Court Remands Nucor Fastener Antidumping Case to ITC

9/27/2011 11:23:00 PM
HEADLINES
Court Remands Nucor Fastener Antidumping Case to ITC

The U.S. Court of International Trade sent the Nucor Fastener antidumping case back to the International Trade Commission.

The September 20, 2011, CIT opinion remanded the ITC’s 2010 unanimous decision to dismiss Nucor’s petition seeking tariffs on fasteners from China and Taiwan.
 

The ITC is due to respond by December 7, 2011. If the ITC again rules against Nucor, the Indiana-based fastener manufacturer can continue to appeal even to the U.S. Supreme Court.
 

In a 31-page ruling, CIT Judge Evan J. Wallach affirmed the ITC’s preliminary ruling on three grounds: that the commission properly relied on limited pricing data; that it sufficiently addressed concerns about estimated data; and it’s handling of injury allegations made by domestic producers was appropriate.
 

But Wallach’s ruling sent the case back to the ITC for a redetermination on two “holdings”: first, that the ITC improperly treated its import data as “comprehensive”; and that the ITC failed to identify a “rational basis for unqualified reliance on (unnamed domestic producer’s) questionnaire response.
 

In remanding the antidumping case, the court handed domestic fastener producers an “important victory” in their efforts to combat dumped imports, according to Alan Price of Wiley Rein LLP in Washington, DC, counsel to domestic fastener producer Nucor Fastener.
 

“There is no doubt that U.S. fastener companies and their workers are being injured by dumped imports from China and Taiwan,” Price stated.
 

But U.S. importer attorney Matthew McGrath of DC law firm Barnes, Richardson & Colburn was quick to downplay Price’s assessment of the ruling.
 

“This is not a reversal, this is a remand,” McGrath told FIN. 

And remands in trade cases are “routine,” he added.

“(They’re) a pretty common thing.”
 

Reached by phone at his office, McGrath told FIN that problems with the ITC’s methodology are detailed in Wallach’s 31-page public opinion. 
 

“What’s not apparent is that the staff already analyzed the data both with the company included and without the company included,” McGrath added.
 

Even with that data excluded, the ITC is likely to conclude that imports, while “significant,” have not caused material injury to the domestic fastener industry, according to McGrath.
 

To gauge the severity of the court’s decision, McGrath pointed to the ITC’s notice of remand proceedings, dated September 14.

The ITC has invited the parties in the case to comment on the remand, but decided that no new evidence would be admitted.

“(The) ITC could have reopened the record, but they declined to do that,” McGrath pointed out. 
 

That leads McGrath and the importers he represents to view the remand as administrative rather than significant.
 

What the ITC will do is “not a complete re-evaluation of data, but a narrow scope” of consideration limited to the judge’s points, McGrath said. 
 

And he likes the importers’ odds on those points. “We feel strongly that this case is one of reaffirmation of the negative decision.” 
 

If the ITC’s determination on the remand remains negative — that is, if the commission determines imports have caused no injury to the domestic fastener industry — the outcome “strengthens the likelihood” that the case will ultimately conclude in the importers’ favor, McGrath stated.
 

If that occurs, Nucor Fastener could continue to pursue appeals, first at the Court of Appeals for the Federal Circuit, and ultimately at the U.S. Supreme Court.
 

“It may be Nucor’s strategy to keep the case alive to keep some sort of uncertainty in the marketplace,” McGrath speculated. 
 

In its petitions, filed in September 2009, Nucor Fastener alleged average dumping margins of 145% for Chinese imports, and 74% for imports from Taiwan. 
 

Price said Nucor Fastener is one of the last remaining producers of standard fasteners in the United States, and that many of those still in existence have been forced to slash production, resulting in significantly decreased operating income, profits, production workers and wages.
 

Reached by phone at his DC office, Price declined to speculate on the outcome of the case but expressed optimism about Nucor Fastener’s chances for a positive decision from the ITC.
 

“We believe we have a strong case,” Price told FIN.
 

“If we’re going to have jobs in the United States, then we need to make fasteners and other products here,” Price noted. “Requiring goods to be sold at non-dumped and subsidized prices will bring jobs back to the United States.”
 

Nucor Fastener employs more than 225 workers at its 500,000 sq ft facility in St. Joe, IN. Web: nucor-fastener.com 

An ITC decision in the case is due by December 7, 2011.

Judge: Import Volumes “Significantly Underreported”

In granting Nucor Fastener’s appeal on the U.S. International Trade Commission’s (ITC) negative preliminary determination, the U.S. Court of International Trade (CIT) remanded the antidumping investigation of standard steel fasteners from China and Taiwan because of how the ITC collected and analyzed certain volume and pricing data in the case. 
 

The “ITC’s reliance on certain data collected in these investigations is arbitrary, capricious, and an abuse of discretion,” Judge Wallach wrote in his 31-page opinion.
 

Dated August 11, 2011, the opinion notes Wallach’s determination that, unlike the Department of Commerce questionnaire regarding Certain Stainless Steel Fasteners (CSSF), the ITC questionnaire sent to domestic and foreign producers and importers was flawed because it did not explicitly exclude OEM fasteners specific to any automotive, work truck, medium-duty passenger vehicle, or aircraft.
 

