UNITED STATES INTERNATIONAL TRADE COMMISSION

POLYETHYLENE TEREPHTHALATE FILM, SHEET, AND STRIP

FROM INDIA AND TAIWAN

Investigations Nos. 701-TA-415 and 731-TA-933-934 (Final)

DETERMINATIONS AND VIEWS OF THE COMMISSION

(USITC Publication No. 3518, June 2002)
 

1

 The record is defined in sec. 207.2(f) of the Commission’s Rules of Practice and Procedure (19 CFR §

207.2(f)).

UNITED STATES INTERNATIONAL TRADE COMMISSION

Investigations Nos. 701-TA-415 and 731-TA-933-934 (Final)

POLYETHYLENE TEREPHTHALATE FILM, SHEET, AND STRIP FROM INDIA AND TAIWAN

DETERMINATIONS

On the basis of the record1 developed in the subject investigations, the United States International

Trade Commission determines, pursuant to sections 705(b) and 735(b) of the Tariff Act of 1930 (19

U.S.C. § 1671d(b) and 19 U.S.C. § 1673d(b)) (the Act), respectively, that an industry in the United States

is materially injured by reason of imports from India of polyethylene terephthalate film, sheet, and strip

(PET film), provided for in subheading 3920.62.00 of the Harmonized Tariff Schedule of the United

States, that have been found by the Department of Commerce to be subsidized by the Government of India

and by reason of imports from India and Taiwan of PET film that have been found by the Department of

Commerce to be sold in the United States at less than fair value (LTFV).

BACKGROUND

The Commission instituted these investigations effective May 17, 2001, following receipt of a

petition filed with the Commission and Commerce by DuPont Teijin Films, Wilmington, DE, Mitsubishi

Polyester Film of America, Greer, SC, and Toray Plastics (America), Inc., North Kensington, RI. The

final phase of the investigations was scheduled by the Commission following notification of preliminary

determinations by Commerce that imports of PET film from India were being subsidized within the

meaning of section 703(b) of the Act (19 U.S.C. § 1671b(b)) and that imports of PET film from India and

Taiwan were being sold at LTFV within the meaning of section 733(b) of the Act (19 U.S.C. § 1673b(b)). 

Notice of the scheduling of the final phase of the Commission’s investigations and of a public hearing to be

held in connection therewith was given by posting copies of the notice in the Office of the Secretary, U.S.

International Trade Commission, Washington, DC, and by publishing the notice in the Federal Register of

February 1, 2002 (67 FR 4995). The hearing was held in Washington, DC, on May 9, 2002, and all

persons who requested the opportunity were permitted to appear in person or by counsel.
 

2

 19 U.S.C. §1677(4)(A).

 

3

 19 U.S.C. § 1677(4)(A).

 

4

 19 U.S.C. § 1677(10).

 

5 See, e.g., NEC Corp. v. Department of Commerce, 36 F. Supp.2d 380, 383 (Ct. Int’l Trade 1998); Nippon

Steel Corp. v. United States, 19 CIT 450, 455 (1995); Torrington Co. v. United States, 747 F. Supp. 744, 749 n.3

(Ct. Int’l Trade 1990), aff’d, 938 F.2d 1278 (Fed. Cir. 1991) (“every like product determination ‘must be made on

the particular record at issue’ and the ‘unique facts of each case’”). The Commission generally considers a number

of factors including: (1) physical characteristics and uses; (2) interchangeability; (3) channels of distribution; (4)

customer and producer perceptions of the products; (5) common manufacturing facilities, production processes and

production employees; and, where appropriate, (6) price. See Nippon, 19 CIT at 455 n.4; Timken Co. v. United

States, 913 F. Supp. 580, 584 (Ct. Int’l Trade 1996).

 

6 See, e.g., S. Rep. No. 96-249 at 90-91 (1979).

 

7 Nippon Steel, 19 CIT at 455; Torrington, 747 F. Supp. at 748-49. See also S. Rep. No. 96-249 at 90-91 (1979)

(Congress has indicated that the like product standard should not be interpreted in “such a narrow fashion as to

permit minor differences in physical characteristics or uses to lead to the conclusion that the product and article are

not ‘like’ each other, nor should the definition of ‘like product’ be interpreted in such a fashion as to prevent

consideration of an industry adversely affected by the imports under consideration.”).

 

8 Hosiden Corp. v. Advanced Display Mfrs., 85 F.3d 1561, 1568 (Fed. Cir. 1996) (Commission may find single

(continued...)

3

VIEWS OF THE COMMISSION

Based on the record in these investigations, we determine that an industry in the United States is

materially injured by reason of imports of polyethylene terephthalate film, sheet, and strip (“PET film”)

from India and Taiwan that are sold in the United States at less than fair value (“LTFV”) and imports of

PET film from India that are subsidized.

I. DOMESTIC LIKE PRODUCT AND INDUSTRY

A. In General

In determining whether an industry in the United States is materially injured or threatened with

material injury by reason of imports of the subject merchandise, the Commission first defines the “domestic

like product” and the “industry.”2 Section 771(4)(A) of the Tariff Act of 1930, as amended (“the Act”),

defines the relevant domestic industry as the “producers as a [w]hole of a domestic like product, or those

producers whose collective output of a domestic like product constitutes a major proportion of the total

domestic production of the product.”3 In turn, the Act defines “domestic like product” as “a product which

is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an

investigation . . . .”4

The decision regarding the appropriate domestic like product(s) in an investigation is a factual

determination, and the Commission has applied the statutory standard of “like” or “most similar in

characteristics and uses” on a case-by-case basis.5 No single factor is dispositive, and the Commission

may consider other factors it deems relevant based on the facts of a particular investigation.6 The

Commission looks for clear dividing lines among possible like products and disregards minor variations.7

Although the Commission must accept the determination of the Department of Commerce (“Commerce”) as

to the scope of the imported merchandise that has been found to be subsidized or sold at LTFV, the

Commission determines what domestic product is like the imported articles Commerce has identified.8
 

8

 (...continued)

like product corresponding to several different classes or kinds defined by Commerce); Torrington, 747 F. Supp. at

748-752 (affirming Commission determination of six like products in investigations where Commerce found five

classes or kinds).

