Seah Steel Vina Corp. v. United States, Slip Op. 16-82

• Decision Date: 31 August 2016
• Docket Number: Consolidated Court No. 14-00224,Slip Op. 16-82
• Parties: SeAH Steel VINA Corporation, Plaintiff, v. United States, Defendant, and Maverick Tube Corporation, United States Steel Corporation, Boomerang Tube LLC, Energex Tube (a Division of JMC Steel Group), Tejas Tubular Products, TMK IPSCO, Vallourec Star, L.P., and Welded Tube USA Inc., Defendant-intervenors.
• Court: U.S. Court of International Trade

182 F.Supp.3d 1316

SeAH Steel VINA Corporation, Plaintiff,

v. United States, Defendant,andMaverick Tube Corporation, United States Steel Corporation, Boomerang Tube LLC, Energex Tube (a Division of JMC Steel Group), Tejas Tubular Products, TMK IPSCO, Vallourec Star, L.P., and Welded Tube USA Inc., Defendant-intervenors.

Slip Op. 16-82

Consolidated Court No. 14-00224

United States Court of International Trade.

Dated: August 31, 2016

Jeffrey M. Winton, Law Office of Jeffrey M. Winton PLLC, of Washington DC, argued for plaintiff.

Emma E. Bond, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With her on the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Whitney Rolig, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

Jeffrey D. Gerrish and Luke A. Meisner, Skadden, Arps, Slate, Meagher & Flom LLP, of Washington, DC, argued for defendant-intervenor United States Steel Corporation. With them on the brief was Robert E. Lighthizer.

Alan H. Price, Adam M. Teslik, Laura El-Sabaawi, Robert E. DeFrancesco, III, Wiley Rein, LLP, of Washington DC, for defendant-intervenor Maverick Tube Corporation.

Roger B. Schagrin, John W. Bohn, Paul W. Jameson, Schagrin Associates, of Washington DC, for defendant-intervenors Boomerang Tube LLC, Energex Tube (a Division of JMC Steel Group), Tejas Tubular Products, TMK IPSCO, Vallourec Star, L.P., and Welded Tube USA Inc.

PUBLIC VERSION

OPINION AND ORDER

Goldberg, Senior Judge:

This case resolves challenges to the final antidumping duty determination of the U.S. Department of Commerce ("Commerce") for oil country tubular goods ("OCTG") from the Socialist Republic of Vietnam ("Vietnam"). See Certain Oil Country Tubular Goods from the Socialist Republic of Vietnam , 79 Fed. Reg. 41,973 (Dep't Commerce July 18, 2014) (final determ.) (" Final Determination "), as amended by Certain Oil Country Tubular Goods from India, the Republic of Korea, Taiwan, the Republic of Turkey, and the Socialist Republic of Vietnam , 79 Fed. Reg. 53,691 (Dep't Commerce Sept. 10, 2014) (amended final determ.).

Both Plaintiff, SeAH Steel VINA Corporation ("SSV"), and Defendant-Intervenor, United States Steel Corporation ("U.S. Steel"), moved for judgment on the agency record under USCIT Rule 56.2. SSV challenges five aspects of the Final Determination . Pl.'s Mot. for J. on Agency R. 4–11, ECF No. 54 ("SSV Br."). U.S. Steel challenges four aspects of the Final Determination . Def.-Intervenor's Mot. for J. on Agency R. 6–8, ECF No. 56 ("U.S. Steel Br."). For the reasons set forth below, the court remands the Final Determination to Commerce for reconsideration on all but one of the challenges.

GENERAL BACKGROUND

When foreign merchandise sold for less than fair value in the United States injures or threatens a domestic industry, the United States collects antidumping duties on the merchandise. See 19 U.S.C. § 1673 (2012). To calculate antidumping duties, Commerce contrasts the "export price (or the constructed price)" of the merchandise with the "normal value" ("NV") of the merchandise. Id. §§ 1673, 1677b(a). In general, the export price reflects the price of the merchandise in the United States, and the normal value is the price of the merchandise in the exporting country. Id. §§ 1677a–1677b.

The method of calculating NV hinges on whether the merchandise comes from an exporter in a market economy ("ME") or an exporter in a nonmarket economy ("NME"). Id . § 1677b(a)(1), (c)(1). If the merchandise originates in a ME, Commerce typically uses the price of the merchandise in the exporting country. Id. § 1677b(a)(1)(B)(i). But here the source of OCTG is Vietnam, which is a NME. Surrogate Country Selection Mem., PD 186 (Apr. 10, 2014), ECF No. 60.

