United States Court of International Trade

Commerce Determination Remanded in Part

In Aristocraft of America LLC. et. al. v. United States, Slip Op. 18-97, Court No. 15-00307 (August 9, 2018) before the Court was Commerce’s remand determinations regarding the agency’s calculation of irrecoverable amounts of VAT and the agency’s selection of Thai surrogate companies to calculate surrogate financial ratios. Previously, the Court had remanded these issues to Commerce to clarify the effects of Chinese law on the calculation of irrecoverable VAT and to clarify the importance of the practice of “drawing wire” in surrogate selection. For the following reasons the Court sustains Commerce’s determinations regarding the surrogate selections and remands again the VAT calculations.

The Court previously held that Commerce’s calculations of irrecoverable VAT, based on the FOB export value of the finished goods, “appeared inconsistent with Commerce’s definition of irrecoverable VAT as an un-refunded amount of VAT paid on inputs and raw materials.” Id. at 4-5. On remand, Commerce provided an explanation of how Chinese law “supports Commerce’s definition of irrecoverable VAT and resolves the apparent inconsistencies between the definition, and calculation, of the amount of irrecoverable VAT.” Id. at 5. The Court was “still confused and cannot understand how a reasonable mind would conclude that the amount of input tax actually deducted from Shanghai Wells’ VAT liability is “not relevant” to the adjustment of Shanghai Wells’ EP and CEP”. Id. at 11.  The Court remanded for further explanation.

Commerce selected financial statements for calculating surrogate financial ratios from three Thai companies. On remand, Commerce acknowledged that it prefers “financial statements from companies that draw wire from wire rod to produce identical or comparable merchandise in order to calculate the surrogate financial ratios”. Plaintiffs then argued the data from LS Industry alone represented the best available data. However, the Court held “Commerce reasonably concluded that “LS Industry’s financial statements are not superior to” the other companies and that all three were equal. Id. at 17.  The results were sustained.

Commerce Determination Regarding Hot Rolled Coils Sustained

In SeAH Steel VINA Corp. v. United States, Slip Op. 18-97, Court No. 14-00224 (August 13, 2018) before the Court was Commerce’s remand determinations regarding antidumping duties on oil country tubular goods from Vietnam. The Court had previously remanded for Commerce to reconsider the surrogate value of hot rolled coils, and the use of Argo Dutch data as a surrogate value. In addition, plaintiffs also argued that Commerce had acted in bad faith with regards to the investigation. For the following reasons the Court sustains Commerce’s determinations.

Plaintiff urged the Court to find that Commerce acted in bad faith, supporting allegations of malicious prosecutions by calling the results of the investigation arbitrary. “Bad faith is difficult to prove …essentially requiring the discovery of a smoking gun.” Id. at 4. Plaintiff had not produced any evidence of bad faith by Commerce, and the Court said plaintiff’s argument was unsupported by the record.

The previous remand required Commerce to adequately explain its valuation of hot-rolled coil using the HTSUS 7208.37.00 information. On remand, Commerce decided against using the HTSUS information because it was a basket provision and could obscure the data. Instead, Commerce opted to use market economy purchase data and called it the most specific data available. The Court said Commerce “has now given a more detailed explanation of its practice” and the use of the data was upheld. Id. at 7.

The Court ordered Commerce to reconsider its use of Argo Dutch data, because it included marine insurance cost, which was compiled using a per tonnage cost, and was adjusted using an Indian price index and was on the record in an illegible document. On remand, Commerce omitted valuations for marine insurance, disputed the assertion the data was compiled using tonnage cost and provided a clear copy of the data. Plaintiff argued Commerce’s actions in opening the record to supply a new copy of the data violated their due process rights, and that ambiguities still exist with the data.  The Court said plaintiff failed to demonstrate they had “been deprived of a protected right” and their due process rights were violated.  Id. at 11. The Court also said that “an examination of the document in question confirms that Commerce’s reading was a reasonable one” and there were no ambiguities for Commerce to further explain. Id. at 14.  The Court also sustained the brokerage and handling cost allocations.