 

9 E.g., Notice of Final Determination of Sales at Less Than Fair Value: Polyethylene Terephthalate Film, Sheet,

and Strip From India, 67 Fed. Reg. 34899 (May 16, 2002).

 

10 Confidential Staff Report, as revised by Memorandum INV-Z-079 (“CR”) at I-5, Public Report (“PR”) at I-4.

 

11 CR at I-5-6, PR at I-4-5.

 

12 Polyethylene Terephthalate Film, Sheet, and Strip from Japan and the Republic of Korea, Inv. Nos. 731-TA458 and 459 (Final), USITC Pub. 2383 (May 1991).

 

13 Polyethylene Terephthalate (PET) Film from Korea, Inv. No. 731-TA-459 (Review), USITC Pub. 3278 (Feb.

2000). 

 

14 USITC Pub. 2383 at 6-7 and 15-16; USITC Pub. 3278 at 5.

4

B. Product Description

Commerce’s final determinations define the imported merchandise within the scope of these

investigations as:

all gauges of raw, pretreated, or primed PET film, whether extruded or coextruded. 

Excluded are metallized films and other finished films that have had at least one of their

surfaces modified by the application of a performance-enhancing resinous or inorganic

layer of more than 0.00001 inches thick. Imports of PET film are classifiable in the

Harmonized Tariff Schedule of the United States (HTSUS) under item number

3920.62.00.9

PET film is a high-performance, flexible, transparent or translucent material produced from PET

polymer, a linear thermoplastic resin. The desirable qualities of PET film include its high tensile strength,

good flexibility and retention of physical properties over a wide temperature range, excellent electrical

properties, durability, heat resistance, good gas-barrier properties, excellent dimensional stability, chemical

inertness, good optical clarity, and low moisture absorption. PET film is typically sold to downstream

converters who apply various substrates to the film, depending on end-use requirements.10 The main enduses for PET film can be grouped into five broad segments: packaging, industrial, magnetics, electrical,

and imaging. Each of these market segments can be further divided into numerous subsegments.11

C. Domestic Like Product

General. We define the domestic like product as the domestically produced articles coextensive

with the scope of these investigations. We considered whether to include “equivalent” PET film (that is,

PET film with a coating of more than 0.00001 inch thick) in the definition of the domestic like product. 

We recognize that the Commission used a broader definition of the domestic like product in previous

antidumping duty investigations involving the same scope as these investigations,12 and in an expedited

sunset review of an order arising from those earlier investigations.13 In those earlier proceedings, the

Commission’s definition of the domestic like product included PET films that are thickly coated during the

production process, such as Cronar®, Estar®, and other PET film equivalent to Cronar® and Estar®.14

However, as discussed below, based on the record information in these investigations, we find that it is
 

15 In the 1991 antidumping duty investigations of PET film from Japan and Korea, the Commission described

equivalent PET film as “a particularized type of PET film destined for the graphics market that contains the

essential characteristics . . . common to all PET film, in addition to its specialized adhesive characteristics.” 

USITC Pub. 2383 at 15.

 

16 Witnesses for the Indian respondents explained that the thinner coatings “are functional coatings that

allow you to do something else to the surface of the film,” while the thicker coatings “are for specific

properties such as increased barrier properties, improvement where those in-line properties [i.e., thinner

coated films] are not going to do that.” Hearing Transcript at 150-151 (Woody, J2 Enterprises). The

witnesses characterized film with thinner and thicker coatings as “distinctly different.” Id.

 

17 CR at I-11, PR at I-8.

 

18 CR at I-11, PR at I-8-9; and Hearing Transcript at 116 (Gazard, Dupont Teijin Films).

 

19 CR at I-12, PR at I-9.

 

20 CR at I-11-12, PR at I-9.

 

21 Hearing Transcript at 45-46 (Gazard, Dupont Teijin Films), and 89, 100, 272 and 281 (Greenwald). 

 

22 Hearing Transcript at 151 (Woody, J2 Enterprises).

5

most appropriate to define the like product as coextensive with the scope of these investigations, and not to

include equivalent PET film in this definition.

Physical Characteristics and Uses. PET film may or may not be coated with a performance

enhancing resinous or inorganic layer. Viewed in one way, the only difference in physical characteristics

between PET film that has been coated and equivalent PET film is the thickness of the film’s coating -- film

with a coating more than 0.00001 inch (“one gauge”) thick is considered to be equivalent PET film.15

However, testimony at the hearing in these investigations indicated that there is a bright line between films

that are coated with a thickness of less than one gauge and those that receive a thicker coating. The thicker

coatings on equivalent PET film give the film distinct physical characteristics.16 

The uses for PET film and equivalent PET film are different. PET film tends to be a more general

purpose product, while the addition of coatings on equivalent PET film means that it is sold to more

specific end-use markets.17

Interchangeability. There appears to be little interchangeability between PET film and equivalent

PET film. However, limited interchangeability for specific end uses is common to most other PET film.18

Channels of Distribution. PET film and equivalent PET film have different channels of

distribution. During the period of investigation, most PET film (***) was sold to processors, whereas most

equivalent PET film (***) was sold to end-users.19

Common Manufacturing Facilities, Production Processes and Employees. Some of the basic

production processes and equipment used to make PET film and equivalent PET film are substantially the

same.20 However, PET film that is coated to less than one gauge thickness is almost always made in a

single in-line production process; whereas equivalent PET film is made either by applying the thicker

coating in a separate offline process (as occurs at Dupont-Teijin Films, for example), or it is made in

dedicated facilities in which the line moves very slowly to allow for the thicker coating (as occurs at Agfa,

for example).21

Customer and Producer Perceptions. The evidence in the record of these investigations indicates

that producers and purchasers of PET film perceive film with thicker and thinner coatings (with one gauge

as the dividing line) as separate products. As noted above, the witnesses at the hearing in these

investigations characterized PET film and equivalent PET film as “distinctly different” products.22 Also,
 

23 See Questionnaire Responses cited in Petitioners’ Posthearing Brief, Part II at 5-6. 

 

24 In the 1991 antidumping duty investigations of PET film from Japan and Korea the Commission did not

compare the pricing of PET film and equivalent PET film. Because all equivalent PET film was then captively

consumed (i.e., transferred to related parties), there was no market-based price data for equivalent PET film. 

