UNITED STATES INTERNATIONAL TRADE COMMISSION

LOW ENRICHED URANIUM FROM FRANCE, GERMANY,

THE NETHERLANDS, AND THE UNITED KINGDOM

Investigations Nos. 701-TA-409-412 and 731-TA-909 (Final)

DETERMINATIONS AND VIEWS OF THE COMMISSION

(USITC Publication No. 3486, FEBRUARY 2002)
Low Enriched Uranium Determinations and Views

 

1

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

 

2

 Vice Chairman Deanna Tanner Okun not participating.

 

3

 19 U.S.C. § 1671d(b).

 

4

 Commissioner Lynn M. Bragg determines that an industry in the United States is threatened with material injury.

 

5

 Vice Chairman Deanna Tanner Okun not participating.

 

6

 19 U.S.C. § 1673d(b). 

 

7

 Commissioner Lynn M. Bragg determines that an industry in the United States is threatened with material injury.

 

8

 19 U.S.C. § 1671b(b).

 

9

 19 U.S.C. § 1673b(b). Following final determinations by Commerce of sales at not less than fair value for imports

of low enriched uranium from Germany, the Netherlands, and the United Kingdom (66 FR 65886, December 21, 2001),

the Commission terminated investigations Nos. 731-TA-910-912 (Final) effective December 21, 2001 (67 FR 344,

January 3, 2002).

Invs. Nos. 701-TA-409-412 and 731-TA-909 (Final) 1

UNITED STATES INTERNATIONAL TRADE COMMISSION

Investigations Nos. 701-TA-409-412 and 731-TA-909 (Final)

LOW ENRICHED URANIUM FROM FRANCE, GERMANY,

THE NETHERLANDS, AND THE UNITED KINGDOM

DETERMINATIONS

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

Trade Commission (Commission) determines,2 pursuant to section 705(b) of the Tariff Act of 1930 (the

Act),3 that an industry in the United States is materially injured4 by reason of imports from France,

Germany, the Netherlands, and the United Kingdom of low enriched uranium, provided for in subheadings

2844.20.00 or 2844.40.00 of the Harmonized Tariff Schedule of the United States, that have been found

by the Department of Commerce (Commerce) to be subsidized.

The Commission also determines,5 pursuant to section 735(b) of the Act,6 that an industry in the

United States is materially injured7 by reason of imports from France of low enriched uranium that have

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

BACKGROUND

The Commission instituted these investigations effective December 7, 2000, following receipt of a

petition filed with the Commission and Commerce by USEC Inc. and its wholly owned subsidiary United

States Enrichment Corp., Bethesda, MD. The final phase of the investigations was scheduled by the

Commission following notification of preliminary determinations by Commerce that imports of low

enriched uranium from France, Germany, the Netherlands, and the United Kingdom were being

subsidized within the meaning of section 703(b) of the Act8 and were being sold at LTFV within the

meaning of section 733(b) of the Act.9 Notice of the scheduling 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
Low Enriched Uranium

 

10 66 FR 46467, September 5, 2001. Subsequently, the Commission published notice of a revised schedule for the

investigations and public hearing (66 FR 57986, November 19, 2001).

2 U.S. International Trade Commission

Office of the Secretary, U.S. International Trade Commission, Washington, DC, and by publishing the

notice in the Federal Register of September 5, 2001.10 The hearing was held in Washington, DC, on

December 14, 2001, and all persons who requested the opportunity were permitted to appear in person or

by counsel.
Determinations and Views

 

1

 Commissioner Bragg finds that an industry in the United States is threatened with material injury by reason of

imports of LEU from France, Germany, the Netherlands, and the United Kingdom found to be subsidized, and by

imports of LEU from France found to be sold in the United States at LTFV. She joins Parts I-III.A of these Views. 

See Separate Views of Commissioner Lynn M. Bragg Regarding Threat of Material Injury.

 

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).

Invs. Nos. 701-TA-409-412 and 731-TA-909 (Final) 3

VIEWS OF THE COMMISSION

Investigations Nos. 701-TA-409-412 and 731-TA-909 (Final)

LOW ENRICHED URANIUM FROM FRANCE, GERMANY,

THE NETHERLANDS, AND THE UNITED KINGDOM

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 low enriched uranium (“LEU”) from France, Germany, the

Netherlands, and the United Kingdom found to be subsidized, and by imports of LEU from France found

to be sold in the United States at less than fair value (“LTFV”).1

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
Low Enriched Uranium

 

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 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: Low Enriched Uranium From France, 66 Fed.

Reg. 65877 (Dec. 21, 2001).

 

10 Id.

4 U.S. International Trade 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

B. Product Description

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

investigations, LEU, as:

enriched uranium hexafluoride (UF6) with a U235 product assay of less than 20 percent

that has not been converted into another chemical form, such as UO2, or fabricated into

nuclear fuel assemblies, regardless of the means by which the LEU is produced

(including LEU produced through the down-blending of highly enriched uranium).9 

Commerce’s notices specify five types of merchandise that are outside the scope of its investigations: (i)

enriched uranium hexafluoride with a U235 assay of 20 percent or greater (highly enriched uranium); (ii)

fabricated LEU, defined as “enriched uranium dioxide (UO2), whether or not contained in nuclear fuel

rods or assemblies;” (iii) natural uranium concentrates (U3O8) with a U235 concentration of no greater

than 0.711 percent; (iv) natural uranium concentrates converted into uranium hexaflouride with a U235

concentration of no greater than 0.711 percent; and (v) LEU owned by a foreign utility end-user and

imported into the United States solely for purposes of conversion by a U.S. fabricator into uranium dioxide

and/or fabrication into fuel assemblies, provided that the uranium dioxide and/or fuel assemblies: (a)

remain in the possession and control of the fabricator, the foreign end-user, or their designated

transporter; and (b) are re-exported within 18 months of their entry.10

C. Domestic Like Product

None of the parties to these investigations have contested the finding in the preliminary

determinations of a single domestic like product consisting of all LEU corresponding to the scope of these

investigations, and no new information has emerged in the final phase of these investigations that calls into
Determinations and Views

 

11 19 U.S.C. § 1677(4)(A).

 

12 See United States Steel Group v. United States, 873 F. Supp. 673, 681-84 (Ct. Int’l Trade 1994), aff’d, 96 F.3d 1352

(Fed. Cir.1996).

 

13 We note that there is no issue in these investigations as to whether USEC should be excluded from the

domestic industry pursuant to 19 U.S.C. §1677(4)(B). USEC is neither related to an exporter or importer of subject

merchandise nor is it an importer of the subject merchandise.

 

14 Confidential Report (“CR”) at I-13, Public Report (“PR”) at I-10.

 

15 19 U.S.C. §1677(7)(G)(i). 

 

16 19 U.S.C. §1677(7)(C)(ii).

Invs. Nos. 701-TA-409-412 and 731-TA-909 (Final) 5

question our earlier decision. Accordingly, for the reasons stated in our preliminary determinations, we

determine that there is one domestic like product consisting of all LEU corresponding to the scope of

these investigations as amended by Commerce in its final determinations. 