Commerce’s Results in Seventh Administrative Review were Sustained

In Stanley Works (Langfang) Fastening Systems Co. Ltd. et.al. v. United States, Slip Op. 18-99, Court No. 17-00070 (August 13, 2018) before the Court was Commerce’s results in the seventh administrative review of antidumping duties on certain steel nails from China. Stanley objected to the results on three grounds that Commerce contravened regulations by self-initiating a targeted dumping analysis, that Commerce’s differential pricing analysis was an unreasonable interpretation of statute, and that the differential pricing analysis contravenes U.S. obligations under the World Trade Organization (“WTO”). For the following reasons the Court sustains Commerce’s final results in full.

Stanley argued that the final results violated 19 C.F.R. § 351.414 because Commence initiated a differential pricing analysis without an allegation that Stanley was engaged in targeted dumping. The Court said that although the allegation requirement did not apply to administrative reviews, the “appropriate statistical techniques” of the regulation did, and that the Court found that the appropriate statistical technique was used.  Commerce was free to self-initiate a targeted dumping analysis. Stanley also argued the Cohen’s d test was not an effective test, and Commerce’s results from the test were not permissible. Stanley argued the test was arbitrary and the data classifications used were not defined. The Court said “use of the Cohen’s d test in the context of a targeted dumping evaluation is not unreasonable and that it aids in Commerce fulfilling its obligation,” taking specific note that the test was widely used in many different fields. Id. at 26.  Stanley next argued that the results of the d test were unlawful because Commerce incorrectly calculated resulting statistics,” particularly the standard deviation Id. at 26.  The Court said “using a simple average to calculate the pooled standard deviation” was a reasonable decision by the agency and upheld the statistics. Id. at 30.  Moreover, the meaningful difference test, as applied is reasonable. Finally, in regards to the applicability of the WTO obligations the Court said “WTO decisions are irrelevant to the interpretation of domestic U.S. law” because the WTO bodies only interpret the terms of WTO treaties and agreements, Therefore, Stanley’s WTO arguments lacked merit.

The Court Clarified a Previous Order Regarding the Injunction to Ban Certain Fishery Imports

In Natural Resources Defense Council Inc., et. al. v. Wilbur Ross et. al., Slip Op. 18-100, Court No. 18-00055 (August 14, 2018) the Court clarified the applicability and scope of its previous injunction because of the governments motion to for clarification on the ruling regarding the ban of imported fish from Mexico. The case originated under the Marine Mammal Protection Act (“MMPA”) in an effort to help the endangered vaquita porpoise. The government argued the terms “incidental catching” and “taking of a marine mammal” should be interpreted under 50 C.F.R. § 216.3 because they were not specifically defined in the statute. The Court dismissed this argument, saying “by the regulation’s own terms, those definitions only apply to the part 216 regulations themselves.” Id. at 7. Next, the government argued the preliminary injunction could not “include imports of shrimp and chano caught in gillnets contrary to Mexican law because the Lacey Act and the Magnuson-Stevens Act statutorily ban fish harvested in violation of foreign law and impose steeper penalties than the MMPA.” Id. at 8.  The Court found the government’s argument unavailing because “Federal statutes can and do have complementary and overlapping objectives, and the existence of one source of enforcement authority does not render other statutory authorities inoperative.” Id. at 9. The government also argued the injunction was not immediately effective because they were required to take administrative steps under 50 C.F.R. § 216.24(h)(9) to carry out the Court’s Order. The Court reiterated that the injunction to ban imports from the four specified fisheries – shrimp, curvina, chano, and sierra, was “effective immediately as to all such imports, unless affirmatively identified as having been caught with a gear type other than gillnets or affirmatively identified as having been caught outside the vaquita’s range.” Id. at 12.