Zhaoqing Tifo New Fibre Co. v. United States

• Citation: 256 F.Supp.3d 1314
• Decision Date: 30 August 2017
• Docket Number: Slip Op. 17-118 Court No. 13-00044.
• Parties: ZHAOQING TIFO NEW FIBRE CO., LTD., Plaintiff, v. UNITED STATES, Defendant, and DAK Americas LLC, Defendant–Intervenor.
• Court: U.S. Court of International Trade

256 F.Supp.3d 1314

ZHAOQING TIFO NEW FIBRE CO., LTD., Plaintiff,

v.UNITED STATES, Defendant,andDAK Americas LLC, Defendant–Intervenor.

Slip Op. 17-118 Court No. 13-00044.

United States Court of International Trade.

August 30, 2017

Gregory S. Menegaz, deKieffer & Horgan, PLLC, of Washington, D.C., argued for Plaintiff. With him on the briefs were J. Kevin Horgan and Alexandra Salzman.

Ryan M. Majerus, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington D.C., argued for Defendant. With him on the brief were Benjamin C. Mizer, Assistant Attorney General, Civil Division, and Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch. Of counsel on the brief was Shana Hofstetter, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, D.C.

Paul C. Rosenthal, Kelley Drye & Warren LLP, of Washington D.C., argued for Defendant–Intervenor. With him on the brief was David C. Smith.

OPINION

RIDGWAY, JUDGE:

In this action, Plaintiff Zhaoqing Tifo New Fibre Co., Ltd. ("Zhaoqing Tifo")—a Chinese producer and exporter of polyester staple fiber—has contested the Final Determination of the U.S. Department of Commerce ("Commerce") in the fourth administrative review of the 2007 antidumping duty order on polyester staple fiber from the People's Republic of China.¹ The period of review is June 1, 2010 through May 31, 2011. See generally Certain Polyester Staple Fiber From the People's Republic of China: Final Results of Antidumping Duty Administrative Review; 2010–2011, 78 Fed. Reg. 2366 (Jan. 11, 2013) ("Final Determination")² ; Issues and Decision Memorandum for the Final Results of the 2010–2011 Administrative Review (Jan. 4, 2013) (Pub. Doc. No. 108) ("Issues & Decision Memorandum")³ ; Zhaoqing Tifo New Fibre Co. v. United States, 39 CIT ––––, 60 F.Supp.3d 1328 (2015) (" Zhaoqing Tifo I").

In its Complaint, Zhaoqing Tifo charges, inter alia , that the antidumping margin calculated by Commerce in its Final Determination "double counts" certain energy costs, because those costs are reflected in the financial statements of P.T. Tifico Fiber Indonesia Tbk ("P.T. Tifico") (on which the Final Determination relied) and then are counted again elsewhere in the agency's calculations (i.e. , in the factors of production database ("FOP database")). Zhaoqing Tifo contends that its dumping margin is therefore inflated. See Complaint, Counts I–III; see also , e.g. , Zhaoqing Tifo I, 39 CIT at ––––, 60 F.Supp.3d at 1333, 1339 n.16.

Because the Final Determination failed to address Zhaoqing Tifo's double counting claim, Zhaoqing Tifo I remanded the matter to Commerce, to permit the agency to analyze whether energy costs are already reflected in the surrogate financial ratios that the agency derived from the financial statements of P.T. Tifico, such that the agency's inclusion of coal in the FOP database results in double-counting. See Zhaoqing Tifo I, 39 CIT at ––––, 60 F.Supp.3d at 1361–65.

Now pending is Commerce's Remand Determination, filed pursuant to Zhaoqing Tifo I. See generally Final Results of Redetermination Pursuant to Court Remand (Supp. Pub. Doc. No. 5) ("Remand Results"). On remand, Commerce reopened the decision that it made in its Final Determination concerning the selection of financial statements, abandoning its earlier selection of the financial statements of P.T. Tifico and substituting an entirely different set of financial statements that break out energy costs. Based on that set of financial statements, Commerce excluded energy costs from the surrogate financial ratios and included them in the FOP database, thus accounting for energy costs but avoiding double counting. See generally Remand Results.