D. Domestic Industry

Section 771(4) of the Act defines the relevant 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

the major proportion of that product.”11 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 tollproduced, captively consumed, or sold in the domestic merchant market.12 Based on our like product

determination, we determine that there is a single domestic industry consisting of the sole domestic

producer of LEU, USEC.13

Most LEU is produced pursuant to arrangements in which utilities pay the enricher in cash for the

enrichment component of the LEU (measured in “separative work units” or “SWUs”), and deliver a

quantity of natural UF6 to the enricher equal to the amount of converted uranium deemed to be contained

in the LEU. These transactions are referred to hereinafter as “SWU transactions” or “SWU sales.” In

addition, some LEU is sold in transactions where the customer pays an all-inclusive price for both natural

UF6 feedstock and the enrichment component.14 These transactions are referred to hereinafter as “EUP

transactions” or “EUP sales.”

Respondents and AHUG argue that the Commission is precluded from conducting the analysis

necessary for deciding whether to cumulate subject imports or for evaluating price effects, because

foreign enrichers and USEC sell enrichment services and not LEU. We find these arguments

unpersuasive. The statute instructs the Commission to cumulate “if such imports [of the subject

merchandise] compete with each other and with domestic like products in the United States market.”15 In

analyzing price effects, the Commission is instructed to “[evaluate] the effects of [the subject]

merchandise on prices.”16 As noted above, Commerce has defined the subject merchandise to include all

LEU entering the United States. Moreover, it is undisputed that LEU is a tangible product both when it is

imported and when it is produced in the United States. Thus, contrary to Respondents’ assertions, the

Commission is required to make the evaluations relating to underselling and cumulation specified in the

statute, as part of its injury analysis.

Respondents and AHUG have not challenged the Commission’s conclusion from the preliminary

phase of the investigations that USEC and not the utilities is the domestic producer of LEU. Where
Low Enriched Uranium

 

17 19 U.S.C. § 1677(7)(G)(i).

 

18 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).

 

19 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).

 

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

 

21 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.”).

6 U.S. International Trade Commission

foreign producers win enrichment contracts, it results in subject imports of LEU that may injure the U.S.

production operations of the domestic producer USEC. This situation is squarely within the antidumping

and countervailing duty laws, whether or not enrichment contracts are formally considered service

transactions in other contexts.

II. 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.17 In assessing whether

subject imports compete with each other and with the domestic like product,18 the Commission has

generally considered four factors, including:

(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.19

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.20 Only a “reasonable overlap” of

competition is required.21
Determinations and Views

 

22 CR at I-12, PR at I-10.

 

23 CR/PR at Appendix. E.

 

24 See CR/PR at Appendix. E. 

 

25 CR at I-13, PR at I-10.

 

26 CR/PR at Table IV-1.

 

27 Commissioner Bragg finds that the same analysis which justifies cumulation for purposes of the Commission’s

majority’s assessment of present material injury applies equally to her assessment of a threat of material injury.

 

28 Respondents have argued that the Commission should not cumulate imports from the Netherlands and the

United Kingdom with those from Germany and France because the countervailing duty rates for the Netherlands and

the United Kingdom were attributed to those countries by Commerce based on a subsidy found in Germany

pursuant to the “international consortium” provision in 19 U.S.C. §1671(d). Respondents’ Resubmission of

Comments on the Accuracy, Reliability, and Probative Value of New Information Released After the Submission of

Respondents’ Posthearing Brief, Jan. 18, 2002, at 16 n.52. We reject Respondents’ arguments on two grounds. First,

their argument would essentially require that the Commission supplant Commerce’s final determinations of

subsidization, a task reserved for Commerce by the statute. See generally, e.g., Algoma Steel Corp. v. United States,

865 F.2d 240, 242 (Fed. Cir. 1989). Second, the statute mandates cumulation of subject imports that were the subject

of simultaneously filed petitions and that compete with each other and the domestic like product, with only four

specifically enumerated exceptions. As the subject imports were the subject of simultaneously filed petitions and

those imports compete with the each other and the domestic like product, and none of the four exceptions apply, we

cumulate the imports from the four subject countries.

 

29 19 U.S.C. §§ 1671d(b) and 1673d(b).

Invs. Nos. 701-TA-409-412 and 731-TA-909 (Final) 7

B. Analysis

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, LEU

from one manufacturer is highly interchangeable with LEU produced by other enrichers,22 as underscored

by the fact that ***.23 Second, the record indicates that the subject imports are sold or offered for sale in

the same geographic markets as domestically-produced LEU.24 Third, the channels of distribution for

subject imports and domestically-produced LEU are similar, and the products are sold to the same

customers.25 Fourth, imports from each of the subject countries have been present in the U.S. market

throughout the period of investigation.26 

27

In sum, we find that there is a reasonable overlap of competition among the subject imports from

France, Germany, the Netherlands, and the United Kingdom, and between subject imports and the

domestic like product. Consequently, we cumulate subject imports from France, Germany, the

Netherlands, and the United Kingdom for purposes of these final determinations.28

III. MATERIAL INJURY BY REASON OF LESS THAN FAIR VALUE

AND SUBSIDIZED IMPORTS

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

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

investigation.29 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
Low Enriched Uranium

 

30 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.”

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

 

31 19 U.S.C. § 1677(7)(A).

 

32 19 U.S.C. § 1677(7)(C)(iii).

 

33 Id.

 

34 Commissioner Bragg finds that an industry in the United States is threatened with material injury by reason of

imports of LEU from France, Germany, the Netherlands, and the United Kingdom found to be subsidized, and by

imports of LEU from France found to be sold in the United States at LTFV.

 

35 CR at I-12, PR at I-10.

 

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

8 U.S. International Trade Commission

product, but only in the context of U.S. production operations.30 The statute defines “material injury” as

“harm which is not inconsequential, immaterial, or unimportant.”31 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.32 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.”33

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

reason of cumulated subject imports from France, Germany, the Netherlands, and the United Kingdom

found to be subsidized, and by imports from France found to be sold in the United States at LTFV.34

A. Conditions of Competition

The following conditions of competition in the LEU industry inform our determinations. 

LEU is a fungible, commodity product. LEU produced by one enricher is highly interchangeable

with LEU produced by other enrichers.35

LEU is one of several intermediate products in the production of nuclear reactor fuel. The

processing of uranium ore into such fuel involves the following four successive stages of production,

collectively known as the “nuclear fuel cycle:” (i) the mining of uranium ore and extraction of uranium in

a concentrated form of U3O8 by “concentrators;” (ii) the transformation of the U3O8 into natural uranium

hexafluoride (UF6) by “converters;” (iii) the enrichment of natural UF6 (in which the effort involved to

increase the percentage of U235 is measured in SWUs) by “enrichers;” and (iv) the fabrication of

enriched UF6 into nuclear fuel assembly rods by “fabricators.”36 LEU is produced in the third stage of

the nuclear fuel cycle.

Traditionally, utilities have purchased concentrated U3O8 from converters, and have arranged for

each intermediate product to be further processed along each stage of the nuclear fuel cycle. In most

cases, utilities obtain LEU from enrichers by paying cash for the SWUs deemed to be contained in the

LEU and provide the enrichers with a quantity of converted uranium feedstock equal to the amount of
Determinations and Views

 

37 CR at I-13, PR at I-10.

 

38 CR/PR at II-1.

 

39 CR at II-15-16, PR at II-11.

 

40 CR/PR at III-1 and Table III-3.

 

41 CR at III-2; PR at III-1.

 

42 These exceptions included: (1) events beyond the company’s reasonable control, such as natural disasters;

(2) a decrease in annual worldwide demand to less than 28 million SWUs; (3) a decline in the average price for all

SWUs under USEC’s long-term firm contracts to less than $80 per SWU (in 1998 dollars); (4) a decline in the

operating margin to below 10 percent in a consecutive 12-month period; or (5) a downgrade of USEC’s long-term

corporate credit rating to below an investment grade, or the reasonable anticipation of such a downgrade. CR/PR at

III-2.