USITC Pub. 2383 at 16 and n.54 (May 1991).

 

25 CR at I-12, PR at I-9.

 

26 Indian Respondents’ Posthearing Brief, Exh. 1 at 22.

 

27 See United States Steel Group v. United States, 873 F. Supp. 673, 681-84 (CIT 1994), aff’d, 96 F.3d 1352

(Fed. Cir.1996).

 

28 19 U.S.C. § 1677(7)(G)(i).

 

29 The SAA expressly states that “the new section will not affect current Commission practice under which the

statutory requirement is satisfied if there is a reasonable overlap of competition.” SAA at 848, citing Fundicao

Tupy, S.A. v. United States, 678 F. Supp. 898, 902 (Ct. Int’l Trade 1988), aff’d, 859 F.2d 915 (Fed. Cir. 1988).

6

some purchasers and producers confirmed this perception of different products in their questionnaire

responses.23

Pricing. The record indicates a very large price differential between PET film and equivalent PET

film.24 The unit values of commercial shipments of PET film and equivalent PET film were $*** and $***,

respectively, in 1999, and $*** and $***, respectively, in 2001.25 A large price differential remains even if

equivalent PET film is compared only with PET film imaging products – weighted-average annual prices

for individual imaging products ranged from $*** to $*** over the period of investigation.26

We conclude that the definition of the domestic like product is all PET film, not including

equivalent PET film. We find that the record in these investigations, including the evidence on physical

characteristics and uses, channels of distribution, manufacturing facilities, customer and producer

perceptions, and pricing, considered together, weighs in favor of not including equivalent PET film in the

definition of the domestic like product.

D. Domestic Industry

In defining the domestic industry, the Commission’s general practice has been to include in the

industry all of the domestic production of the like product, whether toll-produced, captively consumed, or

sold in the domestic merchant market.27 Based on our definition of the domestic like product, we define the

domestic industry to include all domestic producers of PET film.

III. CUMULATION

A. In General

For purposes of evaluating the volume and price effects for a determination of material injury by

reason of the subject imports, section 771(7)(G)(i) of the Act requires the Commission to assess

cumulatively the volume and effect of imports of the subject merchandise from all countries as to which

petitions were filed and/or investigations self-initiated by Commerce on the same day, if such imports

compete with each other and with domestic like products in the U.S. market.28 In assessing whether subject

imports compete with each other and with the domestic like product,29 the Commission has generally

considered four factors, including:
 

30 See Certain Cast-Iron Pipe Fittings from Brazil, the Republic of Korea, and Taiwan, Inv. Nos. 

731-TA-278-280 (Final), USITC Pub. 1845 (May 1986), aff’d, Fundicao Tupy, S.A. v. United States, 678 F. Supp.

898 (Ct. Int’l Trade), aff’d, 859 F.2d 915 (Fed. Cir. 1988).

 

31 See, e.g., Wieland Werke, AG v. United States, 718 F. Supp. 50 (Ct. Int’l Trade 1989).

 

32 See Goss Graphic System, Inc. v. United States, 33 F. Supp. 2d 1082, 1087 (Ct. Int’l Trade 1998)

(“cumulation does not require two products to be highly fungible”); Mukand Ltd. v. United States, 937 F. Supp.

910, 916 (Ct. Int’l Trade 1996); Wieland Werke, 718 F. Supp. at 52 (“Completely overlapping markets are not

required.”).

 

33 CR at II-20, PR at II-13. These purchasers are virtually the only ones who addressed these comparisons in

their questionnaire responses.

 

34 CR at II-19, PR at II-13. These importers are the only ones that addressed these comparisons in their

questionnaire responses.

 

35 CR at II-19, PR at II-13. These producers are the only ones that addressed these comparisons in their

questionnaire responses.

7

(1) the degree of fungibility between the subject imports from different countries and between

imports and the domestic like product, including consideration of specific customer

requirements and other quality related questions;

(2) the presence of sales or offers to sell in the same geographic markets of subject

imports from different countries and the domestic like product;

(3) the existence of common or similar channels of distribution for subject imports

from different countries and the domestic like product; and

(4) whether the subject imports are simultaneously present in the market.30

While no single factor is necessarily determinative, and the list of factors is not exclusive, these

factors are intended to provide the Commission with a framework for determining whether the subject

imports compete with each other and with the domestic like product.31 Only a “reasonable overlap” of

competition is required.32

B. Analysis

The conditions for cumulating the subject imports have been satisfied. The petition was filed with

respect to all subject imports on the same day, and, based on the record in the final phase of these

investigations, we find that there is a reasonable overlap of competition among the subject imports, and

between the subject imports and the domestic like product. 

First, there is at least a moderate level of fungibility between domestic PET film and the subject

imports, and among imports from India and from Taiwan. Nineteen purchasers reported that domestically

produced PET film and Indian PET film are used in the same applications, 13 reported that U.S. and

Taiwan PET film are used in the same applications, and two reported that Indian and Taiwan film are used

in the same applications.33 Fifteen importers reported that U.S. and Indian PET film are used

interchangeably.34 Five U.S. producers reported that domestically produced PET film and the subject

imports are used interchangeably.35 Moreover, there also is a reasonable overlap between domestic PET
 

36 The record shows that over the period of investigation, shipments to the packaging segment accounted for ***

percent of U.S. merchant market shipments, *** percent of Indian imports, and *** percent of Taiwan imports;

shipments to the industrial segment accounted for *** percent of U.S. merchant market shipments, *** percent of

Indian imports, and *** percent of Taiwan imports; shipments to the electrical segment accounted for *** percent

of U.S. merchant market shipments, *** percent of Indian imports, and *** percent of Taiwan imports; shipments

to the magnetic media segment accounted for *** percent of U.S. merchant market shipments, *** percent of

Indian imports, and *** percent of Taiwan imports; and shipments to the imaging segment accounted for ***

percent of U.S. merchant market shipments, *** percent of Indian imports, and *** percent of Taiwan imports. 

