Petition for Writ of Certiorari — JTEKT Corp. v. United States (No. 06-1632)

Supreme Court brief2007

Ask Donna

What actually matters in this document.

Text

No. 06-

IN THE eae

Supreme Court of the Wuited States

JTEKT CORPORATION (F/K/A/ KOYO SEIKO COMPANY, LTD.).

KOYO CORPORATION OF U.S.A., NTN CORPORATION,

NTN BEARING CORPORATION OF AMERICA,

AMERICAN NTN BEARING MANUFACTURING CORPORATION,

NTN DRIVESHAFT, INC., AND NTN-BOWER CORPORATION,

Petitioners,

UNITED STATES OF AMERICA,

Respondent.

Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Federal Circuit

PETITION FOR WRIT OF CERTIORARI

DONALD J. UNGER CARTER G. PHILLIPS*

DIANE A. MACDONALD JOSEPH R. GUERRA

LOouISA V. CARNEY NEIL R. ELLIS

BAKER & MCKENZIE LLP ROBERT A. PARKER

One Prudential Plaza SIDLEY AUSTIN LLP

130 E. Randolph Street 1501 K Street. N.W.

Suite 3500 Washington, D.C. 20005

Chicago, Illinois 60601 (202) 736-8000

(312) 861-8000

Counsel for Petitioner

June 6, 2007 * Counsel of Record

ne nen er SRA ROR EN REECE PTE TONNER ES AE NN RON

WiLSON-EPES PRINTING Co., INC. — (202) 789-0096 — WASHINGTON, D. C. 20002

QUESTIONS PRESENTED

1. Whether a federal court is required to remand an

administrative decision to an agency, when the agency

decision under review was based on a policy that the agency

has since reversed or modified in a highly analogous context;

and

2. Whether a federal court is required to remand an

administrative decision to an agency, when the agency action

has been found to violate the United States’ treaty obligations

and the agency is the only body statutorily authorized to

consider whether and how to implement the treaty.

PARTIES TO THE PROCEEDING

Petitioner Koyo Corporation of U.S.A. is a wholly-owned

subsidiary of Petitioner Koyo Seiko Co., Ltd., which is now

known as JTEKT Corporation. JTEKT Corporation is a

publicly-owned company with shares listed on the Tokyo

Stock Exchange. Toyota Motor Corporation, a publicly-

owned company with shares listed on the Tokyo, New York,

and London Stock Exchanges, owns more than 10% of the

shares of JTEKT Corporation.

Petitioners NTN Bearing Corporation of America,

American NTN Bearing Manufacturing Corporation, NTN

Driveshaft, Inc., and NTN-Bower Corporation are wholly-

owned subsidiaries of NIN USA Corporation, which is a

wholly-owned subsidiary of Petitioner NTN Corporation, a

publicly-owned company with shares listed on the Tokyo

Stock Exchange.

Respondent is the United States of America.

TABLE OF CONTENTS

Page

CPR FEGs b RDE GDF BRRICDEEES BEM nnccsnsscccsncssneccscsoesengnsseccsennce i

PARTIES TO THE PROCEEDIN................ccceceseseesseeees il

TP i PURE AI se hsiecsishenaincsinndascccnrsdesiovindin v

Se a I OT Sasi iascccsicein ionic chitinase l

PeP ETETTE dickies shisiciniicitittenniihlieiniessnmiainicennanindateisianan ]

STATUTORY PROVISIONS INVOLVED .................... a

SA BRINE COE DBRS CA in ccccsccissncssivnsscsccsesssnzansesices

A. Antidumping Proceedings .................::ccceeseeeeeeees 4

B. The Antidumping Agreement And Uruguay

ROUNG Agrecenenits At ..........c0ccsscrscseceseessensesssas

C. Commerce's “Zeroing” Practic.............0.s0..0000- 6

D.The WTO Has Found That Commerce’s

Zeroing Practice Violates The United States’

International Obligations, And Commerce Has

Agreed Fully To Implement This Determin-

SO is ciskcicininctnlcacieccia tkabintnnasaeiaa tteiaiaain 8

REASONS FOR GRANTING THE PETITION.............. 11

I. THE DECISION BELOW IS CONTRARY TO

PRECEDENT OF THE UNITED STATES

COURT OF APPEALS FOR THE DISTRICT

OF COLUMBIA CIRCUIT AND PERPETU-

ATES AN UNWARRANTED CONFLICT IN

THE LAW GOVERNING JUDICIAL REVIEW

OF FEDERAL AGENCIES. ..........ccccsssescccnsscsscncesees 12

(iii)

TABLE OF CONTENTS - continued

Page

Il. THE FEDERAL CIRCUIT’S DECISION IS

INCONSISTENT WITH THE CONSTITUT-

IONAL SEPARATION OF POWERS AND

INTERFERES WITH THE EXECUTIVE

BRANCH’S ABILITY TO COMPLY WITH

THE UNITED STATES’ TREATY OBLIGA-

TABLE OF AUTHORITIES

CASES Page

Blackman-Uhler Chem. Div., Synalloy Corp. v.

NERB, 561 F.2d 1118 (4th Cir. 1977)... 14

Bowe Passat Reinigungs- und Waschereitechnik

GmbH v. United States, 926 F. Supp. 1138 (Ct.

ET RG Ps aiiivisseensccheneanicectinctsciemnibaiveinss 7

Corus Staal BV v. Dep’t of Commerce, 395 F.3d

1343 (Fed Cir. 2005), cert. denied, 126 S. Ct.

ND SU indicrbciscisetassaiisccinecsecassensesaiusnomonasonns 18, 19

Nat’l Fuel Gas Supply Corp. v. FERC, 899 F.2d

Se i RI SIE ss ents cas sins incgncescinsensaranatsnscnces 13

NLRB v. Coca-Cola Bottling Co. of Buffalo, 55

Fe Pe A rts, SED iececiccasdtsacsantoninsinectncnaioaencs 14

NLRB v. Food Store Employees Union, 417 U.S.

Se Pi icieloabiaiiasadincasibiisheiin Kaibigtbahveintacanicualctimdeliin 14

_—— Panhandle-E..Pipe-Line-Co.-v..FERC,.890 F.2d

BOD EIA GAR, TIO) sicciccrcscitnsciciarssssmnsaniaaes 12, 13, 14

Republic of Mex. v. Hoffman, 324 U.S. 30

ERI Binirviasnciciacnesdibeaninsiaihnriciaadoaeicakeauann Vickaakanaiies 16

United States v. Curtiss-Wright Exp. Corp., 299

U.S. 304 (1936)............06. sisivinisninatdccigelianteunmasiibaet 16

Vimar Seguros y Reaseguros, S.A. v. M/V Sky

TO FED TEs A A MO wicscesinsnnisctincssevnaiscone 20

Williston Basin Interstate Pipeline Co. v. FERC,

NS Fe re ler Be LIS ovscicsissesntenscaeesiavesinnn 13

STATUTES AND REGULATIONS

Uruguay Round Agreements Act of 1994, Pub. L.

No. 103-465, 108 Stat. 4809 ........ccsccccssecssseessseees 6

PE Roi viel cntececbucs 8,19

FEE Oe ivi cecck cies 2,4

(DRE Peace 5

“ST Re Rane mete or 3,4

S| earn, 3

es a a 16

TABLE OF AUTHORITIES — continued

SD EE EB Baie saiiihessivstintininccisiicseetactietomnninioias 16

Antidumping Proceedings: Calculation of the

Weighted-Average Dumping Margin During an

Antidumping Investigation, 71 Fed. Reg. 77,722

(Dec. 26, 2006), amended by 72 Fed. Reg.

FF Cs i MED Vileiaicntaticesesssiasasieansciinsevens 8, 18

Antidumping Proceedings: Calculation of the

Weighted-Average Dumping Margin During an

Antidumping Investigation, 72 Fed. Reg. 3783

CON TD kites ibiinctesserannssaciensebiininanbacnnziaveans 9

Antifriction Bearings (Other Than Tapered Roller

Bearings) and Parts Thereof From France,

Germany, Italy, Japan, Sweden, and the United

Kingdom, 66 Fed. Reg. 36,551 (July 12, 2001)... 5

TREATIES, INTERNATIONAL AGREEMENTS AND

RELATED AUTHORITIES

Agreement on the Implementation of Article V1 of

the General Agreement on Tariffs and Trade,

Marrakesh Agreement Establishing the WTO,

Annex 1A (Apr. 15, 1994), reprinted in H.R.

Doc. No. 103-316, vol. I (1994)... eeeeeeeeee 5, 6

Action by the Dispute Settlement Body, United

States — Measures Relating to Zeroing and

Sunset Reviews, WT/DW322/15 (Jan. 30,

SEE entice nikskivettavicsiaminad eran aiadaisedentinite 9

Agreement on Reasonable Period of Time, United

States — Measures Relating to Zeroing and Sun-

set Reviews, WT/DS322/20 (May 8, 2007) ....... 10, 18

Appellate Body Report, United States — Laws,

Regulations, and Methodology for Calculating

Dumping Margins (“Zeroing”), WT/DS294/

I ls MIE olathe siinciinnsianiedbcanaaiesias 9

vil

TABLE OF AUTHORITIES -— continued

Page

Appellate Body Report, United States — Measures

Related to Zeroing and Sunset Reviews,

WT/DS322/AB/R (Jan. 9, 2007)...........sccccecesceeees 9,18

Dispute Settlement Body, Minutes of the Meeting,

WT/DSB/M/226 (Mar. 26, 2007)................ 10, 15, 17

Panel Report, United States-Section 129(c)(1) of

the Uruguay Round Agreements Act, WT/

Eee ALES CIMEY 0g MUD: cissscessctsterichecscinicdncencesss 17

Request for Consultations by Japan, United

States — Measures Relating to Zeroing and Sun-

set Reviews, WT/DS322/1 (Nov. 29, 2004)......... 9

Second Written Submission of the United States,

United States — Section 129(c)(1) of the

Uruguay Round Agreements Act, WT/DS221

SOs Fe I iis icles bekiasictadlcaepccnaadspcaanicbsaininipins 17

— SCHOLARLY AUTHORITY

Jacob Viner, Dumping: A Problem in Internat-

ional Trade (Augustus M. Kelley 1996)

PN Gicnbasthotc ss bocensrtah dc etic Siti nnideaaicabaenentebik 4

OTHER AUTHORITY

Statement of David P. Shark, U.S. Deputy Chief

of Mission, WTO (Feb. 20, 2007), available at

http://www.usmission.ch/Press2007/0220DSB.

SII sissies tsetse hersontibk bchnecidihadncdatdceesedoaesaaaions 10, 15, 17

PETITION FOR A WRIT OF CERTIORARI

Petitioners Koyo Seiko Company, Ltd. and Koyo

Corporation of U.S.A. (collectively “Koyo”),' and NTN

Corporation, NIN Bearing Corporation of America,

American NTN Bearing Manufacturing Corporation, NTN

Driveshaft, Inc., and NTN-Bower Corporation (collectively

“NTN”) respectfully petition this Court for a writ of certiorari

to the United States Court of Appeals for the Federal Circuit.

OPINIONS BELOW

The opinion of the court of appeals is available at 210 F.

App’x 992 (Fed. Cir. 2006), Pet. App. la-2a. The order of the

court of appeals denying the petition for rehearing is

unreported, but is available at 2007 U.S. App. LEXIS 4456

(Fed. Cir. Feb. 6, 2007), Pet. App. 50a-5 1a.

The opinion of the United States Court of International

Trade is reported at 341 F. Supp. 2d 1334 (Ct. Int’l Trade

2004), Pet. App. 3a-33a.

The final determination of the United States Department of

Commerce in the underlying administrative review is reported

at 66 Fed. Reg. 36,551 (July 12, 2001), Pet. App. 34a-49a.

JURISDICTION

The judgment of the court of appeals was entered on

December 8, 2006. On February 6, 2007, the court of appeals

entered an order denying Petitioners’ timely motion for

rehearing. On May 7, 2007, the Chief Justice granted

Y>titioners’ anplication to extend the time for filing this

Pziition for a Wnt of Certiorari to and including June 6, 2007.

‘On January 1, 2006, after the initiation of the underlying legal

proceedings, Koyo Seiko Company, Ltd. changed its name to “JTEKT

Corporation.”

Petitioners invoke the jurisdiction of this Court pursuant to 28

U.S.C. §1254(1).

STATUTORY PROVISIONS INVOLVED

The Tariff Act of 1930 provides, in relevant part:

If—

(1) the administering authority determines that a class

or kind of foreign merchandise is being, or is likely to

be, sold in the United States at less than its fair value,

and

(2) the Commission determines that—

(A) an industry in the United States—

(i) is materially injured, or

(11) is threatened with material injury, or

(B) the establishment of an industry in the United

States is materially retarded,

by reason of imports of that merchandise or by reason

of sales (or the likelihood of sales) of that

merchandise for importation,

then there shall be imposed upon such merchandise an

antidumping duty, in addition to any other duty

imposed, in aN amount equal to the amount by which

the normal value exceeds the export price (or the

constructed export price) for the merchandise.

19 U.S.C. § 1673.

The Tanff Act, as amended, further provides that “[t]he

term ‘dumping margin’ means the amount by which the

normal value exceeds the export price or constructed export

price of the subject merchandise,” and “[t]he term ‘weighted

average dumping margin’ is the percentage determined by

dividing the aggregate dumping margins determined for a

specific exporter or producer by the aggregate export prices

and constructed export prices of such exporter or producer.”

19 U.S.C. § 1677(35)(A)-(B).

Finally, the Tariff Act, as amended, provides that “[i]n

determining under this subtitle whether subject merchandise

is being, or is likely to be, sold at less than fair value, a fair

comparison shall be made between the export price or

constructed export price and normal value.” 19 U.S.C.

§ 1677b(a).

STATEMENT OF THE CASE

This case presents two significant issues: (1) a circuit split

between the United States Court of Appeals for the District of

Columbia Circuit and the United States Court of Appeals for

the Federal Circuit on whether an agency’s decision to change

an administrative rule under which it previously rendered a

decision adverse to a party requires a federal court on appeal

to remand the case to the agency; and (2) whether a federal

court must remand such a case to the agency when the change

in rule is dictated by international treaty obligations,

consistent with the constitutional separation of powers.

The Federal Circuit effectively answered both questions in

the negative and refused to consider remanding this case,

despite the fact that Petitioners were held liable by the United

States Department of Commerce (“Commerce”) for

“dumping” under a policy that Commerce has since

announced it will abandon. Commerce’s change in policy

was prompted by a decision of the World Trade Organization

(“WTO”), holding that the procedure Commerce applied in

this and other cases violates the United States’ treaty

abligations. The Federal Circuit’s refusal to remand this case

creates an unnecessary conflict with longstanding precedent

of the D.C. Circuit, and an unwarranted schism in the law

governing federal agencies, and violates important separation

of powers principles by creating an obstacle to the Executive

Branch’s ability to discharge the nation’s treaty obligations.

A writ of certiorari is required to correct the Federal Circuit’s

error, resolve the conflict between the courts of appeals, and

restore the Constitution’s balance in the field of foreign

affairs.

A. Antidumping Proceedings.

Koyo and NTN are producers of various kinds of

automobile parts and antifriction bearings, with facilities in

Japan, the United States, and elsewhere around the world. In

1988, at the request of a domestic producer of antifriction

bearings, Commerce and the United States International

Trade Commission (“Commission”) instituted an

“antidumping” investigation of antifriction bearings imported

from various countries, including Japan.” In an antidumping

- investigation, the Commission examines whether or not an

industry in the United States is materially injured, or

threatened with material injury, by reason of imports of

merchandise. 19 U.S.C. § 1673(2). Simultaneously,

Commerce investigates whether or not the merchandise is

being sold, or is likely to be sold, in the United States at less

than its fair value. Jd. § 1673({1). If the final determinations

of both agencies are affirmative, Commerce may (pursuant to

the Tariff Act of 1930) impose upon the merchandise an

antidumping “duty” equal to the amount by which the

“normal value” of the merchandise (i.e., the statutorily-

adjusted price of the product in Japan) exceeds the statutorily-

adjusted price of the product in the United States. Jd. § 1673.

This amount is known as the “dumping margin.” /d.

§ 1677(35).

? “Dumping” is a form of international price discrimination whereby an

exporter sells its merchandise in the country of importation at prices lower

than those at which it sells the same goods in its home market. See Jacob

Viner, Dumping: A Problem in International Trade 4-5 (Augustus M.

Kelley 1996) (1922).

Once an initial investigation is complete and an

antidumping order has been issued, tentative dumping

liability is established. Interested parties may, however,

request an “administrative review” of the duty in each year

following Commerce’s initial investigation and order. /d.

§ 1675(a). The purpose of this annual review is to recalculate

the antidumping margins for individual importers and assess

the importer’s actual dumping liability for the year. Thus,

“administrative reviews” are distinct from initial

“investigations,” although the two administrative procedures

are closely analogous.

Commerce issued an antidumping duty order on antifriction

bearings from various countries, including Japan, on May 15,

1989. Since the imposition of the order, annual

administrative reviews of the antidumping order have been

requested with respect to the sales of both Koyo and NTN.

This case results from the eleventh such annual review,

covering the period May 1, 1999 to April 30, 2000.°

B. The Anti-Dumping Agreement And Uruguay

Round Agreements Act.

