21 Ct. Int'l Trade 448 | Ct. Intl. Trade | 1997
Opinion
This matter is before the Court on plaintiffs motion for judgment on the agency record and request for remand. Plain
Background
I. The Antidumping Petition:
On May 9, 1994, BIC, the sole domestic producer of disposable lighters, filed a petition with the Commission and Commerce alleging that the United States’s (“U.S.”) disposable lighter industry was materially injured, or threatened with material injury, by reason of subsidized and less than fair value (“LTFV”) imports of disposable pocket lighters from Thailand, and LTFV imports of disposable lighters from China. Disposable Lighters from the People’s Republic of China and Thailand, 59 Fed. Reg. 25,502 (1994). Thai Lighters at 1-8.
In April 1995, the ITC reached a final negative determination with respect to disposable lighters from Thailand. Thai Lighters. Two months later, the Commission reached a final negative determination with respect to disposable lighters from China. Chinese Lighters.
II. The Commission’s Determinations:
The Commission’s determination in Chinese Lighters parallels its determination in Thai Lighters. That is, in Chinese Lighters, the Commission adopted and incorporated by reference the conditions of competition and the discussion of the domestic industry contained in Thai Lighters.
In both determinations, the Commission found one like product, consisting of both standard and child-resistant disposable lighters. Thai Lighters at 1-6.
The Commission then examined the state of the domestic industry. It began by identifying two conditions of competition which provided the context for its assessment of the economic health of the domestic dispos
The second condition of competition involved a finding that the disposable lighter market consists of two primary market segments, one containing “higher-priced, higher-quality, brand name disposable lighters, ” and the other containing “lower-priced, lower-quality private label brands.” Id. The Commission further found that BIC’s lighters were sold in the higher-quality segment, while the subject imports were sold in the lower-quality segment. Id.
Against this backdrop, the Commission then discussed the state of the domestic industry. The Commission found that between 1991 and 1994, the cumulated volume of subject imports increased, and BIC’s market share by quantity decreased slightly. Thai Lighters at I-14-I-15. Importantly, the Commission also found that any negative inferences this data might raise were offset by increased domestic consumption of lighters during the same period. Id. Moreover, when it measured market share by value, the Commission found that BIC’s market share actually increased from 1992 to 1994. Id. at 1-15. Additionally, in the post-CPSC ban period, the Commission found that BIC’s market share increased whether measured by quantity or value. Id.
The Commission then found that the two products competed on factors other than price. Id. at I-15-I-16. Consequently, the Commission concluded that “[t]he domestic industry retained a relatively stable share (by value) of a growing market, and was profitable throughout most of the period of investigation, even though domestic production decreased.” Thai Lighters at 1-17 (footnotes omitted). As a result, the Commission unanimously determined that the domestic industry was not experiencing material injury by reason of the LTFV imports from Thailand and China.
The Commission then turned to the question of whether the subject imports threatened the domestic industry with material injury. A majority of the Commission first concluded that after the CPSC ban, “only the Thai and Chinese existing and future capacity to produce child-resistant lighters [would be] evidence of any threat of material injury to the domestic industry.” Id. at 1-20. It then found that, as a percentage of total capacity, the Thai and Chinese producers’ capacity to produce child-resistant lighters was too small to pose a threat to BIC. Id. at I-20-I-21.
Standard of Review
The Court will uphold the Commission’s determination unless it finds that it is “unsupported by substantial evidence on the record, or not otherwise in accordance with law.” 19 U.S.C. § 1516a(b)(l)(B) (1994). Substantial evidence is “more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951) (citations omitted).
To make this assessment, the Court reviews “all information presented to or obtained by the * * * Commission during the course of the administrative proceeding * * 19 U.S.C. § 1516a(b)(2)(A)(I). Importantly, the Court may not remand the Commission’s determination simply because the evidence on the record may support two inconsistent conclusions. Consolo v. Federal Maritime Comm’n, 383 U.S. 607, 620 (1966); Matsushita Elec. Indus. Co. v. United States, 3 Fed. Cir. (T) 44, 54, 750 F.2d 927, 936 (1984); accord, Mitsubishi Materials Corp. v. United States, 20 CIT 328,330, Slip Op. 96-44 at 5 (Feb. 29,1996). Rather, the choice between two possible conclusions is properly the task of the Commission, and not the court. Bando Chemical Indus, v. United States, 17 CIT 798,802-03 (1993), aff’d, 26 F.3d 139 (Fed. Cir. 1994); Ac-ciai Speciali Terni S.p.A. v. United States, 19 CIT 1051, 1054, Slip Op. 95-142 at 8-9 (Aug. 7,1995). Thus, the Court affirms agency factual determinations so long as they are reasonable and supported by the record when considered as a whole, even though there may be evidence on the record which detracts from the agency’s conclusions. Atlantic Sugar, Ltd. v. United States, 2 Fed. Cir. (T) 130, 137-38, 744 F.2d 1556, 1563 (1984).
Discussion
BIC challenges the Commission’s negative current injury determinations and negative threat determinations in both Thai Lighters and Chinese Lighters. With respect to the current injury determinations, BIC argues that the Commission’s causation analysis is not in accordance with law because it is internally inconsistent and it is unsupported by substantial evidence on the record. BIC further asserts that
With respect to the threat determinations, BIC argues that the majority of the Commission ignored evidence of rapidly increasing subject imports, and evidence that Thai and Chinese producers planned to convert standard lighter capacity to child-resistant lighter capacity. BIC further asserts that the ITC ignored evidence of adverse price trends for child-resistant lighters, and growing inventories of subject lighters.