The ITC sent questionnaires to “all” firms it believed produced standard fasteners in the U.S., certain firms that imported standard fasteners to the U.S., and certain firms it “believed to be possible producers or exporters” of standard fasteners in China or Taiwan, according to court records.
 

The commission received responses from 72% of domestic producers (26 of 36 firms); 46% of domestic importers (36 of 78 firms);35% of standard fastener producers in China (12 of 34 firms); and an unspecified percentage of Taiwan producers.
 

Some of these responses were deemed unusable because they were incomplete or untimely, Wallach’s opinion states.
 

“In addition, some responding firms certified that they did not produce, export, or import (standard fasteners) during the period of investigation, and others provided data relating only to fasteners that were ultimately excluded from the scope of the investigation.”
 

Nucor Fastener attorney Price told FIN a key component of Wallach’s ruling was the decision to have ITC exclude data from one unnamed domestic fastener producer company that manufactured only nonstandard fasteners during the period of investigation.
 

Volume and price figures from this particular domestic producer “never should have been in the record in the first place,” Price told FIN. 
 

Court records show that the manufacturer’s response to the ITC questionnaire “suggests significant confusion.”
 

The producer in question “appears to have classified the same fasteners as both standard and nonstandard, placing them simultaneously within and beyond the scope of its investigations.”
 

Overall, pricing data also proved to be an issue, the court concluded.
 

Some of the domestic producers and importers “reported useable price information, but not necessarily for all

products or periods.”
 

Specifically, three U.S. producers of standard fasteners, six U.S. importers of Chinese fasteners, and nine importers of fasteners from Taiwan reported useable price information that covered between 1.1% and 3.6% of total reported CSSF shipments between 2006 and 2008.
 

Problems with domestic producer profit and loss statements for CSSF were discovered as well, as some of the responding manufacturers mistakenly “estimated all of their CSSF costs based upon the ration of CSSF sales to all fastener sales.”

“As a result, the [reported] profit margin for CSSF and all other fasteners was the same.”
 

At least six domestic standard fastener manufacturers accounting for “a very significant” percent of reported 2008 production identified negative financial effects related to imports, including five companies that “lost revenues or sales.”
 

The sixth domestic producer “stated that the prices of CSSF from China and Taiwan are so low that the firm doesn’t bother to provide competing price quotes when product from these countries is being considered by a potential customer.”
 

The two principle errors the ITC is said to have made in its determination are that the ITC improperly treated its import data as “comprehensive”, and that the ITC failed to identify a “rational basis for unqualified reliance on (unnamed domestic producer’s) questionnaire response.”
 

On the question of comprehensive verses representative data, Wallach supported Nucor Fastener’s challenge to the ITC’s characterization of its data as “comprehensive,” especially with regard to the import volumes documented and evaluated by the commission.
 

Counsel for Nucor Fastener also successfully challenged the conclusion the ITC drew from comparing importer responses with foreign producer responses.

“Firms in Taiwan reported exporting more subject merchandise to the United States than firms in the United States reported importing from Taiwan,” Wallach wrote, characterizing the discrepancy as “significant.”
 

Wallach said Nucor Fastener correctly concluded that “these higher export volumes demonstrate that the import volumes used by ITC are ‘significantly underreported.'” 
 

Wallach dismissed the ITC’s conclusion that because export figures from China represented a converse imbalance (more imports into U.S. reported than exports from China) to Taiwan figures, the data, when combined, becomes reliable.
 

“At the data collection state of ITC’s proceedings, CSSF from China and CSSF from Taiwan are dissimilar; ITC offers no explanation for how undercounting the exports of one can remedy undercounting the imports of the other,” noted Wallach, who was appointed in 1995 by President Bill Clinton.
 

The court criticized the ITC for failing to supply a “reasoned basis” for “characterizing and relying on manifestly incomplete import data as ‘comprehensive.'”
 

The ITC first treated the reported import volumes as the actual import volumes, Wallach found. Then the ITC calculated “apparent U.S. consumption” by summing those reported import volumes with domestic volumes, followed by calculating the “[c]umulated subject imports’ share of apparent U.S. consumption” by dividing the reported import volumes by that sum — an exercise the court deemed “meaningless.”
 

While noting that a standard of “comprehensive” data is unrealistic, the judge upheld that a negative 
preliminary injury determination must still possess “a rational basis in fact.”

The ITC’s assertion that its limited data are comprehensive demonstrates a “complete failure to consider an important aspect of the problem and amounts to an explanation for its decision that runs counter to [its] evidence.”
 

“Treating those data as pieces of the full picture is analytical; treating them as the full picture is arbitrary.”
 

And while the court did not specifically criticize the ITC for the method it used in determining that the U.S. industry was not materially injured by imports, it did direct the commission to reconsider its decision.
 

“The reasons for remand … compel reconsideration of this finding,” stated Wallach. ©2011 GlobalFastenerNews.com

Click here to read the Judge Wallach’s 31-page opinion. 

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