 

43 CR at III-2-3, PR at III-2 

 

44 CR at II-1 n.6 and III-6 n.15, PR at II-1 n.6 and III-4 n.15.

Invs. Nos. 701-TA-409-412 and 731-TA-909 (Final) 9

converted uranium deemed to be contained in the LEU (i.e., in SWU transactions). Utilities may also

purchase LEU entirely for cash (i.e., in EUP transactions).37

The global enrichment industry is highly concentrated. There are currently only four major

enrichers in the world: USEC, the Urenco companies (with enrichment facilities in Germany, the

Netherlands, and the United Kingdom), Eurodif (with enrichment facilities in France), and Tenex in

Russia.38 Entry into this industry is difficult because of its capital-intensive nature.39

USEC is the only producer of LEU in the United States. The company supplies 40 percent of the

world market for enriched uranium, and a substantial portion of its total sales are to export markets.40

USEC was established by the U.S. Government in 1992 as the first step in the privatization of the

Department of Energy’s uranium enrichment activities. It became a publicly-held corporation in July

1998.41 At that time, USEC operated two uranium enrichment plants, one near Portsmouth, Ohio, and the

other in Paducah, Kentucky. As part of its privatization, USEC entered into an agreement with the U.S.

Treasury Department whereby it committed itself to continue operation of these two plants until at least

January 2005, subject to several exceptions.42 One of these exceptions (a downgrade in the company’s

long-term corporate debt to below investment grade) was triggered in February 2000. As a result, in June

2000, the company announced that it would cease uranium enrichment operations at its Portsmouth plant

in June 2001 and shift all enrichment operations to the Paducah plant.43 USEC ceased production

operations at the Portsmouth plant in May 2001.44

Another significant condition of competition relating to the supply of LEU in the United States is

the U.S.-Russian HEU Agreement executed in 1994. Under this agreement, the United States is

committed to buying LEU that is produced in Russia by blending down weapons-grade, highly enriched

uranium (HEU). USEC acts as the U.S. Government’s Executive Agent under the Russian HEU

Agreement. In this capacity, the company is required to purchase 5.5 million SWUs annually from Russia

in the 1999-2014 period, which, in turn, represents a *** of USEC’s annual enrichment sales. Most of the

LEU obtained under the Russian HEU Agreement cannot be sold to USEC’s export market customers
Low Enriched Uranium

 

45 CR at III-4 n.13, PR at III-3 n.13.

 

46 Total Russian LEU – most of it obtained pursuant to the Russian HEU Agreement – shipped to U.S. nuclear

electric utilities averaged *** percent of total U.S. apparent consumption in the period of investigation. CR/PR at II2 n.12.

 

47 CR at II-7, PR at II-5.

 

48 CR at VI-11, PR at VI-5; See also, CR/PR at Table VI-4.

 

49 Apparent U.S. consumption of LEU measured by SWUs increased from *** SWUs in 1998, to *** SWUs in

1999, and *** SWUs in 2000. CR/PR at Table IV-4. We do not place much weight on the data for the interim periods

in these investigations, given that LEU consumption can vary considerably in the short term, based on variations in

nuclear utilities’ reload cycles. CR at II-25 and IV-8 n.10, PR at II-15 and IV-3 n.10, Transcript of Hearing at 88

(Testimony of Dan Collier).

 

50 U.S. nuclear reactor requirements are forecast at 10.8 million SWUs in 2001, 11.0 million SWUs in 2002, and 10.9

million SWUs in 2003. CR at II-26, PR at II-17.

 

51 CR at II-31-33, PR at II-20-21.

 

52 CR at II-11-12, PR at II-8.

 

53 Purchasers were asked to describe the importance of various factors affecting purchasing decisions in two

ways. First, they were asked to list, in order of importance, the three major factors that they generally consider when

making purchasing decisions. The responses to this request showed the three major factors to be, in order of

importance: (i) price, (ii) reliability/stability/security of supply, and (iii) flexibility of contract terms. CR at II-37-38, PR

at II-24. The second way in which purchasers were asked to rank factors affecting purchasing decisions was by

ranking 23 preselected factors as “very important,” “somewhat important,” or “not important.” For SWU

transactions, “reliable supply” was ranked the highest, followed closely by “lowest price” and “availability of

supply.” For EUP transactions “lowest price” was ranked highest, followed closely by “reliable supply” and

“availability of supply.” CR/PR at Tables II-3a, II-3b and II-3c.

10 U.S. International Trade Commission

and thus must be sold in the United States.45 The Russian LEU thus supplies a significant percentage of

U.S. demand.46

Under the Russian HEU Agreement, *** and pays in cash for the value of enrichment (SWUs).47

As SWU prices have declined over the period of investigation, the price terms of the Russian HEU

Agreement have become unfavorable to USEC. These price terms expired on December 31, 2001, and

USEC currently is engaged in negotiations with the Russian Executive Agent to adjust the price for the

SWU component of future deliveries under the agreement. These imports and sales of Russian LEU

have led to a diminished use of USEC’s enrichment facilities in the United States and have contributed to

increased unit costs.48 

U.S. consumption of LEU rose between 1998 and 2000.49 Demand in 2001-2003 is expected to

be relatively flat.50 The market for LEU has been affected by the deregulation of electrical utilities in the

United States. As nuclear power plants have been forced to compete with other sources of electricity,

utilities operating nuclear plants have faced increasing pressure to cut costs by obtaining uranium at the

lowest possible price.51 There also has been a certain amount of consolidation among nuclear electric

utilities, and this has given the utilities a greater degree of purchasing power.52

Price is the first or second most important factor in nuclear utilities’ purchasing decisions.53

While price is a major factor, nuclear utilities’ LEU purchasing decisions also may be affected by

considerations of diversity and reliability of supply; that is, utilities may seek to avoid dependence on any
Determinations and Views

 

54 CR at II-37-43 and V-11 n.27, PR at II-24-28 and V-9 n.27.

 

55 CR at V-1 and n.3, V-2, V-7-8, V-15, PR at V-1 and n.3, V-5-6, V-10-11.

 

56 CR at V-7; PR at V-5-6. There is some evidence that the terms of these contracts have more recently tended to

become shorter, ranging from three to five years. CR at II-12 and V-7 n.12, PR at II-8 and V-5 n.12.

 

57 See CR/PR at Appendix E. This intense competition effectively refutes the argument of AHUG that competition

in this case is blunted by a form of “captive consumption.” AHUG Prehearing Brief at 17-22 and Posthearing Brief at

2-7.

 

58 See CR/PR at Table V-9b.

 

59 Nuclear utilities tend to buy more in the spot market when LEU prices are low. CR at II-8, PR at II-6. U.S.

nuclear utilities’ purchases in the spot market accounted for 4.4 percent of total LEU purchases in 1998, and 6.8

percent of total purchases in 2000. CR at II-8 n.32, PR at II-6 n.32.

 

60 CR at V-7 n.13, PR at V-6 n.13, and Transcript of Hearing at 133 (Testimony of Robert Van Namen).

 

61 Commissioner Bragg does not join the remainder of this opinion.

 

62 19 U.S.C. § 1677(7)(C)(i).

