                                       Slip Op. 06-131

               UNITED STATES COURT OF INTERNATIONAL TRADE

Before: Judge Judith M. Barzilay
____________________________________
CLEO INC, CRYSTAL CREATIVE           :
PRODUCTS, INC., and TARGET           :
CORPORATION,                         :
                                     :
             Plaintiffs,             :
                                     :
                     v.              :
                                     :
UNITED STATES,                       :                   Consol. Court No. 05-00336
                                     :                   Public Version
             Defendant,              :
                                     :
             and                     :
                                     :
SEAMAN PAPER COMPANY OF              :
MASSACHUSETTS, INC.,                 :
                                     :
             Defendant-Intervenor.   :
____________________________________:


[Plaintiffs’ Motions for Judgment on Agency Record denied.]

                                                                 Decided: August 31, 2006

Blank Rome, LLP (Frederick L. Ikenson), Larry Hampel, and Roberta K. Daghir, for Plaintiffs
Cleo Inc, and Crystal Creative Products, Inc.

Mayer, Brown, Rowe & Maw, LLP (Marguerite E. Trossevin), Kristy L. Balsanek, and James J.
Jochum, for Plaintiff Target Corporation.

Michael D. Panzera, U.S. Department of Justice, Commercial Litigation Branch, Civil Division;
(Mark B. Rees, Neal J. Reynolds, and James M. Lyons), U.S. International Trade Commission,
Office of the General Counsel, for Defendant.

Collier, Shannon, Scott, PLLC (Adam H. Gordon and Kathleen W. Cannon), for Defendant-
Intervenor.
Court No. 05-00336                                                                       Page 2


                                           OPINION

BARZILAY, JUDGE:              This action is before the court on Plaintiffs’ motions for judgment

on the agency record pursuant to USCIT Rule 56.2. The parties contest a final material injury

determination issued by an evenly divided United States International Trade Commission (“ITC”

or “Commission”), which found an industry in the United States materially injured by reason of

imports of certain tissue paper products from the People’s Republic of China (“China”) already

determined by the Department of Commerce (“Commerce”) to have been sold at less than fair

value (“LTFV”) in the United States. The court has jurisdiction pursuant to 28 U.S.C. § 1581(c)

(2000). For the reasons set forth below, the court upholds the ITC’s determination.

                                         BACKGROUND

       This case arises from an ITC investigation instituted on February 17, 2004, by petitioners

Seaman Paper Company of Massachusetts, Inc. (“Seaman” or “Defendant-Intervenor”),

American Crepe Corporation (“American Crepe”), Eagle Tissue LLC (“Eagle Tissue”), Flower

City Tissue Mills Co. (“Flower City”), Garlock Printing & Converting, Inc. (“Garlock Printing”),

Paper Service, Ltd., Putney Paper Co., Ltd., and the Paper, Allied-Industrial, Chemical and

Energy Workers International Union AFL-CIO, CLC. See Certain Tissue Paper Products and

Crepe Paper Products from China, 69 Fed. Reg. 8232-01 (Feb. 23, 2004) (initiation notice

(prelim.)). The petitioners alleged that domestic industries producing tissue paper and crepe

paper were materially injured by reason of dumped imports of tissue paper and crepe paper from

China. P.D. 1.1


       1
         Citations to documents contained in the public administrative record are designated as
“P.D.,” followed by the document number assigned by the ITC. Citations to documents
Court No. 05-00336                                                                       Page 3

       In April 2004, the ITC made an affirmative material injury determination in the

preliminary phase of its injury investigation. Certain Tissue Paper Products and Crepe Paper

Products From China, 69 Fed. Reg. 20,037 (Apr. 15, 2004), P.D. 62A. It found that there were

two domestic like products – tissue paper and crepe paper – and performed separate injury

analyses for the industries producing these products. See Certain Tissue Paper Products and

Crepe Paper Products from China, Inv. No. 731-TA-1070 (Preliminary), USITC Pub. 3682

(Apr. 2004), P.D. 70. After the ITC made its preliminary injury determinations, Commerce

issued final affirmative LTFV determinations for crepe paper and tissue paper from China on

December 3, 2004 and February 14, 2005, respectively. Notice of Final Determination of Sales

at LTFV and Affirmative Final Determination of Critical Circumstances: Certain Crepe Paper

from the People’s Republic of China, 69 Fed. Reg. 70,233-01 (Dec. 3, 2004); Notice of Final

Determination of Sales at LTFV: Certain Tissue Paper Products from the People’s Republic of

China, 70 Fed. Reg. 7475 (Feb. 14, 2005). The Commission then issued its final determination

based on a three-to-three split vote. See Certain Tissue Paper Products from China, 70 Fed.

Reg. 15,350 (Mar. 25, 2005), P.D. 307. The views of the Commission are published in Certain

Tissue Paper Products from China, Inv. No. 731-TA-1070B (Final), USITC Pub. 3758 (Mar.

2005) (hereinafter “Final Results”), P.D. 308. The period of investigation (“POI”) was July 1,

2003, through December 31, 2003. See Notice of Final Determination of Sales at LTFV: Certain

Tissue Paper Products from the People’s Republic of China, 70 Fed. Reg. at 7476.



contained in the business proprietary, confidential administrative record are designated “C.D.,”
followed by the document number assigned by the Commission. Confidential versions of the
ITC’s tissue paper views appear at C.D. 518 (majority “Confidential Views”) and 519
(“Dissenting Views”).
Court No. 05-00336                                                                       Page 4

       Plaintiffs Cleo Inc (“Cleo”), its wholly owned subsidiary Crystal Creative Products, Inc.

(“Crystal”), (collectively “Cleo/Crystal”) – domestic producers of tissue paper – and Target

Corporation (“Target”), a domestic purchaser of tissue paper, challenge the ITC’s tissue paper

determination. They appeal the ITC’s 1) finding that bulk and consumer tissue paper constitute a

single domestic like product; 2) attribution of the increase in Target’s imports of consumer tissue

paper to dumping despite Target’s special requirements for consumer tissue; 3) decision to

attribute to dumping the increase in Cleo/Crystal’s consumer tissue imports; and 4) analysis of

the data on injury and impact.

                                     STANDARD OF REVIEW

       The Court will uphold a determination by the Commission unless it is not supported by

substantial evidence in the administrative record or is otherwise not in accordance with law. See

19 U.S.C. § 1516a(b)(1)(B)(i) (2000). The ITC’s determination is “presumed to be correct,” and

the burden of proving otherwise rests upon the parties challenging the determination. 28 U.S.C.

§ 2639(a)(1).

       “Substantial evidence” is “such relevant evidence as a reasonable mind might accept as

adequate to support a conclusion,” taking into account the record as a whole. Universal Camera

Corp. v. NLRB, 340 U.S. 474, 477 (1951) (quotations and citations omitted). “‘[T]he possibility

of drawing two inconsistent conclusions from the evidence does not prevent an administrative

agency’s finding from being supported by substantial evidence.’” Matsushita Elec. Indus. Co. v.

United States, 750 F.2d 927, 933 (Fed. Cir. 1984) (quoting Consolo v. Fed. Mar. Comm’n., 383

U.S. 607, 619-20 (1966)); see Am. Silicon Techs. v. United States, 261 F.3d 1371, 1376 (Fed.

Cir. 2001). That Plaintiffs seeking a review
Court No. 05-00336                                                                           Page 5

       can point to evidence of record which detracts from the evidence which supports
       the Commission’s decision and can hypothesize a reasonable basis for a contrary
       determination is neither surprising nor persuasive. It is not the function of a court
       to decide that, were it the Commission, it would have made the same decision on
       the basis of the evidence.

Matsushita, 750 F.2d at 936. Thus, under the substantial evidence standard, the Court may not,

“even as to matters not requiring expertise . . . displace the [agency’s] choice between two fairly

conflicting views, even though the court would justifiably have made a different choice had the

matter been before it de novo.” Universal Camera Corp., 340 U.S. at 488; see also Grupo

Industrial Camesa v. United States, 85 F.3d 1577, 1582 (Fed. Cir. 1996). In sum, the Court

“may not reweigh the evidence or substitute its own judgment for that of the agency.” Usinor v.

