Source: http://openjurist.org/291/f3d/806/fag-italia-skf-usa-skf-v-united-states
Timestamp: 2013-12-06 09:35:16
Document Index: 798879412

Matched Legal Cases: ['§ 1677', '§ 1675', '§ 1673', '§ 1673', '§ 1673', '§ 1673', '§ 1673', '§ 1675', '§ 1675', '§ 1675', '§ 1675', '§ 1675', '§ 351', '§ 1675']

291 F3d 806 Fag Italia Skf Usa Skf v. United States | OpenJurist
291 F. 3d 806 - Fag Italia Skf Usa Skf v. United States	Home291 f3d 806 fag italia skf usa skf v. united states
291 F3d 806 Fag Italia Skf Usa Skf v. United States 291 F.3d 806
FAG ITALIA S.p.A. and Fag Bearings Corporation, Plaintiffs-Appellants, andSKF USA Inc. and SKF Industries S.p.A., Plaintiffs-Appellants,v.UNITED STATES, Defendant-Cross Appellant, andThe Torrington Company, Defendant-Cross Appellant.
No. 01-1215.
No. 01-1214.
Opinion for the court filed by Circuit Judge DYK, in which Circuit Judge PROST joins. Circuit Judge MICHEL concurs-in-part and dissents-in-part.
This case presents two issues. First, it involves the question whether the Department of Commerce ("Commerce") properly defined "foreign like product" for purposes of 19 U.S.C. §§ 1677b(a)(1) and 1677b(e). In SKF USA Inc. v. United States, 263 F.3d 1369 (Fed.Cir.2001), we vacated the Court of International Trade's decision on that identical issue and remanded for Commerce to explain why it uses a different definition of "foreign like product" for price-based calculations for normal value than it does for calculations of constructed value. The parties agree that SKF USA governs here, and that we should likewise remand this case to Commerce for further consideration of that issue. Accordingly, we will not discuss the "foreign like product" issue further in this opinion. We vacate the decision of the Court of International Trade on this issue and remand for further proceedings consistent with our opinion in SKF USA.
Second, this case involves the question whether Commerce can properly conduct a duty absorption inquiry pursuant to 19 U.S.C. § 1675(a)(4) for "transition orders"1 in 1996 and 1998, the second and fourth years after the deemed issuance date of transition orders under section 1675(c)(6)(D). We hold that Commerce's action in conducting such inquiries is not authorized by the statute and affirm the judgment of the Court of International Trade in this respect. The opinion that follows addresses that issue.2
The antidumping statute is designed to prevent foreign goods from being sold at unfairly low prices in the United States to the injury of United States producers. Antidumping orders are issued as a result of a process that involves both Commerce and the ITC.
Commerce decides whether dumping exists by determining whether foreign merchandise has been sold or is likely to be sold in the United States at "less than its fair value." 19 U.S.C. § 1673(1) (2000). Commerce first makes a preliminary determination whether there is a reasonable indication that foreign merchandise is being sold at less than fair value, 19 U.S.C. § 1673b(b)(1)(A) (2000), then establishes dumping margin3 rates reflecting that amount. 19 U.S.C. §§ 1673d(a)(1), 1673d(c)(1)(B) (2000). The ITC determines whether a domestic industry is "materially injured" or is "threatened with material injury," or whether "the establishment of an industry in the United States is materially retarded" by dumping. 19 U.S.C. § 1673d(b)(1) (2000). If the determinations of Commerce and ITC are both affirmative, Commerce issues an antidumping order assessing duties on the foreign exporter. 19 U.S.C. § 1673d(c)(2) (2000).
During any [annual] review ... initiated 2 years or 4 years after the publication of an antidumping duty order, [Commerce], if requested, shall determine whether antidumping duties have been absorbed by a foreign producer or exporter subject to the order if the subject merchandise is sold in the United States through an importer who is affiliated with such foreign producer or exporter.
19 U.S.C. § 1675(a)(4) (2000).4 Section 1675(a)(4) further provides that Commerce "shall notify the [ITC] of its findings regarding such duty absorption for the [ITC] to consider in conducting a [sunset review]."