 

63 CR/PR at IV-3. Subject imports rose from *** SWUs in 1998, to *** SWUs in 1999, and to *** SWUs in 2000. 

CR/PR at Table IV-1. 

 

64 The market share of subject imports measured by quantity on a SWU basis was *** percent in 1998, ***

percent in 1999, and *** percent in 2000. The domestic industry’s market share declined from *** percent in 1998, to

*** percent in 1999, before recovering somewhat to *** percent in 2000. CR/PR at Table IV-5.

Invs. Nos. 701-TA-409-412 and 731-TA-909 (Final) 11

single enricher.54 In making purchasing decisions, nuclear utilities may evaluate a number of factors in

addition to bid price to arrive at an “evaluated price” for a particular bid. Such factors may include

discounts on pre-existing supply commitments, extended payment terms, the timing of the provision by the

utilities of the converted uranium feedstock, and packaging and handling terms.55 However, not all utilities

use evaluated prices, and among those that do, the methodologies for determining the evaluated price

often vary. 

Most LEU is sold pursuant to long-term contracts between enrichers and utilities ranging in

duration from three to seven years, with prices that are fixed or subject to escalator clauses.56 The

quantity in contracts often is expressed as a percentage of a utility’s requirements. The bidding for these

contracts often is very competitive.57 It is not uncommon for long-term contracts to be renegotiated at

some point during their term.58 A relatively small amount of LEU is also sold in the spot market.59 Even

though the amount of LEU sold in the spot market is small relative to the amount sold pursuant to longterm contracts, it appears that prices in the spot market have some effect on the pricing of long-term

contracts.60 61

B. 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.”62 

The volume of the cumulated subject imports increased by *** from 1998 to 2000.63 The market

penetration of subject imports also rose substantially, while the market share of the domestic industry

declined sharply overall.64 
Low Enriched Uranium

 

65 The cumulative volume shipped by enrichers in the subject countries pursuant to such contracts was ***

SWUs in 1998, *** SWUs in 1999, and *** SWUs in 2000. See Staff Worksheet #1, Table 2. (The “Staff

Worksheets” referred to in these views are tabulations of data which are derived from data in the Staff Report and

the record which have been prepared to assist the Commission in its analysis.)

 

66 The market share of subject imports, measured on this basis, rose from *** percent in 1998, to *** percent in

1999, and *** percent in 2000. The domestic industry’s market share fell from *** percent in 1998, to *** percent in

1999, before recovering ***, to *** percent in 2000. See Staff Worksheet #1, Table 2.

 

67 While one would expect to see increasing volume, when measuring shipments in each year pursuant to

contracts entered into during the period of investigation (because each year’s shipments reflects shipments

pursuant to contracts in that year and any preceding years of the period of investigation), the increase in subject

imports’ market share represented by these shipments shows the significant gains made by subject imports in the

U.S. market in this period. 

 

68 Imports from Russia rose from *** SWUs in 1998, to *** SWUs in 1999, and to *** SWUs in 2000. The market

share of the Russian imports (in terms of U.S. shipments) was *** percent in 1998, *** percent in 1999, and ***

percent in 2000. CR/PR at Tables IV-5 and C-1.

12 U.S. International Trade Commission

We recognize that, because most LEU is sold pursuant to multi-year long-term contracts, imports

during the period of investigation reflect to some degree sales made in earlier years. Thus, we have

looked also to the volume of shipments pursuant to new and re-negotiated contracts that were awarded to

enrichers in the subject countries during the period of investigation, and the market share represented by

these shipments. The volume of subject imports involved in such contracts increased by *** percent from

1998 to 2000.65 The market share of subject imports, measured on this basis, also increased, at the same

time as the domestic industry’s market share declined.66 67

We recognize also that non-subject imports from Russia played a significant role in the U.S.

market during the period of investigation. The level of such imports was higher than that of the subject

imports in each year of the period of investigation, and the rate of the increase in such imports was

comparable to that of the subject imports.68 However, the domestic industry’s loss of market share from

1998 to 2000 (a decline from *** percent to *** percent of apparent consumption) cannot be attributed,

for the most part, to an increase in imports from Russia (which increased from *** percent to *** percent

of domestic consumption, or by *** percentage points, in this period), but rather primarily to the subject
Determinations and Views

 

69 CR/PR at Tables IV-5 and C-1. The domestic industry’s loss of market share can also be explained, to a lesser

extent, by the increase in the category of imports from “All other sources” (which consists of nonsubject LEU

imports from the subject countries), which increased from *** percent of the market in 1998 to *** percent in 2000. 

These non-subject imports consist mainly of LEU delivered to U.S. firms for fabrication and subsequent re-export. 

As these imports are never consumed by U.S. utilities, USEC consented to the exclusion of these imports from the

scope of the investigations. See Commerce’s “Issues and Decision Memorandum for the Antidumping Duty

Investigation of Low Enriched Uranium from France” (Decision Memorandum) at Comment 2.

 

70 An inter-year analysis of the market share data shows that the industry’s decline in market share from 1998 to

1999 was entirely attributable to an increase in imports from Russia in that period, but that subject imports gained

market share at the expense of the domestic industry and the Russian imports from 1999 to 2000. CR/PR at Table IV5.

 This case presents the unusual situation in which the U.S. industry (USEC) was, by virtue of its status as the

sole Executive Agent under the Russian HEU Agreement, essentially the only importer of the non-subject Russian

LEU and controlled the sale of the Russian product in the U.S. market. Nevertheless, from 1998 to 2000, USEC’s

combined market share of U.S.-produced and Russian LEU fell from *** percent to *** percent, mainly because of

the subject imports. Calculated from CR/PR at Table IV-4.

 

71 We also note that, based on contracts currently in effect (i.e., contracts entered into before the period of

investigation and during that period, and those re-negotiated in that period) subject imports are projected to capture

increasing market share over the next several years. It is estimated that the market share of subject imports will be

*** percent in 2001 and *** percent in 2002. See Staff Worksheet #1, Table 1. We recognize that these data are

only estimates, and that a certain portion of demand in 2002 is still “open.” 

 

72 We note that two-year and three-year moving averages from 1998 to 2004 show steady increases in subject

imports’ market share. Thus, the increase in subject imports’ market share from 1998 to 2000 does not appear to have

been simply the result of variations in demand in any single year due to the 18-24 month nuclear fuel reload cycle. 

See Staff Worksheet #15.

 

73 19 U.S.C. § 1677(7)(C)(ii).

Invs. Nos. 701-TA-409-412 and 731-TA-909 (Final) 13

imports (which increased from *** percent to *** percent in this period, or by *** percentage points).69.

70

Thus, notwithstanding the significant levels of non-subject imports, in light of the increase in the volume of

subject imports between 1998 and 2000, the increase in their market share in the same period, and the

overall decline in the domestic producer’s market share, we find the volume of subject imports of LEU to

be significant.71 72

C. 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.73

As discussed above, LEU produced by the domestic industry is highly substitutable with the

subject imports, and price is among the most important factors in purchasing decisions.
Low Enriched Uranium

 

74 CR at V-15-19 and Appendix E, PR at V-11-13 and Appendix E. In comparing bid price information, we have

used evaluated prices where purchasers have provided them. While we understand that purchasers do not apply a

uniform methodology for determining evaluated prices, evaluated prices reflect factors that are sufficiently

quantitative that the purchaser could adjust the suppliers’ bid prices based on them. For example, evaluated prices

may factor in aspects of a supplier’s bid such as discounts on pre-existing supply commitments, extended payment

terms, packing and handling terms, and other aspects. Considering the basic price only would fail to take into

account important aspects of suppliers’ offers that directly affect price competition in the LEU market. It is not

unusual for the Commission to look beyond the base price where other price aspects are significant. In any event,

we do not believe that considering basic versus evaluated prices is determinative of our conclusions regarding the

price effects of subject imports. 