In 1994, the United States signed and ratified the Uruguay

Round Agreements, which established the WTO and required

all Members to conform their antidumping practices to the

terms of the treaty. See Agreement on the Implementation of

Article VI of the General Agreement on Tariffs and Trade,

Marrakesh Agreement Establishing the WTO, Annex 1A

(Apr. 15, 1994) (“Anti-Dumping Agreement”).* — In

calculating antidumping duties, Article 2.4 of the Anti-

Dumping Agreement requires that

> See Antifriction Bearings (Other Than Tapered Roller Bearings) and

Parts Thereof From France, Germany, Italy, Japan, Sweden, and the

United Kingdom, 66 Fed. Reg. 36,551 (July 12, 2001) (Final Admin.

Review), Pet. App. 34a-49a.

* Reprinted in H.R. Doc. No. 103-316, vol. I, at 1453-77 (1994).

[a] fair comparison shall be made between the export

price and the normal value. This comparison shall be

made at the same level of trade, normally at the

exfactory level, and in respect of sales made at as nearly

as possible the same time.

Id. art. 2.4 (emphasis added.) Congress incorporated this

requirement into U.S. law in the Uruguay Round Agreements

Act of 1994 (““URAA”), Pub. L. No. 103-465, § 224, 108 Stat.

4809, 4878 (codified at 19 U.S.C. § 1677b(a)).

C. Commerce’s “Zeroing” Practice.

In the administrative review at issue in this case, Commerce

applied a rule known as “zeroing” when calculating

Petitioners’ dumping margins. When an importer sells

merchandise in the country of importation at a price that is

above the normal value, it results in a “negative dumping

margin,” which (as the WTO has held) should be included in

the calculation to offset any “positive dumping margins” (i.e.,

the margins generated by sales in the country of importation

at prices below the normal value) when determining the

weighted average dumping margin for that importer.

Commerce, however, converts any negative dumping margins

to zero when determining the importer’s weighted average

dumping margin, while accounting fully for any positive

dumping margins. In this way, zeroing negates the benefit to

importers from the fact that some of their sales in the United

States (the country of importation) are at prices above the

normal value.

This calculation methodology, therefore, artificially inflates

the weighted average dumping margin, and can result in a

positive weighted average margin even though the negative

margins are equal to or greater than the positive margins.°

* As a simple example, assume that only two U.S. sales of the subject

merchandise occurred during the relevant period, one with a U.S. price,

after adjustment, of $600, and the other with a U.S. price of $400.

Assume further that the normal value in each case is $500. Thus, the first

Essentially, Commerce puts a heavy thumb on the scale in

favor of finding the existence of, and inflating the amount of

liability for, dumping. Indeed, “[b]y zeroing negative

margins Commerce [would] find that some dumping occurred

if any U.S. sales were made below the average [normal

value,] even if the. vast majority of sales made by the subject

foreign producers in the United States were at prices higher

than the average [normal value].” Bowe Passat Reinigungs-

und Waschereitechnik GmbH v. United States, 926 F. Supp.

1138, 1149-50 (Ct. Int’] Trade 1996) (emphasis added)

(internal quotation marks omitted).

In the investigation phase and in each of the annual reviews

of its order, including the annual review at issue, Commerce

has used zeroing to calculate the antidumping duty margins

for Koyo and NTN. In this review, Commerce calculated,

using zeroing, weighted-average dumping margins for Koyo

of 10.10% for ball bearings, 5.27% for cylindrical roller

bearings, and 0.00% for spherical plain bearings; and

weighted-average dumping margins for NIN of 9.16% for

transaction has a dumping margin of -$100, and the second has a dumping

margin of $100. Under the Department’s zeroing practice, the -$100

would be converted to zero, and the weighted average dumping margin

would be calculated as follows:

_0 + $100 = 10 percent

$600 + $400

If the full effect of the negative dumping margin transaction were

considered, however, the weighted average dumping margin would be:

-$100 + $100 = 0 percent

$600 + $400

The result of the Department’s practice was to impose a 10%

antidumping duty on all of the company’s imports of the subject

merchandise into the United States, rather than the mathematically correct

duty-free treatment those imports should have received.

ball bearings,° 16.26% for cylindrical roller —— and

3.60% for spherical plain bearings.

Both Koyo and NTN challenged Commerce’s use of

zeroing in their administrative briefs before the agency during

the course of the review, and explained that if their negative

margins were properly included in the calculation of their

weighted average margins, those margins would be negative.

In other words, but for Commerce’s use of the zeroing

practice, neither Petitioner would have been liable for

dumping in this annual review, and they would be entitled to

a refund of their cash deposits, which accumulated in the

millions of dollars.

D. The WTO Has Found That Commerce’s Zeroing

Practice Violates The United States’ Internat-

ional Obligations, And Commerce Has Agreed

Fully To Implement This Determination.

Petitioners appealed Commerce’s antidumping

determination in its eleventh administrative review to the

Court of International Trade, which held that Commerce’s use

of the zeroing methodology was a permissible interpretation

of the antidumping statute. Pet. App. 20a-2la. Petitioners

appealed to the Federal Circuit, which affirmed the Court of

International Trade’s decision without opinion. See id. at la-

2a.

After the court of appeals’ decision, but before the Federal

Circuit issued its mandate, the Department of Commerce

announced that it would not use zeroing in any pending or

future dumping investigation. Antidumping Proceedings:

Calculation of the Weighted-Average Dumping Margin

Petition.

’ The Federal Circuit has exclusive jurisdiction over appeals from the

Court of International Trade governing Commerce decisions under the

antidumping statute. See 28 U.S.C. § 1295(a)(5).

During an Antidumping Investigation, 71 Fed. Reg. 77,722,

77,725 (Dec. 27, 2006) , amended by 72 Fed. Reg. 3783 (Jan.

26, 2007). Commerce’s change in policy was prompted by

an earlier WTO decision (in a case brought against the United

States by the European Community) that zeroing violates the

treaty when used in initial investigations. See Appellate Body

Report, United States — Laws, Regulations, and Methodology

for Calculating Dumping Margins (“Zeroing”) § 263,

WT/DS294/AB/R (Apr. 18, 2006).

Before the Federal Circuit issued its mandate, the WTO

Appellate Body also issued another decision that covered,

inter alia, this very case, holding that Commerce’s zeroing

practice did not ensure a “fair comparison” as required by the

Anti-Dumping Agreement and thus violated the United

States’ treaty obligations when used in either initial

investigations or annual administrative reviews. See

Appellate Body Report, United States — Measures Related to

Zeroing and Sunset Reviews ¥J 138, 166, 176, WT/DS322/

AB/R (Jan. 9, 2007) (hereinafter “U.S. — Zeroing (Japan)’),

Pet. App. 53a-54a.. The WTO Dispute Settlement Body

adopted the Appellate Body’s report as the final action of the

WTO on January 23, 2007. See Action by the Dispute

Settlement Body, United States — Measures Relating to

® Commerce stated that this change in rule would become effective on

January 16, 2007. It later extended this date to February 22, 2007. See

Antidumping Proceedings: Calculation of the Weighted-Average Dumping

Margin During an Antidumping Investigation, 72 Fed. Reg. 3783 (Jan. 26,

2007).

* The WTO’s decision was issued in response to a complaint brought

against the United States by Japan, which included the application of

zeroing to Petitioners in the annual review at issue here. See Request for

Consultations by Japan, United States — Measures Relating to Zeroing and

Sunset Reviews, WT/DS322/1 (Nov. 29, 2004).

Zeroing and Sunset Reviews, WT/DW322/15 (Jan. 30,

2007)."°

In light of the Department of Commerce’s change in the

rule governing investigations, and the WTO’s determination

that zeroing likewise violates the United States’ treaty

obligations when employed in administrative reviews,

including the very review that is the subject of this appeal,

Petitioners jointly requested rehearing by the Federal Circuit

and a stay of the mandate for the purpose of seeking a remand

of this case to the agency for further consideration. The

Federal Circuit inexplicably refused. See Pet. App. 51a.

On February 20, 2007, the United States formally

announced, as expected, that it would comply fully with its

treaty obligations in light of the WTO’s decision in U.S. —

Zeroing (Japan), which extends to the administrative review

that is the subject of this appeal. See Dispute Settlement

Body, Minutes of the Meeting | 34, WT/DSB/M/226 (Mar.

26, 2007) (hereinafter “Minutes”), Pet. App. 58a; Statement

of David P. Shark, U.S. Deputy Chief of Mission, WTO (Feb.

20, 2007), available at http://www.usmission.ch/Press2007/

0220DSB.html (hereinafter “Statement of David P. Shark”).

The United States has committed to Japan that it will fully

implement the Appellate Body’s decision by December 24,

2007. See Agreement on Reasonable Period of Time, United

States — Measures Relating to Zeroing and Sunset Reviews,

WT/DS322/20 (May 8, 2007) (hereinafter “Agreement’”), Pet.

App. 59a-60a. The United States cannot fulfill its diplomatic

commitments regarding this administrative review, however,

unless the case is remanded to the Department of Commerce

to allow the agency to decide how to implement the WTO’s

decision. The Federal Circuit inexplicably refused to follow

this perfectly reasonable course.

"The WTO maintains a complete electronic collection of the

documents filed in this case, available at http://www.wto.org/english/

tratop_e/ dispu_e/cases_e/ds322_e.htm.

REASONS FOR GRANTING THE PETITION

This petition presents an exceptionally important issue that

exposes a conflict between the Federal Circuit and the United

States Court of Appeals for the District of Columbia Circuit

in the law governing federal agencies, and concerns a serious

(and unnecessary) judicially created obstacle to the executive

branch’s ability to implement the United States’ treaty

obligations. A writ of certiorari is warranted to harmonize the

courts of appeals’ rules and preserve the constitutional

separation of powers. :

First, the decision below is inconsistent with longstanding

law in the D.C. Circuit and precedents of this Court. As

explained, the Department of Commerce found Koyo and

NTN liable for dumping based on its “zeroing” rmule—a

decision Commerce renewed in the annual administrative

review on which Petitioners’ appeal is based. While this case

was still before the Federal Circuit, the WTO held that the use

of zeroing violates the United States’ treaty obligations,

particularly in this case. Commerce is charged with ensuring

U.S. compliance with those treaty obligations and has

previously responded to adverse WTO rulings on the subject

of zeroing by announcing that it will comply with the WTO

decision and stop using zeroing. In the D.C. Circuit, this

situation would result in a remand to allow the agency to

reconsider its decision in light of the changed rule. The

Federal Circuit, however, has followed a contrary rule in this

and other cases. This creates an intolerable conflict in the law

governing federal agencies that should be resolved by this

Court.

Second, the decision below creates a serious and wholly

unnecessary obstacle to the Executive Branch’s ability to

discharge the nation’s treaty obligations, and thus violates the

constitutionally mandated separation of powers. Congress

has placed responsibility for implementing WTO decisions

squarely in the hands of the Executive Branch. The United

Reet Se

States has given the WTO and its treaty partners specific

assurances that it will implement the WTO’s rejection of

zeroing in all cases (including this specific case), and has

assured the WTO generally that the Department of Commerce

(and not the courts) will decide whether to reopen completed

investigations in light of subsequent rule changes. The

Federal Circuit’s refusal to remand antidumping cases to the

agency for reconsideration in light of the demise of the

zeroing procedure is flatly inconsistent with the nation’s

treaty obligations, and makes hollow the Executive Branch’s

diplomatic assurances that the United States will implement

and comply with the WTO agreements in this and other cases.

The Federal Circuit’s decision below thus frustrates the

Executive Branch’s ability to conduct the foreign affairs of

the United States. This unwarranted violation of separation of

powers principles requires this Court’s intervention. Indeed,

if this Court does not correct the Federal Circuit’s erroneous

decision below, Petitioners will be left without a remedy for

the treaty violations the WTO has identified in this case,

because the Executive Branch will be unable to provide the

remedy it has promised.

I. THE DECISION BELOW IS CONTRARY TO

PRECEDENT OF THE UNITED STATES COURT

OF APPEALS FOR THE DISTRICT OF

COLUMBIA CIRCUIT AND PERPETUATES AN

UNWARRANTED CONFLICT IN THE LAW

GOVERNING JUDICIAL REVIEW OF FEDERAL

AGENCIES.

The D.C. Circuit—which like the Federal Circuit has

statutory responsibility for reviewing many agency actions—

has long held that a court reviewing an agency decision must

remand the case to the agency when the agency has

announced a change in its governing regulations or policies

during the pendency of the appeal. In Panhandle Eastern

Pipe Line Co. v. FERC, 890 F.2d 435 (D.C. Cir. 1989), for

example, the Federal Energy Regulatory Commission denied

certain tariff sheets proposed by a natural gas pipeline

company on grounds that the method of apportioning

transportation entitlements was not allowed by FERC policy.

While the appeal was pending, the FERC announced a change

in policy that would allow the apportionment. The court of

appeals held that the agency’s announcement required it to

remand the case to the agency. As the court explained,

Such a disposition represents the intersection of two

well-established doctrines. The first holds that an

appellate court must consider the law in effect at the

time it renders its decision, even when a change in

governing law is made by an administrative agency.

[Citing Thorpe v. Housing Auth., 393 U.S. 268, 281

(1969).] The second holds that a reviewing court may

“not supply a reasoned basis for the agency’s action that

the agency itself has not given.” [Quoting Motor

Vehicles Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co.,

463 U.S. 29, 43 (1983).] Thus, because we are at

liberty neither to evaluate the Commission’s decision

under FERC’s old policy[,] nor to assess on our own

how Panhandle’s tariffs would fare under FERC’s new

policy, we are required to remand so that the

Commission may indicate how, if at all, its decision

would be affected by its intervening policy change.

Id. at 438-39 (footnotes omitted). See also Williston Basin

Interstate Pipeline Co. v. FERC, 165 F.3d 54, 62-63 (D.C.

Cir. 1999) (remanding to the FERC where an intervening

change in agency policy regarding the calculation of return on

common equity might require the appellant’s rate of return to

be recalculated); Nat’l Fuel Gas Supply Corp. v. FERC, 899

F.2d 1244, 1249-50 (D.C. Cir. 1990) (remanding to the

agency where the legal basis for an agency’s decision was

undercut in a subsequent court of appeals decision).

The D.C. Circuit did not fashion this rule out of whole

cloth. As explained in Panhandle, this Court’s “intersect[ing]

doctrines” of applying the law in force at the time of appeal,

and declining to supply reasons for an agency decision on

which the agency did not rely, require a remand when an

agency bases a decision on a rule that it then changes while

the aggrieved party’s appeal is pending. See Panhandle, 890

F.2d at 438-39 (citing Thorpe, 393 U.S. at 281, and Motor

Vehicles Mfrs. Ass’n, 463 U.S. at 43).

In fact, the D.C. Circuit’s rule was arguably dictated by this

Court’s decision in NLRB v. Food Store Employees Union,

417 U.S. 1 (1974), in which this Court reversed a court of

appeals decision that purported to apply a changed agency

rule to the circumstances of the case before it. This Court

_ explained, inter alia, that “a court reviewing an agency

decision following an intervening change of policy by the

agency should remand to permit the agency to decide in the

first instance whether giving the change retrospective effect

will best effectuate the policies underlying the agency’s

governing act.” Jd. at 10 n.10.""

The Federal Circuit’s decision in this case is inconsistent

with the rule in the D.C. Circuit and the decisions of this

Court on which the D.C. Circuit’s longstanding rule is based.

Here, before the Federal Circuit issued its mandate, the WTO

held that Commerce’s zeroing rule as used in investigations

violated the treaty. Commerce announced that it would no

longer use zeroing in investigations, and the WTO further

ruled that Commerce’s zeroing practice violates the United

States’ obligations under the Antidumping Agreement when

used in administrative reviews, including the one at issue in

this case. In light of these developments, Petitioners filed a

petition for rehearing in the Federal Circuit requesting a stay

for purposes of seeking a remand to the agency. Petitioners

'! Other courts of appeals have applied the Food Store Employees rule

to require remands when agency decisions are later called into question by

appellate decisions or changes in the governing agency rule. See NLRB v.

Coca-Cola Bottling Co. of Buffalo, 5S F.3d 74, 78 (2d Cir. 1995);

Blackman-Uhler Chem. Div., Synalloy Corp. v. NLRB, 561 F.2d 1118,

1119 (4th Cir. 1977) (en banc).

explained that Commerce, and not the federal courts, should

decide whether to implement the WTO’s rejection of zeroing

in this administrative review as it had in pending and future

investigations. The Federal Circuit, however, refused to

rehear the case or to issue a stay to determine whether a

remand was necessary.'* Less than three weeks after the

Federal Circuit issued this decision, the United States (as

expected) assured the WTO and its treaty partners that it

would fully comply with its obligations under the

Antidumping Agreement in light of the WTO’s decision

rejecting the use of zeroing in administrative reviews.

The Federal Circuit’s decision below is plainly inconsistent

with the rule the D.C. Circuit follows, and the rationale

underlying that rule. The WTO’s condemnation of zeroing as

violative of U.S. treaty obligations in this case, and

Commerce’s response to a prior condemnation of the same

practice in a closely analogous category of administrative

proceedings, made it abundantly clear that the Federal

Circuit’s decision rested on legal principles that the agency

was extremely likely to (and in fact did) change. In the D.C.

'2 The Federal Circuit has steadfastly refused to remand Commerce’s

antidumping determinations despite the WTO’s repeated determinations

that the zeroing rule is-invalid, and despite Commerce’s announced

intention to follow the WTO’s decisions. In addition to the decision

below, the Federal Circuit recently refused a similar remand request in

Corus Staal BV v. Department of Commerce, and a Petition for a Wnit of

Certiorari is currently pending before this Court in that case. See Petition

for Certiorari, Corus Staal BV v. United States, No. 06-1057 (filed Jan. 25,

2007). As in this case, the Federal Circuit denied Corus’ request for

rehearing to remand to the Department of Commerce, despite the fact that

the WTO had earlier held that zeroing was a violation of treaty obligations

in that case, and Commerce announced its intention to comply with the

WTO’s ruling. See id. at 6-9, 11-12. Indeed, the Federal Circuit

apparently felt that its no-remand rule was so well established that it

denied Koyo’s and NTN’s request without amy explanation for its

decision. See Pet. App. 2a.