See CR & PR at Tables D-7, -8, and -9.

 

37 CR at II-1, PR at II-1.

 

38 Id.

 

39 CR at II-2 n.5, PR at II-1 n.5. 

 

40 CR & PR at Table IV-2.

 

41 19 U.S.C. §§ 1671d(b) and 1673d(b).

 

42 19 U.S.C. § 1677(7)(B)(i). The Commission “may consider such other economic factors as are relevant to the

determination” but shall “identify each [such] factor . . . [a]nd explain in full its relevance to the determination.”

(continued...)

8

film and the subject imports, and among subject imports from India and Taiwan, in terms of the market

segments into which the products are sold.36

Second, the record indicates that subject imports from India and Taiwan, and PET film produced

in the United States, are sold in the same geographic markets throughout the United States. Of the 15

importers of subject merchandise who provided information on the geographic area in which they sell, eight

stated that they sell to the entire U.S. market, and seven stated that they sell in more specific areas.37 The

five U.S. producers selling to the merchant market reported that they generally sell throughout the United

States.38

Third, most sales of domestically produced PET film and of the subject imports from Taiwan are

made to processors who specialize in coating PET film for a particular end use. Some sales also are made

through distributors, and some are made directly to end-users. It appears that subject imports from India

are sold to end users to a greater extent than subject imports from Taiwan or the domestic product.39

Finally, the record shows that there were significant volumes of imports of the subject merchandise

from both India and Taiwan throughout the period of investigation.40 Consideration of the four factors

discussed above shows that there is a reasonable overlap of competition among the subject imports, and

between the subject imports and the domestic like product. 

We therefore find that a reasonable overlap of competition exists among the subject imports and

between subject imports and the domestic like product. Consequently, we cumulate subject imports from

India and Taiwan for the purpose of analyzing whether the domestic industry is materially injured by

reason of the subject imports.

IV. MATERIAL INJURY BY REASON OF LESS THAN FAIR VALUE AND SUBSIDIZED

IMPORTS

In the final phase of antidumping duty and countervailing duty investigations, the Commission

determines whether an industry in the United States is materially injured by reason of the imports under

investigation.41 In making this determination, the Commission must consider the volume of imports, their

effect on prices for the domestic like product, and their impact on domestic producers of the domestic like

product, but only in the context of U.S. production operations.42 The statute defines “material injury” as
 

42 (...continued)

19 U.S.C. § 1677(7)(B). See also, Angus Chemical Co. v. United States, 140 F.3d 1478 (Fed. Cir. 1998).

 

43 19 U.S.C. § 1677(7)(A).

 

44 19 U.S.C. § 1677(7)(C)(iii).

 

45 Id.

 46 U.S. producers’ internal consumption and transfers to related firms accounted for *** percent of total

U.S. shipments in 1999, *** percent of total U.S. shipments in 2000, and *** percent of total U.S.

shipments in 2001. See CR & PR at Table III-4.

 47 The captive production provision, 19 U.S.C. § 1677(7)(C)(iv), provides:

(iv) CAPTIVE PRODUCTION -- If domestic producers internally transfer significant

production of the domestic like product for the production of a downstream article and sell

significant production of the domestic like product in the merchant market, and the

Commission finds that --

(I) the domestic like product produced that is internally transferred for processing

into that downstream article does not enter the merchant market for the domestic

like product, 

(II) the domestic like product is the predominant material input in the production

of that downstream article, and

(III) the production of the domestic like product sold in the merchant market is not

generally used in the production of that downstream article,

then the Commission, in determining market share and the factors affecting financial

performance set forth in clause (iii), shall focus primarily on the merchant market for the

domestic like product.

 

48 Commissioner Bragg does not join the remainder of section IV.A. Consistent with her previous interpretation

(continued...)

9

“harm which is not inconsequential, immaterial, or unimportant.”43 In assessing whether the domestic

industry is materially injured by reason of subject imports, we consider all relevant economic factors that

bear on the state of the industry in the United States.44 No single factor is dispositive, and all relevant

factors are considered “within the context of the business cycle and conditions of competition that are

distinctive to the affected industry.”45

For the reasons discussed below, we determine that the domestic industry is materially injured by

reason of cumulated subject imports from India and Taiwan found to be sold in the United States at LTFV

and subject imports from India found to be subsidized.

A. Captive Production

The domestic industry captively consumes part of its production of the domestic like product in the

manufacture of downstream articles.46 Accordingly, we have considered whether the statutory captive

production provision requires us to focus our analysis primarily on the merchant market when assessing

market share and the factors affecting the financial performance of the domestic industry.47 48
 

48 (...continued)

of the captive production provision, Commissioner Bragg finds that the three statutory criteria are not met;

therefore, Commissioner Bragg does not apply the captive production provision in these investigations. She does,

however, join the majority in recognizing the domestic industry’s captive production as a condition of competition. 

In particular, Commissioner Bragg finds that the threshold criterion is satisfied given that *** percent of

U.S. shipments of domestic production in 2001 is devoted to the merchant market and *** percent is devoted to

captive production. CR/PR at Table III-4. The first statutory criterion is not satisfied because the same kind of

PET film that is being captively consumed is being sold in the merchant market. CR/PR at Tables D-7, 11-14. 