Finally, BIC asserts that the majority of the Commission erred in Chinese Lighters when it refused to cumulate imports from Thailand with imports from China. The Court will address each of these contentions in turn.
I. The Commission’s Current Injury Determinations:
A. The Commission’s Causation Analysis:
BIC attacks the Commission’s causation analysis on two levels: one legal, the other factual. First, BIC argues that the Commission cannot legally justify its apparently inconsistent findings. BIC points out that the Commission found sufficient fungibility between the subject imports and BIC’s lighters to support its finding of one like product, as well as its decision to cumulate. Yet, the Commission also found that there was insufficient fungibility between the two groups of lighters to negatively affect domestic prices and production. BIC asserts that such contradictory findings cannot pass legal muster. Second, BIC contends that substantial evidence on the record fails to support the division of the disposable lighter market into low- and high-end product lines. Thus, according to BIC, the Commission’s causation analysis is unsupported by substantial evidence on the record because it is predicated on this division.
1. Whether the Commission’s Causation Analysis is in Accordance with Law:
BIC asserts that “any evidence of competition between the imported and domestic like product” legally prevents the Commission from segmenting the domestic market when it assesses causation. PI. ’s Br. at 19. According to BIC, the Commission’s finding of one like product and its decision to cumulate constitute such evidence of competition. See Thai Lighters at 1-6,1-12-I-13. Relying on Grupo Indus. Camesa v. United States, 18 CIT 461, 853 F. Supp. 440 (1994), and Encon Indus., Inc. v. United States, 16 CIT 840 (1992), BIC then concludes that the Commission’s causation analysis was not in accordance with law.
Plaintiffs arguments miss their mark: how the Commission analyzes competition in the contexts of like product and cumulation does not legally dictate how the Commission must analyze competition in the context of causation.
The Court initially notes that in previous determinations, the Commission has recognized market segments as a condition of competition, notwithstanding concurrent findings of a single like product. See, e.g.,
Importantly, “neither the governing statute nor its legislative history require the Commission to adopt any particular analysis when the market consists of several segments.” Copperweld Corp. v. United States, 12 CIT 148,162,682 E Supp. 552,566 (1988). Hence, when it has reviewed determinations in which the Commission has considered using market segments, the court has deferred to the Commission’s findings regarding the existence and importance of such segments. See, e.g., Acciai Spe-ciali, 19 CIT at 1063-64, Slip Op. 95-142 at 25-26 (upholding the Commission’s decision not to invoke market segments in its causation analysis even though market segments were decisive in its cumulation analysis).
Indeed, BIC ignores previous cases in which the court has consistently recognized that the Commission’s inquiry into product substitutability, i.e, to what degree two or more products compete with each other, may differ according to context:
Analysis of substitutability varies according to the context of its application. For the purposes of defining “like product” as described in 19 U.S.C. § 1677(10X1988), it is not necessary that like products be completely substitutable, only that the like product be like, or in the absence of like, most similar in characteristics and uses. For purpose of cumulation, the analysis of substitutability is also not stringent, as only a reasonable overlap in competition is required where like product imports compete with each other and with like products of the domestic industry. In analysis of material injury, substitutability is one factor in the evaluation of volume and price.
R-MIndus., Inc. v. United States, 18 CIT 219,226 n.9,848 F. Supp. 204, 210 n.9 (1994) (citations omitted) (internal quotations omitted). See also United States Steel Group-A UnitofUSXCorp. v. United States, 18 CIT 1190,1216,873 E Supp. 673,697 (1994); Acciai Speciali, 19 CIT at 1068, Slip Op. 95-142 at 35 (citation omitted).
Moreover, contrary to BIC’s contentions, neither Grupo, 18 CIT 461, 853 F. Supp. 440, nor Encon, 16 CIT 840, suggest that the Court should accord less deference to the Commission’s determinations in the present case. In Grupo, the court evaluated whether substantial evidence supported the Commission’s decision to reject market segments both as a condition of competition, and as a factor in its causation analysis. 18 CIT at 464-66,853 F. Supp. at 443-45. The court affirmed the Commission’s decisions because the Commission had made findings of a high degree of fungibility. 18 CIT at 465-66, 853 F. Supp. at 445. In the present case, there are no such findings. Thai Lighters at 1-13 (noting that the evidence indicates that the subject imports and domestic product have “somewhat limited fungibility”).
Hence, the Court concludes that the Commission’s findings regarding fungibility as they relate to like product, cumulation, and causation accord with law.
2. Whether the Commission’s Causation Analysis is Supported by Substantial Evidence on the Record:
As a condition of competition, the Commission determined that the U.S. disposable lighter market consisted of two major market segments. Specifically, it found that higher-priced, higher-quality, brand name disposable lighters were concentrated at one end of the market, and that lower-priced, lower-quality private label disposable lighters were concentrated at the other. Thai Lighters at 1-9. The Commission further found that BIC’s lighters were in the higher-quality category, and that the subject imports were in the lower-quality category. Id.
BIC argues that substantial evidence on the record does not support these findings. BIC challenges these findings on three separate grounds. First, BIC contends that the Commission’s market segment findings are based solely on quality differences, and that quality differences alone do not constitute substantial evidence “that products do not compete with each other. ” PL’s Bj: at 24-25. Second, BIC argues that the evidence that the Commission relied on to support its like product and cumulation findings overwhelm the evidence that the Commission relied on to support its causation findings. Id. at 26-31. Third, BIC claims that the Commission ignored other evidence on the record which suggested that the subject imports compete with BIC’s lighters. Id. at 31-33. The Court is unpersuaded by these arguments and addresses each of them in turn.