'? Minutes, Pet. App. 58a; Statement of David P. Shark, supra.

Circuit, petitioner would have obtained a stay and remand so

that Commerce could decide whether petitioner should be

found liable for dumping under the agency’s new policy.

The Federal Circuit has adopted a different rule, however,

which requires Petitioners and the Department of Commerce

to live with an agency decision that was based on a rule

subsequently disapproved by the WTO and the Department of

Commerce. These flatly inconsistent approaches to judicial

review of agency actions should be resolved by this Court.

Il. THE FEDERAL CIRCUIT’S DECISION IS

INCONSISTENT WITH THE CONSTITUTIONAL

SEPARATION OF POWERS AND INTERFERES

WITH THE EXECUTIVE BRANCH’S ABILITY

TO COMPLY WITH THE UNITED STATES’

TREATY OBLIGATIONS.

It is well established that the separation of powers requires

courts to defer to the Executive Branch in matters involving

the foreign affairs of the United States. See, e.g., Republic of

Mex. v. Hoffman, 324 U.S. 30, 35 (1945) (“[T]he courts

_should not so act as to embarrass the executive arm in its

conduct of foreign affairs.”); United States v. Curtiss-Wright

Exp. Corp., 299 U.S. 304, 319 (1936). Moreover, under the

URAA, Congress has placed responsibility for implementing

adverse WTO decisions squarely in the hands of the

Executive Branch, specifically the Department of Commerce

and the United States Trade Representative (““USTR”). See

19 U.S.C. §§ 3533(g), 3538.

The D.C. Circuit’s remand rule—which accords with this

Court’s precedents—is doubly important in cases involving

treaty obligations. In cases like this one, where an agency

rule conflicts with treaty obligations and the Executive

Branch announces its intention to modify its rule for that

reason, a remand to the agency is necessary to allow the

Executive Branch to reevaluate its earlier decision, thus

minimizing the likelihood that the United States will act

contrary to its international obligations. Because the statute

grants Commerce and the USTR sole responsibility for

implementing adverse WTO decisions, a remand allows the

Executive Branch properly to discharge its statutory and

treaty obligations.

Indeed, the United States has given the WTO specific

assurances that where (as here) an agency rule is to be

revoked in implementing a WTO decision, “Commerce would

need to decide what to do with respect to entries [i.e., final

administrative decisions] that took place prior to the date of

revocation.” Second Written Submission of the United

States, United States-Section 129(c)(1) of the Uruguay Round

Agreements Act J 19, WT/DS221 (Mar. 8, 2002) (emphasis

added), Pet. App. 66a. In that case, Canada challenged the

United States’ legal regime for implementing adverse WTO

reports on grounds, inter alia, that it would not allow the

Executive Branch to revisit its previously issued decisions

when revoking an antidumping order. The United States

argued, consistent with the remand rule that prevails in the

D.C. Circuit, that the agency has authority to decide whether

a policy change requires modification or reversal of the

agency’s prior decision, and that court-ordered remands were

available as a vehicle by which implementation of WTO

decisions could be obtained. Jd. 7 19-20, Pet. App. 66a-67a.

Based largely on this assurance, the WTO ruled that the

United States was not in violation of its treaty obligations.

See Panel Report, United States-Section 129(c)(1) of the

Uruguay Round Agreements Act {| 6.82-6.83, WT/DS221/R

(July 15, 2002).

Consistent with these assurances, the United States also

committed to the WTO in this specific administrative review

that it will implement the WTO’s rejection of zeroing. See

Minutes, Pet. App. 58a; Statement of David P. Shark, supra

(stating, in reference to the WTO’s decision in U.S. — Zeroing

(Japan), that “the United States wishes to state that it intends

to comply in this dispute with its WTO obligations and will

be considering carefully how to do so”). As explained, the

United States has committed to Japan that it will fully

implement the WTO Appellate Body’s report by December

24, 2007. See Agreement, Pet. App. 59a. And, the

Department of Commerce has stopped using zeroing in any

new or pending antidumping investigations. See Antidumping

Proceedings, 71 Fed. Reg. at 77,725. Petitioners are certainly

entitled to a decision by the agency whether this change in

policy applies to Petitioners’ pending “administrative

review,” particularly since the Executive Branch has

committed to the WTO and its treaty partners that it will

implement the WTO’s decision that zeroing violates treaty

obligations in administrative reviews as well as

investigations. See U.S.-Zeroing (Japan) {J 138, 166

(concluding that zeroing is inconsistent with the United

States’ treaty obligations in both “original investigations” and

“periodic reviews”), Pet. App. 53a-54a.

The Federal Circuit’s decision in this case prevents the

United States from fulfilling its treaty obligations and

implementing the assurances made by the Executive Branch

to the WTO and U.S. treaty partners. A writ of certiorari is

thus required to allow the Executive Branch to determine

whether and how to comply with the WTO’s explicit

directives in this case. Indeed, unless this Petition is granted,

there will be no way for the Executive Branch to comply with

its treaty obligations in this administrative review, and

Petitioners will be effectively unable to challenge dumping

liability that was imposed in clear violation of the United

States’ treaty obligations.

As explained in footnote 12 above, the Federal Circuit’s

error is not an isolated incident. This is especially perplexing

given the Federal Circuit’s earlier solicitude for the

Executive’s prerogatives in such cases. In Corus Staal BV v.

Department of Commerce, 395 F.3d 1343 (Fed Cir. 2005),

cert. denied, 126 S. Ct. 1023 (2006), decided after the WTO’s

rejection of zeroing in investigations but before Commerce’s

announcement that it would implement fully the WTO’s

decision, the court of appeals explained that it could not usurp

the Executive’s role in deciding when and how to comply

with treaty obligations.

Congress ... has authorized the United States Trade

Representative, an arm of the Executive branch, in

consultation with various congressional and executive

bodies and agencies, to determine whether or not to

implement [the] WTO reports and determinations and,

if so implemented, the extent of implementation.... We

will not attempt to perform duties that fall within the

exclusive province of the political branches.

Id. at 1349.

This attentiveness to the separation of powers was short-

lived: as noted, the Federal Circuit abruptly and inexplicably

changed its position in its next Corus decision and refused to

remand the case to the agency following Commerce’s

announcement that it would repeal its zeroing rule. The same

occurred here with regard to administrative reviews. Thus,

the Federal Circuit is preventing the Executive from doing

precisely what the court recognized the Executive should do.

If not corrected by this Court, the Federal Circuit will

perpetuate its error in all pending and future antidumping

determinations to which adverse WTO decisions apply.'*

* * * *

The Federal Circuit’s decision in this case will frustrate the

Executive Branch’s attempts to implement the nation’s treaty

obligations, particularly in this and other antidumping

proceedings. It also makes hollow the specific assurances the

Executive Branch has made to the WTO and to U.S. treaty

partners in this case, and assurances the United States made

previously to the WTO in defending its legal regime for

'* As explained, the Federal Circuit has exclusive jurisdiction over

appeals from antidumping decisions. See 28 U.S.C. § 1295(a)(5).

—

implementing adverse decisions. As this Court has

emphasized, “[i]f the United States is to be able to gain the

benefits of international accords and have a role as a trusted

partner in multilateral endeavors, its courts should be most

cautious before interpreting domestic legislation in such [a]

manner as to violate international agreements.” Vimar

Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528,

539 (1995). The same principle applies here. The Federal

Circuit’s refusal to entertain Petitioners’ request for rehearing

and a stay for the purpose of seeking a remand to the agency

threatens the Executive Branch’s ability properly to conduct

the nation’s foreign affairs and treaty relationships.

Accordingly, this Court should intervene to correct this

unwarranted violation of the separation of powers.

CONCLUSION

For the foregoing reasons, the Petition for a Writ of

Certiorari should be granted.

Respectfully submitted,

DONALD J. UNGER CARTER G. PHILLIPS*

DIANE A. MACDONALD JOSEPH R. GUERRA

LOUISA V. CARNEY NEIL R. ELLIS

BAKER & MCKENZIE LLP ROBERT A. PARKER

One Prudential Plaza SIDLEY AUSTIN LLP

130 E. Randolph Street 1501 K Street, N.W.

Suite 3500 Washington, D.C. 20005

Chicago, Illinois 60601 (202) 736-8000

(312) 861-8000

Counsel for Petitioner

June 6, 2007 * Counsel of Record

APPENDIX

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

05-1297, 05-1323

SNR ROULEMENTS,

Plaintiff,

and

Koyo SEIKO Co., LTD. and KOYO CORPORATION OF U.S.A.,

Plaintiffs-Appellants,

and

NSK CORPORATION, NSK BEARINGS EUROPE, LTD.,

and NSK LTD.,

Plaintiffs,

and

NTN CORPORATION, NTN BEARING CORPORATION OF

AMERICA, AMERICAN NTN BEARING MANUFACTURING

CORPORATION, NTN-DRIVESHAFT, INC., and

NTN BOWER CORPORATION,

Plaintiffs-Appellants,

and

NTN-BCA CORPORATION,

Plaintiff,

and

INA SCHAEFFLER KG and INA USA CORPORATION,

Plaintiffs,

¥.

UNITED STATES,

Defendant-Appellee,

and

THE TORRINGTON COMPANY

(now known as Timken US Corporation),

Defendant-Appellee.

December 8, 2006, Decided

December 8, 2006, Filed

DECISION WITHOUT PUBLISHED OPINION

RADER, Circuit Judge, ARCHER, Senior Circuit Judge,

and PROST, Circuit Judge.

JUDGMENT

This CAUSE having been heard and considered it is

ORDERED and ADJUDGED:

Per Curiam

AFFIRMED. See Fed. Cir. R. 36.

APPENDIX B

UNITED STATES COURT OF

INTERNATIONAL TRADE

SLIP OP. 04-100.

COURT NO: 01-00686.

SNR ROULEMENTS, KOYO SEIKO Co., LTD., KOYO CorRpPo-

RATION OF U.S.A., NSK CORPORATION, NSK BEARINGS

EUROPE, LTD., NSK LTD., NTN-BCA CORPORATION, NTN

BOWER CORPORATION, NTN-DRIVESHAFT, INC., AMERICAN

NTN BEARING MANUFACTURING CORP., NTN BEARING

CORPORATION OF AMERICA, NTN CORPORATION, INA-

SCHAEFFLER KG, INA USA CORPORATION,

Plaintiffs,

UNITED STATES,

Defendant,

and

THE TORRINGTON COMPANY,

Defendant-Intervenor.

Aug. 10, 2004

OPINION

GOLDBERG, Senior Judge.

In this action, plaintiffs challenge the United States De-

partment of Commerce’s (“Commerce”) final determination

in the 11th administrative review of dumping orders covering

antifniction bearings in Antifriction Bearings (Other than

Tapered Roller Bearings) and Parts Thereof from France, et

al.; Notice of Final Results of Antidumping Duty Admin-

istrative Reviews and Revocation, 66 Fed.Reg. 36551 (July

12, 2001) (“Final Results”).' Defendant-Intervenor The

Torrington Company (“Torrington”) also challenges certain

aspects of the Final Results. The Final Results covers the

period of review May 1, 1999 through April 30, 2000 for ball

bearings and May 1, 1999 through December 31, 1999 for

cylindrical roller bearings and spherical plain bearings. Pur-

suant to USCIT R. 56.2, plaintiffs and defendant-intervenor

move for summary judgment and request the Court to remand

Commerce’s Final Results.

For the reasons that follow, the Court sustains in part and

reverses and remands in part the Final Results. The Court has

jurisdiction over this matter pursuant to 28 U.S.C. § 1581(c).

I. STANDARD OF REVIEW

The Court will sustain the Final Results unless it is “unsup-

ported by substantial evidence on the record, or otherwise not

in accordance with law.” 19 U.S.C. § 151l6a(b)(1)(B). To

determine whether Commerce’s construction of the statutes is

in accordance with law, the Court looks to Chevron U.S.A.,

Inc. v. Natural Resources Defense Council, Inc., 467 U.S.

837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The first step of

the test set forth in Chevron requires the Court to determine

“whether Congress has directly spoken to the precise question

at issue.” /d. at 842, 104 S.Ct. 2778. It is only if the Court

concludes that “Congress either had no intent on the matter,

or that Congress’s purpose and intent regarding the matter is

ultimately unclear,” that the Court will defer to Commerce’s

’ Plaintiffs in this action are SNR Roulements (“SNR”); Koyo Seiko

Co., Ltd. and Koyo Corporation of U.S.A. (“Koyo”); NSK Corporation,

NSK Bearings Europe, Ltd., and NSK Ltd. (“NSK”); NTN-BCA Corpo-

ration, NIN Bower Corporation, NTN-Driveshaft, Inc., American NTN

Bearing Manufacturing Corp., NTN Bearing Corporation of America, and

NTN Corporation (“NTN”), and INA-Schaeffler KG and INA USA

Corporation (“INA”).

construction under step two of Chevron... Timex V.I., Inc. v.

United States, 157 F.3d 879, 881 (Fed.Cir.1998). If the

statute 1s ambiguous, then the second step requires the Court

to defer to the agency’s interpretation so long as it is “a

permissible construction of the statute.” Chevron, 467 U:S. at

842. In addition, “[s]tatutory interpretations articulated by

Commerce during its antidumping proceedings are entitled to

judicial deference under Chevron.” Pesquera Mares Australes

Ltda. v. United States, 266 F.3d 1372, 1382 (Fed.Cir.2001)

(interpreting United States v. Mead, 533 U.S. 218, 121 S.Ct.

2164, 150 L.Ed.2d 292 (2001)). Accordingly, the Court will

not substitute “its own construction of a statutory provision

for a reasonable interpretation made by [Commerce].” /PSCO,

Inc. v. United States, 965 F.2d 1056, 1061 (Fed.Cir.1992).

Il. DISCUSSION

A. Commerce’s Exclusion of SNR’s Imputed Expenses In

Calculating Total Expenses For Constructed Export Price

Profits Is In Accordance With Law.

SNR challenges Commerce’s calculation of constructed

export price (“CEP”) profits, arguing that the inclusion of

imputed expenses in its calculation of “total U.S. expenses”

necessitates the inclusion of those same imputed expenses in

its calculation of “total expenses.”

CEP profits are determined by multiplying the total actual

profit by the percentage determined by dividing the total

United States expenses by the total expenses. 19 U.S.C.

§ 1677a(f)(1); 19 U.S.C. § 1677a(f)(2)(A). “Total actual

profit” is defined as “the total profit earned by the foreign

producer, exporter and affiliated parties . . . with respect to

the sale of the same merchandise for which total expenses

are determined[.]” 19 U.S.C. § 1677a(f)(2)(D). “Total ex-

penses” consist of “all expenses . . . which are incurred by or

on behalf of the foreign producer and foreign exporter of the

subject merchandise and by or on behalf of the U.S. seller

affiliated with the producer or exporter with respect to

the production and sale of such merchandise.” 19 U.S.C.

§ 1677a(f)(2)(C). The price used to establish CEP is reduced

by “the amount of the following expenses generally incurred

by or for the account of the producer or exporter, or the

affiliated seller in the United States, in selling the sub-

ject merchandise (or merchandise to which value has been

added).” 19 U.S.C. § 1677a(d)(1). These expenses include

“expenses that result from, and bear a direct relationship to,

the sale, such as credit expenses, guarantees and warranties”

and “any selling expenses not deducted under subparagraph

(A), (B), or (C).” 19 U.S.C. § 1677a(d)(1)(B) and (D).

In short, when calculating CEP profit, the statute permits a

reduction by the applicable percentage (i.e., a portion of total

profit), thereby ensuring that the CEP profit calculation accu-

rately reflects whether, and to what degree, the exporter has

an unfair advantage over the domestic producer.

SNR argues that Commerce erred by not including imputed

credit and inventory carrying expenses in its calculation of

“total expenses’”—because they were included in its calcu-

lation of “total United States expenses.” SNR requests that

this issue be remanded to Commerce with instructions to

include the imputed credit and inventory carrying expenses in

its calculation of “total expenses” for the purpose of calc-

ulating CEP profit.

Commerce denies that it failed to comport with the plain

meaning of the statute and argues instead that its calculations

are based on “normal accounting principles [which] permit

the deduction of only actual booked expenses, not imputed

expenses, in calculating profit.” See Memo of the United

States in Opposition to the Plaintiffs’ Motions for Judgment

upon the Agency Record (“Def.’s Br.’”’) at 96. Commerce

also argues that the inclusion of imputed expenses in the

calculation of total expenses would result in a partial double

counting of the expenses which would result in a distortion of

the ratio of total U.S. expenses to total expenses. /d. at 95.

Additionally, Commerce argues that if Congress had intended

to require both total U.S. expenses and total expenses to be

calculated using the same figures Congress would not have

used disparate definitions when defining the two terms. /d.

Finally, Commerce cites U.S. Steel Group v. United States,

225 F.3d 1284 (Fed.Cir.2000), followed by the Court of

International Trade in Timken v. United States, 26 CIT __,

240 F.Supp.2d 1228 (2002), which specifically rejects the

argument that symmetry must exist in the ratio of total U.S.

expenses to total expenses.

The Court first turns to the plain language of the statute

under Chevron step-one. First, the Court finds the statute

does not clearly address the use of imputed expenses in the

calculation of total expenses or total profit. See Timken, 26

CIT at _—, 240 F.Supp.2d at 1245; cf’ SNR Roulements v.

