United States Court of International Trade

Commerce’s Decision Sustained in Less than Fair Value Sales Determination

Before the Court in Dong-A Steel Company et. al. v United States et. al. Slip Op. 18-134, Court No. 16-00201 (October 3, 2018) was the affirmative less than fair value sales determination in the antidumping investigation of heavy walled rectangular welded pipes from Korea. Plaintiffs, the largest importers of subject merchandise, challenged Commerce’s determination on six grounds. These were, the decision to use the earlier of the invoice date or the shipment date as the date of sale, the decision to assign full costs to non-prime merchandise, the decision to adjust plaintiff’s reported input costs for merchandise that was identical except for paint, the decision to compare merchandise on a theoretical weight basis, the decision to deny a constructed export price offset, and the decision to use the zeroing methodology. For the following reasons the Court sustained Commerce’s determination in full.

“In identifying the date of sale … Commerce normally will use the date of invoice.” Id. at 9. However, “Commerce may use a date other than the date of invoice if … a different date better reflects the date on which the exporter or producer establishes the material terms of sale.” Id. The Court believed that Commerce had correctly applied the standard by applying the later of the dates and that plaintiffs had failed to establish that another proposed date was a better reflection of the establishment of a sale.  The next issue was if Commerce’s decision to assign full costs to non-prime merchandise was supported by substantial evidence. “Commerce seeks to determine whether it is possible to use the non-prime merchandise in the same applications as the prime merchandise.” Id. The Court said there was substantial evidence to support Commerce’s decision because customers could use plaintiff’s “prime and non-prime products in any applications for which they consider the products suitable.”  Id. at 18.

The next issue was the adjustment of reported input costs for products that were identical except for paint. In determining cost, “an agency may either accept financial records … or reject the records if accepting them would distort the company’s true costs.” Id. at 21. The Court said Commerce’s adjustment was supported by substantial evidence because the agency “found that the significant cost differences between the two product control numbers could not be explained by the physical characteristic of one being painted and the other not painted” leading to distorted cost. Id. at 22.  The next issue was whether Commerce erred in deciding to compare merchandise weight on a theoretical basis, based on a standard industry formula. The court concluded that Commerce’s choice to use theoretical weight was reasonable and based upon substantial evidence on the record because “utilizing theoretical weight would not decrease any distortions in the calculation compared to actual weight.” Id. at 27. 

The next issue was if Commerce erred in deciding to deny a constructed export price (“CEP”) offset for plaintiffs. Commerce will grant a CEP offset when “normal value is established at a level of trade which constitutes a more advanced stage of distribution than the level of trade of the CEP, but the data available do not provide an appropriate basis to determine . . . a level of trade adjustment.” Id. at 28.  The Court said Commerce’s decision was supported by substantial evidence because the agency determined plaintiff did not qualify because there was only one home market level of trade. The final issue, was whether Commerce erred in deciding to use the zeroing methodology in its differential pricing analysis. Plaintiff’s argued “Commerce’s use of zeroing is not in accordance with the law because it violates the WTO Antidumping Agreement.” However, the Court sustained Commerce because “The WTO’s adverse ruling regarding the practice of zeroing has not been implemented into U.S. law, thus Commerce has no obligation to refrain from using zeroing in this case.” Id. at 33.

Sustained Remand Decisions in Nails Case

Before the Court in Stanley Works (Langfang) Fastening Co., Ltd. et. al. v. United States et. al., Slip Op. 18-134, Court No. 11-00102 (October 5, 2018) were Commerce’s final redeterminations in the agency’s first administrative review of an antidumping duty covering steel nails from China. Plaintiffs challenged Commerce’s inclusion of surrogate financial data from Indian company Sundram. Specifically, Commerce did not use the company as a surrogate initially in the first review, but reconsidered its approach in the second annual review. After determining in the second review Sundram was an appropriate surrogate, the agency then applied it as a surrogate in the first review and removed one of the initial surrogates used, J&K. This raised plaintiff’s duty margins from 10.63% to 15.43%. After extensive litigation two issues remained before the Court, whether Commerce reasonably included Sundram’s financial ratios in the calculation of Stanley’s dumping margin and whether Commerce’s decision to apply the revised 15.43 percent rate to the entries not associated with Stanley was contrary to law. For the following reasons Commerce’s determinations are sustained by the Court.

When selecting surrogate data Commerce should “avoid using any prices which it has reason to believe or suspect may be dumped or subsidized.” Id. at 9. Commerce’s decision was supported by substantial evidence because Sundram’s financial statement plainly states that it “has not received any grant from the Government.” Id. at 10.” In regards to the application of the 15.43% rate, the Court said “it is Commerce’s normal practice to assign non-investigated separate rate respondents a rate based on the average of the margins calculated for those companies selected for individual review.” Id. at 16. The Court pointed out that defendant intervenors could have participated in previous litigation to contest the all other rate applied to them, and that because Stanley had started its own litigation, injunctions against the rate in separate litigation were not applicable.