United States, 28 CIT __, __, 342 F. Supp. 2d 1267, 1272 (2004).

                                            DISCUSSION

       Commerce and the ITC have distinct functions in antidumping proceedings. Upon receipt

of a petition, Commerce determines the scope of investigation by “determin[ing] that a class or

kind of foreign merchandise is being, or is likely to be, sold in the United States at less than fair

value.” 19 U.S.C. § 1673(i); see §§ 1673a, 1673d. If Commerce finds that subject merchandise

is being sold at LTFV, the ITC then must determine whether a U.S. industry is being injured,

threatened with injury, or materially retarded by reason of imports of that merchandise. §§ 1673,

1673a, 1673b. First, the ITC determines the scope of the “domestic industry” by defining the

“domestic like product” under investigation. See 19 U.S.C. § 1677(4)(A). The Commission then

makes either negative or affirmative injury determination. See 1673d(b). “[O]nly where

[Commerce's] and the ITC's determinations are both affirmative,” can Commerce issue an
Court No. 05-00336                                                                           Page 6

antidumping order.2 Badger-Powhatan v. United States, 9 CIT 213, 216, 608 F. Supp. 653, 656

(1985).


          A.     The ITC’s Finding of a Single Like Product

          To determine whether an industry in the United States is materially injured or threatened

with material injury by reason of imports of the subject merchandise, the Commission first

defines the “industry”3 and the “domestic like product.”4 See 19 U.S.C. § 1673(1)-(2). “The

Commission’s decision regarding the appropriate domestic like product is a factual

determination, where the Commission applies the statutory standard of ‘like’ or ‘most similar in

characteristics and uses’ on a case-by-case basis.” NEC Corp. v. Dep’t of Commerce, 22 CIT

1108, 1110, 36 F. Supp. 2d 380, 383 (1998) (citing Torrington Co. v. United States, 14 CIT 648,

652 n.3, 747 F. Supp. 744, 749 n.3 (1990), aff'd, 938 F.2d 1278 (Fed. Cir. 1991); Asociacion

Colombiana de Exportadores de Flores v. United States, 12 CIT 634, 638 n.5, 693 F. Supp.

1165, 1169 n.5 (1988)). “Although the Commission must accept the determination of Commerce

as to the scope of the imported merchandise sold at less than fair value, the Commission



          2
         For the purposes of § 1673, subject merchandise refers to “that merchandise upon which
both affirmative LTFV sales and material injury determinations have been made.”
Badger-Powhatan, 608 F. Supp. at 656.
          3
          “The term ‘industry’ means the producers as a whole of a domestic like product, or
those producers whose collective output of a domestic like product constitutes a major proportion
of the total domestic production of the product.” 19 U.S.C. § 1677(4)(A).
          4
         “‘[D]omestic like product’ means a product which is like, or in the absence of like, most
similar in characteristics and uses with, the article subject to an investigation under this subtitle.”
19 U.S.C. § 1677(10).
Court No. 05-00336                                                                         Page 7

determines what domestic product is like the imported articles Commerce has identified.” Id.

(citing Makita Corp. v. United States, 21 CIT 734, 748, 974 F. Supp. 770, 783 (1997)).

Consequently, “Commerce’s designation of the class or kind of merchandise sold at LTFV does

not control the Commission’s definition of the industry injured in its sales of like products.”

Hosiden Corp. v. Advanced Display Mfrs. of Am., 85 F.3d 1561, 1568 (Fed. Cir. 1996).

       In identifying a single like product, the ITC “disregards minor differences, and looks for

clear dividing lines between like products.” Nippon Steel Corp. v. United States, 19 CIT 450,

455 (1995) (not reported in F. Supp.). The ITC has employed the following factors in its “like

product” analysis: (1) physical appearance, (2) interchangeability, (3) channels of distribution, (4)

customer perceptions, (5) common manufacturing facilities and production employees, and

where appropriate, (6) price. See NEC Corp., 22 CIT at 1110. These factors are by no means

exhaustive.5

       Target claims that the Commission’s analysis in this case rested on the notion that there is

a legal presumption that the domestic like product is coextensive with the scope of the imports

under investigation and was therefore legally flawed. Target S.J. Mem. 10-11. Cleo/Crystal, on



       5
         Legislative history demonstrates that when Congress tasked the ITC with making injury
determinations in antidumping cases, it gave the ITC significant leeway in deciding what
constitutes “like products:”
        The ITC will examine an industry producing the product like the imported article
        being investigated . . . . The requirement that a product be ‘like’ the imported
        article should not be interpreted in such a narrow fashion as to permit minor
        differences in physical characteristics or uses to lead to the conclusion that the
        product and article are not ‘like’ each other, nor should the definition of ‘like
        product’ be interpreted in such a fashion as to prevent consideration of an industry
        adversely affected by the imports under investigation.
S. Rep. No. 96-249 at 90-91 (1979), reprinted in 1979 U.S.C.C.A.N. 381, 476-77
(emphasis added).
Court No. 05-00336                                                                         Page 8

the other hand, argues that the Commission imposed a stringent overlap requirement – “one that

tolerates far less ‘overlap’ in the factors when looking for clear dividing lines between the two

like products.” Cleo Reply 3. Plaintiffs have not demonstrated how the ITC’s analysis is

distorted by these supposed presumptions. The ITC expressly refuted that it employed the

presumption that the like product definition must be coextensive with the scope of Commerce’s

LTFV investigation. Def’s S.J. Mem. 18-19; see Acciai Speciali Terni S.p.A. v. United Staes, 24

CIT 1064, 1065 n.3, 118 F. Supp. 2d 1298, 1300 n.3 (2000) (stating that it is ITC’s task to

determine “what domestic product or products is like the imported articles Commerce

identified.”) Plaintiffs also claim that the ITC’s finding was not supported by substantial

evidence and was not in accordance with law with respect to the six factors that the ITC

employed to determine that bulk tissue paper and consumer tissue paper constitute a single like

product.6 As discussed below, the court’s review of the administrative record leads it to conclude

that the ITC’s finding of a single like product was supported by substantial evidence and in

accordance with law.

        1. Physical Appearance

       According to the ITC, the

       [s]ubject tissue paper products are produced from rolls of flat tissue paper (i.e.,
       jumbo rolls) and are cut to length sheets that are either white, colored, decorated,
       or customized in a variety of ways. They are sold either flat or folded and are
       typically used by businesses as a wrap to protect customer purchases or by


       6
         Plaintiffs argue that the split among the Commissioners supports their position. This
Court has held that “[s]uch a split in the evidence, however, is not fatal to the ITC's
determination. It is well-established that there may be substantial evidence on an administrative
record to support two inconsistent determinations.” Siderca, S.A.I.C. v. United States, 29 CIT
__, __, 374 F. Supp. 2d 1285, 1298 (2005) (citing Consolo, 383 U.S. at 620).
Court No. 05-00336                                                                         Page 9

       consumers to wrap objects, often in conjunction with gift bags. Key performance
       characteristics include appearance, strength, and durability.

Final Results at 3. The ITC established that “bulk tissue” is “sold in bulk to independent

retailers, department stores, specialty stores, catalog stores, cosmetic companies and

manufacturers, which typically use the tissue paper in their own businesses, often to wrap

customer purchases.” Final Results at 6. “‘Consumer tissue’ is sold packaged to various

retailers (e.g., mass merchants, warehouse discount clubs, specialty stores, party supply stores,

drug stores, and grocery stores) for retail sale.” Final Results at 6.

       The Commission found that bulk and consumer tissue paper share the same general

physical characteristics and uses. This position is solidly supported by the following evidence in

the record: 1) Both forms of tissue paper are made from flat tissue and consist of lightweight

paper with a gauze-like, fairly transparent character, Final Results at 6; Confidential Staff Report

at I-5; 2) Consumer and bulk tissue paper come in a variety of grades, colors, designs,

dimensions, quantities, and packaging, and both are sold primarily as white or solid color sheets,

Confidential Staff Report at I-6-I-9; 3) Consumer and bulk tissue paper may be sold in printed

form or undergo specialty treatment in small amounts, Final Results at 6-7; Confidential Staff

Report at I-11-I-12, I-22 & Tables I-1-I-2; and 4) Consumer and bulk tissue paper are used for

wrapping an item within a box, or bag or as lightweight gift wrap, Final Results at 7;

Confidential Staff Report at I-6-I-7.