United States, 24 CIT 1130, 1139, 118 F.Supp.2d 1333, 1341

(2000); NTN Bearing Corp. of America v. United States, 25

CIT 664, 694, 155 F.Supp.2d 715, 743 (2001). Second, on

the issue of whether computational symmetry is statutorily

required, the Court refers to U.S. Steel Group, which su-

stained Commerce’s practice of including imputed expenses

in the calculation of total United States expenses, but not

including imputed expenses in the calculation of total ex-

penses. See id. at 1290. Symmetry between the two is not

required because “the definitions of the Act themselves under

cut symmetrical treatment of ‘total U.S. expenses’ and ‘total

expenses.’” U.S. Steel Group, 225 F.3d at 1290. Total U.S.

expenses are not a subset of total expenses because “[t]he

statute itself defines ‘total U.S. expenses’ distinctly, both

structurally and substantively, from ‘total expenses.’” /d. at

1289. '

Even if U.S. Steel Group was not applicable to selling

expenses, Commerce’s methodology was a reasonable inter-

pretation of the statute. Timken, 26 CIT at _, 240

F.Supp.2d at 1246. “Commerce has some flexibility in

determining total United States expenses under 19 U.S.C.

§ 1677a(d)(1)-(2) . . . [bJut if Commerce decides to include a

category of expenses in calculating total United States ex-

penses . . . it must also include such expenses in [total

expenses] unless they are already represented in total ex-

penses in some other fashion.” Thai Pineapple Canning

Indus. Corp. Ltd. v. United States, 23 CIT 286, 296, 187 F.3d

1362 (1999), aff'd in part, rev'd in part, 273 F.3d 1077

(Fed.Cir.2001) (emphasis added).

Although imputed numbers for total U.S. expenses may not

be exactly the same as those for total expenses, they are

reasonable surrogates for each other. See Timken, 26 CIT at

___, 240 F.Supp.2d at 1247. Following Timken, the Court

holds that “although the definitions of both total United States

expenses and total expenses direct Commerce to include a

figure for selling expenses, it is not clear from the statute that

these figures need to be precisely the same.” Timken, 26 CIT

at __, 240 F.Supp.2d at 1237. “Theoretically, the total

expenses denominator would reflect the interest expenses

captured in the U.S. sales expenses numerator . . . as well as

‘home’ market interest expenses, because the total expenses

denominator is derived from a net unit figure based on all

company interest expenses without regard to sales destina-

tion.” /d. (quoting Thai Pineapple Canning Indus. Corp. Ltd.

v. United States, 24 CIT 107, 115, 2000 WL 174986 (2000)

(emphasis added)).

Although companies may not track the per customer cost

of maintaining inventory or extending credit, Commerce rea-

sonably recognizes that companies do actually incur these

costs. As a result, Commerce asks respondents to impute

these costs to aid in the calculation of normal value and U.S.

price. If a peculiarity or discrepancy arises as a result of the

use of imputed amounts in the calculation of total U.S.

expenses and the use of actual amounts in the calculation of

total expenses, Commerce’s findings may be challenged

(1) by demonstrating that a distortion was caused by different

expenses over time or (2) that the inclusion of imputed

expenses will not result in double counting because there

were no actual U.S. expenses included in the actual booked

expenses. The Court concludes that SNR has not demon-

strated either condition. Commerce has shown that the actual

booked expenses included in the calculation of total expenses

account for amounts representing the imputed U.S. credit and

inventory carrying expenses, and SNR has failed to demon-

strate any peculiarity or discrepancy which necessitates the

inclusion of imputed expenses because they are not otherwise

accounted for.

Accordingly, Commerce’s exclusion of imputed expenses

in its calculation of total expenses for CEP profita#sustained.

B. Commerce’s Use Of The 99.5 Percent Arm’s Length

Test To Exclude Certain Home Market Sales By Koyo

To Affiliates Is In Accordance With Law.

In comparing Koyo’s export prices to Koyo’s home market

prices, Commerce excluded from Koyo’s home market sales

database any sales to an affiliated party where the weighted

average price was less than 99.5 percent of the weighted

average price of non-affiliated parties. In light of the World

Trade Organization (“WTO”) Appellate Body’s decision in

United States—Anti-Dumping Measures on Certain Hot

Rolled Steel Products from Japan, WT/DS184/AB/R (July

24, 2001) (“Hot Rolled Steel’), Koyo asserts that this 99.5

percent “arm’s length” test violates U.S. obligations under

international law. In Hot Rolled Steel, the WTO Appellate

Body held that the arm’s length test established dumping in a

manner impermissible under the Agreement on Implemen-

tation of Art. VI of the General Agreement on Tariffs and

Trade (“Anti-Dumping Agreement’).

10a

To determine whether merchandise has been dumped, 19

U.S.C. § 1677b(a) requires Commerce to make “a fair com-

parison” between the export price and normal value. Com-

merce excludes from the calculation of normal value any sale

to an affiliated party that is not comparable to sales to non-

affiliated parties pursuant to 19 C.F.R. § 351.403(c). To

ensure that sales to affiliates are comparable to sales to non-

affiliates (i.e., at arm’s length) under § 351.403(c), Com-

merce adopted the 99.5 percent arm’s length test, which was

applied in the Final Results.

The ambiguity of the statutes and regulations regarding the

definition of “ordinary course of trade” precludes analysis

under the first step of Chevron. See Timken v. United States,

26 CIT _, _, 240 F.Supp.2d 1228, 1240 (2002). Under

the second step of Chevron, Commerce’s use of the 99.5

percent arm’s length test has been repeatedly upheld as

reasonable. See, e.g., Usinor v. United States, 18 CIT 1155,

1158, 872 F.Supp. 1000, 1004 (1994) (affirming the test as

reasonable where plaintiff failed to show that it distorted

price comparability); SSAB Svenskt Stal AB v. United States,

21 CIT 1007, 1010, 976 F.Supp. 1027, 1030 (1997) (uphold-

ing the test as reasonable even though there was no showing

‘that plaintiff had deliberately manipulated affiliate prices);

Micron Technology, Inc. v. United States, 19 CIT 829, 846,

893 F.Supp. 21, 38 (1995) (sustaining Commerce’s use of the

test where plaintiff made no showing that its excluded

affiliate sales had been made at arm’s length).

1. Koyo Has Standing Under 19 U.S.C. § 3512(c)

Commerce asserts that 19 U.S.C. § 3512(c)* bars Koyo’s

claim that the arm’s length test is inconsistent with the

* Section 3512(c) states that “[nJo person other than the United States

. may challenge . . . any action or any inaction by any department,

agency, or other instrumentality of the United States . . . on the ground

that such action or inaction is inconsistent with [a WTO agreement].” 19

U.S.C. § 3512(c)(1).

lla

WTO’s decision in Hot Rolled Steel. Section 3512(c) bars

private parties from bringing claims directly against the gov-

ernment alleging that Commerce acted inconsistently with a

WTO agreement. However, Koyo’s claim does not arise

directly under the AntiDumping Agreement or any other

WTO agreement. Rather, Koyo is “free to argue that

Congress would never have intended to violate an agreement

it generally intended to implement, without expressly saying

so.” Gov't of Uzbekistan v. United States, 25 CIT 1084,

1088, 2001 WL 1012780 (2001). By relying on § 3512(c),

Commerce merely asserts an “erroneous technical bar” in this

case, and thus Koyo’s claim is properly before the Court. See

Gov't of Uzbekistan, 25 CIT at 1088, 2001 WL 1012780.

2. Relevance of Hot-Rolled Steel

The effect of WTO dispute settlement decisions on U.S.

domestic trade law is intricate and rife with particularly

delicate issues of statutory interpretation and separation of

powers.

The classic tenet of statutory interpretation in light of

international obligations is that “an act of Congress ought

never to be construed to violate the law of nations if any other

possible construction remains. . . .” Murray v. Schooner

Charming Betsy, 6 U.S. (2 Cranch) 64, 81, 2 L.Ed. 208

(1804) (“The Charming Betsy”); see also Federal-Mogul

Corp. v. United States, 63 F.3d 1572, 1581 (Fed.Cir.1995)

(“[A]bsent express Congressionai language to the contrary,

statutes should not be interpreted to conflict with international

obligations.”)

The Charming Betsy doctrine may conflict in certain cir-

cumstances with the deference that courts owe to inter-

pretations of statutory law by agencies.” A court must yield

* See Jane A. Restani & Ira Bloom, /nterpreting International Trade

Statutes: Is the Charming Betsy Sinking?, 24 Fordham Int'l LJ. 1533

(2001).

12a

to an agency’s interpretation of an ambiguous statute so long

as it “is based on a permissible construction of the statute.”

Chevron, 467 U.S. at 843, 104 S.Ct. 2778. Agencies are

accountable to the elected executive, and thus, policy

decisions are best left to them rather than to non-elected

judges. See id. at 865-66, 104 S.Ct. 2778. Moreover, the

judiciary generally grants the executive branch an even

greater level of deference in the area of foreign affairs. See

United States v. Curtiss-Wright Export Corp., 299 U.S. 304,

320, 57 S.Ct. 216, 81 L.Ed. 255 (1936). However, courts

have held that “Chevron must be applied in concert with the

Charming Betsy doctrine when the latter is implicated.”

Usinor v. United States,26 CIT __,___, 2002 WL 1998315,

*8 (quoting Hyundai, 23 CIT at 313, 53 F.Supp.2d at 1344);

see also Timken, 26 CIT at __, 240 F.Supp.2d at 1240 (de-

termining that “the court must determine if the Department’s

interpretation is reasonable, as informed by Chevron step-two

and Charming Betsy’).

WTO decisions are not binding on the Court nor on

Commerce. See Hyundai Elecs. Co. v. United States, 23 CIT

302, 311, 53 F.Supp.2d 1334, 1343 (1999); see also Corus

Staal BV y. United States, 27 CIT __, __, 259 F.Supp.2d

1253, 1273 (2003) (upholding Commerce’s practice of zero-

ing contrary to a WTO Appellate Body decision concerning

the European Communities’ use of zeroing); see also Timken,

26 CIT at _, 240 F.Supp.2d at 1242 (sustaining the arm’s

length test, in part by distinguishing Hot Rolled Steel). WTO

decisions may, however, shed light on whether an agency’s

practices and policies are in accordance with U.S. interna-

tional obligations. See Hyundai, 23 CIT at 311-12, 53

F.Supp.2d at 1343.

Timken examined the WTO’s decision in Hot Rolled Steel

as it related to the same application of the arm’s length test

and concluded that Commerce’s 99.5 percent test was a rea-

sonable interpretation of “ordinary course of trade.” Thus, a

closer look at both Hot Rolled Steel and Timken is warranted.

13a

Hot Rolled Steel did not find that 19 U.S.C. § 1677b or 19

C.F.R. § 351.403 violated the Anti-Dumping Agreement.

Timken, 26 CIT at __, 240 F.Supp.2d at 1242. Rather, the

WTO Appellate Body found that Commerce’s 99.5 percent

arm’s length test does “not rest on a permissible interpretation

of the term ‘sales in the ordinary course of trade’” in Article

2.1 of the Anti-Dumping Agreement‘ due to its lack of “even-

handedness.” Hot Rolled Steel at ¢ 148. First, the test was

found to be asymmetric because it automatically excludes

lower-priced affiliate sales using a numerical threshold of

99.5 percent. Jd. at | 149. In contrast, there is no bright line

test for higher-priced affiliate sales. Instead, such sales can

be excluded from the calculation of home market sales only if

Commerce deems the sales aberrationally high, a fact on

which a respondent has the burden of proof. Jd. at § 151.

The WTO Appellate Body determined that the 99.5 percent

test is more likely to result in a higher home market price and,

as a consequence, a finding of dumping. /d. at 4 154. In

essence, Hot Rolled Steel concluded that Commerce is af-

forded considerable discretion in determining whether any

given sales to affiliated parties are not in the ordinary course

of trade but held that such discretion must be exercised in an

evenhanded manner.

Timken sustained Commerce’s use of the arm’s length

test, distinguishing the case from the facts in Hot Rolled

Steel. Hot Rolled Steel reasoned that exporters had no

notice of the aberrationally-high standard and thus had

no reason to supply evidence that high-priced sales to

* Article 2.1 of the Anti-Dumping Agreement provides:

[A] product is to be considered as being dumped, i.e. introduced

into the commerce of another country at less than its normal value,

if the export price of the product exported from one country to

another is less than the comparable price, in the ordinary course of

trade, for the like product when destined for consumption in the

exporting country.

l4a

affiliates were aberrational. Jd. at § 155. In contrast,

Timken pointed out that the foreign respondent, Koyo,

did have notice of the aberrationally-high standard. Tim-

ken, 240 F.Supp.2d at 1241. With such notice and

Koyo’s failure to argue that the arm’s length test had

excluded any sales in the ordinary course of trade, Tim-

ken reasoned that Koyo was not pre-judiced as the

foreign respondents were in Hot Rolled Steel.’ See id. at

1242. Timken found compelling Commerce’s rationale

for applying an asymmetric test—namely, that exporters

are likely to provide advantageous information, such as

why a high-priced affiliate sale is not in the ordinary

course of trade, but may withhold disadvantageous evi-

dence of lower-priced affiliate sales that are not in the

ordinary course of trade. Jd. at 1241-42.

The relevance of a WTO dispute settlement decision in this

context lies solely in its persuasive force as a means of

properly interpreting a controlling statute. See Marbury v.

Madison, \ Cranch 137, 5 U.S. 137, 177, 2 L.Ed. 60 (“[I]t is

emphatically the province and duty of the judicial department

to say what the law is.”). This persuasive force, however,

must be carefully balanced with the reasoned rulemaking

process underlying Chevron step-two deference. The Court is

wary of overstepping the bounds of its judicial authority

under the guise of the Charming Betsy doctrine. See

* Contrary to the reasoning in Timken, it is at least arguable that the

WTO Appellate Body did not intend to confine its reasoning to the facts at

issue in Hot Rolled Steel. Rather, Hot Rolled Steel held that “the appili-

cation of the 99.5 percent test does not rest on a permissible interpretation

of the term ‘sales in the ordinary course of trade."” Hot Rolled Steel at

{| 158 (emphasis in original). The Hot Rolled Steel decision rejected the

rationale for Commerce’s policy, applied to the specific case and gen-

erally. See id. at { 157 ‘noting that Commerce’s test focuses on the

distortion of low affiliate prices whereas the Anti-Dumping Agreement’s

language applies to sales both above and below the home market price

established in the ordinary course of trade).

lSa

Hyundai, 23 CIT at 313-14, 53 F.Supp.2d. at 1345 (stating

that “unless the conflict between an international obligation

and Commerce’s interpretation of a statute is abundantly

clear, a court should take special care before it upsets Com-

merce’s regulatory authority under the Charming Betsy

doctrine”). The Court is also mindful of the prerogative of

the Executive Branch—most importantly, the Office of the

U.S. Trade Representative—in dealing with the WTO in its

diplomatic and policymaking roles. See id. at 312, 53

F.Supp.2d at 1343. Thus, in light of prior decisions that have

found the 99.5 percent test to be reasonable, the Court holds

that Chevron deference controls here.°

Accordingly, Commerce’s use of the 99.5 percent arm’s

length test to exclude certain home market sales by Koyo to

affiliated parties is sustained. ’

° The Court declines to reach the issue of whether a WTO dispute

settlement decision interpreting a WTO agreement may constitute an in-

ternational obligation under any circumstances in applying the Charming

Betsy doctrine.

’ The Court notes that since the publication of the Final Results and the

filing of the instant case, Commerce has adopted a new policy for its

arm’s length test to comply with Hot Rolled Steel. See Antidumping

Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67

Fed.Reg. 69186 (Nov. 15, 2002). This change in methodology provides

for the overall ratio calculated for an affiliate to be between 98 percent

and 102 percent of prices to unaffiliated customers in order for sales to

that affiliate to satisfy the arm’s length test. See id. at 69187; see also

Stainless Steel Plate in Coils from Belgium: Preliminary Results of

Antidumping Duty Administrative Review, 69 Fed.Reg. 32501 (June 10,

2004) (applying the new test). Incorporating the reasoning of Hot Rolled

Steel, Commerce has described this new test as “consistent with the view,

expressed by the WTO Appellate Body, that rules aimed at preventing the

distortion of normal value through sales between affiliates should reflect,

‘even handedly,’ that both high and low-priced sales between affiliates

might not be ‘in the ordinary course of trade.’” Jd.

l6a

C. Commerce’s Practice of Zeroing Is In Accordance

With Judicial Precedent and Does Not Violate the

Antidumping Statute.

Koyo and NSK challenge Commerce’s practice of zeroing

in its calculation of dumping margins. Commerce calculates

the dumping margins on individual U.S. transactions and then

calculates the weighted-average dumping margin “by divid-

ing the aggregate dumping margins determined for a specific

exporter or producer by the aggregate . . . constructed ex-

port prices of such exporter or producer.” 19 U.S.C.

§ 1677(35)(B). In calculating the weighted-average dumping

margin, Commerce treats transactions that produce “nega- .

tive” dumping margins—that is, transactions in which the

export price exceeds normal value—as if they were zero, a

practice commonly referred to as “zeroing.”