(a) Quality Differences:
The Commission decided to discount evidence of underselling because it determined that the subject imports and the domestic products were concentrated in different segments of the disposable lighter market. Thai Lighters at I-15-I-16. In order to reach this decision, the Commission evaluated evidence that BIC’s lighters have a reputation for quality and safety, and benefit from advertizing, promotional support,
Based on evidence contained in the purchaser responses, the Commission found that factors other than price influenced 80% of the purchasers. These non-price factors include: product quality, supplier liability insurance, brand name recognition, credibility/reliability of supplier, customer preference, availability, incentives, packaging, supplier service, and support. Conf. Staff Rpt. at 1-99; Pub. Staff Rpt. at 11 — 35.
BIC claims that these findings do not support the Commission’s negative injury determination because “competition exists between products of differing quality.” PI. ’s Br. at 25. Yet, BIC forgets that the court does not require the Commission to find a total absence of competition between the domestic like product and the subject imports before it may discount evidence of underselling.
Instead, the court has consistently recognized that the Commission may discount evidence of underselling whenever it finds that the subject imports compete with the domestic like product on other factors besides price. See General Motors Corp. v. United States, 17 CIT 697, 706,827 F. Supp. 774,783-84 (1993); R-M Indus., 18 CIT at 226-28,848 F. Supp. at 210-11; Gifford-Hill Cement Co. v. United States, 9 CIT 357, 368-69, 615 F. Supp. 577, 586 (1985). As discussed infra, the Court finds that substantial evidence on the record supports the Commission’s findings that non-price factors mitigated price competition.
(b) Evidence of Competition Incorporated into the Commission’s Like Product and Cumulation Findings:
As previously noted, the Commission found sufficient fungibility between the subject imports and BIC’s lighters to support its like product and cumulation findings. Thai Lighters at 1-6,1 — 12—I—13. BIC now attempts to use these findings to impugn the Commission’s causation analysis on an evidentiary level. According to BIC, the evidence on competition and fungibility which underpins the like product and cumulation findings is so strong that it should have resulted in an affirmative injury determination. PI. ’s Br. at 26-31.
Yet, this argument fails because BIC again overlooks the importance of context; like product, cumulation, and causation are functionally different inquiries because they serve different statutory purposes. R-M Indus., 18 CIT at 226 n.9,848 F. Supp. at 210 n.9. As aresult, each inquiry requires a different level of fungibility. Hence, the record may contain
More concretely, the purpose of the like product inquiry is to delimit the domestic industry that the Commission will examine in its material injury determination. S. Rep. No. 96-249 at 90-91 (1979), reprinted in, 1979 U.S.C.C.A.N. 381,476-77. It is not unusual for the Commission to find one like product even though it includes individual products that either lack or have limited fungibility. See Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide From the Netherlands, USITC Pub. No. 2783, at I-6-I-7, Inv. No. 731-TA-652 (June 1994) (final affirmative determination); Steel Wire Rod from Brazil and Japan at I-6-I-8; Steel Wire Rope From The Republic of Korea and Mexico, USITC Pub. No. 2613, at 9-10, Inv. Nos. 731-TA-546 and 731-TA-547 (Mar. 1993) (final affirmative determination). Hence, a finding of one like product is not synonymous with a finding that two products are highly fungible. Acciai Speciali, 19 CIT at 1068, Slip Op. 95-142 at 35 (citations omitted).
Likewise, cumulation does not require two products to be highly fungible. Rather, to support a decision to cumulate, the Commission need only find a “reasonable overlap” of competition between the subject imports, and between the subject imports and the domestic like product. See, e.g., U.S. Steel Group, 18 CIT at 1199-200,873 F. Supp. at 685 (citations omitted). Fungibility is only one of four factors that the Commission considers when it decides whether a reasonable overlap of competition exists. Czestochowa v. United States, 19 CIT 758,768,890 F. Supp. 1053, 1062 (1995) (citations omitted). In this case, the Commission decided to cumulate despite its findings that the subject imports and the domestic product were only “somewhat fungible.” Thai Lighters at 1-13.
Nevertheless, BIC argues that other language in the cumulation discussion suggests that the subject imports and the domestic product are fungible. PI. ’s Br. at 29 (citing Thai Lighters at 1-13). Importantly, however, fungibility plays a far more important role in the causation context than in either the like product or cumulation contexts; the more fungible two products are, the more likely underselling by one will affect the price of the other. General Motors, 17 CIT at 711-12, 827 F. Supp. at 787-88 (citing Negev Phosphates, Ltd. v. U.S. Dep’t of Commerce, 12 CIT 1074,1084,699 F. Supp. 938,947; H.R. Rep. 317,96th Cong., 1st Sess. 46 (1979)).
Different features, consumer perceptions of quality and reliability, price differences, and brand loyalty all affect how fungible two products
(c) Other Evidence on the Record:
Highlighting certain importer and purchaser questionnaire responses, BIC further argues that the Commission ignored evidence on the record indicating that the subject imports and BIC lighters are both comparable in quality and interchangeable. PL’s Br. at 31-33. The Court remains unpersuaded.