The second statutory criterion is not satisfied; although there is some debate regarding the data to be analyzed (i.e.,

whether based upon relative costs, volume, or weight), PET film nonetheless does not account for a predominant

share of the value of the downstream products on a percentage basis using any of the data. Memorandum from ***

(May 30, 2002). Nor is the third statutory criterion satisfied based on the fact that the domestic like product is sold

in three principal captive downstream segments (industrial, imaging, and magnetic), and these segments accounted

for *** percent of merchant market sales of PET film (two domestic producers, ***, also reported that they

internally consumed PET film in the production of equivalent PET film that was then used to produce downstream

products in the packaging, imaging, and industrial segments – consideration of such internal consumption under

the captive production provision indicates that merchant market purchasers of PET film used *** percent of their

purchases in 2001 to produce downstream articles in the industrial, imaging, magnetic, and packaging segments);

therefore, the domestic like product sold in the merchant market is generally used in the production of the same

downstream articles resulting from captive production. CR/PR at Tables D-7 and 11-14, and Producer

Questionnaire Responses of ***. For these reasons, Commissioner Bragg determines that the captive production

provision does not apply; nevertheless, Commissioner Bragg considers the domestic industry’s captive production

as a condition of competition.

 

49 See CR & PR at Table III-4.

 

50 See, e.g., Certain Hot-Rolled Steel Products From Japan, Inv. No. 731-TA-807 (Final), USITC Pub. 3202 at

32-33 (June 1999).

 

51 Domestic Producer Questionnaire Responses of ***. 

 

52 Neither the statute nor the legislative history specify whether this criterion should be analyzed in terms of

the relative cost, weight or volume of the material inputs used in producing the downstream products. 

However, we traditionally have conducted this analysis in terms of costs. See, e.g., Beryllium Metal and

High-Beryllium Alloys from Kazakstan, Inv. No. 731-TA-746 (Final), USITC Pub. 3019 at 8-9 (Feb. 1997); and

Pure Magnesium from China, Israel and Russia, Inv. Nos. 701-TA-403 and 731-TA-895-897 (Final), USITC Pub.

3467 at 16 (Nov. 2001). In certain circumstances it may be appropriate to analyze this criterion using relative

weight or volume, but we do not find convincing reasons to depart from our traditional analysis in these

investigations. We also note that Petitioners did not suggest this interpretation until the hearing, and consequently

(continued...)

10

Significant production of the domestic like product is both internally transferred and sold in the

merchant market. In 2001, for instance, the domestic industry’s captive consumption accounted for ***

percent of the industry’s total U.S. shipments, and shipments to the merchant market accounted for ***

percent.49 Accordingly, we find that the threshold criterion is satisfied. 

We interpret the first statutory criterion of the captive production provision to ask whether the

actual domestic like product that is transferred internally for further processing enters the merchant

market.50 Under this interpretation, the first criterion is satisfied because the domestic industry’s captive

consumption of the like product is used to produce downstream products and does not enter the merchant

market.51

The second statutory criterion asks whether the domestic like product is the predominant material

input in the production of the downstream article(s). We analyze this criterion in terms of relative cost of

the material inputs used in producing the downstream products.52 PET film is used to make a variety of
 

52 (...continued)

the record on this issue is limited. 

 

53 Domestic Producer Questionnaire Responses.

 

54 Note of telephone conversations of Commission staff with *** (May 30, 2002).

 

55 See, e.g., Nonfrozen Concentrated Apple Juice from China, Inv. No. 731-TA-841 (Final), USITC Pub. 3303 at

10 (May 2000); Certain Emulsion Styrene-Butadiene Rubber from Brazil, Korea, and Mexico, Inv. Nos. 731-

TA-794-796 (Final), USITC Pub. 3190 at 14 (May 1999).

 

56 CR & PR at Table D-7.

 

57 CR & PR at Table II-1, CR at I-5 n.18, PR at I-4 n.18.

 

58 CR at II-11-13, PR at II-7-9

 

59 CR at I-6 and II-13, PR at I-5 and II-9.

 

60 CR at I-6, PR at I-5.

 

61 Hearing transcript at 18 (Cook, Mitsubishi Polyester Films).

 

62 CR at III-5-6, PR at III-3-4.

 

63 CR & PR at Tables III-1-2.

11

downstream products (for example, ***).53 For some of these, PET film is clearly the predominant material

input in terms of cost, and for others it is not.54 In short, because the evidence gathered in these final phase

investigations concerning the second statutory criterion is inconclusive, we cannot conclude that the second

statutory criterion is met and we do not apply the provision. However, even though we have determined not

to apply the captive production provision, we have recognized that captive consumption is an important

condition of competition in this market.55

B. Other Conditions of Competition

The following other conditions of competition are included in our analysis.

The market for PET film in the United States can be divided into five broad segments -- packaging,

industrial, magnetics, electrical, and imaging. Domestic product has a substantial presence in all five

segments.56 The packaging and industrial segments of the PET film market together accounted for over 60

percent of domestic consumption in 2001 (packaging accounting for about 28-29 percent and industrial for

about 35-40 percent).57 Overall demand for PET film appears to have been growing until 2000 or 2001,

when it experienced a slowdown.58 Demand in the packaging and industrial segments has remained strong

and has grown over the period of investigation, while demand in magnetic media applications has declined

given the increasing popularity of CDs and DVDs, which substitute for audio and video tapes.59

PET film production is capital intensive; in order to recover the high fixed costs involved,

producers must achieve and sustain high rates of capacity utilization.60 It is important for PET film

producers to obtain orders for large volumes of commodity grade product, as it is costly to temporarily shut

down production lines to reconfigure them for product changes.61

The domestic PET film industry underwent restructuring during the period of investigation. Many

of the firms in the domestic industry have changed ownership, or have entered into joint ventures with other

(often foreign) producers.62 There was one significant new entrant into the U.S. industry during the period

of investigation. SKCA, which is owned by the Korean producer SKC, opened a new plant with

substantial capacity in Georgia in 1999.63

Nonsubject imports were a substantial source of supply to the U.S. market throughout the period

of investigation, albeit at declining levels. Nonsubject imports accounted for *** percent of apparent U.S.
 

64 CR & PR at Table IV-4.

 

65 In 1999, U.S. producers imported 119.487 million pounds out of a total of 202.289 million pounds of

nonsubject imports; in 2000, U.S. producers imported 114.869 million pounds out of a total of 185.884 million

pounds of nonsubject imports; and in 2001, U.S. producers imported 79.589 million pounds out of a total of

134.487 million pounds of nonsubject imports. CR & PR at Tables IV-1 and IV-2. 