1, EC-Bed Linen /s Not Binding or Persuasive

Koyo first claims that Commerce’s practice of zeroing is

impermissible under U.S. law. Koyo argues that the decision

of the WTO Appellate Body in European Communities—

Antidumping Duties on Import of Cotton-Type Bed Linen

from India, WT/DS141/AB/R (Mar. 1, 2001) (“EC-Bed

Linen”) prohibits Commerce’s practice of zeroing. In EC-

Bed Linen, the WTO Appellate Body found that the European

Communities’ (“EC”) use of zeroing was inconsistent with

the Anti-Dumping Agreement. Koyo argues that Com-

merce’s practice is the functional equivalent of the EC’s

practice. See Motion of Plaintiffs Koyo Seiko Co., Ltd. and

Koyo Corporation of U.S.A. fer Judgment on the Agency

Record (“Koyo Br.”) at 18-21. Koyo claims that zeroing is

unlawful under the Charming Betsy doctrine.

With respect to Koyo’s EC-Bed Linen argument, the Court

is bound by the Federal Circuit’s recent decision in Timken v.

United States, 354 F.3d 1334 (Fed.Cir.2004). As a threshold

matter, the Federal Circuit held, as the Court does here, that

17a

Koyo’s claim 1s not barred by 19 U.S.C. § 3512(c). /d. at

1341; see also, supra, II.B. Timken, however, rejected

Koyo’s WTO-based arguments by holding that Commerce’s

practice of zeroing was not prohibited by EC-Bed Linen: “In

light of the fact that Commerce’s ‘longstanding and con-

sistent administrative interpretation is entitled to considerable

weight,’ we refuse to overturn the zeroing practice based on

EC-Bed Linen.” Id. at 1344 (quoting Zenith Radio Corp. v.

United States, 437 U.S. 443, 450, 98 S.Ct. 2441, 57 L.Ed.2d

337 (1978)). The Federal Circuit distinguished Timken from

EC-Bed Linen, stressing that the United States had not been a

party in the latter and that EC-Bed Linen had dealt with an

antidumping investigation and not an administrative review

as was the case in Timken. Id.

Accordingly, the Court holds that Commerce’s use of

zeroing is not invalidated by EC-Bed Linen.®

2. The Plain Language of the Antidumping Statutes Is

Ambiguous and Mandates Deference to Commerce's

Zeroing Practice

NSK and Koyo challenge zeroing as contradictory to the

plain language of 19 U.S.C. § § 1673 and 1677. Commerce

argues that the plain language of the antidumping statutes

actually mandates zeroing. The Court holds that the language

of 19 U.S.C. § 1673 neither unambiguously requires nor pro-

hibits zeroing under the first step of Chevron.

NSK suggests that the plain meaning of 19 U.S.C. § 1673

unambiguously renders Commerce’s practice of zeroing

impermissible. See Memorandum of Points and Authorities

* A divided WTO panel recently found Commerce’s practice of zeroing

to be impermissible under the Anti-Dumping Agreement. See United

States—Final Dumping Determination on Softwood Lumber from Can-

ada, WT/DS264 (Apr. 13, 2004) (“Softwood Lumber”). The Court finds

Softwood Lumber insufficiently persuasive in light of the Federal Circuit's

decision in Timken.

18a

in Support of NSK Bearings Europe’s Motion for Judgment

on the Agency Record (“NSK Europe Br.”) at 5. According to

NSK, the focal point of an antidumping inquiry is the class or

kind of merchandise.” Because § 1673 specifies that anti-

dumping duties apply only when Commerce determines that a

“class or kind of foreign merchandise” is being, or is likely to

be sold at less than its fair value, “Commerce’s dumping

calculation violates this basic principle, because it trivializes

the presence of U.S. sales above fair value by wiping out (i.e.,

by zeroing) the difference by which the export price or

constructed price of these sales exceeds normal value.” NSK

Europe Br. at 11. NSK notes that other statutory provisions

support the premise that zeroing is unlawful. NSK claims

that the definition of “dumped” and “dumping” contained

within 19 U.S.C. § 1677(34) “reformulates the first

requirement of § 1673 that sales below fair value are dumped

but sales above fair value are not.” Jd. at 8. NSK also

maintains that the definition of “dumping margin” contained

within 19 U.S.C. § 1677(35){A) “reaffirms that dumping only

exists when normal value exceeds the export price or

construcied export price of the subject merchandise, which

* NSK claims that the “entire structure of U.S. antidumping law” rests

upon § 1673, which provides that:

(1) the administering authority determines that a class or kind of

foreign merchandise is being, or is likely to be sold, in the United

States at less than its fair value, and

(2) the Commission determines that . . .

(b) the establishment of an industry is materially retarded, by

reason of imports of that merchandise or by reasons of sales (or

the likelihood of sales) of that merchandise for importation, then

there shall be imposed upon such merchandise an antidumping

duty . . . in an amount equal to the amount by which the normal

value exceeds the export price (or the constructed export price)

for the merchandise[.}

19 U.S.C. § 1673 (emphasis added).

19a

section [19 U.S.C. § 1677(25)] defines as the ‘class or kind of

merchandise within the scope of an investigation.”” Jd.

Even though NSK’s argument presents what could be

deemed logical inferences of 19 U.S.C. §§ 1673 and 1677, the

logic does not go so far as to make NSK’s interpretation

of the statute unambiguous. Webster defines “class” as “a

group, set, or kind marked by common attributes . . .” and

“kind” as “a group united by common traits or interests.”

Webster’s Third New International Dictionary (unabridged)

416, 1243 (1986). These definitions could be construed to

require the subject merchandise to be considered in their

entirety and thus bar zeroing. On the other hand, §§ 1673 and

1677 could also be construed to require Commerce to eval-

uate individual transactions only from the perspective of a

common group of merchandise. Such an interpretation would

leave the statutory authority ambiguous.

Koyo contends that Commerce’s argument must fail be-

cause 19 U.S.C. § 1677 does not explicitly mention “zero-

ing.” See Reply Brief of Plaintiffs Koyo Seiko Co., Ltd. and

Koyo Corporation of U.S.A. in Support of Their Motion for

Judgment on the Agency Record at 13-19.

Commerce argues that the plain language of § 1677 unam-

biguously requires the zeroing of sales with negative mar-

gins. Commerce contends that § 1677(34) defines the terms

“dumped” and “dumping” as “the sale or likely sale of goods

at /ess than fair value” (emphasis added). Commerce also

points to § 1677(35)(A), which defines the term “dumping

margin” as “the amount by which the normal value exceeds

the export price”. Def.’s Br. at 53. Commerce also argues

that a failure to zero out negative margins would permit those

negative margins to effectively cancel out dumped sales,

“effectively eviscerating the very purpose of the antidumping

law.” Def.’s Br. at 55.

20a

A combined reading of §§ 1673 and 1677 does not unam-

biguously mandate zeroing. “A plain reading of the statute

discloses no provision for Commerce to offset sales made at

[less than fair value] with sales made at fair value.” Seram-

pore Indus. Pvt. Ltd. v. Dep’t of Commerce, 11 CIT 866, 873,

675 F.Supp. 1354, 1360 (1987); see Timken, 354 F.3d at

1342. The use of the word “exceeds” in § 1677(35)(A) does

not explicitly require that dumping margins be positive. See

Timken, 354 F.3d at 1342. Thus, when considered in con-

junction with relevant case law, NSK’s and Koyo’s respective

arguments help serve to refute Commerce’s claim that the

statute unambiguously requires zeroing.

Having found the antidumping statutes ambiguous regard-

ing zeroing, the Court next considers whether Commerce’s

practice is based on a permissible construction of the statutes

under the second step of Chevron. In Timken, the Federal

Circuit observed three reasons for affirming Commerce’s

practice of zeroing as a permissible construction of the

dumping statute. First, the word “exceeds” could justify a

practice of finding dumping margins only where the normal

value “falls to the right of [the export price] on the number

line.” Jd. Second, zeroing was found to be in accord with

Commerce’s practice of assessing dumping duties on an

entry-by-entry basis. Jd. Finally, because zeroing checks the

practice of masked dumping—hiding a few transactions with

dumped sales under the curtain of multiple sales at fair

price—the Federal Circuit deemed the practice proper. /d. at

1343. Where Commerce has construed the statute in a way

reasonably designed to prevent masked dumping, the Court

will not substitute its own interpretation for that of Com-

merce. See Serampore, |1 CIT at 874, 675 F.Supp. at 1361.

It has been noted that statistical biases inherent in Com-

merce’s zeroing practice prevent the statute from being equiv-

ocal. See Bowe Passat Reinigungs-Und Waschereitechnik

Gmbh v. United States, 20 CIT 558, 570-72, 926 F.Supp.

2la

1138, 1149-50 (1996) (upholding Commerce’s zeroing prac-

tice “[u]nless and until it becomes clear that such a practice is

impermissible or unreasonable”). The proportion of fair sales

to dumped sales does not affect the Court’s determination of

the reasonableness of Commerce’s interpretation. In Bowe

Passat, the Court sustained Commerce’s zeroing practice

even where 92 percent of Bowe Passat’s U.S. sales were

made at or above fair market value. /d. at 571, 926 F.Supp. at

1149. Here, Commerce found a dumping margin where 67

percent of NSK Europe’s U.S. sales and 89 percent of NSK

Japan’s U.S. sales exceeded normal value. See NSK Europe

Br. at 2; Memorandum of Points and Authorities in Support

of NSK Ltd.’s Motion for Judgment on the Agency Record

(“NSK Japan Br.”) at 2. The Court cannot find any basis for

rejecting Commerce’s determination on these grounds. See

Bowe Passat, 20 CIT at 570-72, 926 F.Supp. at 1149-50.

NSK further claims that zeroing is not only biased, but

punitive in nature, which is specifically prohibited in the

antidumping statute. See id.; see also Nat'l Knitwear &

Sportswear Ass'n v. United States, 15 CIT 548, 558, 779

F.Supp. 1354, 1373 (1991) (“[A]ntidumping duty law .. . is

intended to be remedial, not punitive’’).

To be punitive, a duty must lack relation between the cost

imposed and the harm done. See Huaiyin Foreign Trade

Corp. (30) v. United States, 322 F.3d 1369, 1380 (Fed.Cir.

2003). The statistical bias inherent in zeroing is mitigated by

the fact that the denominator used in calculating the dumping

margin includes sales both above and below fair value. See

Bowe Passat, 20 CIT at 571-72, 926 F.Supp. at 1150. Such

inclusion of fair value and dumped sales thus creates a

rational connection between the harm done-—dumping—and

the penalty imposed—the dumping margin.

Accordingly, Commerce’s zeroing of Koyo’s and NSK’s

negative dumping margins is sustained.

22a

D. Commerce’s Use Of Adverse Facts Available To NTN’s

Home Market and U.S. Freight Expenses Was Reasonable

and In Accordance With Law.

NTN challenges Commerce’s use of adverse facts available

to NTN’s home market and U.S. freight expenses.

Commerce requested that NTN report its freight expense

allocation in terms of weight. Pursuant to 19 C.F.R.

§ 351.401(g)(2), Commerce’s questionnaire directed that if an

interested party was unable to allocate freight expenses on

the basis on which they were incurred, the party should have

(1) explained how it allocated expenses; (2) explained why

the party could not allocate expenses on any of the bases on

which they were incurred; and (3) demonstrated that the

allocation methodology used was not distortive. Rule 56.2

Motion and Memorandum For Judgment Upon the Agency

Record Submitted On Behalf of the Plaintiffs and Defendant-

Intervenors, NTN et al. at 6 (“NTN Br.”). Commerce’s

regulations, specifically 19 C.F.R. § 351.401(g)(2), empha-

size the importance that a party demonstrate why its own

methods are not distortive. NTN determined that it could not

report the freight expense allocation on the basis on which it

was incurred because of multiple, inconsistent variables.

Instead, NTN reported its freight allocation on the basis of the

sales value of the merchandise, claiming it was the only

consistent factor. While Commerce accepted this reporting

methodology in past reviews, for this review, Commerce

requested NTN to report its freight expense allocation in

terms of weight, and sent NTN two supplemental question-

naires specifically requesting this information. NTN failed to

comply. To justify its use of adverse facts available,

Commerce determined that NTN was not cooperating to its

full ability, and specifically that NTN failed to show why its

methodology, in terms of value, was not distortive. Issues

and Decision Memorandum for the Administrative Reviews

of Antifriction Bearings (other than tapered roller bearings)

Mee OS ES

23a

and parts thereof from France, Germany, Italy, Japan,

Sweden, and the United Kingdom—May 1, 1999, through

April 30, 2000 (“Issues and Decision Memo”), Comment 34.

Commerce is required to use facts otherwise available if a

respondent “withholds information that has been requested”

or “fails to provide such information by the deadlines for the

submission of the information or in the form and manner

requested.” 19 U.S.C. § 1677e(a)(A) and (B).

The Court finds that Commerce adequately considered

NTN’s submission of freight expenses in terms of weight, and

acted within its statutory authority in applying adverse facts.

Commerce determined that because of NTN’s refusal to

submit the requested weight data, NTN did not cooperate to

the best of its ability as is required by § 1677m(e). If

Commerce anticipates rejecting a party’s submitted infor-

mation, § 1677m(d) requires Commerce to give notice of

the deficiency to the party. Commerce complied with

§ 1677m(d) by giving sufficient notice to NTN in the two

supplemental questionnaires, specifically requesting the data

in terms of weight. Commerce explicitly determined that

NTN did not comply with the requirements to use its own

allocation methodology. Specifically, in pursuing its option

of submitting an alternative methodology based on value,

NTN never explicitly explained to Commerce why its meth-

odology was not distortive as required by 19 C.F.R.

§ 351.401(g)(2). In addition, Commerce acted in accordance

with § 1677m(c){1), which requires Commerce to modify its

request for information to avoid imposing an unreasonable

burden on the respondent.'? Commerce considered NTN’s

' Under 19 U.S.C. § 1677m(c)(1):

If an interested party, promptly after receiving a request from the

administering authority . . . for information, notifies the admin-

istering authority . . . that such party is unable to submit the infor-

mation requested in the requested form and manner .. . , the

administering authority . . . shall consider the ability of the inter-

24a

ability to submit the freight expenses in terms of weight and

determined that NTN would have been able to submit such

information, regardless of NTN’s contention that a ruling

based on weight rather than value would have been distortive.

Accordingly, Commerce’s use of adverse facts available

for NTN’s home market and U.S. freight expenses is sus-

tained.

E. Commerce’s Inclusion Of NTN’s Export Price Sales

in Calculating Constructed Export Price Profit Adjust-

ment Is In Accordance With Law.

NTN argues that Commerce should not have included

export price (“EP”) sales in its calculation of CEP profit

adjustment. NTN asserts that 19 U.S.C. § 1677a(f)(2)(C),

which defines total expenses as “all expenses in the first of

three categories which applies and which are incurred by or

on behalf of the foreign like product sold in the exporting

country” does not include any explicit provision about export

price expenses. Therefore, based on the plain language of

the statute, Commerce may not include EP sales in its CEP

profits.

Commerce responds that its inclusion of EP sales in CEP

profits is a reasonable interpretation of § 1677a(f)(2)(C), con-

sistent with its prior practice, and otherwise in accordance

with law. According to Commerce, “‘total expenses’ re-

fers to all expenses incurred with respect to the subject

merchandise sold in the United States... . Thus, where the

respondent makes both export-price and CEP’ sales to the

United State[s] (sic), sales of the subject merchandise would

encompass all such transactions.” Def.’s Br. at 32. There-

ested party to submit the information in the requested form and

manner and may modify such requirements to the extent necessary

to avoid imposing an unreasonable burden on that party.

19 U.S.C. § 1677m(c)(1).

25a

fore, as NTN made both EP and CEP sales in the United

States, Commerce’s inclusion of EP sales is proper.

The Court finds that Commerce’s decision to include EP

sales in the CEP profit adjustment calculation was reasonable

and in accordance with law. The term total expenses is

not exclusive to CEP sales but may also include EP ex-

penses. See Torrington Co. v. United States, 25 CIT 395,

426, 146 F.Supp.2d 845, 882 (2001), aff'd, 62 Fed.Appx. 950

(Fed.Cir.2003). Because “subject merchandise” refers to the

class or kind of merchandise that is within the scope, it is

reasonable for Commerce to include EP sales when EP sales

were made. /d. In the first category of expenses, total

expenses include “subject merchandise sold in the United

States,” including any merchandise within the scope of the

review. /d. This definition also includes EP sales, as EP sales

were made by NTN.

Accordingly, Commerce’s inclusion of EP sales in the CEP

profit adjustment calculation is sustained.

F. Commerce’s Inclusion of NTN’s CT Scan Bearings in

the Margin Calculation Is Remanded for Clarification.

Commerce included CT scan bearings in its calculation of

NTN’s dumping margin even after informing NTN that CT

scan bearings would be excluded from the scope of the

administrative review. NTN argues that Commerce should

exclude NTN’s CT scan bearings from its margin calculation.

In its original investigation, Commerce found “slewing rings”

or “turntable bearings” to be distinct from antifriction

bearings. Seeking to confirm that Commerce would continue

to exclude these bearings from the scope, NTN requested a

ruling from Commerce on this issue on May 24, 2001.

Commerce responded io NTN by letter, dated July 10, 2001,

ruling that “turntable slewing bearings are not within the

scope of the order.” NTN Br., Attachment A. Two days later,

on July 12, 2001, Commerce issued the Final Results, which

26a

included these same bearings in the margin calculations. See

66 Fed.Reg. at 36552.

In response, Commerce argues that recalculating the mar-

gin would create an administrative burden, add uncertainty,

and defeat the principle of finality. See Def.’s Br. at 51.

Commerce also claims that the Final Results had already

been signed for five days prior to the issuance of the July 10,

2001 letter.

The Court finds that Commerce did not adequately address

the issue raised by NTN. Accordingly, the Court remands

this issue with instructions to clarify the circumstances in

which the July 10, 2001 letter, confirming the exclusion of

CT scan bearings, was published while the Final Results

included the same subject merchandise.