The inquiry into whether a set of products is comparable is a fact intensive one. Iwatsu Electric Co. v. United States, 15 CIT 44, 57, 758 F. Supp. 1506,1517 (1991). Often, there may be substantial evidence on the record to support several inconsistent conclusions. Metallverken Nederland B.V v. United States, 13 CIT 1013, 1017, 728 F. Supp. 730, 734 (1989) (citing Consolo, 383 U.S. at 620; Matsushita, 3 Fed. Cir. (T) at 51,750F.2dat933; Negev Phosphates, 12 CIT at 1076-77,699 F. Supp. at 942; Citrosuco Paulista, S.A. v. United States, 12 CIT 1196,1210, 704 F. Supp. 1075,1088 (1988)). Consequently, because of its role as fact-finder, the Commission “has great latitude in making [these] finding[s].” Iwatsu, 15 CIT at 57,758 F. Supp. at 1517. Hence, although BIC correctly notes that other evidence indicates that the subject imports compete with its products, the Court finds this evidence insufficient to render the Commission’s determination unsupported by substantial evidence on the record.
The record reveals that purchasers infrequently change suppliers, and that many customers prefer BIC lighters because they enjoy a reputation for safety and a brand name recognition unmatched by the subject lighters. See List 2, Docs. 58.72, 58.74, 58.83, 58.87, 58.89, 58.98 (purchaser’s questionnaire responses); Final Econ. Mem. at 21-23, List 2, Doc. 45; Pub. Staff Rpt. at II-30-II-31.
Furthermore, the majority of responding purchasers reported that the lowest priced lighters do not always win a contract or sale. See List 2, Docs. 58.72,58.74,58.83,58.87,58.89,58.98 (purchaser’s questionnaire responses); Final Econ. Mem. at 21-23. Instead, these purchasers evaluate the following non-price factors when they decide which lighters to purchase: product quality, supplier liability insurance, brand name recognition, the reliability of the supplier, customer preference, availabil
Evidence in the record also indicates that, for the most part, subject imports and domestic lighters are not distributed through the same channels. Rather, the low-end imported lighters are more commonly sold to street vendors or “mom and pop” convenience stores, while BIC sells significantly more lighters to retail chains. Hr’g Tr. at 114 (testimony of John Norstrom); Hr’g. Tr. at 122 (testimony of John Tucker); Hr’g Tr. at 134 (testimony of Richard D. Boltuck).
Hence, the Court finds that, notwithstanding the questionnaire responses isolated by BIC, substantial evidence on the record supports the Commission’s causation findings.
B. The Commission’s Underselling Analysis:
When it assessed whether the subject imports caused material injury, the Commission decided to discount evidence that subject imports consistently undersold the domestic like product. Thai Lighters at 1-16. BIC now challenges this aspect of the determination, arguing that “evidence of underselling is an indicator per se of injury by reason of subject imports.” Pl.’s Br. at 35. According to BIC, once the Commission acknowledged that the subject imports undersold BIC’s lighters, it was legally bound to make an affirmative injury determination unless it could quantify a price premium. The Court finds this analysis unpersuasive.
Evidence of underselling alone is legally insufficient to support an affirmative injury determination. Rather, the Commission has a statutory mandate to consider not only whether the subject imports have significantly undersold the domestic like product, but also how the subject imports affect the prices of the domestic like product. See 19 U.S.C. § 1677(7)(C)(iii). Interpreting this provision, the court has previously noted that Congress has vested the Commission with broad discretion to analyze and to assess the significance of all relevant factors in its injury determination. USX Corp. v. United States, 12 CIT 844, 846, 698 F. Supp. 234,237 (1988) (citing Copperweld, 12 CIT at 156,682 F. Supp. at 564; Maine Potato Council v. United States, 9 CIT 293, 300,613 F. Supp. 1237,1244 (1985)). See also Trent TubeDiv., Crucible Materials Corp. v. United States, 14 CIT 386, 401-03, 741 F. Supp. 921, 934-35 (1990).
The Court now finds that the Commission permissibly exercised its discretion, and that substantial evidence on the record supports its decision to discount the evidence of underselling. First, the Commission explicitly considered evidence on the record regarding the margins of underselling. Thai Lighters at 1-15.
Second, the Commission determined that the margins were consistent with its finding of no material injury because the subject imports and the domestic like product were concentrated in different market segments. In deciding to discount, the Commission noted that:
Standard lighters in the high-end segment typically range between 30 cents and 40 cents per lighter. Prices in the low-end segment*459 vary from 10 cents to 20 cents per lighter. The disposable lighters selling at the high end [sic] of the market enj oy brand name recognition, as well as a reputation for quality and safety that is not characteristic of the lower-priced imports * * *. Purchasers agree that the primary advantage of the domestic product is its quality, brand name recognition and its advertising/promotional support. We discount the significance of underselling for these reasons.
Thai Lighters at I — 15—I—16 (footnotes omitted).
The Court finds this explanation reasonable. As previously noted, different features, consumer perceptions of quality and reliability, price differences, and brand loyalty can all affect to what extent the price of the subject imports affects the price of the domestic like product. General Motors, 17 CIT at 707-10,827 F. Supp. at 784-87. See also R-M Indus., 18 CIT at 226-28, 848 F. Supp. at 210-11. Here, it was precisely these types of factors that the Commission weighed when it decided to discount evidence of underselling. Thai Lighters at I — 15—I—16. Moreover, as discussed in the preceding subsection, the record supports the Commission’s decision to evaluate these non-price factors. See List 2, Docs. 58.72, 58.74, 58.83, 58.87, 58.89, 58.98 (purchaser’s questionnaire responses); Final Econ. Mem. at 21-23.