 

75 CR at V-15, PR at V-10-11.

 

76 CR at V-20-37, PR at V-13-19.

 

77 CR at V-37-48, PR at V-19-22. The data for 2001-2004 were based on estimates by USEC and the subject

importers.

 

78 CR at V-9-14, PR at V-6-10.

14 U.S. International Trade Commission

The contracting process for LEU makes evaluating the price effects of subject imports in these

investigations a challenging exercise. The prices for LEU sold during the period of investigation include

prices from contracts negotiated prior to the period of investigation as well as prices from contracts

negotiated (or renegotiated) during the period of investigation. Also, because of the nature of the bid

terms, it was difficult in some cases to ascertain the lowest bidder. To understand LEU pricing, the

Commission collected several types of price data in the final phase of these investigations.

First, the Commission obtained bid-price information for SWU transaction contracts and EUP

transaction contracts from nuclear utility purchasers for each contract entered into in the January 1998-

June 2001 period of investigation, including information on evaluated prices where applicable.74

Second, the Commission obtained quarterly selling price and quantity data from USEC and

importers of the subject merchandise for SWU sales during January 1998-June 2001, broken down into

four categories of contracts (spot sales and long-term contracts with three different types of pricing). 

The bulk of LEU sold during the period of investigation was pursuant to long-term SWU contracts with

price terms that were fixed or subject to escalator clauses specified in the contracts (sales category 4).75

Quarterly pricing data for sales category 4 contracts were compiled by the Commission staff into

weighted-average prices for each contract year, because the quarterly data were considered to be too

variable to show reliable trends and pricing comparisons.76

Third, the Commission obtained data from USEC and importers of the subject merchandise on

annual shipments pursuant to SWU and EUP transactions from 1998-2004, broken down into three

contract categories: contracts newly negotiated during the period of investigation, pre-existing contracts

that were renegotiated during the period of investigation, and pre-existing contracts that were not

renegotiated during that period.77

Finally, the Commission also gathered publicly reported spot prices for enrichment services during

the period of investigation.78

The weighted-average price data for SWU transaction deliveries by contract year show that

prices generally declined. This was true for U.S. sales made by USEC and enrichers from each of the
Determinations and Views

 

79 CR/PR at Table V-6.

 

80 Id.

 

81 CR/PR at Table V-9a.

 

82 CR at V-9 and Figure V-5, PR at V-6-8 and Figure V-5.

 

83 See Staff Worksheets # 12 and 13 (approximately 64 percent competitively bid). Of the 92 contracts awarded

during the period of investigation, 54 were competitively bid. In some cases in which a contract was not awarded via

competitive bid, the purchaser indicated that it had recently held a bid competition and therefore was aware of the

relative prices of the various suppliers (thus rendering a new bid process unnecessary). See CR at Appendix E, pp.

E-20, E-33, E-65, E-69, and E-76; PR at Appendix E, p. E-3. Therefore, the absence of a new competitive bid process

does not necessarily mean that price was an unimportant factor to the purchaser or that competition did not occur.

 

84 Of the 54 contracts awarded through a competitive bid process, 46 were awarded to the lowest bidder. CR at V16, PR at V-11-12. In cases in which the award was made to a bidder other than the low bidder, the awardee’s price

was often not substantially above the low bidder’s price. See CR at Appendix E, pp. E-13, E-19, E-22, E-46, and E-57;

PR at Appendix E, p. E-3.

 

85 Of the 46 contracts awarded based on the lowest bid, USEC (using SWUs and EUP produced in the United

States and Russia) won 20 contracts that accounted for approximately 40 percent of the total of such SWUs and EUP

contracted for during the period of investigation for delivery during 1998-2004 from these 46 contracts. (A further 8

contracts awarded based on the lowest bid were won by brokers/traders of SWUs and EUP produced in the United

States and Russia. These contracts accounted for approximately 3.5 percent of the total SWUs and EUP contracted

for during the period of investigation for delivery during 1998-2004 from the 46 contracts.) Of the 20 contracts won

by USEC, 9 contracts appear to have been spot contracts. See CR/PR at Appendix E, Table E-1, and Staff Worksheet

No. 14.

Invs. Nos. 701-TA-409-412 and 731-TA-909 (Final) 15

subject countries.79 For example, the weighted-average annual selling price for sales by USEC declined

from $*** per SWU for contracts entered into in ***, to $*** per SWU for contracts entered into in

***.80 The data on annual shipments during the period of investigation pursuant to newly-negotiated

contracts also show a decline in prices. For example, the weighted-average unit value of deliveries by

USEC (of LEU produced in the United States and LEU sourced from Russia combined) declined from

$*** per SWU in 1998, to $*** per SWU in 1999, to $*** per SWU in 2000.81 Spot prices confirm this

declining price trend over most of the period of investigation. The average spot price for enrichment

service fell from $88.17 per SWU in the first quarter of 1998 to $78.50 per SWU in the second quarter of

2000, before recovering in the second half of 2000 and reaching $94.33 per SWU in the third quarter of

2001.82

We believe that the nature of price competition between subject imports and domestic LEU is

best examined on the basis of the bid data supplied by LEU purchasers, which are generally utilities that

operate U.S. nuclear plants. These data paint an overall picture of fairly intense price competition. 

Contracts awarded during the period of investigation that were competitively bid represented the majority

of the SWUs and EUP awarded during the period of investigation.83 The vast majority of the

competitively bid contracts were awarded to the low bidder.84 USEC and brokers /traders selling U.S.

and Russian product won the majority of the contracts awarded to the low bidder, although many of these

contracts were lower volume spot contracts.85 Imports from the subject countries won contracts as the

lowest bidder accounting for a significant percentage of SWUs awarded during the period of
Low Enriched Uranium

 

86 Of the 46 contracts awarded based on the lowest bid, imports from subject countries won 16 contracts that

accounted for approximately 54 percent of the total of such SWUs and EUP contracted for during the period of

investigation for delivery during 1998-2004 from these 46 contracts. Of these 16 contracts, there was a competing

offer conforming to bid specifications by USEC for the sale of U.S./Russian product with respect to 12 of the

contracts, accounting for approximately 51 percent of the total SWUs and EUP contracted for during the period of

investigation for delivery during 1998-2004 from the 46 contracts. See CR/PR at Appendix E and Staff Worksheet No.

14. 

 The amount of SWUs awarded includes estimated deliveries for future years. We note, however, that nearly

half of the subject LEU imported during the period of investigation was pursuant to contracts awarded during the

period of investigation. See CR/PR at Tables V-2-V-5 (*** of *** SWUs).

 

87 See, e.g., USEC’s Final Comments (January 14, 2002) at 1-9 and Respondents’ Final Comments (January 18,

2002) at 12-14.

