CIT Sustains ITC's Decision Not to Cumulate Brazil's Imports in Sunset Review

The suit was brought by various U.S. steel companies, led by Cleveland-Cliffs, which contested whether the cumulation decision preliminarily required a finding of injury to the U.S. market, the alleged inconsistent treatment of Section 232 measures and the reasoning of the cumulation decision itself.

'Circular' Analysis

Cleveland-Cliffs challenged the cumulation decision for relying on an "impermissibly 'circular' analysis," alleging that the commission relied on Brazil's "likely absolute volume" as the sole factor in its cumulation and final injury analyses, prematurely requiring a showing of material injury by Brazilian imports at the cumulation stage. The steel companies said the court has previously found cumulation decisions to be circular in this way when they are based on analyses of likely absolute volume.

They said this claim was "insensitive to why the court has previously disfavored" the consideration of likely absolute volume. The court doesn't impose a "reflexive taboo" on considerations of likely absolute volume at the cumulation stage, but what it does do is look at whether the ITC "complied with its statutory mandates by conducting independent analyses for both cumulation and the ultimate material-injury determination," the opinion said.

The "potential problem" of whether the ITC bases its injury and cumulation decisions on the same analysis is not unique to "likely import volumes as a factor," but instead rooted in whether the commission had "effectively performed the same analysis twice." The ITC can avoid this problem by ensuring that its analysis "is not a mere echo of the cumulation-stage analysis," Judge Gary Katzmann said.

In its conditions-of-competition analysis conducted as part of the cumulation decision, the ITC said that unlike from all but one of the other subject countries, cold-rolled steel goods from Brazil are subject to an absolute quota limit under the Section 232 tariffs. The commission noted that the absence of any absolute quotas on the subject goods from most other subject nations means that goods from these nations are in a position to compete for a larger volume of sales than the Brazilian firms that share the quota limits.

In the injury analysis, the commission looked at many different factors, likely volume being one of them. When considering them, the ITC said the Brazilian industry has little incentive to export significant volumes. The court said that while both analyses "relied on similar input data," the commission analyzed this data "in starkly different ways." The cumulation decision considered the quota as a factor in distinguishing Brazilian goods from other subject nations' goods, while the injury decision considered the quota as a factor supporting the finding that import volumes would be low in absolute terms, the court said.

As a result, the cumulation decision was not "circular" as the steel companies claimed, the judge found.

"There was nothing unlawfully circular about the ITC’s determination," said Michael Jacobson, counsel for Brazilian company CSN, in an email. "We stated throughout this proceeding including at oral argument that this is not a close case, and we are glad that the Court agreed."

Treatment of Section 232 Tariffs

Cleveland-Cliffs also said the ITC's treatment of the Section 232 measures was inconsistent with its prior treatment of these tariffs, basing the claim on five past ITC decisions. Katzmann said that since the steel company is only challenging the cumulation decision, it can't rely on prior injury decisions to establish a prior agency practice.

In cumulation decisions, the ITC looks at whether goods from a given country are likely to have no discernible adverse impact on the domestic industry, while the commission considers the impact of imports on the industry if the orders are revoked in injury decisions. Katzmann said these are "two different inquiries," noting that the injury decision requires a "holistic analysis" of the imports, while the "no discernible adverse impact" part of the cumulation decision "merely requires a finding that a set of imports clears a baseline discernability threshold for adverse impact."

Cumulation Decision

Cleveland-Cliifs also challenged the cumulation decision itself, arguing first that the ITC failed to show why differences between South Korea's and Brazil's export levels indicate that imports from the two nations would compete under different levels of competition. The judge said that the ITC clearly explained the Brazilian industry is less export-oriented than the South Korean industry, citing an internal staff report that detailed country-by-country export metrics of cold-rolled steel products.

Katzmann said that while the commission "could have more clearly explained the connection between the country-related data it cited and the broader point that the South Korean and Brazilian CRS industries differ in their export orientation," the "relevant standard" is not "ideal clarity."

The steel company also said the ITC failed to explain how differing Section 232 measures on non-Brazilian companies would translate to different conditions of competition. The judge said the commission "adequately explained" its position here, noting that the fact that Brazilian imports face a lower quota than South Korean ones amounts to a "qualitative difference in the receptiveness of the U.S. market to CRS imports from each country."

While this is a "contestable proposition," the court said it's "nevertheless a reasonable explanation for why section 232 quota levels are relevant to a conditions-of-competition analysis." Prior ITC decisions show a practice of "treating extraordinarily imposed import restrictions as generative of differences in conditions of competition.”

Cleveland-Cliffs also said the commission ignored evidence showing that Brazil was pressuring the Biden administration to revise the Section 232 quota on Brazil and that the administration had already liberalized the steel tariffs on other trading partners. Katzmann said evidence of a foreign nation's pressure on the U.S. president "does not compel a conclusion that the United States is likely to yield in the near future." In fact, the judge said, this pressure "might tend to establish the United States' resistance to the alluded-to lobbying efforts."

(Cleveland-Cliffs v. United States, Slip Op. 24-34, CIT # 22-00257, dated 03/20/24; Judge: Gary Katzmann; Attorneys: Neal Reynolds of King & Spalding for plaintiff Cleveland-Cliffs; Roger Schagrin of Schagrin Associates for plaintiff-intervenor Steel Dynamics; Alan Price of Wiley Rein for plaintiff-intervenor Nucor Corp.; Thomas Beline of Cassidy Levy for plaintiff-intervenor U.S. Steel Corp.; John Henderson for defendant U.S. government; Michael Jacobson of Hogan & Lovells for defendant-intervenor Companhia Siderurgica Nacional; and Chunlian Yang of Alston & Bird for defendant-intervenor Usinas Siderurgicas De Minas Gerais S.A. Usiminas)