UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 25-16

Before the Court in Jiangsu Senmao Bamboo & Wood Indus. Co. v. United States, Court No. 22-00190, Slip Op. 25-16 (February 18, 2018) was a court’s review of the remand determination of the U.S. Department of Commerce’s surrogate value data for plywood in annual review of the antidumping duty order on multilayered wood flooring from China. The Court reviewed Commerce’s selection of Brazil as the primary surrogate country and the use of Malaysian data for oak log inputs.

This issue arises from an administrative review by Commerce initiated on February 2, 2021when Commerce conducted a review of the antidumping order on multilayered wood flooring from China from December 2019-November 2020 and selected Jiangsu Senmao Bamboo and Wood Industry Co. Ltd. as the mandatory respondent in the investigation. In the final results, Commerce selected Brazil as the primary surrogate country, but it valued Senmao’s oak and non-oak logs with Malaysian surrogate values because it determined that Brazilian ones were not usable for oak and non-oak log inputs. Commerce also adjusted the Brazilian surrogate values for plywood by excluding data that it determined to be incorrect regarding the quantity of plywood. In Slip Op. 25-15, the Court examined two questions: (1) whether Commerce’s determination to select Brazil as the primary surrogate country, while using Malaysian data for oak log inputs, is supported by substantial evidence and in accordance with law; and (2) whether Commerce’s determination to adjust the Brazilian surrogate value data for plywood is supported by substantial evidence and in accordance with law.

In the past iterations of this case, the Court had remanded Commerce’s decision due to a lack of necessary evidence, explanations, and support. Commerce was instructed to reconsider its use of Malaysian surrogate values for oak and non-oak log inputs, as it didn’t justify departing from its usual practice of using one surrogate country. The Court also ordered a reconsideration of Commerce’s adjustment to plywood surrogate values, as it relied on unsupported evidence. On remand, Commerce reaffirmed Brazil as the primary surrogate country, deciding to value non-oak logs with Brazilian data and oak logs with Malaysian data, while defending its adjustment of plywood values as reasonable. Commerce claimed it followed the Court’s Order in Senmao I by including Exhibit 9 from AMMWF’s Surrogate Value Comments, which had been cited but not on the record before the Court. Commerce revised the antidumping duty rate, assigning a 34.68% margin to Senmao. However, the Court found that defects still existed in Commerce’s analysis, including the choice of Brazil as the primary surrogate country, its selection of surrogate values for non-oak and oak logs, and its adjustment of plywood surrogate values. The Court held that Commerce failed, again, to cite any specific evidentiary documents on the record in support of its determination that Brazil was the appropriate primary surrogate country. Instead, Commerce cited to its own agency filings, such as its Preliminary Determination Memorandum, which is not evidence. The Court remanded this issue for further reconsideration.

In this last remand, the Court sustained Commerce’s determinations on the issue of selection of Brazil as the primary surrogate country and the use of two surrogate countries for surrogate value inputs, finding that Commerce cured these problems when it considered the proper factors as required by regulatory policy reflected in Policy Bulletin No. 04.1. Commerce noted that the Malaysian data for “European oak” and “red oak” were most specific to Senmao’s oak wood inputs, but the Brazilian data for the remaining five wood inputs (non-oak logs) were not “unavailable, inadequate or unreliable,” and thus Commerce relied on record evidence of the Brazilian subheading HS 4403.99: “Wood In The Rough” to value the remaining log types. Commerce determined that the Brazilian SV data for oak logs was unavailable, and thus “the record only contains usable data from Malaysia for one species of log that make up Senmao’s two oak log inputs.” Commerce summarized that, “based on the totality of the SV data and the weighing of these factors, we find that the quality of data and financial statements in Brazil favors selecting Brazil over Malaysia as the primary surrogate country.” The Court found that Commerce’s analysis, based on the statutory requirement to use the “best available information,” was supported by record evidence. It found that Commerce’s choice of Brazil for the primary surrogate country and the use of Malaysian data for two oak inputs was lawful and backed by substantial evidence.

In the second remand Commerce provided additional explanation that the erroneous surrogate value data was contained in the Global Trade Atlas (“GTA”), which was publicly available, contemporaneous with the period of review, and “[s]pecifically, the GTA SV data represent broad market averages because they encompass the average prices for inputs imported into Brazil and Malaysia during the [period of review]. Further, GTA data have previously been found to be tax and duty-exclusive, and no parties have argued otherwise.” Although the Global Trade Atlas is typically viewed as a reputable and reliable source of evidence in surrogate value cases, Commerce became aware that “this particular component of the Brazilian SV is clearly incorrect.” That the GTA surrogate value data for imports into Brazil for the period of review was incorrect was not disputed by the parties. The Court accepted that the erroneous January 2020 Spanish import data in the Global Trade Atlas was likely the result of clerical error and, that as a third-party publication, it was reasonable for Commerce to determinate that it had to either use the erroneous data or delete the erroneous number from its calculations since the agency must determine what set of data represents the “best available information.” The Court reasoned that because in this case the GTA data for plywood imports to Brazil was not only flawed but also incorrect, using wrong data from Spain for January 2020 would significantly lower the surrogate value of Brazilian plywood. Removing the January 2020 data caused a distortion, increasing the surrogate value by 453%.

On this point, the Government contended that “accuracy,” as defined by the U.S. Court of Appeals for the Federal Circuit (“CAFC”) in the context of determinations from Commerce, is a result that is “correct as a mathematical and factual matter, thus supported by substantial evidence.” However, the Court disagreed with Commerce’s contention that “removal of the erroneous plywood line item results in a more accurate dataset,” and decided against sustaining this deletion of the Spanish import data that led to the incorrect and 453% distorted value. The Court found that in deeming this distortion the “best available information” Commerce abused its discretion, calling the deletion unreasonable and not in accordance with law. Thus, this adjustment to the Brazilian surrogate value data for plywood was not supported by substantial evidence. The Court remanded for further consideration.