United States Court of International Trade

Commerce’s Final Results were Sustained

Before the court  in Fresh Garlic Producers Association et al. v. United States, et al., Court No. 13-23, Slip Op. 15-77 (July 16, 2015) was plaintiffs’ USCIT Rule 56.2 motion for judgment on the agency record.  Plaintiffs Fresh Garlic Producers Association and several of its individual members, Christopher Ranch, L.L.C., The Garlic Company, Valley Garlic, and Vessey and Company, Inc. (collectively, “plaintiffs”), challenged the United States Department of Commerce’s (“Commerce” or the “Department”) final results of the seventeenth annual administrative review of the antidumping duty order on fresh garlic from the People’s Republic of China (“PRC”). Fresh Garlic from the PRC, 78 Fed. Reg. 36,168 (Dep’t of Commerce June 17, 2013) (final results of antidumping duty administrative review; 2010–2011), and accompanying Issues and Decision Memorandum, PD 297 at bar code 3139858-01 (June 10, 2013), ECF Dkt. No. 28 (“Issues & Dec. Mem.”) (collectively, “Final Results”). Defendant-intervenors Shenzhen Xinboda Industrial Co., Ltd. (“Xinboda”) and Hebei Golden Bird Trading Co., Ltd. (“Golden Bird”) (together, “mandatory respondents” or “respondents”) were the two largest exporters of Chinese fresh garlic by volume and were the two mandatory respondents selected by Commerce for individual examination in the administrative review.

Plaintiffs argued that the source Commerce selected to establish the price for the surrogate value of the raw garlic bulbs was less specific to the level of trade at which respondents purchased their garlic bulbs than other record evidence. According to plaintiffs, the value was not based on the best available information as to the surrogate price for the raw garlic bulbs. Defendant United States and mandatory respondents maintained, among other things, that, because the selected source used to price the garlic bulbs was based on a broad market average, it represented the best available information.

The parties placed on the record several sets of data from various proposed sources, including (1) 2009 Ukrainian garlic producer prices provided by the United Nations’ Food and Agricultural Organization’s Statistical Division (“FAO”) and (2) daily garlic prices from eight regional markets in Ukraine during the POR, published by Fruit-Inform (“FI”). See Mem. from David Lindgren, International Trade Compliance Analyst, to The File at 4, PD 193 at bar code 3108863-02 (Dec. 3, 2012), ECF Dkt. No. 28 (“Prelim. Surrogate Values Mem.”). In the Final Results, Commerce found that the FAO price “represent[ed] the broadest market average” because it was “a single annual price intended to represent all Ukrainian garlic production.” Commerce selected data from Ukraine because (1) it was among the countries the Department had identified as economically comparable to the PRC, (2) it was a significant producer of comparable merchandise, and (3) there was Ukrainian data Commerce could use to value the factors of production that was “both available and reliable.” Plaintiffs challenged Commerce’s determination to use the FAO data, rather than the FI data, to calculate the surrogate value for the raw garlic bulb inputs.

Because the FAO price, as a national average annual price, represented all Ukrainian garlic production over the entire year, while the FI price only accounted for a small fraction of Ukrainian garlic production from regional markets, it was reasonable for Commerce to find that the FAO price represents a broader market average than the FI data and to favor the use of the FAO data to value the raw garlic bulbs. Here, only a small proportion of the Ukrainian garlic bulb market were reflected in the FI data and that the data was based on regional prices, whereas the FAO data was for the whole country and represented an average price for all domestic garlic production. Thus, no party disputed, that the broad market average factor strongly supports Commerce’s selection of the FAO data over the FI data.

As for tax and duty exclusivity, faced with evidence that (1) the FI director stated that the FI prices were tax exclusive, (2) it was clear that a 20 percent VAT was required by law, and (3) the argument that sales away from the farmgate must have included the VAT, Commerce determined that the record was unclear as to whether the FI garlic bulb prices were tax exclusive. See Issues & Dec. Mem. at 16 (“Therefore, while there is some lack of clarity regarding the VAT in FI, it is . . . uncontested that [FAO] data are tax exclusive.”). Commerce’s findings regarding the tax exclusivity of the data were not unreasonable.

Commerce’s findings as to both level of trade and contemporaneity were also not unreasonable. First, as has been noted, Commerce determined that respondents’ garlic bulb inputs were not purchased at farmgate prices. Rather, mandatory respondents paid prices at a more advanced level of trade. It was also apparent that the FAO prices were likely close to farmgate prices, although there was at least some evidence indicating that they reflect a more advanced level of trade themselves. While there was some indication that there would be a note accompanying FAO data that contained costs beyond the farm gate, whether the actual data contains this level of detail was unclear. As to the level of trade of the FI prices, website printouts of several of the regional markets on the record, as well as a declaration made by FI’s editor-in-chief, support the conclusion that they are wholesale prices. The evidence found on these websites further indicated that the farmers selling their produce at each of these markets pay fees to the markets, including entrance fees and parking fees, which would likely be reflected in the prices paid by a buyer. This conclusion is supported by a declaration on the record made by FI’s editor-in-chief, which stated that “individuals or entities selling fresh garlic on the wholesale markets monitored by [FI] are required to pay an entrance fee (or a trading platform fee)” and “[t]he amount of the fee depends on the class and size of the seller’s vehicle and, thus, was related to the volume of goods offered by the seller.” The FI prices in the Preliminary Results, where Commerce used the FI data, were adjusted to take into account (remove) the costs represented by these fees.  Thus, the FI prices likely included costs not paid by mandatory respondents when they purchased their raw garlic bulbs, while the FAO data did not include costs that were included in respondents’ purchase prices.

Commerce found that “both the [FAO] price and the FI price data appear to be at a different level of trade and processing than respondents’ purchases and, without more information, it is not possible to determine whether one is more similar to respondent[s’] purchases of processed garlic bulb over the other.” On a level of trade spectrum with garlic purchased at farmgate prices (i.e., garlic that has undergone no processing) as one extreme and garlic purchased at wholesale prices (i.e., garlic that has undergone significant processing, storage, transportation, and payment of brokers’ fees) as the other, mandatory respondents’ garlic bulb purchases appear to be somewhere in the middle. However, the level of trade reflected by the FI data was sufficiently vague, that, faced with the imperfect information on the record, Commerce’s choice of the FAO data was not unreasonable. This was because the FAO data might well reflect prices for merchandise sold beyond the farmgate and the FI data appears to contain costs greater than those contained in the prices paid by mandatory respondents.

Finally, the court also agreed with the Department’s contemporaneity conclusions and found that, under the circumstances, indexing the FAO price to the POR was reasonable. This is because the FAO data was from calendar year 2009, which was relatively close in time to the POR (November 1, 2010 through October 31, 2011).  There was no record evidence to indicate that the market for garlic had substantially changed since 2009, and no party objected to Commerce’s method of indexing the price for inflation.

For all these reasons, the court sustained Commerce’s findings.