G. Torrington Did Not Exhaust Its Administrative Remedies

by Applying for a Scope Inquiry Regarding INA Steering

Column Supports.

Commerce excluded INA’s steering column supports from

the scope of the antidumping order covering cylindrical roller

bearings from Germany. Torrington asserts that Commerce’s

failure to initiate a scope inquiry was contrary to law;

alternatively, Torrington argues that Commerce’s determi-

nation that the steering column supports were outside the

scope of the order was not supported by substantial evidence

or in accordance with law.

Under 19 C.F.R. § 351.225(b), Commerce is obligated to

self-initiate a scope inquiry only when, based on the available

information, it cannot determine whether a product is in-

cluded within the scope of an order. Commerce argues that it

was able to make a decision as to the scope based on the

available product descriptions, and therefore, was not obli-

gated to self-initiate a scope inquiry.

27a

Torrington, however, did not have to rely on Commerce’s

judgment. If Torrington was not satisfied with Commerce’s

decision on the matter, the regulations also provide that any

interested party may request a scope inquiry as provided by

19 C.F.R. § 351.225(c)(1). Although Torrington “vigorously

contested Commerce’ [sic] determination to accept INA’s

exclusion of the product based on its informal inquiry,”

Torrington did not formally apply for a scope inquiry. The

Torrington Company’s Reply Brief at 3. As a result, because

it failed to apply for a ruling as permitted by the regulations,

Torrington failed to exhaust its administrative remedies.

Whenever warranted, the Court is obligated to require the

exhaustion of administrative remedies before an issue canbe |

properly addressed here. 28 U.S.C. § 2637(d). The “detailed

scope determination procedures that Commerce has provided

constitute precisely the kind of administrative remedy that

must be exhausted before a party may litigate the validity of

the administrative action.” Sandvik Steel Co. v. United

States, 164 F.3d 596, 599-600 (Fed.Cir. 1998).

Accordingly, because Torrington did not exhaust its

administrative remedies by applying for a scope inquiry, the

Court does not have jurisdiction to address the issue of

whether certain cylindrical bearings fell within the scope of

the antidumping order.

H. Commerce’s Acceptance of Koyo’s Method of Calc-

ulating Air and Ocean Freight Expenses Is Supported

by Substantial Evidence and Otherwise In Accordance

With Law.

Torrington challenges Commerce’s acceptance of Koyo’s

method of calculating air and ocean freight expenses. Koyo

calculated a single international freight expense factor by

weight, using the aggregate expenses for both air and ocean

freight divided by the total weight of all bearings shipped to

the United States. Torrington argues that Koyo could and

28a

should have either reported its international freight expenses

on a transaction-specific basis or separately reported air and

ocean freight expenses, allocating the air freight expenses in a

more specific manner. The Torrington Company’s Memo-

randum In Support Of Its Rule 56.2 Motion. For Judgment

Upon the Agency Record (“Torrington Br.”) at 56. Tor-

rington claims that Koyo’s allocation method led to sig-

nificant inaccuracies. According to Torrington, accurate

reporting of air freight expenses would decrease U.S. prices

and therefore increase Koyo’s dumping margins. /d. at 69.

19 U.S.C. § 1677a(c)(2)(A) provides for an adjustment to

EP or CEP for the amount attributable to any costs incident to

bringing subject merchandise into the United States. Pur-

suant to § 1677a(c)(2)(A), Commerce deducts air and ocean

freight costs. Commerce “may consider allocated expenses

and price adjustments when transaction-specific reporting is

not feasible, provided . . . that the allocation method used

does not cause inaccuracies or distortions.” 19 C.F.R.

§ 351.401(g)(1). A party seeking to submit allocated ex-

penses and price adjustments must demonstrate “that the

allocation is calculated on as specific a basis as feasible and

must explain why their allocation methodology used does not

cause inaccuracies.” 19 C.F.R. § 351.401(g)(2).

At issue here is whether Koyo was capable of reporting its

air freight expenses in a more specific manner. Torrington

claims that since Koyo only shipped via air freight on an

emergency basis to deal with low inventories, it would not

have been infeasible for Koyo to have reported transaction-

specific air freight expenses. See Torrington Br. at 64. Koyo

responds that this would not have been feasible because it did

not possess records that would allow the linkage of units

shipped by air to specific sales in the United States. See

Memorandum of Koyo Seiko Co., Ltd. and Koyo Corporation

U.S.A. in Response to Torrington'’s Motion for Judgment on

the Agency Record (“Koyo Resp. Br.”) at 15.

29a

To require Koyo to submit more specific air and ocean

freight expenses, Torrington must first establish linkage

between the shipments and specific sales in the United States.

See Torrington Co. v. United States, 21 CIT 491, 498, 965

F.Supp. 40, 45 (1997) (respondent’s reporting methodology is

permissible because “[t]he documents cited by Torrington do

not provide a means of linking individual sales to specific

shipments”). Torrington does not adequately demonstrate

such linkage based upon documents on the record. Tor-

rington erroneously focuses on how Koyo could have docu-

mented its shipments in a manner that would allow for

more specific reporting of its international freight expenses.

Torrington’s argument is misplaced as § 351.401(g)(1) refers

to the feasibility of using existing documents to use trans-

action-specific reporting—not the feasibility of maintaining

records that would allow such reporting. See also 19 U.S.C.

§ 351.401(g)(3) (Commerce must consider “the records main-

tained by the party in question in the ordinary course of

business”). Nothing suggests that companies are required to

make wholesale changes to their record-keeping practices to

comply with § 351.401(g)(1).

The Court must also determine whether Commerce ade-

quately investigated Koyo’s proposed methodology to deter-

mine whether it was reasonable and representative. See

Torrington Co. v. United States, 21 CIT 686, 695, 969

F.Supp. 1332, 1339 (1997). Commerce has the authority to

accept averages rather than transaction-specific data “as long

as the methodology chosen by a respondent is reasonable and

supported by information contained in the administrative

record.” Torrington, 21 CIT at 497, 969 F.Supp. 45. As part

of the sixth administrative review, Commerce verified Koyo’s

reporting methodology. By tracing data from freight invoices

to reports provided by freight carriers, Commerce determined

that it did accurately represent Koyo’s shipping expenses.

There is nothing in the record that demonstrates Koyo has

30a

altered its methodology since Commerce conducted its in-

quiry in the sixth administrative review.

Accordingly, Commerce’s acceptance of Koyo’s method of

calculating air and ocean freight expenses is sustained.

I. Commerce’s Treatment of NTN’s Sales to Affiliated

Parties Is Supported By Substantial Evidence.

In the Final Results, Commerce applied the arm’s length

test to NTN’s sales to affiliated parties. Torrington chal-

lenges Commerce’s decision on two separate grounds: (1)

that Commerce erred in not applying facts available to NTN’s

affiliates and (2) that Commerce improperly disregarded cer-

tain downstream sales in its calculation of normal value.

Torrington argues that when calculating normal value,

Commerce erred by relying on sales figures to affiliates as

reported by NTN rather than on downstream sales or facts

available. Although downstream sales may be used to caic-

ulate normal value when the foreign like product is sold to an

affiliated party, Commerce may not rely on downstream sales

if the “arm’s length” test is satisfied. 19 C.F.R. § 351.403(c).

Commerce explained that a model-specific comparison of

sales to affiliated and unaffiliated parties showed that sales to

_ affiliated parties were an average of 99.5 percent or more of

the price of sales to unaffiliated parties. As a result of this

comparison, Commerce concluded that NTN’s sales to affili-

ated parties satisfied the arm’s length test and therefore

formed a reasonable basis for calculating normal value. See

Issues and Decision Memo at Comment 25. Therefore,

according to Commerce, it was unnecessary to rely on down-

stream sales or facts available when calculating normal value.

Torrington points out, however, that Commerce has recog-

nized that the 99.5 percent arm’s length test is not the sole

method for dealing with the issue of sales to affiliated parties.

See Torrington Br. at 46 (citing Antidumping Duties; Coun-

tervailing Duties; Final Rule, 62 Fed.Reg. 27296, 27355

3la

(May 19, 1997)). However, Torrington fails to point out that

in the next sentence Commerce announced that it will

“continue to apply the current 99.5 percent test unless and

until [it] develop[s] a new method.” /d. Commerce found that

this 99.5 percent arm’s length test was suitable and that it was

satisfied. Acting in accordance with 19 C.F.R. § 351.403(c),

Commerce did not err in relying on NTN’s reported sales

figures rather than on downstream sales or facts available

when calculating normal value.

In prior reviews and the preliminary results of this

administrative review, NTN’s failure to supply all down-

stream sales through affiliated resellers resulted in Com-

merce’s application of adverse facts available in its calcu-

lation of normal value. Commerce did not, however, apply

adverse facts available in the Final Results. Issues and

Decision Memo at Comment 2. Citing Queen’s Flowers de

Colombia v. United States, 21 CIT 968, 981 F.Supp. 617

(1997), Torrington points out that an agency is required either

to conform to its prior decisions or to explain the reasons for

its departure. As a result, Torrington argues that Commerce’s

failure to use adverse facts in the Final Results, without

providing an explanation of its reasoning, requires the issue to

be remanded for further explanation.

Commerce argues that its previous decisions are not bind-

ing. In addition, Commerce concluded in the Final Results

that because NTN’s reported sales satisfied the arm’s length

test they provided Commerce with a reasonable basis for

calculating normal value. Therefore, according to Com-

merce, it can hardly be said that Commerce failed to comply

with its prior decisions.

Commerce may, but is not required to, apply adverse facts

when “an interested party has failed to cooperate by not

acting to the best of its ability to comply with a request for

information.” 19 U.S.C. § 1677e(b). Given Commerce’s

satisfaction with NTN’s compliance with requests for addi-

32a

tional information and explanations and Commerce’s rea-

sonable conclusion that it had sufficieni information to

calculate normal value, Commerce its not compelled to use

adverse facts available. Because Commerce is not bound by

prior decisions based on different facts and because applying

adverse facts available in the case at hand is unwarranted, the

Court holds that there is no basis for remanding this issue for

further clarification.

As to the second issue, Commerce claims that it was

unable to use downstream sales data for sales to affiliates that

did not satisfy the arm’s length test because matching down-

stream figures were unavailable. Def.’s Br. at 75. Torrington

argues that this is not supported by the evidence and that

Commerce’s failure to request the allegedly missing data

constitutes a blatant abrogation of its statutory duty to con-

duct an adequate investigation. See Freeport Minerals Co. v.

United States, 776 F.2d 1029 (Fed.Cir.1985). Upon

reviewing the record, the Court holds that Commerce did not

err by deciding not to use [sic] certain downstream sales data.

Commerce’s decision not use these downstream sales is in

accordance with 19 U.S.C. § 1677(16), which states that

Commerce is not required to “obtain information on all

possible sales of the foreign like product.” Furthermore,

Commerce exercised its discretion pursuant to 19 C.F.R.

§ 351.403(c), which states that “[i]f an importer or producer

sold the foreign like product through an affiliated party, the

Secretary may calculate normal value based on such sale by

the affiliated party.” Commerce, after reviewing the record

evidence, concluded that it was not “necessary or appropriate

to require the reporting of [downstream sales] . . . in all

instances.” Antidumping Duties; Countervailing Duties;

Final Rule, 62 Fed.Reg. at 27356.

Accordingly, Commerce’s treatment of NTN’s sales to

affiliated parties is sustained.

33a

Il. CONCLUSION

For the aforementioned reasons, the Final Results is

sustained in part and reversed and remanded in part.

A separate order will be issued accordingly.

34a

APPENDIX C

NOTICES

DEPARTMENT OF COMMERCE

International Trade Administration

[A-427-801, A-428-801, A-475-801, A-588-804,

A-401-801, A-412-801]

Antifriction Bearings (Other Than Tapered Roller Bearings)

and Parts Thereof From France, Germany, Italy, Japan,

Sweden, and the United Kingdom; Final Results of

Antidumping Duty Administrative Reviews and

Revocation of Orders in Part

Thursday, July 12, 2001

For a complete version of this memorandum, see 66

ITADOC 36551.

AGENCY: Import Administration, International Trade Ad-

ministration, Department of Commerce.

ACTION: Notice of Final Results of Antidumping Duty

Administrative Reviews and Revocation of Orders in Part.

SUMMARY: On February 5, 2001, the Department of

Commerce published the preliminary results of the admin-

istrative reviews of the antidumping duty orders on anti-

friction bearings (other than tapered roller bearings) and parts

thereof from France, Germany, Italy, Japan, Sweden, and the

United Kingdom. The merchandise covered by these orders

are ball bearings and parts thereof, cylindrical roller bearings

and parts thereof, and spherical plain bearings and parts

thereof. The reviews cover 56 manufacturers/exporters. The

periods of review are May 1, 1999, through April 30, 2000,

for ball bearings and May 1, 1999, through December 31,

1999, for cylindrical roller bearings and spherical plain

bearings.

35a

Based on our analysis of the comments received, we have

~ made changes, including corrections of certain programming

and other clerical errors, in the margin calculations. There-

fore, the final results differ from the preliminary results. The

final weighted-average dumping margins for the reviewed

firms are listed below in the section entitled “Final Results of

the Reviews.”

EFFECTIVE DATE: July 12, 2001.

FOR FURTHER INFORMATION: Please contact the

appropriate case analysts for the various respondent firms as

listed below, at Import Administration, International Trade

Administration, U.S. Department of Commerce, Washington,

D.C. 20230; telephone: (202) 482-4733.

France

Edythe Artman (SNFA), George Callen (SNR), Lyn

Johnson (Alfateam—Belgium, Alfa-Team—Germany, Bear-

ing Discount—Germany, Motion Bearings—Singapore, Yoo

Shin—South Korea, Rodamientos Rovi—Venezuela, Rovi-

Valencia—Venezuela, Rovi-Maracay—Venezuela, RIRSA—

Mexico, DCD—Northern Ireland, Euro-Latin—United King-

dom (collectively, Resellers)), David Dirstine, or Richard

Rimlinger.

Germany

George Callen (Cerobear), Hermes Pinilla (INA), Thomas

Schauer (Torrington Nadellager), Lyn Johnson (Resellers), .

David Dirstine, or Richard Rimlinger.

Italy

Lyn Johnson (Resellers) or David Dirstine.

Japan

Minoo Hatten (NSK), Thomas Schauer (NTN), Lyn John-

son (Koyo), David Dirstine, or Richard Rimlinger.

- 36a

Sweden

Lyn Johnson (Resellers) or David Dirstine.

United Kingdom

Thomas Schauer (Timken, RHP/NSK), Dimitry Vladi-

mirov (SNFA), David Dirstine, or Richard Rimlinger.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (the Act), are references to the provisions

effective January 1, 1995, the effective date of the amend-

ments made to the Act by the Uruguay Round Agreements

~ Act (URAA). In addition, unless otherwise indicated, all

citations to the Department of Commerce’s (the Department’s)

regulations are to 19 CFR Part 351 (2000).

Background

On February 5, 2001, the Department published the pre-

liminary results of the administrative reviews of the anti-

dumping duty orders on antifriction bearings (other than

tapered roller bearings) and parts thereof from France,

Germany, Italy, Japan, Sweden, and the United Kingdom (66

FR 8931). The reviews cover 56 manufacturers/exporters.

The periods of review (POR) are May 1, 1999, through Apml

30, 2000, for ball bearings and May 1, 1999, through Decem-

ber 31, 1999, for cylindrical roller bearings and spherical

plain bearings. We invited interested parties to comment on

our preliminary results. At the request of certain parties, we

held hearings for Germany-specific issues and reseller issues

for France, Germany, Sweden and Italy on March 22, 2001,

and for Japan-specific issues on March 26, 2001. The

Department has conducted these administrative reviews in

accordance with section 751 of the Act.

37a

Scope of the Orders

The products covered by these orders, antifriction bearings

(other than tapered roller bearings), mounted or unmounted,

and parts thereof, constitute the following classes or kinds of

merchandise:

i. Ball Bearings and Parts Thereof: These products

include all antifriction bearings that employ balls as the

rolling element. Imports of these products are classified

under the following categories: antifriction balls, ball bear-

ings (BBs) with integral shafts, BBs (including radial BBs)

and parts thereof, and housed or mounted BB units and parts

thereof. :

Imports of these products are classified under the following

Harmonized Tariff Schedules of the United States (HTSUS)

subheadings: 3926.90.45, 4016.93.00, 4016.93.10,

4016.93.50, 6909.19.5010, 8431.20.00, 8431.39.0010,

8482.10.10, 8482.10.50, 8482.80.00, 8482.91.00, 8482.99.05,

8482.99.2580, 8482.99.35, 8482.99.6595, 8483.20.40,

8483.20.80, 8483.50.8040, 8483.50.90, 8483.90.20,

8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50, 8708.60.80,

8708.70.6060, 8708.70.8050, 8708.93.30, 8708.93.5000,

8708.93.6000, 8708.93.75, 8708.99.06, 8708.99.31,

8708.99.4960, 8708.99.50, 8708.99.5800, 8708.99.8080,

8803.10.00, 8803.20.00, 8803.30.00, 8803.90.30, and

8803.90.90.

2. Cylindrical Roller Bearings, Mounted or Unmounted,

and Parts Thereof: These products include all antifriction

bearings that employ cylindrical rollers as the rolling element.

Imports of these products are classified under the following

categories: antifriction rollers, all cylindrical roller bearings

(including split cylindrical roller bearings) (CRBs) and parts

thereof, and housed or mounted CRB units and parts thereof.

