The U.S. International Trade Commission has produced its court-ordered status report on its fourth review of antidumping duties on ball bearings from Japan and the UK.

Twice previously, the Court of International Trade has agreed with complaints filed by NSK and sent the ITC back to rework and justify its results.

This particular review began back in 2006, when the ITC published its initial decision in the five-year "sunset" review of antidumping duties on ball bearings from Germany, France, Italy, Japan and the UK.

article: ITC adjusts dumping duties on bearings
NSK, FAG and others appealed the decision, forcing the ITC to review it.

In June 2006, the ITC came back with its review decision its work was correct and that the antidumping duties on ball bearings would stay as-is. That was the first review 5251R9N7.

NSK and others appealed that finding to the Court of International Trade, but just for bearings from Japan and the UK. In September 2008, the CIT agreed with NSK and instructed the ITC to review its decision again, using a Bratsk analysis of non-subject imports : that is, reassess supply conditions within the United States, and in particular restructuring efforts by U.S. bearing manufacturers; and reexamine its findings in regard to UK bearing imports as a result of the other analyses.

The ITC performed its second review and published the results in May 2009, essentially reaffirming its original decision and the first review that removing duties would harm the U.S. bearing industry.

NSK, FAG and others appealed yet again to the Court of International Trade. In August 2009, the Court responded favorably to the companies, and instructed the ITC to review its methods and findings in regard to ball bearings from Japan and the UK. This would be the third review of the original decision.

Cit. Slip Op. 09-91
The CIT's instruction was essentially for the ITC to go back for an almost-unprecidented third review of the original decision.

In that decision, the Court ominously said: "The court finds that the ITC’s remand determination is neither supported by substantial evidence or in accordance with law for the reasons explained herein, and therefore remands the case to the agency for a second time to conduct further proceedings consistent with this opinion." The court chastised the ITC further, saying, "In examining the Remand Determination under the applicable standard of review, the court finds that the agency’s determinations here do not pass muster because the ITC failed to (1) fully comport with the court’s remand instructions and (2) meaningfully demonstrate a rational connection between the facts in the record and the conclusions reached."

The CIT went on to deeply rebuke the ITC for its methods, determinations, ignoring contrary evidence, acting contrary to law and the court's direction, sloppy reasoning, hasty conclusions, and a number of other issues which it outlined in considerable detail.

In its conclusion, the Court said, "For the foregoing reasons, the court holds that the Remand Determination is not supported by substantial evidence or in accordance with law. The ITC acted contrary to law when it failed to determine whether the subject imports are more than a minimal or tangential cause of likely injury to the domestic industry given the significant presence of non-subject imports in the domestic market. The ITC also failed to support its (1) decision to cumulate ball bearings from the United Kingdom with other subject imports and (2) analysis of the likely impact of subject imports on the domestic industry with substantial evidence."

The CIT issued five Orders to the ITC, with the new review to be published by February 2010.

The ITC completed that third review, essentially reaffirming its second review. The trade court analyzed that third review and has once again refused major portions of it, sending the ITC back for a fourth time.

article: Trade Court rebukes ITC once again for ball bearing dumping review
The only part of the ITC's determination that the court agreed with was that the U.S. ball bearing industry is in a weakened and, therefore, vulnerable condition. The ITC cited data proving the U.S. ball bearing industry has a 12.9% drop in capacity utilization between 2000 and 2005; a 22% decline in productivity; a deteriorated cost structure, including higher COGS to sales ration; and dwindling profits, proved by across-the board drops in operating income, gross profit and gross profit margins.

Otherwise, the court once again had issue with the ITC's impact analysis, finding that its accumulation involving bearings from the UK was flawed (for example, assuming UK bearing producers would immediately ramp up all of their excess capacity and ship all those bearings to the U.S. in every sales channel).

Similarly, the CIT found the, "Commission also relies on inadequate evidence in support of its analysis," made faulty or outrageous assumptions regarding the potential behavior of competitors in the U.S. market, or that contradicted each other.

In its analysis, the ITC made a number of combinations and assumptions involving the UK bearing industry's potential impact on U.S. producers, prompting the court to, "question the reasonableness of the Commission's statement, especially given that the agency fails to account for the dramatic fluctuation and strong downward trend in the value of the subject UK ball bearings sold in the U.S. since the first period of review. The significant downward change in subject imports' market share in terms of value since the first period of review -- between 20% and 40% -- also undercuts the Commission's rationale that the subject UK imports maintained a stable presence in the domestic market."

The ITC pointed out that UK ball bearings are found in various competitive sales channels in the U.S., but the court said "without a rational basis and relying on impermissible conjecture," it failed to prove that means UK producers will bring in more bearings if duties are reduced or removed, or that UK producers will be prompted to ramp up production to compete solely on price in the U.S.

The CIT also ordered the ITC to submit an interim report, which it has now done.

In this report, the ITC said it has taken on all the points ordered by the court, but also gave notice it, "will not be reopening the record," on the issue of the problematic diverse import evaluation conducted for the UK.

ITC interim status report - ball bearings from Japan and UK
The ITC's decision not to revisit the UK sales channel / pricing / volume issue is not likely to be well received in the CIT.

The ITC has now given parties until August 25 to file comments and September 29 for rebuttals.