Trade Updates for Week of June 7, 2017

United States Court of International Trade


Decision Remanded Back to Commerce

In Itochu Building Products Co., Inc. et al. v. United States, Court No. 13-132, Slip Op. 17-66 (June 5, 2017), the Court reviewed the surrogate value date for steel wire rod, an input of steel nails, and the choice of financial statements.  This action challenged the U.S. Department of Commerce (“Commerce”)’s final results rendered in an administrative review of the antidumping (“AD”) duty order on certain steel nails from the People’s Republic of China (“PRC”), covering the period of August 1, 2010, through July 31, 2011. See Certain Steel Nails from the People’s Republic of China: Final Results of Third Antidumping Duty Administrative Review; 2010– 2011, 78 Fed. Reg. 16,651, 16,651 (Dep’t Commerce Mar. 18, 2013) (“Final Results”); see also Certain Steel Nails from the People’s Republic of China: Issues and Decision Mem. for the Final Results of the Third Antidumping Duty Admin. Review at 1, PD 359 (Mar. 5, 2013) (“I&D Memo”).

For purposes of constructing a surrogate value, Commerce relies on data from a market economy or economies to provide surrogate values for the various factors of productions (“FOPs”) used to manufacture the subject merchandise.  Commerce uses financial statements from producers of identical or comparable merchandise to yield surrogate financial ratios to calculate “general expenses and profit” for inclusion in normal value.  Here, while there were three data sources on record for calculating the surrogate value of steel wire rod – (1) Thai Global Trade Atlas (“GTA”) import data; (2) Ukrainian GTA import data; and (3) Ukrainian Metal Expert data – Commerce chose the GTA import data, because it was “comparably specific” to Metal Expert data. The court found that there was no substantial evidence to support the selection where the Metal Expert data and the GTA import data provided prices for rods with different diameters.  The GTA data provided prices for wire rods with a diameter of 14 mm and under; and the Metal Expert data reported prices for wire rods with a diameter of 6.5 mm to 8 mm.  Commerce’s only reasoning was that mandatory respondents’ diameter of 6.5 mm is “covered within” the GTA import data.  Moreover, Commerce does not state that carbon content was important than wire rod diameter to decide against the Metal Expert data. 

As for Commerce’s decision not to use the Ukrainian company Dneprometiz’s financial statements in the financial ratio calculations, because those statements were not public, the court found substantial evidence for such a decision.

However, what must be determined first is which data set for steel rod is superior, before determining what financial statements to use.   Commerce also may mix data sets from different countries if the Ukraine steel wire data is superior.  For these reasons, the court remanded to Commerce the choice of which data set to use in determining surrogate value and what financial statements to apply for the financial ratio calculations.


Sustained Remand Results

In Zhejian Native Produce & Animal By-Product Import & Export Group Corp. v United States and The American Honey Producers Association and the Sioux Honey Association Slip Op. 17-65, Court No. 04-00268 (June 1, 2017), Plaintiff challenged Commerce’s redetermination of an administrative review of a dumping order. Specifically, plaintiff challenged Commerce’s determination of the normal value of honey exported to the US. Plaintiff believed that Commerce failed to use the best available information to calculate the value, unreasonably calculated inflation adjustments and unreasonably failed to average two years’ worth of financial documents in calculating dumping margins.  Commerce argued that the remand results are reasonable, supported by the administrative record, and should be sustained.

To calculate the raw value of honey, Commerce used an article from 2000 as opposed to a similar one from 2001. The articles are about the price of honey in India, Commerce’s surrogate country for China. Id. at 10.  Commerce determines normal value for non-market economies by using surrogate values from similar market counties, and companies. Commerce also needs to use the best available information regarding the factors. The Court held that the record was strong enough to uphold Commerce’s decision to use the 2000 Article. The Court ruled this way because they believe the record reflects that Commerce was correct in finding that the 2001 article was unreliable because of unresolved price issues involving other nations. In addition, the 2000 article was the correct choice, because it weighed such information  as public availability, breadth of market, and specificity, and did not have unresolved issues regarding pricing. Id. at 16.

The next issues were Commerce’s inflation calculations and refusal to use the mean of two years’ worth of surrogate financial data.  The plaintiff felt that Commerce’s price calculations were unreasonable and cites a passage in the administrative record stating there is not “any organizations compiling prices” in India. Id. at 16. The article then provides prices from unidentifiable sources. Plaintiff argued that there was not enough public data to calculate surrogate margins and the prices in the letter should be included. Commerce chose to ignore the letter under belief that the record provided enough publicly available data.   The Court pointed out that Commerce’s regulations refer to a “preference to use publically available data”, and that Commerce had reviewed the documents in question. Id. at 18.  The court said that there was enough evidence on the record for Commerce to disregard the letter, as “the information in this document appeared to be prices obtained from sources not publically available.” Commerce should not have to change its methodology to account for nonpublic information in the letter.  The final issue was Commerce’s decisions to rely on 2001-02 financial statements of surrogate companies, as opposed to averaging 2001-02, and 02-03 statements. The Court pointed to the record saying that it is not Commerce’s normal practice rely on financial statements of surrogate companies, and that because more time from the POR was in the first year than the second it could unfairly skew the margins. The court said that this was enough evidence on the record for them to uphold Commerce.