 

88 We have given less weight to annual weighted-average pricing and unit value data for price comparisons

because they may include sales not subject to head-to-head competition between domestic and subject imported

LEU. Such data are mixed but arguably would confirm our finding of underselling by subject imports. The annual

weighted-average pricing data by contract year show that prices of SWUs sold by USEC and by respondents

generally declined, and that prices of subject imports were lower than those for SWUs sold by USEC in most

possible comparisons. The imported SWUs were priced below USEC’s sales in 14 of 19 possible comparisons based

on contract years. CR at V-33 and Table V-6, PR at V-17-18 and Table V-6. The data on annual shipments during the

period of investigation pursuant to newly-negotiated contracts also show declining prices between 1998 and 2000,

and that the prices of subject imports were lower than those of USEC in all possible comparisons. CR/PR at Table V9a. On the other hand, the data on annual shipments during the period of investigation pursuant to pre-existing

contracts that were renegotiated during the period of investigation indicate price trends that are more mixed, and

shows that the prices of subject imports were higher than those of USEC in all possible comparisons. CR/PR at

Table V-9b.

 

89 We note that purchasers were not able to distinguish between those bids that would be supplied with

domestically-produced LEU and those supplied with Russian-origin LEU. Thus, the record shows that respondents

were underselling both USEC’s domestic production and LEU from Russia being resold by USEC.

16 U.S. International Trade Commission

investigation.86 In sum, USEC may have won a larger number of contracts, but enrichers in the subject

countries won a larger volume of SWUs and EUP.

We note that the issue of whether there was actual competition for some contracts, and the

assessment of which supplier was the lowest bidder for some contracts, is the subject of some dispute

among the parties.87 Regardless of how certain individual contracts are classified, we are satisfied that

the record demonstrates that USEC and subject producers engaged in vigorous price competition and that

subject producers were low bidders on a significant percentage of the SWUs awarded during the period

of investigation. 

In describing the basis for the awards, some purchasers indicated that there were also non-price

reasons for purchasing from a subject producer, most often relating to diversity or reliability of supply. 

We have taken these statements into account in our analysis. We do not find mention of other factors to

mean that price was not an important or even decisive element, particularly in those cases in which the

subject producer submitted the lowest price bid. As noted above, purchasers ranked price as the first or

second most important purchasing factor overall. On balance, we conclude that subject imports have

significantly undersold the domestic like product.88 89
Determinations and Views

 

90 CR at V-12-13, PR at V-9-10.

 

91 19 U.S.C. § 1677(7)(C)(iii). See also SAA at 851 and 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.).

 

92 19 U.S.C. § 1677(7)(C)(iii). See also SAA at 851 and 885 and Live Cattle from Canada and Mexico, Inv. Nos. 701-

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

 

93 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

antidumping determination for imports from France (the only remaining antidumping investigation in this group of

investigations), Commerce assigned a margin of 19.57 percent to all respondents. Notice of Final Determination of

Sales at Less Than Fair Value: Low Enriched Uranium From France, 66 Fed. Reg. 65877 (Dec. 21, 2001).

 

94 USEC’s production was *** SWUs in 1998, *** SWUs in 1999, and *** SWUs in 2000. There was *** of a

noticeable decline over the interim periods, with production falling from *** SWUs in interim 2000, to *** SWUs in

interim 2001. CR/PR at Table III-2.

 

95 USEC’s total enrichment sales (in domestic and export markets) of domestically-produced LEU were *** SWUs

in fiscal 1999, *** SWUs in fiscal 2000, and *** SWUs in fiscal 2001. CR/PR at Table VI-3. 

Invs. Nos. 701-TA-409-412 and 731-TA-909 (Final) 17

As noted above, domestic prices for LEU fell substantially over the period of investigation. The

high degree of price competition and the significant underselling by subject imports undoubtedly played a

significant role in helping to bring about the lowering of domestic prices. At the same time, we are aware

of USEC’s own responsibility for falling prices. Most purchasers identified USEC as the price leader in

the U.S. market during the period of investigation.90 USEC’s aggressive pricing activities in the spot

market from about mid-1998 until mid-2000 were likely a factor in the declining prices of long-term

contracts. Nonetheless, the detailed bid information obtained from purchasers, summarized above, makes

it very clear that respondents were engaged in intense price competition with USEC and not merely

following USEC’s price leadership. The large share of bids won by subject imports, often on the basis of

lowest price, and subject imports’ increasing market share, are likewise inconsistent with a finding that

subject imports did not put downward pressure on domestic LEU prices during the period of investigation. 

Accordingly, we conclude that subject imports have depressed domestic prices for LEU to a significant

degree.

D. 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.91 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.”92 93

Many of the indicators of USEC’s condition deteriorated during the period of investigation. 

Production levels declined *** from 1998 to 2000,94 and USEC’s sales of U.S.-produced LEU fell ***,

especially at the end of the period of investigation.95 The company’s capacity utilization rates were low
Low Enriched Uranium

 

96 USEC’s capacity utilization rates were *** percent in 1998, *** percent in 2000, *** percent in 2001, ***

percent in interim 2000, and *** percent in interim 2001. CR/PR at Table III-2.

 

97 The number of USEC’s production related workers declined from *** in 1998, to *** in 1999, and to *** in 2000. 

There was also a decline from *** in interim 2000 to *** in interim 2001. CR/PR at Table III-5.

 

98 USEC announced the decision to close its Portsmouth plant in June 2000. The plant ceased production

operations in May 2001. The shutting of the Portsmouth plant occurred too late in the period of investigation to

have much effect on our data. 

 

99 See Staff Worksheet #1, Table 2.

 

100 CR/PR at Table VI-3.

 

101 CR/PR at Tables VI-3 and VI-4.

 

102 The company’s spending on research and development fell sharply, from $106 million in 1999, to $11 million in

both 2000 and 2001. CR/PR at Table VI-7. This decline in R&D spending was mainly due to the cessation of

spending on AVLIS, an alternative enrichment process being developed by USEC. USEC’s decision to stop research

on AVLIS appears to have been more for technical reasons than for reasons relating to the effects of subject imports. 

Respondents’ Prehearing Brief at Exh. B, pp. 1-2.

18 U.S. International Trade Commission

throughout the period of investigation, and declined towards the end of the period.96 As detailed above,

USEC’s market share fell ***, at the same time as the subject imports gained market share. Employment

in the LEU industry also declined.97 The significant increase in volume and market share of subject

imports materially contributed to the declines in USEC’s sales and employment.98

Further, we note that the sales lost by the domestic industry to subject imports during the period of

investigation go beyond those for which deliveries took place during the period of investigation, and

include sales won by subject imports during the period of investigation for future delivery. Although

production, delivery and payment will not occur until a later date, these sales represent business

effectively foreclosed to the domestic industry by virtue of transactions in the period of investigation. 

Subject imports won on average about half of the SWUs in contracts that were newly negotiated or

renegotiated during the period of investigation. As a result, estimated market share for subject imports is

estimated to climb to over 40 percent by 2002.99 Thus, the state of USEC’s current “order book” for

future deliveries was substantially impacted by subject producers’ sales activities during the period of

investigation.