Third, contrary to BIC’s contentions, the Commission was not required to quantify a price premium before it could discount the importance of the underselling margin. While BIC correctly notes that in Canned Pineapple Fruit from Thailand, USITC Pub. No. 2907, Inv. No. 731-TA-706 (July 1995) (final affirmative determination) (“Canned Pineapple”), the Commission quantified price premiums when it evaluated the domestic canned pineapple market, neither agency practice nor case law compels it to do so in every investigation.
Thus, in light of the foregoing, the Court upholds the Commission’s underselling analysis because it is both in accordance with law and supported by substantial evidence.
C. The Commission’s Analysis of the CPSC Ban:
The Commission identified the CPSC’s ban on standard lighters as a condition of competition because it concluded that the ban fundamentally altered the domestic disposable lighter market. Thai Lighters at 1-9. BIC now challenges this conclusion, arguing that the Commission wrongly assumed both that the ban excluded subject imports from the U.S. market, and that the ban afforded BIC a competitive advantage. Ac
BIC concedes that the Commission correctly found that the CPSC ban excluded many suppliers from the U.S. market. See PI. ’s Br. at 42; Thai Lighters at 1-9 n.37. However, according to BIC, these suppliers did not import or produce the majority of the subject lighters. As a result, BIC argues that the most important foreign suppliers continued to participate in the U.S. market despite the ban. PI. ’s Br. at 42-46.
BIC’s attack is without consequence. The record contains ample evidence that the ban decreased the number of suppliers who could ship to the U.S. See List 2, Docs. 58.23, 58.32, 58.38, 58.42, 58.49, 58.107 (importers’ questionnaire responses); List 2, Docs. 58.61, 58.71 (purchasers’ questionnaire responses). BIC has not adduced evidence that the remaining suppliers, albeit important ones, were capable of supplying enough child-resistant lighters to fully offset the effect of the ban on standard lighters. The Court concludes that substantial evidence on the record supports the Commission’s finding that the ban had the immediate effect of decreasing the number of suppliers.
The Court further concludes that substantial evidence on the record also supports the Commission’s statement that “BIC [was] well-positioned to compete” in the post-ban domestic lighter market. Thai Lighters at 1-19. This statement merely reflects the Commission’s findings that in the second half of 1994, BIC’s child-resistant lighters showed strong gains, including an improved operating income. Id. Because there is substantial evidence on the record to support these findings, see Conf. Staff Rpt. at A-ll-12, the Court finds BIC’s challenges to be without merit.
D. The Commission’s Use of Allegedly Flawed and Unrepresentative Data:
BIC challenges how the Commission used data on two levels. First, BIC contends that the Commission failed to assess economic data for the entire period of investigation, and instead focused on data for the second half of 1994. Second, BIC contends that the Commission used inaccurate data for imports of child-resistant lighters. The Court rejects these contentions and addresses each in turn.
1. Full Period of Investigation and Half-Year Data:
According to BIC, the Commission focused on post-CPSC ban trends while ignoring “the transitory and unique nature of the period surrounding the ban.” PI. ’s Br. at 50. The Court rejects this argument for two reasons.
First, the Commission explicitly stated that it considered data for the entire period of investigation. See Thai Lighters at 1-9. In particular, the
Second, the record demonstrates that the Commission parsed the 1994 data into pre- and post-ban periods precisely because it recognized that the ban caused market anomalies which rendered full year comparisons problematic. Id. at 1-9,1-15,1 — 17—I—19. BIC now argues that despite its parsing of data, the Commission still failed to adequately account for the market anomalies. In particular, BIC contends that the Commission ignored how industry-wide pre-ban stockpiling of standard lighters distorted market share data for Chinese and all other disposable lighters both before and after the ban.
According to BIC, anticipation of the CPSC ban on standard lighters spawned a surge in imports of standard lighters. This surge, in turn, increased the apparent market share of imported lighters before the ban. Then, in the period immediately after the ban took effect, these same importers reduced their shipments of child-resistant lighters until the stockpiles of standard lighters were depleted. This, in turn, decreased apparent market share of imported lighters. As a result, according to BIC, when the Commission compared the imported lighter’s pre-ban market share with their post-ban market share, the Commission overstated both the imported lighter’s loss and BIC’s gain in market share after the ban took effect. PI. ’s Br. at 51-54.
The record simply does not support BIC’s contention. Rather, it reveals that the Commission was well aware that before the CPSC ban, both BIC and the foreign suppliers increased their inventories of standard lighters. See Thai Lighters at 1-9. BIC merely posits an alternative interpretation of the market share data in the pre- and post-ban periods. The fact that evidence on the record also supports this interpretation is “neither surprising nor persuasive.” Matsushita, 3 Fed. Cir. (T) at 54, 750 F.2d at 936. It does not render the Commission’s determinations invalid.
Furthermore, BIC’s contention does not implicate the Commission’s findings regarding the CPSC ban as they relate both to the number of foreign suppliers and to BIC’s economic performance. As discussed in the preceding section, substantial evidence supports the Commission’s findings that, as a result of the ban, fewer foreign suppliers could compete in the domestic lighter market. The record also supports the Commission’s findings that BIC’s operating income for standard lighters peaked in the first half of 1994, even though BIC’s market share was at its lowest point during the entire period of investigation.
2. Child-Resistant Lighter Import Data:
BIC further attacks the Commission’s use of1994 import data for Chinese and “[ojther [sjource” lighters. PI. ’s Br. at 56-60. Both BIC and the Commission agree that questionnaire data for these importers was incomplete. See PL’s Br. at 57; Conf. Staff Rpt. at 1-65. As a result, the
BIC argues that the Commission miscalculated the percentages for July 1994. BIC contends that because the ban on standard lighters did not take effect until July 12,1994, there were “massive last minute entries” of standard lighters imported into the U.S. between July 1 and July 11,1994, which distorted the relative market share data for standard and child-resistant lighters. PI. ’s Br. at 57. The Court rejects this argument.