Imports of these products are classified under the following

HTSUS subheadings: 3926.90.45, 4016.93.00, 4016.93.10,

4016.93.50, 6909.19.5010, 8431.20.00, 8431.39.0010,

38a

8482.40.00, 8482.50.00, 8482.80.00, 8482.91.00, 8482.99.25,

8482.99.35, 8482.99.6530, 8482.99.6560, 8482.99.70,

8483.20.40, 8483.20.80, 8483.50.8040, 8483.90.20,

8483.90.30, 8483.90.70, 8708.50.50, 8708.60.50,

8708.93.5000, 8708.99.4000, 8708.99.4960, 8708.99.50,

8708.99.8080, 8803.10.00, 8803.20.00, 8803.30.00,

8803.90.30, and 8803.90.90.

3. Spherical Plain Bearings, Mounted and Unmounted,

and Parts Thereof: These products include all spherical plain

bearings (SPBs) that employ a spherically shaped sliding

element and include spherical plain rod ends.

Imports of these products are classified under the following

HTSUS subheadings: 3926.90.45, 4016.93.00, 4016.93.10,

4016.93.50, 6909.50.10, 8483.30.80, 8483.90.30, 8485.90.00,

8708.93.5000, 8708.99.50, 8803.10.00, 8803.20.00,

8803.30.00, 8803.90.30, and 8803.90.90.

The HTSUS item numbers are provided for convenience

and customs purposes. They are not determinative of the

products subject to the orders. The written descriptions

remain dispositive.

Size or precision grade of a bearing does not influence

whether the bearing is covered by one of the orders. These

orders cover all the subject bearings and parts thereof (inner

race, outer race, cage, rollers, balls, seals, shields, etc.) out-

lined above with certain limitations. With regard to finished

parts, all such parts are included in the scope of these orders.

For unfinished parts, such parts are included if (1) they have

been heat-treated, or (2) heat treatment is not required to be

performed on the part. Thus, the only unfinished parts that

are not covered by these orders are those that will be subject

to heat treatment after importation. The ultimate application

of a bearing also does not influence whether the bearing is

covered by the orders. Bearings designed for highly special-

ized applications are not excluded. Any of the subject bear-

39a

ings, regardless of whether they may ultimately be utilized

in aircraft, automobiles, or other equipment, are within the

scopes of these orders.

For a listing of scope determinations which pertain to the

orders, see the “Scope Determinations Memorandum” (Scope

Memo) from the Antifriction Bearings Team to Laurie

Parkhill, dated May 11, 2001. The Scope Memo is on file in

the Central Records Unit (CRU), Main Commerce Building,

Room B-099.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to

these concurrent administrative reviews of the orders on

antifriction bearings are addressed in the “Issues and Decision

Memorandum” (Decision Memo) from Richard W. Moreland,

Deputy Assistant Secretary, to Faryar Shirzad, Assistant

Secretary, dated June 5, 2001, which is hereby adopted by

this notice. A list of the issues which parties have raised and

to which we have responded, all of which are in the Decision

Memo, is attached to this notice as an Appendix. This

Decision Memo, which is a public document, is on file in the

CRU, Main Commerce Building, Room B-099, and is acces-

sible on the Web at ia.ita.doc.gov. The paper copy and

electronic version of the Decision Memo are identical in

content.

Sales Below Cost in the Home Market

The Department disregarded home-market sales that failed

the cost-of-production test for the following firms and classes

or kinds of merchandise for these final results of reviews:

Country Company Subject merchandise

France SNR BBs

Germany INA CRBs

Japan Koyo BBs, CRBs

40a

NSK BBs, CRBs

NTN BBs, CRBs, SPBs

United Kingdom NSK-RHP -~ BBs

Partial Revocation of the Orders

In the preliminary results we stated our intent to revoke the

order covering CRBs from France as it pertains to the sales of

these bearings by SNFA France (66 FR at 8934). However,

the order on CRBs from France was revoked on January 1,

2000, pursuant to a sunset review decision of the International

Trade Commission under section 751(c) of the Act (see

Revocation of Antidumping Duty Orders on Certain Bearings

From Hungary, Japan, Romania, Sweden, France, Germany,

Italy, and the United Kingdom, 65 FR 46267 (July 11, 2000)

(Sunset Revocation Notice)). Therefore, there is no need for

us to rule on this matter in the context of this particular

review.

In addition, also in our preliminary results, we stated our

intent not to revoke the order covering BBs from the United

Kingdom as it pertained to sales of these bearings by SNFA

U.K. However, due to a recalculation of SNFA U.K.’s margin

as the result of clerical errors in our preliminary calculations

(see Post-Preliminary Disclosure Memo from Lzurie Parkhill

to Richard Moreland, dated May 4, 2001), the final margin

for SNFA U.K. is zero, and we are revoking this order in part

with respect to SNFA U.K. The revocation in part applies to

subject merchandise entered, or withdrawn from warehouse,

for consumption on or after May 1, 2000.

Changes Since the Preliminary Results

Based on our analysis of comments received, we have

made revisions that have changed the results for certain firms.

We have corrected programming and clerical errors in the

preliminary results, where applicable. Any alleged program-

4la

ming or clerical errors about which we or the parties do not

agree are discussed in the relevant sections of the Decision

Memo, which is accessible on the Web at ia.ita.doc.gov and is

on file in the CRU, Room B-099.

Final Results of Reviews

We determine that the following percentage weighted-

average margins exist for the period May 1, 1999, through

April 30, 2000 (for BBs), and for the period May 1, 1999,

Cylindrical Spherical plain

France:

SNFA 0.00

SNR ()

Alfateam ; (°)

Alfa-Team ; (°)

Bearing ¢)

Discount

Motion (*)

Bearings

Yoo Shin

Rodamientos

Rovi

Rovi- Valencia

Rovi-Maracay

RIRSA

DCD

Euro-Latin

Germany:

Cerobear

INA

Torrington

Nadellager

Alfateam

Alfa-Team

Bearing

Discount

Motion

Bearings

Yoo Shin

Rodamientos

Rovi

Rovi-Valencia

Rovi-Maracay

RIRSA

DCD

Euro-Latin

Italy:

Alfateam

Alfa-Team

Bearing

Discount

Motion

Bearings

Yoo Shin

70.41

68.29

42a

0.00

2.96

61.60

(’)

61.60

Rodamientos

Rovi

Rovi-Valencia

Rovi-Maracay

RIRSA

DCD

Euro-Latin

Japan:

Koyo

NSK Ltd

NTN

Sapporo

Sweden:

Alfateam

Alfa-Team

Bearing

Discount

Motion

Bearings

Yoo Shin

Rodamientos

Rovi

Rovi-Valencia

Rovi-Maracay

RIRSA

DCD

43a

5.28

5.74

16.26

(>)

0.00

()

3.60

(>)

44a

Euro-Latin ()

United

Kingdom:

NSK/RHP 15.65

SNFA 0.00

Timken 1.1]

1 No shipments or sales subject to this review. The deposit rate re-

mains unchanged from the last relevant segment of the proceeding in

which the firm had shipments/sales.

2 No shipments or sales subject to this review. The firm has no

individual rate from any segment of this proceeding.

3 No request for review under section 751(a) of the Act.

Resellers

With respect to Bearing Discount International, Euro-Latin

Export Services Limited, Representaciones Industriales Rod-

riquez, S.A. de C.V., Rodamientos Rovi C.A., Rovi-Maracay,

and Rovi-Valencia, we have determined that these respon-

dents had no shipments during the POR. We have based our

determination on letters from these respondents indicating

that they had no shipments and on our examination of the

Customs Service database for imports of entered merchandise

involving these respondents. Based upon the record and our

methodology of reviewing Customs Service information, we

have determined that the respondents at issue had no ship-

ments during the POR, and we have not established margins

for use as future cash-deposit rates.

As explained in the accompanying Decision Memorandum,

however, notwithstanding their letters reporting that they had

made no shipments, it is impossible to establish with certainty

from Customs Service data the accuracy of their statements.

Therefore, we will instruct the Customs Service at the time of

liquidation to review all documentation for suspended entries

45a

of subject merchandise. If the Customs Service finds that any

of the six “no-shipment” respondents in fact had shipments of

subject merchandise during the POR, we will instruct the

Customs Service to apply a facts-available rate to such re-

spondents based on the adverse facts-available rate we have

determined for the applicable country of origin (France, Ger-

many, Italy, or Sweden) and subject merchandise. See Pre-

liminary Results, 66 FR 8933, for a description of our

determination of these rates.

Assessment Rates

The Department shall determine, and the Customs Service

shall assess, antidumping duties on all appropriate entries. In

accordance with 19 CFR 351.212(b)(1), we have calculated,

whenever possible, an exporter/importer-specific assessment

rate or value for subject merchandise.

a. Export Price

With respect to export-price (EP) sales for these final re-

sults, we divided the total dumping margins (calculated as the

difference between normal value (NV) and EP) for each

importer/customer by the total number of units sold to that

importer/customer. We will direct the Customs Service to

assess the resulting per-unit dollar amount against each unit

of merchandise on each of that importer’s/customer’s entries

under the relevant order during the review period.

b. Constructed Export Price

For constructed-export-price (CEP) sales (sampled and

non-sampled), we divided the total dumping margins for the

reviewed sales by the total entered value of those reviewed

sales for each importer. When an affiliated party acts as an

importer for export-price sales we have included the appli-

cable export-price sales in the assessment-rate calculation.

We will direct the Customs Service to assess the resulting

percentage margin against the entered customs values for the

46a

subject merchandise on each of that importer’s entries un-

der the relevant order during the review period (see 19 CFR

351.212(a)).

Cash-Deposit Requirements

To calculate the cash-deposit rate for each respondent (i.e.,

each exporter and/or manufacturer included in these reviews),

we divided the total dumping margins for each company by

the total net value for that company’s sales of merchandise

during the review period subject to each order.

In order to derive a single deposit rate for each order for

each respondent, we weight-averaged the EP and CEP deposit

rates (using the export price and CEP, respectively, as the

weighting factors). To accomplish this when we sampled

CEP sales, we first calculated the total dumping margins for

all CEP sales during the review period by multiplying the

sample CEP margins by the ratio of total days in the review

period to days in the sample weeks. We then calculated a

total net value for all CEP sales during the review period by

multiplying the sample CEP total net value by the same ratio.

We then divided the combined total dumping margins for

both export-price and CEP sales by the combined total value

for both export-price and CEP sales to obtain the deposit rate.

We will direct the Customs Service to collect the resulting

percentage deposit rate against the entered customs value of

each of the exporter’s entries of subject merchandise entered,

or withdrawn from warehouse, for consumption on or after

the date of publication of this notice. If an order has been

revoked in full or in part, cash deposits will not be required

on entries made after the effective date of the revocation,

identified in the Revocation section above.

Entries of parts incorporated into finished bearings before

sales to an unaffiliated customer in the United States will

receive the respondent's deposit rate applicable to the order.

47a

Furthermore, the following deposit requirements will be

effective upon publication of this notice of final results of

administrative reviews for all shipments of antifriction bear-

ings entered, or withdrawn from warehouse, for consumption

on or after the date of publication, as provided by section

751(a)(1) of the Act unless the order has been revoked in full

(see Sunset Revocation Notice) or in part (see Revocation

section above): (1) the cash-deposit rates for the reviewed

companies will be the rates shown above except that, for

firms whose weighted-average margins are less than 0.5 per-

cent and therefore de minimis, the Department shall not

require a deposit of estimated antidumping duties; (2) for

previously reviewed or investigated companies not listed

above, the cash-deposit rate will continue to be the company-

specific rate published for the most recent period; (3) if the

exporter is not a firm covered in this review, a prior review,

or the original less-than-fair-value (LTFV) investigation, but

the manufacturer is, the cash-deposit rate will be the rate

established for the most recent period for the manufacturer of

the merchandise; and (4) the cash-deposit rate for all other

manufacturers or exporters will continue to be the “All

Others” rate for the relevant order made effective by the final

results of review published on July 26, 1993 (see Antifriction

Bearings (Other Than Tapered Roller Bearings) and Parts

Thereof From France, et al: Final Results of Antidumping

Duty Administrative Reviews and Revocation in Part of an

Antidumping Duty Order, 58 FR 39729 (July 26, 1993), and,

for BBs from Italy, see Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts Thereof From France,

et al: Final Results of Antidumping Duty Administrative

Reviews, Partial Termination of Administrative Reviews, and

Revocation in Part of Antidumping Duty Orders, 61 FR

66472 (December 17, 1996)). These rates are the “All

Others” rates from the relevant LTFV investigation.

These deposit requirements shall remain in effect until pub-

lication of the final results of the next administrative reviews.

48a

This notice serves as a reminder to importers of their

responsibility under 19 CFR 351.402(f) to file a certificate

regarding the reimbursement of antidumping duties prior to

liquidation of the relevant entries during these review periods.

Failure to comply with this requirement could result in the

Department’s presumption that reimbursement of antidump-

ing duties occurred and the subsequent assessment of doubled

antidumping duties.

This notice also serves as a reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information dis-

closed under APO in accordance with 19 CFR 351.305.

Timely notification of the return or destruction of APO

materials or conversion to judicial protective order is hereby

requested. Failure to comply with the regulations and the

terms of an APO is a sanctionable violation.

We are issuing and publishing these determinations and

notice in accordance with sections 751(a)(1) and 777(i) of the

Act and 19 CFR 351.210(c).

Dated: July 5, 20002.

Faryar Shirzad,

Assistant Secretary for Import Administration.

Appendix

Comments and Responses

10.

11.

49a

Facts Available

CEP Profit

Price Adjustments

A. Inventory Carrying Costs

B. Commissions

C. Bank Charges

D. Other Direct Selling Expenses

E. Other

Resellers

Level of Trade

Arm’s-Length Test

Prototypes and Sales Outside the Ordinary Course of

Trade

Further Manufacturing

Cost of Production and Constructed Value

A. Profit for Constructed Value

B. Affiliated-Party Inputs

C. When to Use CV

Packing and Movement Expenses

Miscellaneous

A. Clerical Errors

B. Scope

C. Other

[FR Doc. 01-17486 Filed 7-11-01; 8:45 am]

BILLING CODE 3510-DS-P

50a

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

05-1297, 05-1323

SNR ROULEMENTS, 7

Plaintiff,

and

Koyo SEIKO Co., LTD. and KOYO CORPORATION OF U.S.A..,

Plaintiffs-Appellants,

and

NSK CORPORATION, NSK BEARINGS EUROPE, LTD.,

and NSK LTD.,

Plaintiffs,

and

NTN CORPORATION, NTN BEARING CORPORATION OF

AMERICA, AMERICAN NTN BEARING MANUFACTURING

CORPORATION, NTN-DRIVESHAFT, INC., and NTN BOWER

CORPORATION,

Plaintiffs-Appellants,

and

NTN-BCA CORPORATION,

Plaintiff,

and

INA SCHAEFFLER KG and INA USA CORPORATION,

Plaintiffs,

¥.

UNITED STATES,

Defendant-Appellee,

and

5la

THE TORRINGTON COMPANY

(now known as Timken US Corporation),

Defendant-Appellee.

February 6, 2007, Decided

February 6, 2007, Filed

THIS DECISION WAS ISSUED AS UNPUBLISHED OR

NONPRECEDENTIAL AND MAY NOT BE CITED AS

PRECEDENT. PLEASE REFER TO THE RULES OF THE

FEDERAL CIRCUIT COURT OF APPEALS FOR RULES

GOVERNING CITATION TO UNPUBLISHED OR NON-

PRECEDENTIAL OPINIONS OR ORDERS.

Before Rader, Circuit Judge, Archer, Senior Circuit Judge,

and Prost, Circuit Judge.

ORDER

A petition for rehearing having been filed by the Appel-

lant, UPON CONSIDERATION THEREOF, it is OR-

DERED that the petition for rehearing be, and the same

hereby is, DENIED.

The mandate of the court will issue on February 13, 2007.

52a

APPENDIX E

WORLD TRADE WT/DS322/AB/R

ORGANIZATION 9 January 2007

(07-0081)

Original: English

UNITED STATES — MEASURES RELATING TO

ZEROING AND SUNSET REVIEWS

AB-2006-5

Report of the Appellate Body

* * * *

1. Introduction

i. Japan and the United Staies each appeals certain

issues of law and legal interpretations developed in the Panel

Report, United States — Measures Relating to Zeroing and

Sunset Reviews (the “Panel Report”).' The Panel was

established to consider a complaint by Japan concerning the

calculation of margins of dumping by the United States based

on 2 methodology that disregards the amounts by which the

export prices are above the normal value in certain

transactions.”

* *£ * *

Vv. Zeroing As Such in Original Investigations, Period-

ic Reviews, and New Shipper Reviews

' WT/DS322/R, 20 September 2006.

? See Panel Report, paras. 2.1 and 7.1. The Panel noted that, “with

regard to periodic reviews and new shipper reviews, Japan challenges

zeroing not only with respect to the calculation of margins of dumping but

also with respect to the calculation of assessment rates.” (Panel Report,

footnote 630 to para. 7.1) (original emphasis).

53a

*x* * *

B. Determination of Margins of Dumping Based

on Transaction-to-Transaction Comparisons

in Original Investigations

As Article 2.4.2 of the Anti-Dumping

Agreement

* * * *

137. In the light of our analysis of Article 2.4.2 of the Anti-

Dumping Agreement, we conclude that, in establishing

“margins of dumping” under the T-T comparison method-

ology, an investigating authority must aggregate the results of

all the transaction-specific comparisons and cannot disregard

the results of comparisons in which export prices are above

normal value.**4

138. Accordingly, we reverse the Panel’s finding, in para-

graphs 7.143 and 7.259(a) of the Panel Report, that the United

States does not act inconsistently with Article 2.4.2 of the

Anti-Dumping Agreement by maintaining zeroing procedures

when calculating margins of dumping on the basis of T-T

comparisons in original investigations, and find, instead, that

the United States acts inconsistently with that provision.