The consequence of a finding of duty absorption by Commerce is that the anti-dumping order is less likely to be revoked as a result of a sunset review. The Statement of Administrative Action recognized that "[d]uty absorption may indicate that the [foreign] producer or exporter would be able to market more aggressively should the order be revoked as a result of a sunset review." Uruguay Round Agreements Act: Statement of Administrative Action ("SAA"), H.R. Doc. No. 103-316, at 886 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4211. It was further understood:
An affirmative finding of absorption in an administrative review initiated two years after the issuance of an order is intended to have a deterrent effect on continued absorption of duties by affiliated importers; if they engage in duty absorption, they will know that they will face an additional hurdle that will make it more difficult to obtain revocation or termination. If, in the four-year review, Commerce finds that absorption has taken place, it will take that into account in its determination regarding the dumping margins likely to prevail if an order were revoked.
ITC considers several factors in deciding whether revocation would likely lead to material injury. 19 U.S.C. § 1675a(a)(1) (2000).5 Among other things, the statute provides that in sunset reviews ITC "shall" consider Commerce's two and four-year duty absorption determinations. 19 U.S.C. § 1675a(a)(1)(D) (2000).
There is no issue in this case as to the operation of these duty absorption inquiry or sunset review provisions with respect to antidumping orders issued after January 1, 1995, the date the URAA amendments came into effect in the United States. The controversy concerns orders issued before that date — so called "transition orders." A "transition order" is defined in the statute as "an antidumping duty order ... which is in effect on the date the WTO Agreement enters into force with respect to the United States," that is, January 1, 1995. 19 U.S.C. § 1675(c)(6)(C) (2000). Congress was well aware that "there likely will be more than 400 of these transition orders" issued before January 1, 1995, and Congress also recognized that "special rules are necessary to enable the agencies to conduct five-year reviews within a reasonable period and in a manner consistent with the [URAA] Agreements." SAA at 882, reprinted in 1994 U.S.C.C.A.N. at 4208. Congress accordingly explicitly provided for sunset review of transition orders: "[f]or purposes of this subsection [(c)], a transition order shall be treated as issued on the date the WTO Agreement enters into force with respect to the United States." 19 U.S.C. § 1675(c)(6)(D) (2000). Thus, transition orders were deemed issued on January 1, 1995, and subject to a sunset review five years after that date.
In the URAA amendments, Congress did not provide for duty absorption inquiries of transition orders in the second or fourth years after the deemed issuance date. Nonetheless, Commerce has claimed the authority to undertake such duty absorption inquiries for transition orders in the second and fourth years after the deemed issuance date, thus leading to the present proceeding.
In 1997, Commerce promulgated a regulation interpreting the statutory scheme as permitting it to conduct duty absorption inquiries of transition orders, if requested, in any annual review initiated in 1996 or 1998. 19 C.F.R. § 351.213(j) (1998).6 However, this regulation is not binding here, because the review at issue was initiated in 1996, and the regulation applies only to "administrative reviews initiated on the basis of requests made on or after the first day of July, 1997...." Antidumping Duties; Countervailing Duties, 62 Fed. Reg. 27,296, 27,416-17 (May 19, 1997). Thus Commerce contradicts itself — on the one hand promulgating a regulation purporting to authorize reviews in 1996, and at the same time stating that that regulation is inapplicable to pre-July 1, 1997, reviews. The regulation nonetheless states Commerce's views that second and fourth year reviews of transition orders are authorized by the statute.
This case predates the issuance of that regulation. At issue in this case is the seventh annual administrative review of an antidumping order on antifriction bearings ("AFBs") imported to the United States during the period of May 1, 1995, through April 30, 1996. Plaintiff-appellant FAG-Italia S.p.A. is a manufacturer of AFBs from Italy that are subject to the antidumping order, and plaintiff-appellant FAG Bearings Corporation imports those AFBs (collectively, "FAG"). Plaintiff-appellant SKF USA and plaintiff-appellant SKF Industrie S.p.A. (collectively, "SKF") also manufacture and import Italian AFBs that are subject to the antidumping order.
On May 15, 1989, Commerce issued the antidumping order.7 On June 20, 1996, Commerce initiated the seventh annual administrative review of this order for the period of May 1, 1995, to April 30, 1996.8 On June 10, 1997, Commerce published Preliminary Results of its review.9 On October 17, 1997, Commerce published its Final Results.10 In its Final Results, Commerce found that FAG and SKF engaged in duty absorption with respect to Italian AFBs. 62 Fed.Reg. at 54,044.
It is undisputed that the underlying order, originally issued May 15, 1989, is a "transition order" with a deemed issuance date of January 1, 1995, for sunset review purposes. 19 U.S.C. § 1675(c)(6)(D) (2000). From the outset of its investigation, Commerce regarded this seventh annual administrative review as the "second year" review for purposes of its