       2. Manufacturing Processes

       The Commission found a reasonable similarity with respect to the production processes
Court No. 05-00336                                                                        Page 10

for bulk and consumer tissue paper.7 See Confidential Views at 9; Confidential Staff Report at I-

12-I-17, I-23-I-24 & App. D. Bulk and consumer tissue paper are both made from jumbo rolls of

flat paper. Final Results at 6; see Tr., In the Matter of Certain Tissue Paper Products and Crepe

Paper Products from China, Inv. No. 731 - TA - 1070 (Final) (Dec. 2004) at 17, P.D. 239

(hereinafter “Revised Tr.”) (testimony of George D. Jones, III, President, Seaman). Producers

making both forms of tissue paper reported that production takes place in the same facilities,

using overlapping equipment and employees. For example, one producer reported [[          ]], and

another reported [[   ]]. Confidential Staff Report at D-4. Bulk and consumer tissue paper are

printed on the same presses. Confidential Staff Report at I-15-I-16, I-24 & App. D; Revised Tr.

at 18-19, (Mr. Jones), 38-40 (Peter Garlock, President, Garlock Printing).

       With respect to manufacturing facilities and processes, Plaintiffs claim that there is a

dividing line between the two products, pointing out that nine of twelve of the U.S. producers

make only one product. In addition, the two companies that produce both products demonstrate a

[[   ]]. Target's S.J. Mem. 20. Notably, Plaintiffs point out that a small number of producers

that manufacture both types of tissue paper often produce them on different production lines or

with different equipment. Target's S.J. Mem. 20 (Final Results, App. 1, Tab. 1). Finally,



       7
        But see the views of the dissenting Commissioners:
       Of twelve producers, only four manufacture both bulk and consumer tissue, and
       only one of these manufactures significant quantities of both. The evidence
       indicates that for the minority of firms that manufacture both bulk and consumer
       tissue paper, both products are produced in the same facilities with common
       employees and similar processes. Nevertheless, consumer tissue paper requires
       either different production lines and/or specialized equipment for the distinct
       packaging. Moreover, at least one large purchaser requires a lengthy design phase
       for the production of consumer tissue paper.
Dissenting Views at 7; C.D. 519, App. 4.
Court No. 05-00336                                                                         Page 11

Plaintiffs ask the court to consider the fact that Seaman [[   ]] Target's S.J. Mem. 21. Plaintiffs

maintain that this agreement “belies” the government and Seaman's position that there is only

one like product. Target's S.J. Mem. 21. Nonetheless, as the Commission ultimately found,

these factors do not outweigh evidence in the record showing that most producers and importers

considered bulk and consumer tissue to be the same or similar products. Confidential Staff

Report at I-23-I-24 & App. D.

       3. Customer Perceptions and Interchangeability

       The government admits that the record was mixed regarding consumer perceptions and

interchangeability. Indeed, the data is mixed. Seven U.S. producers generally found that bulk

and consumer tissue paper were interchangeable, while five found them non-interchangeable.

Confidential Staff Report at I-24-I-25 & D-3-D4. [[     ]] indicated that the only similarity

between consumer and bulk tissue is the base tissue stock. That company pointed to differences

between consumer and bulk tissue paper based on the packaging, labeling, artwork, and folding

of paper within packages. Confidential Staff Report at I-24-I-25 & D-3-D4. Eight importers

affirmatively denied that there is interchangeability and five stated or suggested that they

consider bulk and tissue paper interchangeable. See Confidential Staff Report at D-10-D-11.

       Further, the Purchaser questionnaire revealed a limited consumer overlap between bulk

and consumer tissue paper. Confidential Staff Report D-6-D-7. Out of five purchasers of bulk

and consumer tissue paper, two perceived the products purchased as interchangeable, and one

distinguished the two merely by size. Confidential Staff Report at D-6-D-7. [[       ]] denied any

comparability between the tissue types. Confidential Staff Report at D-7. There is also evidence

that many purchasers bought only one form of tissue paper. See Confidential Staff Report at D-
Court No. 05-00336                                                                           Page 12

6-D-7. The data does not reveal a discernible pattern. Because it is not the court’s task to make

its own evaluation based on the evidence before it, but to find whether the agency’s finding has

reasonable support in the record, the court will not upset the Commission’s finding where

sufficient evidence buttresses the agency’s conclusion. See, e.g., NEC Corp., 22 CIT at 1111.

       4. Channels of Distribution and Price

       In terms of distribution channels and price, the government concedes that there was only

a limited level of overlap between the two types of tissue paper. Confidential Views at 8-9. In

fact, consumer tissue paper was sold primarily to retailers in 2003 ([[   ]] percent of such

shipments), while most domestic bulk tissue paper sales in 2003 were made to distributors

([[   ]] percent of such shipments). Confidential Staff Report at II-1 & Tables II-1-II-2.

Plaintiffs claim that the Commission erred in finding that there was even a limited overlap

between bulk and consumer tissue paper in terms of these distribution channels and price. See

Cleo/Crystal S.J. Mem. 20; Target S.J. Mem. 27-28. However, the record demonstrates some

overlap in the channels of distribution: [[   ]] percent of bulk tissue paper sales were made to

retailers, the channel in which most consumer tissue paper was sold, while [[     ]] percent of

consumer tissue paper sales were made to distributors, the channel in which most bulk tissue

paper was sold. Confidential Views at 8-9; Confidential Staff Report at Table II-2.

       Plaintiff Cleo effectively argues that this weak overlap reveals flaws in the ITC’s prior

position in Folding Gift Boxes from China, Inv. No. 731-TA-921 (Final), USITC Pub. 3480

(Dec. 2001): that an “overlap in terms of packaging quantities between [certain] . . . two

[products is] a significant factor contributing to the blurring of any distinction between bulk and

consumer tissue paper.” Cleo S.J. Mem. 21 (citing Confidential Views at 10 n.49). Cleo argues
Court No. 05-00336                                                                          Page 13

that examining the sheet-count overlap “in the context with the products being packaged and the

channel of distribution to which they are marked discloses the overlap to be illusory.”

Cleo/Crystal S.J. Mem. 21. Specifically, Cleo explains that if bulk tissue paper is

“overwhelmingly sold” by the ream (480 sheets) packaged in poly bags either as flat sheets or

quire-folded sheets, and consumer tissue is usually packaged for sale as a retail item in smaller

quantities of sheets (5 to 40 sheets), the overlap is minimal. However, as the ITC established, to

the extent that there is an overlap,8 the blurring in terms of packaging is not illusory, even in the

context of different channels of distribution.

       The ITC also found that the price of consumer tissue paper was generally higher than that

of bulk tissue paper. Confidential Views at 9; Confidential Staff Report at I-19, I-26-I-27. On

the other hand, as the Commission noted, the consumer tissue paper prices were more

comparable to bulk with respect to larger packaging sizes, suggesting that sheet quantities per

package played an important role in explaining price differences. Confidential Views at 9 &

n.48; Confidential Staff Report at Table V-5; C.D. 440 at Ex. 4. Finding this overlap significant

is a reasonable interpretation of the evidence. See NEC Corp., 22 CIT at 1111.