The Court notes that because Congress has granted the Commission broad discretion to choose its methodology, it will not disturb the Commission’s choice unless it is unreasonable. Cemex, S.A. v. United States, 16 CIT 251,255-56, 790 F. Supp. 290,294-95 (1992). BIC concedes that questionnaire data for these countries was inadequate, and that Commerce’s import data did not disaggregate either by week or by type of lighter. PI. ’s Br. at 57. Under these circumstances, the Court finds that the Commission’s methodology for allocating the lighters is reasonable.
II. The Commission’s Threat of Material Injury Determinations:
After examining the statutory factors relevant to a threat investigation,
A. Import Market Share Before and After the CPSC Ban:
BIC argues that the Commission ignored two trends involving the level of subject imports: first, the subject imports’ increased market penetration for all disposable lighters during the entire period of investigation; and second, the increased level of child-resistant subject lighters shipped after the ban. According to BIC, both trends indicate that the subject imports threaten it with material injury. PI. ’s Br. at 61-64.
However, the Court cannot agree with BIC that the majority of the Commission simply ignored the market penetration of all disposable lighters, including standard, over the entire period of investigation. Rather, the majority concluded that because the CPSC regulation banned the importation or production of standard lighters, “only * * * existing and future capacity to produce child-resistant lighters is evidence of any threat of material injury to the domestic industry.” Thai Lighters at 1-20. The Court finds this explanation reasonable.
Furthermore, the Court disagrees with BIC’s interpretation of post-ban import data which, according to BIC, reveals exponential and threatening increases in shipments of subject child-resistant lighters. PI. ’s Br. at 62-63. The Court finds it is neither surprising, nor informative, that after the ban on standard lighters took effect, subject importers ceased shipping standard lighters and, instead, began shipping child-resistant lighters. This shift resulted in a dramatic increase in child-resistant lighter imports only because subject importers shipped negligible levels of child-resistant lighters before the ban. Conf. Staff Rpt. at D-ll.
In addition, the increase of child-resistant lighter shipments alone fails to show how the number of child-resistant lighters shipped after the ban compares with the number of standard and child-resistant lighters shipped before the ban. Importantly, the majority found that “even if all child-resistant capacity [were] used to produce products shipped to the United States, fewer lighters could be shipped in terms of volume and market share” than prior to the ban. Thai Lighters at 1-21. Against this backdrop, the Court finds that the majority’s decision to focus on foreign capacity instead of import levels was entirely reasonable.
B. Foreign Capacity to Produce Child-Resistant Lighters:
BIC contends that the majority of the Commission underestimated the subject producers’ capacity to ship child-resistant lighters because it ignored evidence that these producers could easily convert their production lines from standard lighters to child-resistant lighters, and because the majority ignored evidence that these producers intended to increase their production of child-resistant lighters. PI. ’s Br. at 64-75.
Yet, BIC overlooks the relevant legal standard for threat determinations: the Commission may not make an affirmative threat determina
Although the production process for standard and child-resistant lighters is basically the same, substantial evidence on the record supports the majority’s finding that it “would be speculative” to conclude conversion of a large volume of standard lighter production capacity is imminent. Thai Lighters at 1-7,1-21. Before a standard lighter producer can convert its facilities to child-resistant lighters, it must overcome a number of technical hurdles. It must create, patent, and test a new design. Next, it must obtain CPSC approval. Only then can it modify and retool equipment on the assembly line, and begin to produce, package, and market the new lighter. Thai Lighters at 1-21 n.145; Hr’g Tr. at 140 (testimony of Lindsay Meyer); Hr’g Tr. at 167 (testimony of Elliot Feld-man) . This process is both costly and time consuming. For instance, BIC spent seven years and approximately twenty-two million dollars to develop and manufacture its Child Guard Lighter. See List 2, Doc. 25 at Ex. 4, p. 4 (Pre-Hr’g Br. for Thai Merry Co., Ltd.) (excerpts from BIC Corp. Market Study, 1993). This suggests that conversion for many subject producers is not imminent.
In addition, BIC has not adduced evidence that those subject producers who already have the ability to produce child-resistant lighters intend to increase their production of these lighters. Instead, it merely asserts that several major subject producers ship child-resistant lighters to the United States, and that data on Chinese shipments of child-resistant lighters is incomplete. Neither of BIC’s arguments merit a remand.
The majority clearly considered to what extent subject producers evidenced an intent to increase shipments to the United States. Thai Lighters at 1-21. In so doing, it evaluated whether any evidence demonstrated that these producers were preparing to abandon other markets in order to increase their ability to produce child-resistant lighters. Id. In particular, it evaluated how Argentina’s and the European Union’s dumping findings against disposable lighters from China and Thailand would affect imports to the United States. Id. at 1-22. Only then did it conclude that the record contained no evidence that “either conversion or certification is imminent.” Id.
C. Price of Subject Child-Resistant Lighter Imports:
BIC contends that the majority of the Commission ignored evidence that child-resistant lighters from Thailand and China undersold its child-resistant lighters, and that this evidence indicated that the subject
Referencing the Commission’s discussion of the effect of subject imports on domestic prices, the majority reiterated that the price of subject imports did not depress or suppress the price of BIC lighters. Thai Lighters at 1-22. Hence, the majority did not ignore evidence of underselling, it merely discounted it. As discussed in the preceding section, the Court finds that the decision to discount this evidence is both in accordance with law and supported by substantial evidence on the record.