* * * *

el Zeroing As Such in Periodic Reviews and New

Shipper Reviews

* * *

3 Articles 9.3 and 9.5 of the Anti-

Dumping Agreement and Article VI:2

of the GATT 1994

*“ Appellate Body Report, US — Softwood Lumber V (Article 21.5 -

Canada), para. 122.

54a

* * * *

166. In the light of these considerations, we reverse the

Panel’s finding, in paragraphs 7.222 and 7.259(b) of the Panel

Report, that the United States does not act inconsistently with

Articles 9.3 and 9.5 of the Anti-Dumping Agreement and

Article VI:2 of the GATT 1994 by maintaining zeroing

procedures in periodic reviews and new shipper reviews, and

find, instead, that the United States acts inconsistently with

these provisions.

* * * *

VI. Zeroing As Applied in Periodic Reviews

* * *

176. For these reasons, we reverse the Panel’s finding, in

paragraphs 7.227 and 7.259(c) of the Panel Report, that

zeroing, as applied by the United States in the 11 periodic

review determinations at issue in this appeal, is not

inconsistent with Articles 2.1, 2.4, 9.1, and 9.3 of the Anti-

Dumping Agreement and Articles VI:1 and VI:2 of the GATT

1994, and find, instead, that the United States acted inconsis-

tently with its obligations under Articles 2.4 and 9.3 of the

Anti-Dumping Agreement and Article VI:2 of the GATT

1994.

* * * *

Signed in the original in Geneva this 14th day of December

2006 by:

Giorgio Sacerdoti

Presiding Member

55a

Georges Abi-Saab A.V. Ganesan

Member Member

56a

APPENDIX F

WORLD TRADE RESTRICTED

ORGANIZATION WT/DSB/M/226

26 March 2007

(97-1261)

Dispute Settlement Body

20 February 2007

MINUTES OF MEETING

Held in the Centre William Rappard

on 20 February 2007

Chairman: Mr. Muhamad Noor Yacob (Malaysia)

* * * *

2. United States — Measures relating to zeroing and

sunset reviews

(a) Implementation of the recommendations of the DSB

* * * *

31. The representative of the United States said that his

country recognized that anti-dumping was a complicated area

and that the issue of “zeroing” was also complex. There was

nothing in the WTO Agreements that mentioned or addressed

“zeroing.” And as the Appellate Body had made clear in the

past, the best indicator of the intent of the negotiators was the

text itself. However, in this dispute the Appellate Body had

appeared to be trying to infer the intent of Members with

respect to the issue of “zeroing” without the benefit of a

textual basis. It was no surprise then that an interpretive

approach, based not on agreed text but on inference, should

raise a number of problems, both legal and practical.

y 4

57a

32. | The United States had provided for the convenience of

Members a written explanation of its objections to the

Appellate Body report.' For the reasons discussed at the 23

January 2007 DSB meeting and in the communication

distributed at the present meeting, the United States consider-

ed that the Appellate Body’s findings relating to zeroing

outside the context of average-to-average comparisons in

investigations were devoid of legal merit. And with regard to

findings on that limited context, the United States referred

Members to its past statements indicating that those findings

were not beyond serious criticism.

33... Wholly apart from their legal shortcomings, the

Appellate Body’s findings suggested forms of implementation

that simply made no sense from a policy perspective. For

example, the Appellate Body had found that dumping duties

might not be calculated and assessed on an import-specific

basis, but must instead be calculated for all the merchandise

of an exporter or producer. These findings suggested that

importers of higher-priced merchandise not responsible for

dumping must be penalized, either by seeing anti-dumping

duties reduced for their competitors who imported the lower

priced merchandise responsible for the dumping, or by them-

selves paying anti-dumping duties because of their com-

petitors’ conduct.

34. It was difficult to conclude that Members agreed upon

such an illogical outcome. The text did not support such a

conclusion, nor did the actions of the Members following the

completion of the text. As was well known, all the major

users of the anti-dumping instrument continued to zero

following the implementation of the Anti-Dumping Agree-

ment. Even after the Appellate Body reports on zeroing in the

average-to-average context, eight of nine impartial anti-

dumping experts agreed that the text did not prohibit zeroing

beyond that context. Were this a municipal court result, such

' Subsequently circulated in document WT/DS322/16.

58a

an illogical outcome would be a prime candidate for reconsid-

eration by the legislative branch. That was no less the case

here, and the United States submitted that Members take up

this issue, which affected the anti-dumping systems of a

number of Members, in the Rules negotiations. Having said

that, the United States wished to state that it intended to

comply in this dispute with its WTO obligations and would be

considering carefully how to do so. The United States would

need a reasonable period of time.

* * +

59a

APPENDIX G

WORLD TRADE WT/DS322/20

ORGANIZATION 8 May 2007

(07-1900)

Original: English

UNITED STATES — MEASURES RELATING TO

ZEROING AND SUNSET REVIEWS

Agreement under Article 21.3(b) of the DSU

The following communication, dated 4 May 2007, from the

delegation of the United States and the delegation of Japan to

the Chairman of the Dispute Settlement Body, is circulated in

accordance with Article 21.3(b) of the DSU.

The Representatives of the United States of America and

Japan wish to inform you that, pursuant to Article 21.3(b) of

the Understanding on Rules and Procedures Governing the

Settlement of Disputes (DSU), the United States and Japan

have mutually agreed that the reasonable period of time for

the United State: to implement the recommendations and

rulings of the Dispute Settlement Body (DSB) in the dispute

“United States — Measures Relating to Zeroing and Sunset

Reviews” (WT/DS322) shall be 11 months, expiring on 24

December 2007.

In addition, we wish to inform you that, in light of our

agreement, Japan no longer seeks to have the reasonable

period of time determined through a binding arbitration

pursuant to Article 21.3(c) of the DSU. We wish to extend

our appreciation and thanks to the arbitrator for his efforts in

this proceeaing.

We request that you circulate this notification to the

Members of the DSB.

60a

For the United States of America For Japan

- Peter F. Allgeier Ichiro Fujisaki

Ambassador Ambassador

6la

APPENDIX H

UNITED STATES — SECTION 129(c)(1) OF THE

URUGUAY ROUND AGREEMENTS ACT

(WT/DS221)

SECOND WRITTEN SUBMISSION OF THE

UNITED STATES OF AMERICA

March 8, 2002

* *£ *€ *

I. Canada Has Failed to Establish that Section 129(c)(1)

of the URAA Mandates a Breach of U.S. Obligations

Under the AD Agreement, the SCM Agreement, or

GATT 1994

* * * *

B. The Meaning of Section 129(c)(1) Is a Factual

Question That Must Be Answered by Applying

U.S. Principles of Statutory Interpretation

10. The United States has argued at length in its first

written submission, in its oral statement at the first Panel

meeting, and in its answers to the Panel’s questions, that

section 129(c)(1) does not breach WTO rules because

“prospective” implementation in WTO disputes involving

antidumping and countervailing duty measures requires a

Member to ensure that the new determination applies to all

merchandise that enters for consumption on or after the date

of implementation. However, even if Canada were correct in

arguing that date of entry is not the controlling issue, section

129(c)(1) can violate WTO rules only if it mandates the

actions that Canada alleges. If it does not do so, then

Canada’s claims must fail, regardless of what it means to

implement a new determination in a WTO-consistent manner.

11. It is well-established that municipal law consists not

only of the provisions being examined, but also domestic

62a

legal principles that govern the interpretation of those

provisions.® While the Panel is not bound to accept the

interpretation presented by the United States, the United

States believes that the Panel should give considerable

deference to the United States’ views on the meaning of its

own law.”

12... For purposes of ascertaining the meaning of section

129(c)(1) as a matter of U.S. law, U.S. courts and agencies

must recognize the longstanding and elementary principle of

U.S. statutory construction that “an act of Congress ought

never to be construed to violate the law of nations if any other

possible construction remains.” Murray v. Schooner Charm-

ing Betsy, 6 U.S. (2 Cranch) 64, 118 (1804). While

international obligations cannot override inconsistent require-

ments of domestic law, “ambiguous statutory provisions. . .

[should] be construed, where possible, to be consistent with

international obligations of the United States.”

C. Canada’s Arguments Fail to Establish that

Section 129(c)(1) Mandates Action Inconsistent

with WTO Rules

13. | Canada makes a number of arguments regarding why

section 129(c)(1) allegedly breaches various provisions of the

AD Agreement, the SCM Agreement, and GATT 1994. Each

of the arguments is a variant on a common theme, and each

arises from a common assumption. To quote Canada’s

response to a question from the Panel:

* See, e.g., Panel Report on United States — Section 301-310 of the

Trade Act of 1974, WT/DS152/R, adopted 27 January 2000, para. 7.108 &

n. 681 (“U.S. 301”).

* U.S. 301, para. 7.19.

'° Restatement (Third) of the Foreign Relations Law of the United

States, § 114 (1987) (Exhibit U.S.-11); and U.S. 301, note 681, in which

the panel recognized the existence of what is known in the United States

as “the Charming Betsy doctrine”.

63a

The language of section 129(c)(1), by limiting compli-

ance to future entries, has the effect of precluding the

Department of Commerce from taking action to comply

with the DSB ruling with respect to prior unliquidated

entries. As Canada understands U.S. law, section

129(c)(1) would be interpreted this way because other-

wise the express limitation to future entries contained in

that section would be meaningless. The language of

section 129(c)(1) precludes the Department of Com-

merce from applying the determination to prior unliqui-

dated entries.

Since Section 129(c)(1) directs the Department to apply

a new WTO-consistent determination to all unliquidated

entries entered on or after a particular date, section

129(c){1) precludes the Department of Commerce from

applying the new determination to unliquidated duties

made prior to the particular date. That is, the use of the

word “after” in section 129(c)(1) excludes any interpre-

tation that would allow the Department of Commerce to

apply the new determination to prior entries. Thus, by

virtue of U.S. statutory interpretation and administrative

law principles, the Department is precluded from

applying the new determination to prior unliquidated

entries.

14. Canada’s assumption, however, is not correct.

Canada’s error arises from a mistaken interpretation of the

term “determination” as that term is used in section 129(c)(1).

As the United States explains below, when the term is

properly understood, it becomes clear that Canada’s claims

and arguments do not establish that section 129(c)(1)

mandates WTO-inconsistent action.

15. Section 129(c)(1) states in its entirety:

'! Canada’s Responses to Questions, paras. 48, 49.

—

64a

tation.—

(1) Effects of determinations.—Determinations concern-

ing title VII of the Tariff Act of 1930 that are imple-

mented under this section shall apply with respect to

unliquidated entries of the subject merchandise (as

defined in section 771 of that Act) that are entered, or

withdrawn from warehouse, for. consumption on or

after—

(A) in the case of a determination by the

Commission under subsection (a)(4), the date on

which the Trade Representative directs the adminis-

tering authority under subsection (a)(6) to revoke an

order pursuant to that determination, and

(B) in the case of a determination by the admin-

istering authority under subsection (b)(2), the date

on which the Trade Representative directs the

administering authority under subsection (b)(4) to

implement that determination.

16. As the text demonstrates, the scope of section

129(c)(1) is actually quite limited. It only addresses the

treatment of entries that take place on or after the date of

implementation, and even then, it only addresses the

application of the particular determination issued under the

authority of section 129(c)(1) to those entries. It does not

address what actions Commerce may or may not take in a

separate determination in a Separate segment of the

proceeding (i.e., any separate review of the order), and thus

does not mandate that Commerce take (or preclude

Commerce from taking) any particular action in any separate

segment of the proceeding.’

'2 Section 351.102 of Commerce's regulations defines a segment of a

proceeding as follows:

6Sa

17. As the United States discussed in response to question

46 from the Panel, this point can be illustrated by considering

the case of a challenge to a Commerce Department final

dumping determination in an investigation. If the challenge

were successful, Commerce would make the necessary

changes in its methodologies and issue a new, WTO-

consistent determination.'? It would then apply that new

determination by setting a new cash deposit rate, which would

apply to all entries that took place on or after the

implementation date. It is this new determination that is the

“determination” referenced in section 129(c)(1).

(1) Jn general. An antidumping or countervailing duty proceed-

ing consists of one or more segments. “Segment of a proceeding” or

“segment of the proceeding” refers to a portion of the proceeding that

is reviewable under section 516A of the Act.

(2) Examples. An antidumping or countervailing duty inves-

tigation or a review of an order or suspended investigation, or a scope

inquiry under § 351.225, each would constitute a segment of a

proceeding.

'3 Section 129(c)(1) does not preclude USTR from directing imple-

mentation prior to the end of the reasonable period of time, and it does not

preclude Commerce from implementing within the reasonable period of

time. In both applications of section 129(c)(1) to date, USTR has directed

implementation, and Commerce has implemented, before the end of the

reasonable period of time. See United States — Anti-Dumping Duty on

Dynamic Random Access Memory Semiconductors (DRAMS) of One

Megabit or Above from Korea, Status Report by the United States,

WT/DS99/6, 17 January 2000, paras. 4, 8, 10 (explaining that USTR

issued its request in the DRAMS case on August 2, 1999, that Commerce

issued its new determination on November 4, 1999, and that the

reasonable period of time expired on November 19, 1999) (Exhibit US-

12); see also Exhibit US-9 (explaining that USTR issued its request in the

Stainless Steel case on April 18, 2001 and that Commerce issued its new

determination on August 28, 2001); United States — Anti-Dumping

Measures on Stainless Steel Plate in Coils and Stainless Steel Sheet and

Strip from Korea, Agreement Under Article 21.3(b) of the DSU,

WT/DS179/5, 1 May 2001 (explaining that the reasonable period of time

in the Stainless Steel case expired on September 1, 2001) (Exhibit US-13).

66a

18. If a company were then to request an administrative

review of what Canada terms “prior unliquidated entries,”

Commerce would conduct the administrative review and issue

a new determination. Since the administrative review

determination would not be the “determination implemented

under section 129(c)(1),” nothing in section 129(c)(1) would

preclude Commerce from applying its new, WTO-consistent

methodologies in the administrative review.'* Canada is

simply wrong to claim that section 129(c)(1) would preclude

Commerce from doing so.

19. The second scenario that Canada has raised is a

situation where the WTO challenge results in the revocation

of an antidumping or countervailing duty order because the

new, WTO-consistent determination results in a finding of no

injury, no dumping, or no subsidization. Under the terms of

section 129(c)(1), the revocation would apply to all entries

which took place on or after the date of revocation of the

order, so Commerce would instruct the U.S. Customs Service

to stop requiring cash deposits as of that date. In any

subsequent administrative review, Commerce would need to

decide what to do with respect to entries that took place prior

to the date of revocation.

20. | Canada has not challenged an actual application of

section 129(c)(1) in such a scenario, and Commerce has not

'* As Canada argued in the first Panel meeting:

[t]he law applied [in an administrative review] is the law as

interpreted by the Department of Commerce at the time that it makes

its administrative review decision. The Department of Commerce’s

interpretation may be quite different from the interpretation it

originally applied in the original investigation or in previous

administrative reviews. Examples are instances in which a U.S. court

has held that the Department of Commerce’s interpretation of the law

is incorrect or where the Department of Commerce has decided that a

different interpretation of the law is more appropriate.

See Canada’s Oral Statement at the first Panel meeting, para. 11 (emphasis

added).

67a

addressed such a scenario to date. The only impact of section

129(c)({1), however, is that Commerce would not determine

the fate of those pre-implementation entries in the revocation

determination itself. Section 129(c)(1) does not require

Commerce to apply duties to those entries,'> it does not limit

Commerce’s discretion in deciding how to administer the law

in separate segments of the proceeding with respect to those

entries, it does not limit judicial review of the results of those

separate proceedings, and it does not limit Commerce’s

obligation to implement the results of any such judicial

proceedings.'® Accordingly, section 129(c)(1) does not man-

date a breach of any of the provisions of the AD Agreement,

the SCM Agreement, or GATT 1994 that Canada cites.

21. Since section 129(c)(1) dves not mandate any

particular treatment of what Canada terms “prior unliquidated

entries” in any determination other than the particular one that

is issued under its terms, section 129(c)(1) could mandate a

breach of WTO rules only if the AD Agreement, the SCM

Agreement, or GATT 1994 contained an_ affirmative

obligation for Members to ensure that any implementation of

adverse DSB recommendations and rulings applied to both

pre- and post-implementation entries. None of the Agree-

ments contains such an obligation; none of the Agreements

even addresses what constitutes proper implementation in

WTO disputes. The only agreement that does address a

Member’s implementation obligations is the DSU, and

Canada has declined to pursue any DSU claims. Under the

'S Even the SAA states only that the entries “would remain subject to

potential duty liability.” SAA at 1026.

129(c)(1) would not violate WTO rules if Commerce “change[d] its

interpretation of U.S. law for other reasons, notably as a result of a

direction from a U.S. court.” See Canada’s Responses to Questions, para.

54. It also admitted that section 129(c)(1) “would not prevent a U.S. court

from directing the Department of Commerce to change the basis on which

it made definitive determinations ... .” See id., para. 51.

68a

DSU, a Member’s implementation obligations are prospective

only.’

* * * &

'’ The United States discusses below why, contrary to Canada’s

repeated assertions, it is in fact seeking through this dispute to establish a

right of retroactive relief in cases involving antidumping and

countervailing measures.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.