       Plaintiffs argue that the agency deviated from its prior practices, citing to several



       8
         The record shows that there are retail ready packages of seasonal consumer tissue folds
with sheet counts between 90-120 sheets and “club packs” containing up to 400 sheets. Thus,
while consumer tissue is often sold packaged in smaller quantities than bulk – in quantities
ranging from 5 to 40 sheets – it is also often sold in seasonal packages and club packs containing
from 90 to 400 (and even more) sheets, which are comparable in size to the packaging in which
some bulk tissue paper is sold. Confidential Views at 7; Confidential Staff Report at I-9, I-22 &
App. D; Amendment to Staff Report, C.D. 504 at I-10. Furthermore, although bulk tissue paper
is usually sold in flat sheets, and consumer tissue paper in folded sheets, bulk tissue paper is also
often sold in quire-folded sheets, while consumer tissue paper can be sold in unfolded flat sheet
form. Confidential Views at 7; Confidential Staff Report at I-8-I-10.
Court No. 05-00336                                                                          Page 14

decisions that involved analogous factual scenarios. For instance, Plaintiffs refer to Folding Gift

Boxes from China, where the ITC found that certain gift boxes sold to stores to give away to their

customers and gift boxes sold to merchants for resale were separate like products. Inv. No. 731-

TA-921 (Final), USITC Pub. 3480 (Dec. 2001). See also Automotive Replacement Glass

Windshields from China, Inv. No. 731-TA-922 (Final), USITC Pub. 3494 (Mar. 2002); Melamine

Institutional Dinnerware from China, Indonesia, and Taiwan, Inv. Nos. 731-TA-741-743 (Final),

USITC Pub. 3016 (Feb. 1997). Plaintiffs argue that in each case, the Commission correctly

found a clear division between the markets for consumer or retail goods and similar industrial or

non-consumer goods. Drawing parallels between the present case and these prior decisions,

Plaintiff asks the court to find the ITC’s decision contrary to law because of its failure to

adjudicate the case based on “the clear dividing line between the consumer and non-consumer

products.” See Target’s S. J. Mem. at 12.

       While this argument is appealing at first, there are critical distinctions between the

present case and these cases.9 In addition, when an agency departs from its prior decisions, it


       9
        The Commission explicitly explains how it distinguished Folding Gift Boxes from China
from this case:
       [T]he significant overlap in physical characteristics and uses, and in
       manufacturing facilities, processes, and employees evident on this record was
       lacking in Folding Gift Boxes. Entire phases of production (e.g., design and
       collating), involving different processes, facilities, and equipment, were unique to
       retail boxes as compared to give-away boxes . . . .
Final Results at 9 n.49. Similarly, in Melamine Institutional Dinnerware, the Commission found
that melamine institutional dinnerware and melamine retail ware were different like products
based on the fact that 1) there were clear physical appearance and distribution differences
between the two products, 2) producers and purchasers uniformly considered them different
products, and 3) the parties agreed that they were different like products. USITC Pub. 3016 at
10-13.
       In rebutting Plaintiff’s position, the government argues that the Commission’s like
product finding in this case resembles its findings in a number of previous determinations. See,
Court No. 05-00336                                                                           Page 15

must “‘explain the reasons for its departure,’” Hussey Cooper, Ltd. v. United States, 17 CIT 993,

997, 834 F. Supp. 413, 418 (1993) (quoting Citrosuco Paulista, 12 CIT at 1209), and here the

ITC did so by explaining why it did not divide the markets for consumer or retail goods and

similar industrial or non-consumer goods. See Final Results at 9 n.49; see also Citrosuco

Paulista, 12 CIT at 1209 (“[T]he Commission’s determinations must be based upon an

independent evaluation of the factors with respect to the unique economic situation of each

product and industry under investigation.”).

       “In reviewing the Commission’s like product findings under the substantial evidence test,

it is not the province of the courts to change the priority of the relevant like product factors or to

reweigh or judge the credibility of conflicting evidence.” NEC Corp., 22 CIT at 1111; see

Nippon Steel Corp. v. United States, No. 05-1404, 05 -1417, 2006 WL 2290991, at *3 (Fed. Cir.

Aug. 10, 2006) (quoting U.S. Steel Group v. United States, 96 F.3d 1352, 1357 (Fed. Cir. 1996))

(Commissioners “presumably are selected to be Commissioners based on their expertise in, inter

alia, foreign relations, trade negotiations, and economics. Because of this expertise,

Commissioners are the fact finders in the material injury determination: ‘It is the Commission’s

task to evaluate the evidence it collects during its investigation. Certain decisions, such as the

weight to be assigned a particular piece of evidence, lie at the core of that evaluative process.’”).

Thus, the court must afford deference to the Commission’s decision to give a greater weight to


e.g., Certain Pasta from Italy and Turkey, Inv. Nos. 701-TA-365-366 and 731-TA-734-735,
USITC Pub. 2977 (July 1996) at 8-9 (rejecting argument that dry pasta packaged for sale to “the
retail market" and dry pasta packaged in bulk for sale to industrial users were different like
products, and noting that similarities in products' basic physical characteristics, end uses, and
production processes outweighed differences between products with respect to their packaging,
channels of distribution, price, and fact products had only limited degree of interchangeability).
Court No. 05-00336                                                                           Page 16

the physical characteristics, end use, and production similarities between bulk and consumer

tissue paper as opposed to the differences in their distribution channels, pricing and

interchangeability, and to uphold the ITC’s conclusion that bulk tissue paper and consumer tissue

paper constitute a single like product.


       B.      The Commission’s Finding of Material Injury by Reason of Imports

       “An affirmative injury determination requires both (1) present material injury and (2) a

finding that the material injury is ‘by reason of’ the subject imports.” Gerald Metals, Inc. v.

United States, 132 F.3d 716, 719 (Fed. Cir. 1997) (citations omitted). The relevant statute

provides:

        The Commission shall make a final determination of whether –
               (A) an industry in the United States –
                       (i) is materially injured, or
                       (ii) is threatened with material injury, or
               (B) the establishment of an industry in the United States is materially
               retarded,
       by reason of imports, or sales (or the likelihood of sales) for importation, of the
       merchandise with respect to which the administering authority has made an
       affirmative determination under subsection (a)(1) of this section. If the
       Commission determines that imports of the subject merchandise are negligible,
       the investigation shall be terminated.

19 U.S.C. § 1673d(b)(1) (emphasis added). “In general [t]he term ‘material injury’ means harm

which is not inconsequential, immaterial, or unimportant.” 19 U.S.C. § 1677(7)(A). When

determining the causal connection between imports and material injury, the “ITC is required to

consider three factors . . . : 1) the volume of imports, 2) the effect of imports on prices of like

domestic products, and 3) the impact of imports on domestic producers of like products.” USX

Corp. V. United States, 11 CIT. 82, 84, 655 F. Supp. 487, 490 (citing 19 U.S.C. § 1677(7)(B)
Court No. 05-00336                                                                         Page 17

(1982)). In addition, the ITC “may consider such other economic factors as are relevant to the

determination regarding whether there is material injury by reason of imports.” 19 U.S.C. §

1677(7)(B)(ii).

                  1. Import Volume Finding

       “In evaluating the volume of imports of merchandise, the Commission shall consider

whether the volume of imports of the merchandise, or any increase in that volume, either in

absolute terms or relative to production or consumption in the United States, is significant.” 19

U.S.C. § 1677(7)(C)(i). The ITC found that the volume of subject imports had been significant

during the period examined in absolute and relative terms. It observed a sharp increase

throughout the POI, rising from [[    ]] million square meters in 2001 to [[   ]] million square

meters in 2002 and [[     ]] million square meters in 2003. Thus, the absolute volume of subject

imports increased approximately [[     ]] percent between 2001 and 2003, with the subject

imports gaining [[     ]] percentage points of market share during this period. Confidential Views

at 23-24. The ITC concluded that the “domestic market share [of the subject merchandise]

declined by approximately the amount that subject import market share grew, from 91.0 percent

in 2001 to 87.2 percent in 2002 and to 70.9 percent in 2003.” Final Results at 17 & Table IV-2.

Moreover, “[s]ubject import volume relative to production in the United States increased

throughout the POI, rising from [[    ]] percent in 2001 to [[   ]] percent in 2002 and to [[   ]]

percent in 2003.” Confidential Views at 24.

       In its analysis, the Commission considered volume trends for bulk and consumer tissue

paper. As the Commission found, the subject imports of bulk tissue paper increased from [[           ]]

square meters to [[     ]] square meters between 2001 and 2003. Confidential Views at 24-25.
Court No. 05-00336                                                                          Page 18

The subject imports of consumer tissue paper increased from [[     ]] square meters to [[    ]]

square meters between 2001 and 2003. Confidential Views at 25. Further, between 2001 and

2003, Target’s imports of consumer tissue paper increased by [[     ]] square meters, and

Cleo/Crystal’s imports of consumer tissue paper [[     ]] square meters. Thus, Target and

Cleo/Crystal accounted for [[    ]] percent of the total increase in subject import volume during

the POI. C.D. 498 (Importer Comparison Data Run Sheet); see Confidential Staff Report at IV-4

(“[[   ]] accounted for [[   ]] of subject tissue paper imports from China in 2003.”).

