustains the I TC’s negative material injury and negative threat of material injury determinations in Certain Structural Steel Beams from China, Germany, Luxembourg, Russia, South Africa, Spain and Taiwan , Invs. Nos. 731-TA-935-936 and 938-942 (Final), USITC Pub. No. 3522 (June 2002). Acc ordingly, the c ourt denies Plaintiffs’ Motion for a Judgment upon an Agency Record. Judgment will be entered

ac co rd in gl y.

Dated: __________________________

__________________________ New York, New York Judith M. Barzilay JudgeERRATUM

Committee for Fair Beam Imports v. United States , Ct. No. 02-00531, Slip Op. 03-73, Dated June 27, 2003. Page 3, footnote 3 : Footnote 3 on page 3 should read: Initially , Italy

was also investigated. However, upon a finding of no dumping by Commerc e, the ITC discontinued its investigation of I talian structural beams. The court further notes that no cumulation issues a

re raise d in this ap

peal. July 22, 2003