 

66 Hearing Transcript at 35 and 60-62 (Gazard, Dupont Teijin Films) and 70-71 and 77 (Greenwald, counsel to

Petitioners); see also CR at IV-1 n.1 and Table IV-1, PR at IV-1 n. 1 and Table IV-1.

 

67 CR at II-19-23, PR at II-13-16.

 

68 CR & PR at Table II-1.

 

69 56 Fed. Reg. 25669 (June 5, 1991). In the preliminary investigations, the Commission made a negative

determination with respect to imports of PET film from Taiwan. Polyethylene Terephthalate Film, Sheet, and

Strip from Japan, the Republic of Korea, and Taiwan, Inv. Nos. 731-TA-458-460 (Preliminary), USITC Pub. 2292

at 1 (June 1990).

 

70 60 Fed. Reg. 52366 (Oct. 6, 1995).

 

71 Polyethylene Terephthalate (PET) Film from Korea, Inv. No. 731-TA-459 (Review), USITC Pub. 3278 (Feb.

2000).

 

72 19 U.S.C. § 1677(7)(C)(i).

12

consumption in 1999, *** percent in 2000, and *** percent in 2001.64 U.S. producers imported the

majority of these nonsubject imports throughout the period of investigation.65 Korea was the largest

supplier of nonsubject imports during the period of investigation. The record indicates that Korean

producer SKC had substantial exports to the United States prior to bringing the new U.S. (SKCA) plant in

Georgia on-line in 1999, and that the production of the (SKCA) U.S. plant gradually replaced imports from

Korea as the plant became fully operational.66

The record indicates that there is at least a moderate degree of substitutability between

domestically produced PET film and the subject imports.67 The subject imports compete primarily in the

industrial and packaging segments of the market, which together accounted for over 60 percent of 2001

consumption.68 However, subject imports were present in the electrical and imaging segments as well.

The domestic industry has obtained relief from unfairly traded imports in the past. Domestic

producers filed an antidumping duty petition on imports from Korea, Japan, and Taiwan in 1990, and

antidumping duty orders affecting imports from Japan and Korea were issued in 1991.69 The order on PET

film from Japan was revoked in 1995, after the domestic industry informed the Department of Commerce

that it was no longer interested in the maintenance of that order.70 The antidumping duty order on PET film

from Korea was subject to an expedited sunset review in 2000, in which the Commission found that

revocation of that order would be likely to lead to continuation or recurrence of material injury to the

domestic industry within a reasonably foreseeable time.71 That order, therefore, remains in effect.

C. Volume of Subject Imports

Section 771(7)(C)(i) of the Act provides that the “Commission shall consider whether the volume

of imports of the merchandise, or any increase in that volume, either in absolute terms or relative to

production or consumption in the United States, is significant.”72

The quantity of subject imports rose from 43.2 million pounds in 1999 to 60.5 million pounds in

2000, and then declined to 49.3 million pounds in 2001, for an overall increase of 14.1 percent over the
 

73 CR & PR at Table IV-2.

 

74 CR & PR at Table IV-4.

 

75 CR & PR at Table IV-5. 

 

76 The market share of subject imports in the packaging segment of the U.S. merchant market was estimated to

be *** percent in 1999, *** percent in 2000, and *** percent in 2001. The market share of subject imports in the

industrial segment of the market was estimated to be *** percent in 1999, *** percent in 2000, and *** percent in

2001. Staff Estimates of Market Share from Appendix D (with adjustments for underreporting of imported

product).

 

77 Petitioners’ Posthearing Brief, Part II at 23 (May 16, 2002) (a graph reflecting official quarterly import

statistics), and Respondents’ Posthearing Brief at Exhibits 13 and 15 (May 16, 2002).

 

78 19 U.S.C. § 1677(7)(C)(ii).

 

79 CR at II-17-23, PR at II-11-16.

 

80 CR & PR at Table V-2 and Appendix E.

13

period of investigation.73 The market share of subject imports, measured by total domestic consumption,

rose from *** percent in 1999 to *** percent in 2000, before declining *** to *** percent in 2001.74

Measured against only domestic open market consumption, the market share of subject imports was 7.1

percent in 1999, 9.7 percent in 2000, and 9.1 percent in 2001.75 We note also that the market share of

subject imports was generally higher in the commodity-grade packaging and industrial segments of the U.S.

merchant market.76

Data on the record indicate that subject imports from India and Taiwan declined in the second half

of 2001, after the filing of the petition and consistent with a decline in demand.77 Despite declines from

2000 to 2001, the absolute volume and market share held by subject imports remained at levels that were

significant and higher than those at the beginning of the period examined.

We find the volume and increase in volume of cumulated subject imports, both in absolute terms

and relative to apparent consumption in the United States, to be significant.

D. Price Effects of the Subject Imports

Section 771(7)(C)(ii) of the Act provides that, in evaluating the price effects of the subject imports,

the Commission shall consider whether –

 (I) there has been significant price underselling by the imported merchandise as compared

with the price of domestic like products of the United States, and

 (II) the effect of imports of such merchandise otherwise depresses prices to a significant

degree or prevents price increases, which otherwise would have occurred, to a significant

degree.78

The record in these investigations indicates that domestically produced PET film and the subject

imports are at least moderately substitutable, and that price is a significant factor in purchasing decisions.79

The Commission collected pricing data on 15 PET film products, and collected separate data for

each product with respect to plain film, corona-treated film, and other treated film. These data indicate that

prices for domestically produced PET film generally were either stable or had increased somewhat over the

period of investigation.80 The prices of subject imports followed a similar trend, but for the most part were
 

81 CR & PR at Table V-2 and Appendix E.

 

82 CR at V-6, PR at V-5.

 

83 CR & PR at Table V-2 and Appendix E.

 

84 We note that nonsubject imports were generally priced higher than subject imports, and underselling by

nonsubject imports was less pronounced than that by subject imports. CR & PR at Table V-2 and Appendix E.