Importantly, the Importer Comparison Data Run Sheet indicates that Target’s share of growth of

the consumer tissue paper imports between 2002 and 2003 was approximately [[         ]] percent,

and Cleo/Crystal’s share about [[    ]] percent. C.D. 498; see also Hr’g Tr. 21.

       Plaintiffs urge the court to focus on the underlying reasons for increased imports rather

than the mere volume of imports. See Target S.J. Mem. 31; Cleo/Crystal S.J. Mem. 30-31. They

claim that they accounted for the vast majority of the consumer tissue paper imports in 2003 and

that their imports were non-injurious because they were not by reason of dumped merchandise.

See Target S.J. Mem. 31; Cleo/Crystal S.J. Mem. 29-32. Thus, they maintain that the

Commission failed to establish the requisite causal nexus between subject imports and the injury

to domestic industry required under 19 U.S.C. § 1673d(b).

       a. Target’s Imports

        Target claims that its imports of consumer tissue paper were non-injurious because they

“did not displace domestic production.” Target S.J. Mem. 31. Citing to several prior cases

where the Commission found that imports serving new or expanding markets without displacing

domestic production did not have a significant adverse effect, Target claims that it opened and
Court No. 05-00336                                                                         Page 19

expanded a new market for specialty consumer tissue paper. Target S.J. Mem. 31 (citing, e.g.,

Fresh Cut Roses from Colombia and Ecuador, Invs. Nos. 731-TA-684-685 (Final), USITC Pub.

2862 at 42 (Mar. 1995) (finding that “imports were sold into important new markets and did not

significantly displace domestic fresh cut roses in their existing markets”)). Since 2001, Target

has seen significant growth in a new market for consumer tissue paper “driven by consumers’

growing preference for gift bags, [sic] and Target’s innovative concept that introduced fully

coordinated, mix-and-match color programs.” Target S.J. Mem. 32-33 (citing Admin. Tr. at 202-

11, P.R. 239). Target explains that consumer tissue paper became part of a coordinated line of

gift-wrapping products unique to the company. Target S.J. Mem. 32-33.

       Target contends that domestic companies did not have the capacity for the kind of design,

color, and quality that Target required. Target S.J. Mem. 34. It explained that domestic

producers could not provide it with the specialized collated presentations and packaging that it

needs. See Revised Tr. at 211-12. Finally, Target maintains that prior to 2004, no domestic

industry actually attempted to meet its needs. In 2004, [[   ]] offered to supply Target with

consumer tissue paper; however, Target found that [[     ]] did not maintain a design team, which

itself would disqualify the company from two of Target’s programs. Decl. Deborah Kelley, ¶ ¶

7-8, Target’s Post-Hr’g Br., Att. A (Jan. 12, 2005), C.D. 441 (“For [one of Target’s programs],

[[   ]] would have to develop design capabilities.”). Target claims that the Commission unfairly

focused on one transaction between [[    ]] and Target to conclude that Target was purchasing

domestic consumer tissue. See Final Results at 23. Target’s Senior Buyer also affirmed that to

her knowledge, “none of the petitioners in this investigation have qualified as vendors to Target

for” two of its product programs. Decl. Deborah Kelley, ¶ 2, Target’s Post-Hr’g Br., Att. A, C.D.
Court No. 05-00336                                                                          Page 20

441. Finally, Target maintains that the Commission also incorrectly considered Target’s

purchases of bulk tissue from certain domestic sources, which it considers “entirely irrelevant to

the issue of whether the U.S. industry can meet Target’s special requirement for consumer

tissue.” Target S.J. Mem. 35 & n.92 (citing Confidential Views at 34).

       The Commission considered Target’s claim that it only purchased growing amounts of

subject consumer tissue paper imports because the domestic industry was unwilling or unable to

meets its demands. It focused on bulk and consumer tissue paper and concluded that the record

demonstrated that Target’s tissue paper needs could be met by domestic suppliers. Thus, one

domestic producer was [[      ]]. Seaman’s Post-Hr’g Br., Ex. 1, Answers to Commission’s

Questions at 27, C.D. 441; see also Confidential Views 33-34. In addition, one domestic

supplier reported that [[   ]]. See Confidential Staff Report at V-19. Furthermore, although

Target claims that it could not source certain specialty paper from the domestic industry, the ITC

concluded that “[s]ales of specialty tissue in relation to the overall U.S. market for tissue paper

appear small, and the record shows that the domestic industry competes for such sales.”

Confidential Views at 23; Confidential Staff Report at I-11 & Table I-2. Specifically, in 2003,

specialty tissue constituted [[   ]] percent of the domestic industry’s U.S. shipments of consumer

tissue paper, and [[   ]] percent of importers’ U.S. shipments of consumer tissue paper.

Confidential Staff Report at I-11. Overall, therefore, the Commission reasonably concluded that

Target could not argue that the domestic companies were unwilling to supply Target with tissue

paper.10


       10
         Further supporting its position, the Commission explains that “there is no consensus
within the industry as to what constitutes ‘specialty’ tissue paper.” Confidential Staff Report at I-
11. The Commission cites to several sources buttressing this observation. Confidential Staff
Court No. 05-00336                                                                        Page 21

       The court “‘must affirm a Commission determination if it is reasonable and supported by

the record as a whole, even if some evidence detracts from the Commission’s conclusion.’ In

short, we do not make the determination; we merely vet the determination.” Nippon Steel Corp.,

2006 WL 2290991 at *5 (emphasis added) (quoting Altx, Inc. v. United States, 370 F.3d 1108,

1121 (Fed. Cir. 2004)). Although Target’s share in the growth of the consumer tissue paper

imports between 2002 and 2003 was significant (approximately [[       ]] percent), and Target’s

“new market” theory is appealing, there is also reasonable support in the record that domestic

producers could and were willing to meet its needs during the period examined as the ITC found.

See Confidential Views at 34.

       b. Cleo/Crystal’s Imports

       Cleo/Crystal argues that the majority of Commissioners “did not properly take into

account the effect of Cleo/Crystal’s supply interruption and subsequent plant closure in 2003,

which were in no way due to subject imports, and of Cleo/Crystal’s increased, non-injurious

imports in 2003, which had become necessary, given the cessation of its domestic production.”

Cleo/Crystal S.J. Mem. 30. In October 2002, Cleo purchased Crystal, a tissue converter, and

simultaneously entered into a renewable supply contract with [[    ]], Crystal’s related paper-

making company, for tissue stock (or jumbo rolls) to be delivered to Crystal’s converting

operation before the end of 2003.11 See Cleo/Crystal's Post-Hr’g Br. (Jan. 12, 2005), App. at A-1

& Ex. 1 at 7-8, C.D. 440. However, in 2003, Cleo decided to terminate its production of


Report at I-11-I-12 & nn.56-58.
       11
           As the record showed, Crystal was the largest domestic supplier of tissue paper in the
U.S. market through [[ ]], when [[ ]]. Confidential Views at 13. Crystal had acquired its
tissue rolls from [[ ]]. Cleo/Crystal S.J. Mem. 6.
Court No. 05-00336                                                                         Page 22

consumer tissue following “the sudden and unexpected decision” by its supplier not to honor the

supply contract and the loss of its supplier of rotogravure printing services. Cleo/Crystal S.J.

Mem. 6. As a result, Cleo/Crystal claims that it could neither find an adequate source of roll

stock, nor a new rotogravure printing company because only flexographic printing (inherently

inferior in quality) was available in the United States. See Cleo/Crystal S.J. Mem. 24-25;

Confidential Views 20-21. Consequently, Cleo/Crystal decided that its only viable option was to

cease domestic production of consumer tissue and to increase imports.12 See Cleo/Crystal’s Post-

Hr’g Br., App. at A-2, A-4–A-7; Cleo/Crystal S.J. Mem. 8.

