Opinion ID: 1255706
Heading Depth: 2
Heading Rank: 3

Heading: The Commission's Determination on Remand

Text: In the time between the Commission's Original Determination and the court's remand, the composition of the Commission changed. Two commissioners were replaced with new appointees. In the remand proceedings, the Commission reopened the record to obtain additional information from purchasers about the degree of competition between subject imports and the domestic like product. Diamond Sawblades and Parts Thereof from China and Korea, Inv. Nos. 731-TA-1092-1093, slip op. at 2 (May 14, 2008) ( Remand Determination ). The Commission sent supplemental questions solely to purchasers that had responded to the initial questionnaires during the original investigation. All interested parties filed comments on DSMC I and the supplemental record, but the Commission did not hold an additional hearing. On May 14, 2008, the Commission filed its determination on remand. Once again, the Commission unanimously found that the domestic industry as a whole had not suffered material injury by reason of the subject imports from China and Korea. The Commission reiterated that although subject imports increased significantly and undersold the domestic like product by significant margins during the period of investigation, the industry was able to maintain its production, sales, and profitability because of considerable increases in demand and the industry's success in reducing expenses and improving productivity. The two new commissioners joined the remaining dissenting commissioner from the Original Determination in finding that there was an affirmative threat of material injury. This led to a tie vote of three to three on the issue of threat of material injury. Because a tie vote is deemed to be an affirmative determination pursuant to 19 U.S.C. § 1677(11), the Remand Determination found there was a threat of material injury to the domestic diamond sawblade industry by imports from China and Korea. The Commission's reversal of its threat determination was based, in part, upon its reversal on the issue of competition. The prevailing commissioners (the majority) found an overlap in usage by the professional and general-use market, especially in the mid-range diameter category. In addition, the majority found that both imported and U.S. produced diamond sawblades were laser-welded, segmented blades. Finally, the majority found that although the type of distributor (branded or other) for domestic and imported diamond sawblades frequently differs, the products ultimately are purchased and used thereafter largely by the same types of end users. Id. at 7. Based on these findings, the majority concluded that the record leaves no doubt that there is considerable overlap in the mid-range sizes and that U.S.-, Chinese-, and Korean-produced finished diamond sawblades compete with each other in the same end-user markets and across the range of product sizes. Id. at 12. The majority also found that although demand grew significantly during the period of investigation, this growth was not expected to continue. In addition, the majority found that the volume of subject imports was likely to continue to rise in part because of the increasing production capacity of the importers. Based on those findings, the majority predicted a significant negative impact on the domestic industry's sales volumes, production levels, profitability, market share, and prices. Thus, the majority concluded that based on import trends, declining prices, flattening demand, the domestic industry's weakening condition, and its diminished opportunities to reduce expenses or improve productivity, the industry is threatened with material injury by reason of the cumulated subject imports. Id. at 3-4. The dissent disagreed with the majority's conclusion that competition in the industry was not limited by a market divided by sawblade characteristics. Instead, the dissent adopted the majority's opinion in the Original Determination, finding that competition was severely limited by the type of end user to which sales were made, the size ranges of the blades sold, and differences in blade type and manufacturing process. The dissent noted that while there was competition in the mid-range sizes, this competition was further limited by differences in channel of distribution, customer types, and blade types. It explained that because prices for the product from the same source (domestic, China, or Korea) vary, in many instances, dramatically, for the same narrowly defined product depending on whether the product is sold to a branded or other distributor, there are very real differences between these two customer types. Id. at 61. The dissent also stated that since the Commission's customary practice is to examine only direct purchasers, not those purchasers further down the distribution chain, analysis of the ultimate end users was irrelevant.