D. Inventories of Subject Imports:
BIC argues that the majority ignored evidence indicating that inventories for subject lighters in general, and for child-resistant lighters in particular, increased over the period of investigation. PI. ’s Br. at 78-80. The Court disagrees.
Although BIC correctly points out that ultimately the majority chose not to evaluate inventory levels of all subject lighters over the entire period of investigation, the Court finds BIC’s challenge immaterial. As discussed in subsection II-A, supra, the Court has already concluded that the majority’s decision to focus solely on foreign capacity to ship child-resistant lighters is reasonable.
The Court also upholds the majority’s decision to discount the importance of child-resistant lighter inventories. Before it made its negative threat determination, the majority assessed and weighed evidence on a number of factors, including child-resistant inventory levels. Thai Lighters at 1-20; 19 U.S.C. § 1677(7)(F)(I). It was only after this deliberative process that the majority decided that child-resistant lighter inventory levels alone did not support an affirmative threat determination. Thai Lighters at 1-22.
Importantly, it is this deliberative process that the standard of review protects because “Congress has vested the Commission with broad discretion ‘to make reasonable interpretations of the evidence and to determine the overall significance of any particular factor or piece of evidence.’” Copperweld, 12 CIT at 160,682 F. Supp. at 564 (quotingMaine Potato, 9 CIT at 300, 613 F. Supp. at 1244) (emphasis added). See also, Rhone Poulenc, S.A. v. United States, 8 CIT 47, 52 n.18, 592 F. Supp. 1318, 1324 n.18 (1984); Citrosuco Paulista, 12 CIT 1196, 1225, 704 F. Supp. 1075,1099 (1988). Thus, the Court only reviews whether there is substantial evidence on the record to support the majority’s decision. See Atlantic Sugar, 2 Fed. Cir. (T) at 138,744 F.2d at 1563; Bando Chemical, 17 CIT at 802-03.
The record demonstrates that in anticipation of the CPSC ban, most participants in the U.S. disposable lighter market stockpiled standard lighters. SeeHr’g Tr. at 59 (testimony of Matthew T. McGrath). The record further reveals that many importers underestimated how long these stockpiles would last, and as a result, shipped too many child-re
Sales of child resistant lighters, through the end of‘94, were moving slow [sic] because of those inventories from all different sources of standard lighters. Standard lighters are the preferred product.
The market indicates because of slowness of sales of child resistant [sic] lighters, that the market is still working off those inventories of standard lighters from subject and non-subject sources.
Id. at 171 (testimony of Kenneth J. Pierce).
Thus, the record suggests that inventory levels of child-resistant lighters reflected a “miscalculation of market conditions,” id. at 124 (testimony of John Tucker), rather than a threat to BIC. This supports the majority’s decision to discount the inventories of child-resistant lighters. Thus, the Court affirms the majority’s decision to discount child-resistant inventory levels because it is both reasonable and supported by the record.
III. Cumulation:
In Chinese Lighters, a majority of the Commission decided not to cu-mulate imports of Chinese disposable lighters with imports of Thai disposable lighters.
BIC argues that the Commission erred in both decisions. Specifically, BIC contends that the majority misapprehended the meaning of “subject to investigation” in 19 U.S.C. § 1677(7)(C)(iv), and was therefore compelled to cumulate the Thai and Chinese imports. In the alternative, BIC contends that the majority should have cumulated the imports un
A. The Majority’s Interpretation of “Subject to Investigation’’:
By statute, the Commission is required to:
cumulatively assess the volume and effect of imports from two or more countries of like products subject to investigation if such imports compete with each other and with like products of the domestic industry in the United States market.
19 U.S.C. § 1677(7)(C)(iv) (emphasis added). A majority of the Commission interpreted the phrase “subject to investigation” to exclude the Thai imports because the Commission had recently found that they did not cause material injury in Thai Lighters. Chinese Lighters at 1-7. Notwithstanding BIC’s many challenges, the Court upholds the majority’s interpretation because it accords both with controlling case law and past agency practice.
In Chaparral, the Federal Circuit concluded that the phrase “subject to investigation” restricts those imports that may be cumulated to those that “are definitely determined to be dumped and to contribute to present material injury.” 8 Fed. Cir (T) at 109,901 F.2d at 901. It then upheld as reasonable the Commission’s decision to “evaluat[e] candidates for cumulation on the basis of their unfair trading or the effects of proven unfair trading as of vote day.” Chaparral, 8 Fed. Cir. (T) at 111, 901 F.2d at 1105.
This is precisely what the majority did here. That is, the majority assessed whether it should cumulate Thai imports with Chinese imports on vote day. Chinese Lighters at 1-7. As noted previously, by vote day in Chinese Lighters, the Commission had already determined that the Thai imports did not contribute to present material injury. See Thai Lighters. Hence, drawing on Chaparral, the Commission concluded that cumulation was inappropriate. Chinese Lighters at 1-7.