       Cleo/Crystal argues that instead of addressing this evidence, the majority of

Commissioners improperly focused on what they believed Cleo/Crystal should have concluded

regarding alternative domestic suppliers. Specifically, the Commission considered [[       ]] a

viable supplier of roll stock and decided that Cleo/Crystal’s printing needs could have been filled

by domestically available flexographic printing. See Confidential Views at 20-21.

       The parties do not dispute that as a result of its supplier’s shutdown in 2003, Cleo/Crystal

found itself in need of another supplier, but they disagree on whether Cleo/Crystal’s decision to

import resulted from the domestic industry’s inability to meet its production needs. In parallel,

Cleo/Crystal maintains that the cessation of its domestic production necessitated increased

imports; thus, the requisite causal link between imports and injury under 19 U.S.C. § 1673d(b)

cannot be met. See 19 U.S.C. § 1673d(b).

       Indeed, in determining whether subject imports were significant under 19 U.S.C.


       12
          In July 2003, [[ ]] purchased Crystal’s bulk tissue business, but not its consumer
tissue business. That is, [[ ]] purchased Crystal’s [[ ]]. See Cleo/Crystal’s Pre-Hr’g Br.
(Dec. 2, 2004) at 14-15 & Ex. 3; C.D. 378, App. 9.
Court No. 05-00336                                                                           Page 23

§ 1677(7)(C)(i), it is proper to consider the overarching requirement that there be a causal link

between imports and injury required by 19 U.S.C. § 1673d(b). The ITC reasonably rejected

Cleo/Crystal’s claim that it imported significant amounts of subject consumer tissue paper in

2003 only because it experienced a raw material supply shortage in that year and the domestic

industry could not meet its needs. Confidential Views at 19-21. First, the ITC found that even

prior to Cleo’s acquisition of Crystal, Cleo was already importing subject tissue paper [[     ]].

Final Results at 14. Cleo imported [[    ]] square meters of subject tissue paper from China in

2001 and then [[     ]] square meters in 2002. Final Results at 14; Amendment to Confidential

Staff Report at Table III-1 n.3, C.D. 495. The ITC determined that this volume of imports

constituted [[   ]] percent of its domestic production in that year. Final Results at 14;

Amendment to Confidential Staff Report at Table III-1 n.3, C.D. 495. Thus, the Commission

concluded that “Cleo was shifting substantial volumes of its sales to subject imports in 2001 and

2002, well before it experienced any raw materials shortage in 2003.” Cleo/Crystal S.J. Mem.

30-31.

         The Commission also found some evidence that, prior to the acquisition of its tissue

paper operations by Cleo, Crystal believed that the subject imports were harming its tissue paper

operations. Confidential Views at 19; see, e.g., Revised Hr’g Tr. at 26-27 (Ted Tepe, Vice

President, Seaman). In 2001, Crystal even sought legal advice concerning the possibility of filing

an antidumping petition against the subject imports. Confidential Views at 19. In addition, at

that time, Crystal’s investment bankers also reported that [[   ]] Cleo Pre-Hr’g Br. Ex. 2 Tab. 5

at 41, C.D. 378 (excerpt from [[    ]] report). These pieces of evidence reasonably support the

ITC’s conclusion that Cleo/Crystal contemplated shifting its paper tissue supply from the United
Court No. 05-00336                                                                           Page 24

States to China because it “viewed low-priced imports as a significant source of competition.”

Confidential Views at 19.

        The Commission’s finding that there was a viable domestic source of tissue paper also is

supported by the record. The ITC considered [[       ]] because [[    ]]. Amendment to

Confidential Staff Report at IV-8 n.24, C.D. 495. This evidence led the Commission to conclude

that “Cleo was more interested in continuing to shift its tissue paper supply overseas than it was

in seeking domestic sources of raw materials.” Cleo/Crystal S.J. Mem. 31.

        Similarly, the Commission’s rejection of Cleo’s claim that it began purchasing subject

imports because it lost its rotogravure printing company has support in the record. First, the

Commission found that “state-of-the-art flexographic printing, for which there is ample domestic

capacity, meets quality requirements of the tissue paper industry.” Confidential Views at 20-21

(citing [[   ]], USCIT Tel. Int. (Jan. 31, 2005), C.D. 481; Revised Hr’g Tr. at 40-41); see

Revised Hr’g Tr. 84 (testimony of Mr. Garlock, President, Garlock Printing & Converting, Inc.)

(“[W]e actually looked at Target’s current tissue line and found that we could print just about any

one of those designs flexographically.”). The Commission also established that rotogravure

printing, albeit of a slightly inferior quality than one available in China, was available in the

United States. Confidential Views at 21 (citing Confidential Staff Report at IV-8); see [[          ]],

USCIT Tel. Int. (Jan. 31, 2005).

        In this case, the Commission gave more weight to the testimony and assertions proffered

on behalf of certain domestic companies, such as [[      ]] and [[   ]], than those of Cleo/Crystal

and Target. However, the court cannot re-evaluate evidence in this case. See U.S. Steel Group,

96 F.3d at 1357 (“It is the Commission's task to evaluate the evidence it collects during its
Court No. 05-00336                                                                         Page 25

investigation. Certain decisions, such as the weight to be assigned a particular piece of evidence,

lie at the core of that evaluative process.”). In particular, this Court cannot second-guess the

ITC’s credibility determinations unless there is evidence undermining those determinations. See

Nippon Steel Corp., 2006 WL 2290991, at *9 (“The assessment of the proper weight to accord to

testimony is within the role of the Commission, not this court and not the Court of International

Trade.”).13

       Both Cleo/Crystal and Target advanced rigorous arguments concerning the significance

of their imports and their impact on the domestic industry. The Importer Comparison Data Run

Sheet to a large extent supported their respective positions because Target’s share of the growth

of consumer tissue paper imports between 2002 and 2003 was approximately [[          ]] percent, and

Cleo/Crystal’s share about [[    ]] percent. See C.D. 498; see also Ct. Hr’g Tr. 21. The court

acknowledges that business judgment played a significant role in the companies’ decision to

source their needs from China; however, the court is constrained by its standard of review to

uphold the ITC’s finding with respect to the significance of imports. See Nippon Steel Corp.,

2006 WL 2290991 at *5.

               2.      The Effect of Subject Imports on Domestic Prices


       13
          During oral argument, the government advanced certain interpretations that it did not
argue in its brief. It argued that the Commission’s rejection of Cleo/Crystal’s argument that at
the time Cleo/Crystal made a business decision to import roll stock paper the domestic industry
could not supply its demands was based on a credibility determination, which this Court cannot
second-guess. Ct. Hr’g Tr. 39. The government explained that the Commission looked at the
evidence and found roll stock available from domestic producers, specifically [[ ]], and
concluded that Cleo/Crystal was wrong. Ct. Hr’g 39:2-14. Likewise, the government maintains
that Cleo/Crystal’s claim that the rotogravure printing could not be adequately replaced with
flexographic printing was undermined by the Commission’s credibility determination that there
was not such a significant difference in quality between the two printing processes. Ct. Hr’g Tr.
41.
Court No. 05-00336                                                                         Page 26


       The statute further provides that in evaluating the price effects of subject imports, the

Commission shall consider whether

       (I) there has been significant price underselling by the imported merchandise as
       compared with the price of domestic like products of the United States, and
       (II) the effect of imports of such merchandise otherwise depresses prices to a
       significant degree or prevents price increases, which otherwise would have
       occurred, to a significant degree.

19 U.S.C. § 1677(7)(C)(ii). The significance of underselling need not be based on a finding that

underselling actually suppressed or depressed domestic prices. See Altx, Inc. v. United States, 25

CIT 1100, 1109, 167 F. Supp. 2d 1353, 1365-66 (2001).

       The ITC considered pricing data for four tissue paper products. Product 1 was white

tissue paper; product 2, solid color tissue paper (other than specialty tissue paper products);

product 3, combination (four print and four solid color) tissue paper; and product 4, white bulk

tissue. Confidential Views at 26; Confidential Staff Report at V-7, V-10 – V-12 Table V-2-V-5.