Emphasizing that the issue of Commerce's selection of financial statements was never appealed to this Court, Zhaoqing Tifo contends that, as a result, finality attached to that aspect of Commerce's Final Determination, and the agency thus lacked the authority to revisit the issue and to select a different set of financial statements on remand. Zhaoqing Tifo further argues that, in any event, the remand that Zhaoqing Tifo I ordered did not permit Commerce to reconsider its Final Determination as to the selection of financial statements and that the Remand Results therefore exceeded the scope of the remand. See generally Plaintiff's Comments in Opposition to Remand Redetermination ("Pl.'s Brief"); Plaintiff's Reply Comments on Remand Redetermination ("Pl.'s Reply Brief").⁴

In contrast, both the Government and the Defendant Intervenor, DAK Americas LLC (the "Domestic Producer"), maintain that the Remand Results should be sustained. They counter that Commerce did not exceed the scope of the remand ordered in Zhaoqing Tifo I, and that the agency properly eschewed P.T. Tifico's financial statements and selected a different set of statements on remand in order to avoid double-counting. The Government and the Domestic Producer further contend that Zhaoqing Tifo's double counting claim and the issue of the selection of financial statements are so integrally related that analysis of Zhaoqing Tifo's claim necessarily raises the issue of Commerce's selection of financial statements. See generally Defendant's Response to Comments on Remand [Determination] ("Def.'s Brief"); Defendant Intervenor's Comments In Response to Plaintiff's Comments on Remand Redetermination ("Def.–Int.'s Brief").

Jurisdiction lies under 28 U.S.C. § 1581(c) (2006).⁵ For the reasons set forth below, this matter must be remanded to Commerce for a second time.

I. Background

Zhaoqing Tifo I laid out the relevant statutory scheme, including citations to the statute and other pertinent authorities. That explanation, together with other relevant background, is summarized below, for the sake of convenience and completeness.

As Zhaoqing Tifo I explained, dumping occurs when merchandise is imported into the United States and sold at a price lower than its "normal value," resulting in material injury (or the threat of material injury) to the U.S. industry. The difference between the normal value of the merchandise and the U.S. price is the "dumping margin." When normal value is compared to the U.S. price and dumping is found, antidumping duties equal to the dumping margin are imposed to offset the dumping. See Zhaoqing Tifo I, 39 CIT ––––, 60 F.Supp.3d at 1332 (and authorities cited there).

Normal value generally is calculated using either the price in the exporting market (i.e. , the price in the "home market" where the goods are produced) or the cost of production of the goods, when the exporting country is a market economy country.⁶ However, where—as here—the exporting country has a non-market economy, there is often concern that the factors of production (inputs) that are consumed in producing the merchandise at issue are under state control, and that home market sales therefore may not be reliable indicators of normal value. See Zhaoqing Tifo I, 39 CIT ––––, 60 F.Supp.3d at 1332 (and authorities cited there).

In cases like this, where Commerce concludes that concerns about the sufficiency or reliability of the available data do not permit the normal value of the merchandise to be determined in the typical manner, Commerce identifies one or more market economy countries to serve as a "surrogate" and then "determine[s] the normal value of the subject merchandise on the basis of the value of the factors of production" in the relevant surrogate country or countries,⁷ including "an amount for general expenses and profit plus the cost of containers, coverings, and other expenses." This surrogate value analysis is designed to determine a producer's costs of production as if the producer operated in a hypothetical market economy. See Zhaoqing Tifo I, 39 CIT ––––, 60 F.Supp.3d at 1332–33 (and authorities cited there).

Under 19 U.S.C. § 1677b(c)(3), the factors of production to be valued "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 cost, including depreciation." However, valuing the factors of production consumed in producing subject merchandise does not capture certain items such as (1) manufacturing/factory overhead, (2) selling, general, and administrative expenses ("SG & A"), and (3) profit. Commerce calculates those surrogate values using ratios—known as "surrogate financial ratios"—that the agency derives from the financial statements of one or more companies that produce identical (or at least comparable) merchandise in the relevant surrogate market economy country. See Zhaoqing Tifo I, 39 CIT at ––––, 60 F.Supp.3d at 1333 (and authorities cited there).

Zhaoqing Tifo's claim here is that there are certain energy costs that are embedded in the surrogate financial ratios that Commerce used in its Final Determination that are also included elsewhere in the agency's antidumping calculations (specifically, in the FOP database), resulting in the "double counting" of energy costs and inflating Zhaoqing Tifo's antidumping margin.⁸

As Zhaoqing Tifo I noted, in Commerce's Preliminary Determination here, Commerce selected Indonesia as the surrogate country and relied on the financial statements of P.T. Asia Pacific, an Indonesian producer of polyester staple fiber. Commerce based that decision in part on its understanding at that time that P.T. Asia Pacific "shares the same level of integration as Zhaoqing Tifo." See Zhaoqing Tifo I, 39 CIT at ––––, 60 F.Supp.3d at 1336 (quoting Certain Polyester Staple Fiber From the People's Republic of China: Preliminary Results of the Antidumping Duty Administrative Review, 77 Fed. Reg. 39,990, 39,991 –93, 39,995 (July 6, 2012)) ("Preliminary Determination").

P.T. Asia Pacific's financial statements are relatively detailed, and include separate line items for that company's energy inputs. In...