Moreover, this conclusion is consistent with past Commission determinations. See Certain Cased Pencils from the People’s Republic of China, USITC Pub. No. 2837, at 1-12, Inv. No. 731-TA-669 (Dec. 1994) (final affirmative determination) (footnote omitted) (“[W]e have not cu-mulated cased pencil imports from China with imports from Thailand * * *. Imports from Thailand are no longer ‘subject to investigation’ as of vote day for this investigation because of the Commission’s negative determination in Certain Cased Pencils from Thailand. ”); Sulfur Dyes From India, USITC Pub. No. 2619, at 13, Inv. No. 731-TA-550 (Apr. 1993) (final negative determination) (“Imports from China and the United Kingdom are no longer technically ‘subject to investigation’ be
B. The Recent Order Exception:
Even if cumulation is not mandated by statute, the Commission still has the discretionary authority to cumulate imports under the “recent order exception,” because the Commission recognizes that “imports subject to a very recent order may continue to contribute an injury to the domestic industry, and are therefore properly cumulable.” Mitsubishi Materials Corp. v. United States, 17 CIT 301, 314, 820 F. Supp. 608, 620 (1993). According to BIC, this exception should govern in the instant case, and the Court should remand. The Court cannot agree.
BIC misapprehends the nature and the scope of the exception. First, before the Commission can invoke the recent order exception, there must be a recent antidumping or countervailing duty order. See Sulfur Dyes at 13 n.50; Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan, USITC Pub. No. 2641, at 7-8, Inv. No. 731-TA-564 (June 1993) (final affirmative determination). Given the negative determination in Thai Lighters, Thai imports were not subject to a recent antidumping order.
Second, even under the recent order exception, the determination must still contain findings “that imports from the candidate for cumulation were definitely determined * * * to contribute to present material injury.” Mitsubishi Materials, 17 CIT at 315, 820 F. Supp. at 621-22 (internal quotations omitted) (quoting Chaparral, 8 Fed. Cir. (T) at 109, 901 F.2d at 1104) (alteration in original). Here, imports from Thailand were determined not to contribute to present material injury. Thai Lighters at 1-17. Hence, the Court upholds the majority’s decision not to invoke the recent order exception.
Conclusion
The Commission’s determinations regarding disposable lighters from Thailand and China are sustained because they are supported by substantial evidence and are otherwise in accordance with law.
As a result, unless otherwise specified, all references to the Commission’s discussion in Thai Lighters also incorporate Chinese Lighters.
In Thai Lighters, Commissioner Lynn M. Bragg concurred with the majority but wrote separately to discuss her analysis. Thai Lighters at I-25-I-27. In both Thai Lighters and Chinese Lighters, Commissioners David B. Rohr and Don E. Newquist did not join the majority’s determination because they determined that the domestic industry was threatened with material injury by reason of the subject imports. See Thai Lighters at I-29-I-37; and Chinese Lighters at I-21-I-28.
Note also that in Canned Pineapple, the Commission undertook a market segment analysis despite a concurrent finding of one like product, consisting of domestic canned pineapple fruit. Canned Pineapple at I-7-I-8,1-13-I-14.
The Court discusses whether the Commission correctly assessed how the CPSC ban affected future foreign capacity infra.
The Commission used two different methods to allocate imports to the categories of standard or child-resistant. If it had data available from importers’ questionnaire responses, the Commission divided the imports for the second half of 1994 using a ratio of child-resistant to standard based on the questionnaire responses. Absent questionnaire responses, the Commission assigned all imports to the standard category for the years 1992 through June 1994, and to the child-resistant category for July-December 1994. Conf. Staff Rpt. at 1-65.
Although BIC cites with approval to the methodology employed by Commissioner Crawford, P.l. ‘s Bn at 58-59, the Court finds it significant that Commissioner Crawford used it to reach a negative determination. See Thai Lighters.
These factors include: any existing unused production capacity, or an imminent, substantial increase in production capacity; a significant rate of increase of the volume or market penetration of imports which suggests that a substantial increase of imports is likely; whether the imports are entering the United States at prices which are likely to significantly depress or suppress the price of the domestic product; the inventory levels of the subject merchandise; and any potential for the subject importers to shift production away from other goods into the production of the subject imports. 19 U.S.C. § 1677(7)(F)(I).
Vice Chair Janet A. Nuzman assessed the effects of the subject imports both on a cumulated anduncumulated basis before concluding that the record supports a negative determination in either framework. Chinese Lighters at I-17-I-20. Commissioner Newquist also decided to cumulate. Chinese Lighters at I-25-I-27.
Although investigations in Thai Lighters and Chinese Lighters began simultaneously, the Commission decided to stagger its final votes in Thai Lighters and Chinese Lighters because Commerce delayed its final LTFV determination for Chinese lighters. Thai Lighters at 1-5 n.4. As a result, the Commission had already reached a negative determination in Thai Lighters when it voted in Chinese Lighters. Chinese Lighters at 1-7. Thus, in Chinese Lighters, the majority concluded that the lighters from Thailand were no longer subject to investigation. Id.
The majority further noted that it “would [have! reaehfed] the same result had fit] cumulated subject imports from China with lighter imports from Thailand.” Chinese Lighters at 1-11 (citations omitted).
The Court notes that after BIC filed the petition that initiated this case, Congress amended the controlling statute through the Uruguay Round Agreements Act. Trade and Tariff Act of 1984, Pub. L. No. 98-573, § 612(a)(2)(A), 98 Stat. 2948, 3033 (1984) (formerly codified at 19 U.S.C. § 1677(G)(i) (1994)). It now provides that the Commission should cumulate imports from investigations that, although commenced simultaneously with the filing of a single petition, have become staggered. See 19 U.S.C. § 1677(7)(G)(i). Importantly, the amended statute does not govern in this case because the petition was filed before its enactment. Trade and Tariff Act of 1984, Pub. L. No. 98-573, § 612(a)(2)(A), 98 Stat. 2948, 3033.