The ITC found that subject imports undersold the domestic product by comparing data on

domestic and importer prices for all four products. Confidential Views at 27. It found that the

“[s]ubject imports undersold the domestic product in 33 quarters [out of 45] by a combined

weighted average of [[    ]] percent.” Confidential Views at 27 (citing C.D., P.D. at Table V-7

(as revised by Mem. INV-CC-019)). It found that “the pricing data show[ed] some evidence of

price depression, but [did] not demonstrate significant price effects of imports on domestic

prices.” Confidential Views at 28. The Commission concluded that significant underselling by

subject imports led to substantial declines in the domestic industry’s market share.14 Confidential


       14

       The large transfer of market share from domestic to Chinese producers is further
Court No. 05-00336                                                                          Page 27

Views at 28-30.

        Plaintiffs argue that the ITC's finding of underselling is not supported by substantial

record evidence. Cleo/Crystal maintains that the ITC improperly combined price comparison

data for all four products. Cleo/Crystal S.J. Mem. 33; see Target S.J. Mem. 39. Specifically,

Cleo/Crystal claims that considering the data for each product separately shows no underselling.

With respect to product 1, Cleo/Crystal's argument is straightforward. The majority found

underselling in six of 15 quarterly comparisons, with margins ranging from [[        ]] percent to

[[    ]] percent, Confidential Views at 27, indicating that underselling did not occur in nine of 15

comparisons. Regarding product 2, however, Cleo/Crystal’s argument is tenuous. The

Commission found that subject imports undersold the domestic product in 12 out of 13

comparisons, with quarterly average margins ranging from [[       ]] percent to [[    ]].

Confidential Views at 27. Cleo/Crystal claims that this finding is unsupported by substantial

evidence because, as found by the dissenting Commissioners:

        The [[ ]]. In contrast, [[ ]]. Therefore, the limited comparisons preclude a
        probative analysis of the price data for product 2.

Dissenting Views at 24. Explaining that the tissue paper industry offers discounts based on

increased purchasing volume, Confidential Staff Report at V-3, Cleo/Crystal maintains that

“[[    ]]” Cleo/Crystal S.J. Mem. 34. However, looking at the relevant comparison table, the


       borne out by the fact that eleven of twelve responding purchasers reported that
       since January 2001 they had shifted purchases from U.S. producers to Chinese
       importers. Three of nine stated that price was the reason for the shift, while one
       of seven stated that, since January 2001, U.S. producers reduced their prices in
       order to compete with prices of Chinese imports.
Confidential Views at 29. In further support of the ITC’s position, [[ ]], reported that [[          ]].
Confidential Views at 29. Similarly, [[ ]]. Confidential Views at 29; Confidential Staff
Report at Table V-9, V-19 – V-20, V-22.
Court No. 05-00336                                                                           Page 28

numbers for U.S. sales to retailers are consistently higher than the numbers for the Chinese

counterparts. See Confidential Staff Report at V-10 Table V-3. In addition, the quantity of U.S.

sales to retailers declined, while the quantity of Chinese sales to retailers increased over the

period examined. See Confidential Staff Report at V-10 Table V-3. Thus, while Plaintiff's

argument is plausible, it fails to account for the entire data as it is subdivided with respect to

retailers and distributors.

        Regarding product 3, Plaintiff is correct that the U.S. sales data is available only for four

quarters, making the comparison less meaningful. See Confidential Staff Report at V-11 Table

V-4. As to product 4, Plaintiff concedes that the data supports the ITC's finding of underselling.

Cleo/Crystal S.J. Mem. 35; see Confidential Staff Report V-12 Table V-5.

        While viewing products 1 and 3 separately weakens the ITC's finding, the combined data

supports its determination. As explained by the government, Plaintiffs appear to believe that the

Commission’s “aggregated” analysis involves making underselling comparisons between pricing

products. The Commission, however, generally totals the number of underselling and overselling

analyses for its pricing products in its analysis “in order to assess whether, as a whole, its price

comparison data reflects consistent or prevalent price underselling throughout the market, as

evidenced by the underselling data for its comparison products.” Gov’t Resp. 37; see Altx, Inc.,

167 F. Supp. 2d at 1365 (“The significance of underselling in an investigation will necessarily

depend on the particulars of the product and industry at issue, not necessarily on the import of

certain percentages understood in the abstract.”); see also Citrosuco, 704 F. Supp. at 1087-88

(1988) (“[T]he Commission's determinations must be based upon an independent evaluation of

the factors with respect to the unique economic situation of each product and industry under
Court No. 05-00336                                                                           Page 29

investigation.”).

                3.        Impact on Affected Domestic Industry

        In examining “the impact of imports of [subject] merchandise on domestic producers of

domestic like products, but only in the context of production operations within the United

States,” 19 U.S.C. § 1677(7)(B)(i)(III),

        the Commission shall evaluate all relevant economic factors which have a bearing
        on the state of the industry in the United States, including, but not limited to –

        (I) actual and potential decline in output, sales, market share, profits, productivity,
        return on investments, and utilization of capacity,
        (II) factors affecting domestic prices,
        (III) actual and potential negative effects on cash flow, inventories, employment,
        wages, growth, ability to raise capital, and investment,
        (IV) actual and potential negative effects on the existing development and
        production efforts of the domestic industry, including efforts to develop a
        derivative or more advanced version of the domestic like product, and
        (V) in a proceeding under part II of this subtitle, the magnitude of the margin of
        dumping.

        The Commission shall evaluate all relevant economic factors described in this
        clause within the context of the business cycle and conditions of competition that
        are distinctive to the affected industry.

19 U.S.C. § 1677(7)(C)(iii).

        The Commission concluded that subject imports of tissue paper had a significant impact

on the domestic industry. In its analysis, the Commission examined the production, trade, and

financial data of the domestic industry and concluded that the industry’s condition declined

considerably during the period examined. Between 2001 and 2003, domestic output fell [[              ]]

percent, capacity utilization [[    ]] percent, domestic shipments [[    ]] percent, and net sales

[[   ]] percent. Confidential Views at 30-32. The number of workers employed by the industry

fell from [[   ]] to [[    ]] in the same period, and total wages declined as well. Confidential
Court No. 05-00336                                                                            Page 30

Views at 31. In addition, the industry’s profitability levels simultaneously fell, with operating

income falling from [[    ]] to [[   ]] and operating profit margins falling from [[   ]] percent to

[[   ]] percent. Confidential Views at 32.

       Cleo/Crystal claims that its decision to “shutdown [its plant] was not due to subject

imports and, as a consequence, it would be a fatal analytical error to combine Cleo/Crystal’s

various declining business and financial indicators with the indicators of other domestic

producers” in evaluating the impact of subject imports domestic industry. Cleo/Crystal Reply 12.

Specifically, it argues that “[i]n the consumer segment, the [[   ]].” Cleo/Crystal S.J. Mem. 38

(citing Confidential Staff Report at C-8, Table C-3A, C-7, Confidential Staff Report). For the

same reason, Plaintiff invites the court to exclude Cleo/Crystal’s imports data from the [SG&A15

values for consumer and all tissue paper to show that SG&A values did not decline contrary to

the ITC’s findings]. Cleo/Crystal Reply 12. Furthermore, Cleo/Crystal suggests that the

Commission disregarded that the “[[      ]] not imports.” Cleo/Crystal Reply 12.

       Plaintiff’s argument for exclusion of its data from the Commission’ calculations is faulty

because it is based on a circular logic. Only if the court rejects the ITC’s reasonable finding that

Cleo/Crystal’s imports were significant does that argument stand. As addressed earlier, the

Commission reasonably found that record evidence did not support Cleo’s claim that it was

unable to replace its lost raw material supply or to obtain printing services domestically.

Confidential Views at 33-34. This finding, in turn, legitimizes the ITC’s decision to include all

domestic producers and resellers in its calculations, including Cleo/Crystal. Further, the


       15
         Selling, General, and Administrative Expenses. Labor cost and SG&A are considered
to be non-import causes of stress when evaluating industry conditions. See Cleo/Crystal S.J.
Mem. 37.
Court No. 05-00336                                                                        Page 31

Commission found that the industry’s increased costs during the POI did not account for the

industry’s declining sales and production volumes. See Gov’t Resp. 39; Confidential Views at

34. Instead, sales declines exacerbated “the increased unit costs of the industry, which grew as

production and sales volumes fell.” Gov’t Resp. 39 (citing Confidential Views at 34). Plaintiffs

do not point to any evidence to contradict this conclusion.