 

85 Indian Respondents’ Prehearing Brief at 29.

 

86 CR at II-18, PR at II-12.

 

87 This ratio was *** percent in 1999, *** percent in 2000, and *** percent in 2001. CR & PR at Table VI-1.

 

88 The industry’s unit raw material cost rose from $*** per pound in 1999 to $*** per pound in 2001. Staff

Worksheet entitled “Operations on PET film, Unit Value (per pound)” (June 7, 2002) (data from Producers’

Questionnaire Responses).

 

89 The industry’s unit other factory costs rose from $*** per pound to $*** per pound in 2001. Staff Worksheet

entitled “Operations on PET film, Unit Value (per pound)” (June 7, 2002).

 

90 CR & PR at Table VI-3. *** provided, as an example of rising costs, a contract for a basic product under

which prices based on a cost index formula rose $*** per pound from 1999 to 2001. Petitioners’ Posthearing

Brief, Pt. II at 30. 

 

91 CR & PR at Table VI-1, Hearing transcript at 82 (Cook, Mitsubishi Polyester Films of America), 107 and 122

(Gazard, Dupont Teijin Films).

 

92 Petitioners’ Posthearing Brief, Pt. II at 36-38.

 

93 CR & PR at Appendix E.

14

at lower levels.81 Subject imports undersold domestically produced PET film in 183 of the 239 quarterly

sales comparisons, for a 76.6 percent incidence of underselling.82 The margins of underselling by subject

imports were in many cases substantial and remained substantial throughout the period of investigation.83

We find this underselling to be significant.84

We are not persuaded by the Indian respondents’ argument that these substantial but varying ***

prices for subject imports were due to quality factors and longer lead times for delivery.85 The record

indicates that 28 of 33 purchasers require certification or qualification for all or most of their purchases

and the remaining purchasers require it for some of their purchases. Certification depends on several

factors, including quality and delivery.86 Thus, once a supplier has been qualified or certified, the

importance of quality or delivery terms is substantially reduced or eliminated. Finally, there is no evidence

that any quality or delivery issues would account for the large price differences seen between subject

imports and domestic product in these investigations.

Even though prices of domestic PET film producers remained steady or rose slightly, the record

shows that the domestic industry experienced a substantial cost-price squeeze, particularly towards the end

of the period of investigation. In particular, the ratio of the cost of goods sold to net sales increased

steadily throughout the period investigated.87 Over the period of investigation, the industry’s costs were

driven up by increases in energy and raw material prices,88 and by the fact that fixed costs were being

spread over a shrinking level of domestic sales.89 The industry’s unit cost of goods sold rose from 1999 to

2001, and it also rose for each individual producer except ***.90 During this same time, the domestic

industry was unable to raise prices sufficiently to cover these increases in costs.91 Several domestic

producers attempted to raise prices over the period of investigation and indicated to their customers that

these price increases were needed to counteract rising costs.92 However, the record indicates that their

attempts were unsuccessful.93 In light of the significant volume of subject imports, the substitutability of

subject imports and domestic product, the significant underselling by subject imports, and the failure of
 

94 We examined whether the entry of SKCA, rather than subject imports, explains the negative price effects in

this market, as argued by Respondents. The record indicates ***. See Pricing Data Worksheets (released June 3,

2002).

 

95 We recognize that many of petitioners’ allegations of lost sales and lost revenues could not be substantiated. 

This fact, however, does not outweigh the other evidence, noted above, of significant adverse price effects by the

subject imports.

 

96 19 U.S.C. § 1677(7)(C)(iii). See also SAA at 851, 885 (“In material injury determinations, the Commission

considers, in addition to imports, other factors that may be contributing to overall injury. While these factors, in

some cases, may account for the injury to the domestic industry, they also may demonstrate that an industry is

facing difficulties from a variety of sources and is vulnerable to dumped or subsidized imports.” Id. at 885.).

 

97 19 U.S.C. § 1677(7)(C)(iii). See also SAA at 851, 885; Live Cattle from Canada and Mexico, Inv. Nos. 701-

TA-386, 731-TA-812-813 (Preliminary), USITC Pub. 3155 (Feb. 1999) at 25 n.148.

 

98 The statute instructs the Commission to consider the “magnitude of the dumping margin” in an antidumping

proceeding as part of its consideration of the impact of imports. 19 U.S.C. § 1677(7)(C)(iii) (V). In its final

determinations, Commerce found the following dumping margins: for India, 24.11 percent for Ester

Industries, Ltd., zero percent for Polyplex Corp., Ltd. (down from 10.34 percent, after adjusting for export

subsidies for which it determined to impose countervailing duties), and 24.11 percent for all others; and for

Taiwan, 2.70 percent for NanYa Plastics Corporation, Ltd., 2.05 percent for Shinkong Synthetic Fibers

Corporation, and 2.56 percent for all others. Notice of Final Determination of Sales at Less Than Fair Value: 

Polyethylene Terephthalate Film, Sheet, and Strip From India, 67 Fed. Reg. 34899, 34901(May 16, 2002), and

Notice of Final Determination of Sales at Less Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip

(PET Film) from Taiwan, 67 Fed. Reg. 35474, 35475 (May 20, 2002).

 

99 Commissioner Bragg notes that she does not ordinarily consider the magnitude of the margin of dumping to

be of particular significance in evaluating the effects of subject imports on domestic producers. See Separate and

Dissenting Views of Commissioner Lynn M. Bragg in Bicycles from China, Inv. No. 731-TA-731 (Final), USITC

Pub. 2968 (June 1996).

 

100 The industry’s capacity was *** million pounds in 1999, *** million pounds in 2000, and *** million

pounds in 2001. CR & PR at Table III-3. 

 

101 The industry’s production was *** million pounds in 1999, *** million pounds in 2000, and *** million

(continued...)