USEC’s financial condition also deteriorated over the period under investigation. Its operating

income before other charges, on the basis of its U.S. production operations, declined from *** percent in

fiscal 1999 to *** percent in fiscal 2000, and to *** percent in fiscal 2001.100 USEC’s falling profits were

mainly the result of a combination of lower domestic sales volumes and lower unit values on those

domestic sales.101 By taking market share and depressing prices, subject imports contributed to USEC’s

worsening financial performance over the period of investigation.102

It is undisputed that imports from Russia have displaced a certain amount of USEC’s domestic

production and sales, and that this has negatively impacted USEC’s domestic operations, for example, by

increasing the company’s average unit production costs. However, the presence of this large volume of

imports from Russia does not detract from the fact that underpriced subject imports increased significantly

over the period of investigation, to the point where they captured almost *** of the domestic market by

the end of the period. Thus, USEC’s lower U.S. sales and production were, in significant part, also due to

the subject imports.
Determinations and Views

 

103 See CR/PR at Table III-3 (*** percent on average from 1998 to 2000).

 

104 See CR/PR at Tables III-3 and VI-3. Moreover, by depressing USEC’s domestic sales, imports played a role in

reducing the ratio of U.S. shipments to total shipments.

Invs. Nos. 701-TA-409-412 and 731-TA-909 (Final) 19

During the period of investigation, *** of USEC’s shipments of its U.S. production were

exported.103 This fact attenuates the impact of subject imports on USEC’s overall domestic operations,

since the imports can have no effect on USEC’s (domestically-produced) exports. Nevertheless, we find

that enough of USEC’s production has been directed to the U.S. market to enable us to conclude that

subject imports had a significant negative impact on the company’s U.S. production operations. Despite

the strength of USEC’s export sales, which grew in volume over the period of investigation and fell *** in

unit value, the harm to USEC’s domestic sales was severe enough to cut by *** USEC’s operating profits

on its U.S. production operations (export and domestic sales combined).104

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

the subject imports, and that the subject imports undersold the domestic merchandise and have had a

significant depressing effect on domestic prices. The domestic industry’s declining market share and

lower prices in the U.S. market led to 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 low enriched uranium from France, Germany, the Netherlands, and the United

Kingdom that are subsidized and imports of low enriched uranium from France that are sold in the United

States at less than fair value.
Low Enriched Uranium

 

1

 Subject imports from France, Germany, the Netherlands, and the United Kingdom have been found by

Commerce to be subsidized. Subject imports from France have been found by Commerce to be sold at less than fair

value. 

 

2

 CR and PR at Table C-1.

 

3

 CR and PR at Table C-1.

 

4

 CR and PR at IV-2.

20 U.S. International Trade Commission

SEPARATE VIEWS OF COMMISSIONER LYNN M. BRAGG 

REGARDING THREAT OF MATERIAL INJURY

Investigations Nos. 701-TA-409-412 and 731-TA-909 (Final)

LOW ENRICHED URANIUM FROM FRANCE, GERMANY,

THE NETHERLANDS, AND THE UNITED KINGDOM

For the reasons set forth below, I determine that the domestic low enriched uranium (“LEU”)

industry is threatened with material injury by reason of subject imports from France, Germany, the

Netherlands, and the United Kingdom that have been found by Commerce to be subsidized and/or sold in

the United States at less than fair value.1

I note that I join my colleagues’ discussion with respect to the definitions of the domestic like

product and domestic industry, cumulation, and the conditions of competition that are distinctive to the

domestic industry.

I. No Material Injury by Reason of Subject Imports

For the reasons discussed below, I determine that the domestic industry is not materially injured

by reason of subject imports from France, Germany, the Netherlands, and the United Kingdom that have

been found by Commerce to be subsidized and/or sold in the United States at less than fair value.

The record in these final phase investigations indicates that from 1998 through interim (JanuaryJune) 2001 subject imports increased their share of apparent U.S. consumption while unit values for

enrichment and EUP transactions in the U.S. market (including subject imports and the domestic like

product) declined and domestic industry performance deteriorated.2 The record also indicates that during

this period the volume and market share of non-subject imports increased while unit values for these

products declined.3 Importantly, the importer of record for most of these non-subject imports was USEC,

the sole domestic producer of LEU.4 This is a particularly important factor in my injury analysis because,

as discussed below, the record indicates that the domestic industry’s declining performance over the

period of investigation was, in part, attributable to USEC’s increasing reliance on non-subject Russian

imports to supply USEC’s LEU sales in the U.S. market. Given the prominent role of non-subject

Russian imports in the U.S. market during the period of investigation and the influence of such imports on

LEU prices, as well as USEC’s pricing behavior in the spot market, I am unable to conclude that the

domestic industry is materially injured by reason of subject imports. I do find, however, that the record

indicates that subject imports are beginning to cause performance problems for the domestic industry and

that such adverse influences will grow in the imminent future. Accordingly, I find that the domestic

industry is threatened with material injury by reason of subject imports.
Determinations and Views

 

5

 CR and PR at Table C-1.

 

6

 I find USEC’s data reported for renegotiated contracts probative because, in my view, the record indicates that

USEC’s pricing for renegotiated contracts was influenced by prevailing market prices and conditions (including the

growing volume of subject and non-subject imports). Hearing Tr. at 260-264 (Cunningham). In this context, the

record indicates that the prices USEC received for contracts renegotiated during the period of investigation ***

below the prices it received for contracts newly negotiated during the period and often lower than prices received by

subject foreign producers for their newly negotiated contracts--corroborating purchasers’ view that USEC’s pricing

behavior was partly to blame for declining LEU prices during the period of investigation. CR at V-12-14, PR at V-9-10,

CR and PR at Tables V-9a and V-9b.

 

7

 Although not all LEU purchasers use evaluated pricing to select LEU suppliers, most LEU purchasers do rely

upon subjective, company-specific pricing factors in selecting LEU suppliers. CR and PR at App. E. I find that the

bid data, although not probative for price comparisons, do indicate that price is an important factor in purchasing

decisions. CR and PR at App. E. 

 

8

 CR at V-21, PR at V-14. Such data are, however, probative for price trends of the domestic like product. See

supra n.6.

Invs. Nos. 701-TA-409-412 and 731-TA-909 (Final) 21

A. Volume

The volume data indicate that subject imports’ share of apparent U.S. consumption increased

from *** percent in 1998 to *** percent in 2000, and from *** percent in interim 2000 to *** percent in

interim 2001. In contrast, domestic producers’ share fell from *** percent in 1998 to *** percent in 2000,

and fell even further between the interim periods to *** percent in interim 2001. In this context, it must

be recognized that non-subject Russian imports increased from *** percent in 1998 to *** percent in

2000, and then to *** percent in interim 2001. The record therefore indicates that the domestic producer

lost market share to both subject and non-subject imports and that non-subject imports (mostly Russian)

accounted for a large percentage of that lost market share.5

Viewed in isolation, the increase in the volume of subject imports would appear to be significant. 

However, given the prominent and increasing role of non-subject Russian imports in the U.S. market over

the period of investigation as well as my conclusions below regarding negative price effects and adverse

impact by reason of subject imports, I find that the volume of subject imports is not now significant.

B. Price

Although the price data were reported in several formats, in my view, the most probative price

data on the record are those data reported for long-term contracts newly negotiated during the period of

investigation and USEC’s data reported for renegotiated contracts during the period of investigation.6 I

also found the evidence regarding spot market sales to be useful in performing my assessment of negative

price effects. 

With respect to the reported bid data, I did not find such data particularly useful given the

subjective, company-specific nature of how most LEU purchasers select suppliers.7 I also found the

quarterly weighted average price data for subject imports of limited probative value.8 As noted in the

Commission Report, the existence of long-term contracts of differing contract periods, differences in
Low Enriched Uranium

 

9

 CR at V-20, PR at V-13-14.