       Plaintiffs also argue that the ITC was incorrect in combining bulk tissue and consumer

tissue data in analyzing the domestic industry trends. They insist that “even if, arguendo, there

were only one like product, there are two distinct market segments in which consumer and bulk

tissue paper are sold.” Cleo/Crytal S.J. Mem. 37; see Cleo Reply 13 (arguing that “segment

analysis” would be appropriate because Cleo/Crystal’s operations were separated in terms of its

bulk tissue and customer tissue production). The ITC considered separately the volume trends

and pricing trends for bulk tissue paper and consumer tissue paper products in its analysis “when

appropriate.” Confidential Views at 17 n.84; see e.g., Confidential Views at 17 (demand), 22-23

(substitutability). The ITC found that the two forms of tissue paper were not sufficiently

differentiated to warrant treating them as constituting different market segments. Confidential

Views at 17 n.84. The ITC’s task is to assess whether the industry “as a whole” has been injured

by the subject imports. See Copperweld Corp. v. United States, 12 CIT 148, 165-66, 682 F.

Supp. 552, 569-70 (1988) (finding that language in 19 U.S.C. § 1673d(b)(1) and § 1677(4)(A)

(1980 & Supp. 1986) “makes manifestly clear that Congress intended the ITC [sic] determine

whether or not the domestic industry (as a whole) has experienced material injury due to the

imports”); Nippon Steel Corp., 19 CIT at 471 (holding that ITC is not required to conduct

specific segmented market analysis). Plaintiffs did not demonstrate how the ITC’s decision not
Court No. 05-00336                                                                             Page 32

to segment the markets for material injury is unsupported by record evidence or contrary to law.

           Finally, Plaintiffs challenge the ITC’s use of one set of financial data over another for

[[      ]] in evaluating the domestic industry’s condition. [[    ]] first submitted its 2003 financial

data for the fiscal year ending in June. See Confidential Staff Report at VI-1 n.1. That data did

not capture [[      ]] purchase of [[   ]] bulk business in July 2003. See Target Resp. Letter 1;

Confidential Staff Report App. C. Thus, while [[         ]] bulk sales volume disappeared from the

data, [[     ]] corresponding increase in production of bulk tissue does not appear in this data

submitted by [[       ]]. Target Resp. Letter 1; Confidential Staff Report App. C. The ITC

requested that the [[      ]] submit data for fiscal year 2004. See Confidential Staff Report at VI-1

n.1. The ITC then prepared two sets of charts indicating trends in the domestic industry’s

financial data from 2001 to 2003 using two different sets of data. The first set of charts

incorporates the three years of financial data for [[     ]] ending with fiscal year 2003 results. See

Confidential Staff Report Tables VI-1-VI-3 & App. C; see Gov’t Resp. Letter 3. The second set

covers the three years of financial data for [[     ]] ending with its fiscal year 2004 results. See

Confidential Staff Report App. E. Plaintiffs claim that the ITC should have used the 2004 fiscal

year data in its evaluation of the industry’s performance.

           In its analysis, the ITC considered both sets of data. See Confidential Views at 32 n.165.

Importantly, both sets show notable declines in the industry’s conditions during the POI. For

example, looking at the first set of data, the domestic industry’s net sales decreased from [[         ]]

square meters in 2001 to [[       ]] billion square meters in 2003, or [[   ]]. See Confidential Staff

Report Table C-1. The second set of data indicates a decline from [[          ]] square meters in 2001

to [[      ]] square meters in 2003, or [[   ]] percent. See Confidential Staff Report Table E-1.
Court No. 05-00336                                                                          Page 33

Remand would be proper if the ITC relied on erroneous or incomplete data. See, e.g., Int’l

Imaging Materials, Inc. v. U.S. Int’l Trade Comm’n, Slip Op. 06-11, at 34-35, 2006 WL 270156

at **11-12 (CIT Jan. 23, 2006). However, other comparisons, such as profits and operating

income, indicate that Plaintiffs did not demonstrate that the use of the alternative data for [[   ]]

would have changed the ITC’s conclusion that there were declines in domestic industry

performance. Compare Confidential Staff Report Table C-1, with Confidential Staff Report

Table E-1. Plaintiffs sidestep the ITC’s finding that bulk and consumer tissue paper were part of

the same like product, and pinpoint significant differences in numbers confined to the industry’s

bulk tissue paper operations. Plaintiffs do not show how the use of 2004 fiscal year data for

[[   ]] would have changed the observed downward trends in operating performance of the

domestic industry.16 Even if significant bulk shipments were included in the financial data, the

ITC’s ultimate conclusion has sufficient support in that alternative data. See Confidential Staff

Report Table E 1.

        The use of the 2004 fiscal year data for [[    ]]. See Cleo/Crystal Resp. Letter 2;


       16
           The court rejects Defendant and Defendant-Intervenor’s interpretation of USCIT Rules
81(i) and 56.2(c) that Plaintiffs raised this argument before the court in a belated fashion. See
Gov’t Resp. Letter 4; Seaman Resp. Letter 1. Initially, Cleo/Crystal brought the issue to the
court’s attention with respect to the dissenting Commissioners’ findings, arguing that their
analysis of the bulk tissue industry was erroneous due to its use of the 2003 fiscal year financial
data for [[ ]]. Thus, if the court were to adopt Plaintiffs’ position that consumer and bulk
tissue paper be analyzed separately, the court would have to use the 2004 fiscal year data for
[[ ]]. See Cleo/Crystal S.J. Mem. 39 n. 102. Plaintiffs further pursued this argument and its
variations in Cleo/Crystal’s Reply Brief and during oral argument.
        The parties do not dispute that this issue was properly raised in the administrative
proceedings. See Target Resp. Letter 1-2; Cleo/Crystal Resp. Letter 1-2; Seaman Resp. Letter 2.
Cleo/Crystal first raised the financial data issue in their post-hearing brief. See C.D. 422, at 10-
12. After [[ ]] submitted financial data for fiscal year 2004 and the ITC reviewed it deciding to
use the 2003 fiscal year data, Cleo/Crystal again raised the issue in its Final Comments. See
Cleo/Crystal’s Final Comments at 10-12, C.D. 514.
Court No. 05-00336                                                                         Page 34

Confidential Staff Report at E-4 Table E-2. Capitalizing on this trend, Cleo/Crystal more

specifically argued that this data, combined with consumer tissue data, covering all domestic

producers except for Cleo/Crystal, would show positive trends. Cleo/Crystal Resp. Letter 3. The

court rejects this argument because it is based on the premise that Cleo/Crystal should have been

excluded from the investigation as a domestic producer and importer without sufficient evidence

to support it.

        The court finds that substantial evidence supports the Commission’ finding that the

domestic industry’s performance declined over the period examined. The ITC determined that

the domestic industry was materially injured based on declines in the industry’s production,

capacity utilization, shipments, sales, employment, and profitability levels – all indicating that

the subject imports had a significant adverse impact on the domestic industry.

                                           CONCLUSION

        Having reviewed the underlying record, this court concludes that the Commission's

determination that consumer and bulk tissue paper constitute a single like product and that the

domestic industry was injured as a result of increased imports of the subject merchandise is

supported by substantial evidence and otherwise in accordance with law.



   August 31, 2006                                              /s/ Judith M. Barzilay
_____________________________                                 ______________________________
    New York, NY                                                 Judith M. Barzilay, Judge
                                            ERRATA


Please make the following changes to Cleo Inc, et al. v. United States, Consol. Court No. 05-
00336, Slip. Op. 06-131 (CIT Aug. 31, 2006).


Page 3:        Replace “The period of investigation (“POI”) was July 1, 2003" through
               December 31, 2003" with “The Commission’s period of investigation (“POI”)
               was January 1, 2001, through December 31, 2003.”


Page 15:       In the last sentence of footnote 9, insert “that” between “and fact” and “products
               had only limited degree of interchangeability.”


Page 25:       In the first full paragraph, replace “USCIT Tel. Int.” with “USITC Tel. Int.”


October 3, 2006