15

domestic prices to rise in the face of significant increased cost, we conclude that subject imports had a

significant price suppressing effect.94

Based on this evidence, we find there has been significant price underselling by imports of the

subject merchandise, and that subject imports suppressed prices to a significant degree.95

E. Impact of the Subject Imports

In examining the impact of the subject imports on the domestic industry, we consider all relevant

economic factors that bear on the state of the industry in the United States.96 These factors include

output, sales, inventories, capacity utilization, market share, employment, wages, productivity, profits, cash

flow, return on investment, ability to raise capital, and research and development. No single factor is

dispositive and all relevant factors are considered “within the context of the business cycle and conditions

of competition that are distinctive to the affected industry.”97 98 99

The domestic industry’s capacity increased between 1999 and 2000 (mainly due to SKCA’s entry

into the market), and then declined in 2001.100 However, the domestic industry’s production declined in

each year of the period of investigation,101 and capacity utilization declined throughout the period of
 

101 (...continued)

pounds in 2001. CR & PR at Table III-3. 

 

102 Capacity utilization fell from *** percent in 1999 to *** percent in 2000, and to *** percent in 2001. CR &

PR at Table III-3. 

 

103 U.S. shipments were *** million pounds in 1999, *** million pounds in 2000, and *** million pounds in

2001. CR & PR at Table III-4. U.S. shipments to the merchant market were 364.789 million pounds in 1999,

370.143 million pounds in 2000, and 366.840 million pounds in 2001. Id. The domestic industry’s net sales were

*** million pounds in 1999, *** million pounds in 2000, and *** million pounds in 2000. CR & PR at Table VI1. 

 

104 The ratio was *** percent in 1999, *** percent in 2000, and *** percent in 2001. CR & PR at Table III-5.

 

105 The number of production and related workers fell from *** in 1999 to *** in 2000 and to *** in 2001. 

Hours worked fell from *** million hours in 1999 to *** million hours in 2000 and to *** million hours in 2001. 

Wages paid fell from $*** million in 1999 to $*** million in 2000 and $*** million in 2001. Hourly wages and

productivity rose, however. Hourly wages increased from $*** in 1999 to $*** in 2000 and to $*** in 2001. 

Productivity increased from *** pounds per hour in 1999 to *** pounds per hour in 2000 and to *** pounds per

hour in 2001. CR & PR at Table III-6.

 

106 Operating income was $*** million in 1999, $*** million in 2000, and a loss of $*** million in 2001. CR

& PR at Table VI-1. Operating income on commercial sales was $*** million in 1999, a loss of $*** million in

2000, and a loss of $*** million in 2001. CR & PR at Table VI-4. 

 

107 This ratio was *** percent in 1999, *** percent in 2000, and negative *** percent in 2001. CR & PR at

Table VI-1. The ratio of operating income to commercial sales was *** percent in 1999, negative *** percent in

2000, and negative *** percent in 2001. CR & PR at Table VI-4.

 

108 CR & PR at Table VI-1. The number of domestic producers reporting operating losses on commercial sales

(with six firms reporting) rose from two to four firms. CR & PR at Table VI-4.

 

109 CR & PR at Table VI-3.

16

investigation.102 The industry’s U.S. shipments and sales increased between 1999 and 2000, but then

declined in 2001, to levels below those of 1999.103 Although the domestic industry gained market share

over the period of investigation, this increase largely reflected SKC’s shift in production from Korea, a

nonsubject country, to the United States. Inventories as a ratio to U.S. shipments declined from 1999 to

2000, before increasing *** in 2001.104 Most employment related indicators in the PET film industry

declined over the period of investigation.105

The financial position of the industry deteriorated throughout the period of investigation, with

operating income declining *** in 2001,106 and the industry’s ratio of operating income to net sales also

fell.107 The number of domestic producers reporting operating losses (with seven firms reporting) rose from

two to five firms.108 As discussed above, this decline in financial position was due to a cost-price squeeze,

as unit cost of goods increased and net sales value fell. While the drop in unit net sales value was partly

due to a change in product mix, the record indicates price suppression by subject imports and the margin

between unit sales value and unit cost of goods narrowed significantly over the period of investigation. 

Respondents have argued that the domestic industry’s injury was due to the decline in demand in

the imaging and magnetic segments, and the shift of some domestic producers to lower-valued industrial

and packaging products. However, while this shift may have had some negative impact on certain

producers, it does not change the fact that subject imports were a material cause of injury. Even those

producers that did not experience such a shift in their product mix experienced a significant deterioration in

their financial condition. The record shows that the producers that focused their production on industrial

and packaging films (e.g., ***) experienced similar financial problems as the other domestic producers.109

*** experienced sharp drops in their operating income to net sales ratios over the period of investigation. 
 

110 We do not find that the industry’s poor financial performance is substantially due to any extraordinary startup costs incurred by SKCA in bringing its new plant on line. By 2001, when the domestic industry’s financial

performance deteriorated ***, SKCA’s plant had been in production for three years. We also do not find that the

new production by SKCA was a material cause of injury to the domestic industry. First, we must consider the

domestic industry as a whole. 19 U.S.C. §1677(4)(A). Second, as discussed earlier, much of SKCA’s domestic

production replaced its nonsubject imports. Finally, as also discussed earlier, SKCA was ***.

 

111 CR & PR at Table VI-3.

 

112 Id.

17

***.110 ***.111 Moreover, as the packaging and industrial segments grew in importance to domestic

producers, the effect of subject imports, which were heavily concentrated in these segments, was magnified. 

Finally, there is no reason to expect that the shift to increased production of packaging and industrial films

alone should lead to operating losses as large as those experienced by the domestic industry; ***.112

In sum, the record shows there have been significant increases in the volume and market share of

the subject imports, that there was widespread underselling of the domestic product by subject imports and

that subject imports had a significant suppressing effect on domestic prices. Suppressed prices in the U.S.

market led to severe financial declines and a deterioration in the overall condition of the domestic industry

during the period of investigation. Accordingly, we find that the subject imports are having a significant

adverse impact on the domestic industry.

CONCLUSION

For the foregoing reasons, we determine that an industry in the United States is materially injured

by reason of imports of PET film from India and Taiwan that are sold in the United States at less than fair

value and by imports of PET film from India that are subsidized.