 

10 CR and PR at Table 9a.

 

11 I recognize that the weighted average quarterly data would appear to indicate that subject imports undersold

the domestic like product. CR and PR at Tables V-1-5. However, as noted earlier, I find such data to be of limited

probative value. 

 

12 CR at V-7 n.13, V-9 n.15, V-11 n.26, and V-12-15; PR at V-6 nn.13 and 15, V-8 n.26, and V-9-11.

 

13 CR and PR at Table C-1.

 

14 Lower domestic production, in turn, resulted in higher unit operating costs for USEC. See CR and PR at Tables

C-1 and C-4.

 

15 CR and PR at Table C-1.

22 U.S. International Trade Commission

contract volumes, and a myriad of contract terms/considerations make it difficult to draw reliable

conclusions regarding price trends and comparisons from such data.9

Nonetheless, the data regarding long-term contracts newly negotiated during the period of

investigation do evidence some underselling by subject imports during the period of investigation.10

However, given that the domestic like product is priced in-line with USEC’s non-subject Russian imports,

it is unclear from the record as to whether subject imports are underselling the domestic like product, nonsubject imports, or both.11 The price analysis is further clouded by the fact that aggressive LEU sales by

USEC in the spot market during the period mid-1998 to mid-2000 resulted in falling spot market prices

and, in turn, influenced long-term contract prices negotiated or renegotiated during this period.12

Accordingly, although there is some evidence that subject imports were adversely impacting

prices for the domestic like product during the period of investigation, the record does not sufficiently

establish that such price effects are, at present, significant. Importantly, there is a sufficient basis to

conclude that subject imports nonetheless garnered a growing number of long-term contracts by

underselling the domestic like product. As deliveries under these contracts grow, so too will the adverse

effects on USEC’s prices and performance.

C. Impact

Nearly every indicia of the performance of the domestic industry trended lower over the period of

investigation.13 Upon review of the record in these proceedings, I find that these declines are primarily

attributable to USEC’s increasing reliance on non-subject imports rather than reflecting the adverse

impact of subject imports. As a result of having to sell increasing volumes of Russian non-subject imports

under the Russian HEU agreement, USEC was forced to close one of its two U.S. production facilities,

thereby reducing domestic production.14 In addition, the record indicates that USEC increasingly utilized

non-subject Russian imports to fill orders in the U.S. market as it shifted sales of the domestic like product

to export markets.15 Although the record also suggests that USEC’s domestic production was adversely

impacted by increasing volumes of subject imports, given the predominant role of non-subject imports in

USEC’s domestic performance I am unable to conclude that during the period of investigation subject

imports had a significant adverse impact on USEC, particularly given my above discussion regarding

negative price effects and volume trends for both subject and non-subject imports.

Accordingly, I find that there is an insufficient basis on the record to conclude that the domestic

industry is presently materially injured by reason of subject imports.
Determinations and Views

 

16 CR at II-34, PR at II-21-23.

 

17 CR and PR at Tables IV-1, V-2-5, and V-9a.

 

18 CR and PR at Tables V-9a, VII-1-5.

 

19 CR and PR at Tables VII-1-4.

 

20 CR and PR at VII-1-9, PR at VII-1-5.

 

21 Diversity of supply is one reasonable explanation for subject imports’ increasing share of the U.S. market both

during the period of investigation and in the near term. However, diversity of supply does not completely explain

the expected continued growth in subject imports’ share of the U.S. market in the imminent future.

 

22 I note respondents’ arguments that the volume of non-subject Russian imports will grow in the future. 

Although the volume of non-subject imports ***. Letter from William H. Timbers, Jr. (Jan. 15, 2001). In contrast, the

volume of subject imports is ***. CR and PR at Tables VII-1-4.

 

23 Although I find that prices for contracts negotiated during the period of investigation were affected by USEC’s

(continued...)

Invs. Nos. 701-TA-409-412 and 731-TA-909 (Final) 23

II. Threat of Material Injury by Reason of Subject Imports

I find that the same analysis which justifies cumulation of all subject imports for purposes of the

Commission’s assessment of present material injury applies equally to the assessment of a threat of

material injury. In this regard, I place particular importance on the significant degree of fungibility among

imports from all subject countries and between subject imports and the domestic like product.16 In

addition, upon review of the entire period of investigation, I found similar volume and pricing trends among

all subject countries.17 Accordingly, I exercise my discretion to cumulate all subject imports in analyzing

whether there is a threat of material injury.

In considering the statutory threat factors, I have taken into account the current state of the

industry and conditions of competition distinctive to the domestic LEU industry. Based upon an evaluation

of these relevant statutory factors, I find that an industry in the United States is threatened with material

injury by reason of subject imports from France, Germany, the Netherlands, and the United Kingdom that

have been found by Commerce to be subsidized and/or sold in the United States at less than fair value.

The record indicates that the volume of subject imports will continue to increase steadily in the

short-term as subject imports enter the United States under long-term contracts negotiated during the

period of investigation.18 In addition, the record indicates that subject foreign producers possess some

inventory which could be directed to the United States in the imminent future.19 With respect to product

shifting, given that subject foreign producers’ LEU facilities are solely devoted to the production of LEU,

these producers have no ability to shift from the production of other products to the production of LEU. 

However, the record does indicate that subject foreign producers currently retain some excess capacity

as well as the ability to incrementally expand production capacity.20

As discussed earlier, the record provides some indication that subject imports undersold the

domestic like product during the period of investigation and that this underselling resulted in subject import

market share gains at the expense of the domestic like product.21 In many instances, prices for subject

foreign producers’ long-term contracts negotiated during the period of investigation are scheduled to

decline in the future as subject import volumes grow.22 Therefore, subject imports will have significant

negative price effects in the imminent future as additional long-term contracts are either renegotiated or

newly negotiated.23 As a result of these negative price effects, the domestic industry’s operating
Low Enriched Uranium

 

23 (...continued)

own sales into the spot market, subject imports nonetheless gained some market share in a price competitive

environment. In this context, while the extent of subject imports’ adverse price effects on the domestic like product

during the period of investigation is unclear, the record does indicate that prices for a substantial volume of subject

imports will be below prices for the domestic like product in the near term and result in significant negative price

effects on the domestic like product and a significant adverse impact on the domestic industry’s performance. CR

and PR at Table 9a (focusing on price comparisons for years 2003 and 2004).

 

24 I note that I considered both the evidence and parties’ arguments regarding the nature of the subsidies at issue

in performing my analysis in these investigations.

24 U.S. International Trade Commission

performance will continue to decline and the industry’s ability to invest in facility maintenance and the

development of new technologies, an essential component of industry health, will be significantly impaired. 

Accordingly, I find that the domestic industry is threatened with material injury by reason of subject

imports from France, Germany, the Netherlands, and the United Kingdom that have been found by

Commerce to be subsidized and/or sold in the United States at less than fair value.24

III. Conclusion

Given the uncertainties regarding negative price effects and adverse impact by reason of subject

imports, I find that the record does not provide a sufficient basis to conclude that the domestic industry is

presently materially injured by reason of subject imports. However, based primarily upon an expected

continued increase in the volume of subject imports priced below the domestic like product, current

excess capacity and inventories of subject merchandise in the subject countries, and the current

performance difficulties of the domestic industry, I find that the domestic industry is threatened with

material injury by reason of subject imports from France, Germany, the Netherlands, and the United

Kingdom that have been found by Commerce to be subsidized and/or sold in the United States at less than

fair value.