When merchandise originates in a NME, Commerce bases the NV of the goods on "the value of the factors of production utilized in producing the merchandise" plus an "amount for general expenses and profit plus the cost of containers, coverings, and other expenses." 19 U.S.C. § 1677b(c)(1)(B). However, in NME countries, the law presumes that government action distorts the cost of the factors of production ("inputs") actually used to produce the merchandise. Blue Field (Sichuan) Food Indus. Co. v. United States , 37 CIT ––––, ––––, 949 F.Supp.2d 1311, 1316–17 (2013). Because Commerce cannot use the distorted input prices of a NME, Commerce calculates and ascribes a "surrogate value" representing a market price to each of the inputs. 19 U.S.C. § 1677b(c)(1)(B). Commerce must base its calculation of each surrogate value on "the best available information regarding the values of such factors in a [ME] country." Id. Additionally, Commerce must use "the prices or costs of [inputs]" in a ME country that is "at a level of economic development comparable to that of the [NME]" and that is a "significant producer[ ] of comparable merchandise." Id. § 1677b(c)(4).

Here, Commerce uses surrogate values from India to calculate the NV. Surrogate Country Selection Mem., PD 186 (Apr. 10, 2014), ECF No. 60. After determining the surrogate values, Commerce calculates an amount corresponding to other production expenses and profits. Id. § 1677b(c)(1)(B). Specifically, "[b]ecause firms have ‘general expenses and profits' not traceable to a specific product, in order to capture these expenses and profits, Commerce must factor [into the NV calculation] (1) factory overhead (‘overhead’), (2) selling, general and administrative expenses (‘SG&A’), and (3) profit." Mittal Steel Galati S.A. v. United States , 31 CIT 1121, 1137–38, 502 F.Supp.2d 1295, 1310 (2007). To calculate and incorporate these factors, "Commerce relies upon financial statements from one or more [surrogate] companies based in the primary surrogate country." Id. Commerce then combines the total expenses, profits, and surrogate input values to create NV. 19 U.S.C. § 1677b(c)(1)(B).

With regard to export price, the relevant background is simpler. To resolve this case, the court need mention only one rule: When calculating export price, or the price of the merchandise in the United States, Commerce must deduct "the amount ... attributable to any additional costs, charges, or expenses, and United States import duties, which are incident to bringing the subject merchandise from the original place of shipment in the exporting country to the place of delivery in the United States." 19 U.S.C. § 1677a(c)(2)(A).

After calculating both the export price and the NV, Commerce determines the "dumping margin," which is the "amount by which the [NV] exceeds the export price." Id . § 1677(35)(A). This is the foundation of the antidumping duties owed on the foreign merchandise. Id. § 1673.

In making the above determinations, Commerce relies on the information in the administrative record, including information submitted by the parties. To gather information from the parties, Commerce issues questionnaires and reviews the resultant submissions of data from the parties. 19 C.F.R. § 351.221(b)(2). Commerce may subsequently issue supplemental questionnaires requesting additional information. Id. § 351.301. If a party is unforthcoming with information, Commerce sometimes applies adverse facts available ("AFA"), which entails making inferences unfavorable to the uncooperative party. Id. § 1677e(a). After reviewing the administrative record, Commerce issues the preliminary results of its calculation on the dumping margin. 19 C.F.R. § 351.221(b)(4). Interested parties may then submit case briefs and rebuttal case briefs to challenge the findings in the preliminary results. Id. Commerce completes the process by reviewing the challenges and issuing its final determination. Id. § 351.221(b)(5).

U.S. Steel and SSV each argue that Commerce improperly calculated antidumping duties on OCTG. U.S. Steel challenges four aspects of Commerce's calculation. First, U.S. Steel argues that Commerce erred in refusing to apply partial AFA to SSV. Second, U.S. Steel contests Commerce's valuation of SSV's hot-rolled coil input. Third, U.S. Steel argues that Commerce improperly excluded the cost of the domestic inland insurance that SSV allegedly used to transport OCTG. And fourth, U.S. Steel opposes Commerce's selection of financial statements for use in calculating the financial statement ratios. U.S. Steel Br. 6–8. The court remands on the second, third, and fourth issues.

SSV challenges five aspects of Commerce's calculation. First, SSV argues that Commerce erred when deducting from the export price the brokerage and handling costs on SSV's exports of OCTG. Second, SSV contests the decision to adjust the normal value by adding a surrogate value for brokerage and handling services on SSV's imports of inputs. Third, SSV argues that Commerce incorrectly allocated the surrogate values for brokerage and handling services on SSV's imports of inputs and exports of OCTG. Fourth, SSV opposes the selection of financial statements used to calculate the financial-statement ratios. And fifth, SSV challenges Commerce's decision to adjust the normal value to account for yield loss on OCTG. SSV Br. 4–11. The court remands for Commerce to reconsider all five issues.

JURISDICTION AND STANDARD OF REVIEW

The court exercises jurisdiction to hear this appeal under 28 U.S.C. § 1581(c). The court will sustain the antidumping duty determination unless the court concludes that the determination is "unsupported by substantial evidence on the record, or otherwise not in accordance with the law." 19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence amounts to "more than a mere scintilla" of evidence. Universal Camera Corp. v. NLRB , 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (citation omitted). It is "such relevant evidence as a reasonable mind might...