Nation Ford Chemical Co. v. U.S., s. 98-1253

Citation166 F.3d 1373
Decision Date02 February 1999
Docket NumberNos. 98-1253,98-1254,s. 98-1253
PartiesNATION FORD CHEMICAL COMPANY, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee, and Yude Chemical Company, Zhenxing Chemical Industry Company and PHT International, Inc., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Reginald T. Blades, Jr., Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant-appellee, United States. With him on the brief were Frank W. Hunger, Assistant Attorney General, and David M. Cohen, Director. Of counsel on the brief were Stephen J. Powell, Berniece A. Browne, and Linda S. Chang, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

William E. Perry, Williams, Mullen, Christian & Dobbins, P.C., of Washington, DC, argued for defendants-appellees, Yude Chemical Company, et al.

Before RICH, NEWMAN, and LOURIE, Circuit Judges.

LOURIE, Circuit Judge.

Nation Ford Chemical Company ("NFC") appeals from the decision of the United States Court of International Trade sustaining the Department of Commerce's use of Indian import prices for aniline in its investigation of certain Chinese manufacturers accused of dumping sulfanilic acid in the United States. See Nation Ford Chem. Co. v. United States, 985 F.Supp. 133 (Ct. Int'l Trade 1997) ("NFC I "). We affirm.

BACKGROUND

NFC is the only manufacturer of sulfanilic acid in the United States. NFC suspected that various manufacturers from the People's Republic of China were "dumping" sulfanilic acid in the United States and successfully petitioned Commerce to investigate those manufacturers' activities from August 1, 1993 to June 31, 1995. 1 See Sulfanilic Acid From the People's Republic of China; Preliminary Results of Antidumping Duty Administrative Review, 61 Fed.Reg. 25196 (1996) ("1993-94 Preliminary Results "); Sulfanilic Acid From the People's Republic of China; Preliminary Results and Partial Rescission of Antidumping Administrative Review, 61 Fed.Reg. 29073 (1996) ("1994-95 Preliminary Results "). In its investigation, Commerce sought to determine the "dumping margin," i.e., "the amount by which the foreign market value exceeds the United States price" for that product. See 19 U.S.C. § 1673 (1988); 2 see also id. § 1677a (defining Finding China to be a "nonmarket economy" country or "NME," 3 Commerce applied 19 U.S.C. § 1677b(c) to determine the "foreign market value." This provision reads as follows:

"United States price"); id. § 1677b (defining "foreign market value"); Aimcor v. United States, 141 F.3d 1098, 1101 (Fed.Cir.1998) (noting that the "dumping margin" constitutes a duty on imported merchandise that is designed to "raise the United States price to the foreign market value.") (citation omitted).

(1) In general

If--

(A) the subject merchandise is exported from a nonmarket economy country, and

(B) [Commerce] finds that available information does not permit the foreign market value of the subject merchandise to be determined under subsection (a) of this section,

[Commerce] shall determine the foreign market value of the subject merchandise on the basis of the value of the factors of production utilized in producing the merchandise.... [T]he valuation of the factors of production shall be based on the best available information regarding the values of such factors in a market economy country or countries considered to be appropriate by the administrator.

. . . . .

(3) For purposes of paragraph (1), the factors of production utilized in producing merchandise include, but are not limited to--

(A) hours of labor required,

(B) quantities of raw materials employed,

(C) amounts of energy and other utilities consumed, and

(D) representative capital costs, including depreciation.

(4) [Commerce], in valuing factors of production under paragraph (1), shall utilize, to the extent possible, the price or costs of factors of production in one or more market economy countries that are--

(A) at a level of economic development comparable to that of the nonmarket economy country, and

(B) significant producers of comparable merchandise.

19 U.S.C. § 1677b(c) (1988). Pursuant to paragraph (4), Commerce chose India as the market economy "surrogate country." See 1993-94 Preliminary Results, 61 Fed.Reg. at 25198; 1994-95 Preliminary Results, 61 Fed.Reg. at 29076. Thus, Commerce's task was to assess the "price or costs" of factors of production of sulfanilic acid in India in an attempt to construct a hypothetical market value of that product in China.

The "factors of production" assessment brought the cost of aniline, one of the raw materials used in the production of sulfanilic acid, into question. The record evidence shows that India protected its domestic aniline industry from global competition with an 85% import tariff, and that this tariff caused the price of domestically-produced aniline to be inflated. Pursuant to India's Advanced License Program, 4 this tariff, however, was not paid by Indian sulfanilic acid producers if they used the aniline to produce sulfanilic acid for export. Not surprisingly, Indian sulfanilic acid producers who exported their product bought imported aniline instead of domestic aniline because it was less expensive. In contrast, the Chinese sulfanilic acid In its preliminary determinations, Commerce valued aniline using a published Indian import price, viz., the price that an Indian sulfanilic acid producer would pay to have aniline imported into India, with appropriate adjustments that are not relevant here. See 1993-94 Preliminary Results, 61 Fed.Reg. at 25198; 1994-95 Preliminary Results, 61 Fed.Reg. at 29076. NFC argued that this value was too low and that Commerce should have used Indian domestic prices instead, viz., the price that an Indian sulfanilic acid producer would have to pay to an Indian producer of aniline. Commerce, in its final determinations, disagreed: "The evidence placed on the record ... indicates that Indian sulfanilic acid producers use imported aniline in their production process when they produce sulfanilic acid for export. Therefore, these values best approximate the cost incurred by the sulfanilic acid exporters in India...." Sulfanilic Acid from the People's Republic of China: Final Results of Antidumping Duty Administrative Review, 61 Fed.Reg. 53711, 53715 (1996) ("1993-94 Final Results "); Sulfanilic Acid from the People's Republic of China: Final Results and Partial Rescission of Antidumping Duty Review Administrative Review, 61 Fed.Reg. 53702, 53704 (1996) ("1994-95 Final Results ").

manufacturers under investigation only procured aniline from its own domestic sources. The parties do not dispute that the foregoing are accurate descriptions of the Indian and Chinese aniline and sulfanilic acid markets during the relevant time periods.

NFC argued in the alternative that the aniline import price should be increased to include both the 85% import duty and importer "mark-up" costs, but Commerce again disagreed. Concerning the 85% import duty, Commerce noted that the duty was not paid by Indian sulfanilic acid producers who produced the product for export. See 1993-94 Final Results, 61 Fed.Reg. at 53716; 1994-95 Final Results, 61 Fed.Reg. at 53705. Concerning importers' "mark-up" costs, Commerce stated: "There is no evidence on the record ... indicating who imports the aniline, the sulfanilic acid producer or an importer who sells the aniline to the sulfanilic acid producer. Accordingly, there is no basis for determining that an importer's markup would be included in the price to the Indian sulfanilic acid producer and for adjusting the surrogate value for such a markup." 1993-94 Final Results, 61 Fed.Reg. at 53716; 1994-95 Final Results, 61 Fed.Reg. at 53705. Commerce ultimately calculated the dumping margin for each of the Chinese producers and assessed appropriate duties. See 1993-94 Final Results, 61 Fed.Reg. at 53718; 1994-95 Final Results, 61 Fed.Reg. at 53711.

NFC appealed to the Court of International Trade, which sustained Commerce's determinations for each of the years in question. NFC I, 985 F.Supp. 133 (Ct. Int'l Trade 1997). NFC then appealed to this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5) (1994).

DISCUSSION

In reviewing a decision of the Court of International Trade, this court applies anew the statutory standard of review applied by that court to the agency's decision. PPG Indus., Inc. v. United States, 978 F.2d 1232, 1236, 11 Fed. Cir. (T) 9, 13 (Fed.Cir.1992). Therefore, we must affirm the court's decision unless we conclude that the agency's determination was not supported by substantial evidence or was otherwise not in accordance with law. See 19 U.S.C. § 1516a(b) (1994). Statutory construction is a question of law that we review de novo. Wolff Shoe Co. v. United States, 141 F.3d 1116, 1121 (Fed.Cir.1998).

NFC argues that it was improper for Commerce to use an Indian import price to value aniline in its "factors of production" assessment. NFC contends that § 1677b(c) mandates that an Indian domestic price be used because the Chinese producers indisputably use domestically-produced aniline. NFC supports its interpretation by noting that § 1677b(c) states that the assessment shall be based on "the values of such factors in a market economy country." 19 U.S.C. § 1677b(c)(1). NFC attempts to further strengthen its argument by noting that Commerce used domestic prices to value other materials used in the production of sulfanilic acid, and argues that it is inconsistent for The government and Chinese manufacturers respond that § 1677b(c) does not mandate that Commerce use an Indian domestic price for aniline merely because Chinese manufacturers use domestically-produced aniline. Instead, the government points out that § 1677b(c) prescribes that Commerce use the "best available information" from the surrogate country, and...

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