Xi'An Metals & Minerals Import & Export Co. v. United States

• Decision Date: 06 September 2017
• Docket Number: Slip Op. 17-120 Consolidated Court No. 15-00109.
• Citation: 256 F.Supp.3d 1346
• Parties: XI'AN METALS & MINERALS IMPORT & EXPORT CO., LTD., Plaintiff, and The Stanley Works (Langfang) Fastening Systems Co., Ltd. and Stanley Black and Decker, Inc., Consolidated–Plaintiffs, v. UNITED STATES, Defendant, and Mid Continent Steel & Wire, Inc., Intervenor–Defendant.
• Court: U.S. Court of International Trade

256 F.Supp.3d 1346

XI'AN METALS & MINERALS IMPORT & EXPORT CO., LTD., Plaintiff,andThe Stanley Works (Langfang) Fastening Systems Co., Ltd. and Stanley Black and Decker, Inc., Consolidated–Plaintiffs,

v. UNITED STATES, Defendant,andMid Continent Steel & Wire, Inc., Intervenor–Defendant.

Slip Op. 17-120 Consolidated Court No. 15-00109.

United States Court of International Trade.

September 6, 2017

Gregory S. Menegaz, J. Kevin Horgan, Alexandra H. Salzman, and John J. Kenkel, deKieffer & Horgan, PLLC, Washington, D.C., for the plaintiff.

Lawrence J. Bogard and Peter J. Bogard, Neville Peterson LLP, Washington, D.C., for the consolidated-plaintiffs.

Sosun Bae, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., for the defendant. Also on the papers Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director; Zachary Simmons, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of counsel.

Adam H. Gordon and Ping Gong, The Bristol Group PLLC, Washington, D.C., for the intervenor-defendant.

Opinion & Order

AQUILINO, Senior Judge:

At bar are consolidated complaints invoking 19 U.S.C. §§ 1516a(a)(2)(A)(i)(I) and (B)(iii) and 28 U.S.C. § 1581(c) jurisdiction over the final results of the fifth administrative review ("AR5") of its antidumping-duty order covering certain steel nails from the People's Republic of China ("PRC") published by the U.S. Department of Commerce, International Trade Administration ("ITA") sub nom. Certain Steel Nails from the PRC, 80 Fed.Reg. 18816 (April 8, 2015), PDoc 294. See accompanying final issues and decision memorandum ("IDM"), PDoc 276, covering the period of August 1, 2012 through July 31, 2013.

Moving for judgment on the resultant administrative record of AR5, plaintiff Xi'an Metals & Minerals Import & Export Co., Ltd. raises four issues: (1) the suitability of Thailand as the primary surrogate country, (2) valuation of its brokerage/handling ("B & H") and freight costs, (3) adjustment of the weight denominator used in calculating its inland freight and B & H costs, and (4) double counting of SG & A (selling, general, and administrative) labor expenses in the labor rate used.

Also moving for judgment pursuant to USCIT Rule 56.2, consolidated-plaintiffs The Stanley Works (Langfang) Fastening Systems Co., Ltd. and Stanley Black & Decker, Inc. press one minor issue and a much broader matter for relief: (5) correction of a "transcription error" in their factors-of-production ("FOP") database and (6) various challenges to ITA's "differential pricing" analysis.

Judicial review of AR5 is governed by the applicable law and by the substantial evidence of record, which has long been defined as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938). See 19 U.S.C. § 1516a(b)(l)(B)(i).

I

The antidumping-duty statute requires the ITA to seek surrogate values ("SVs") for the factors of production for subject merchandise produced in or exported from a non-market economy ("NME") country. 19 U.S.C. § 1677b(c)(1). The agency selected Xi'an Metals and the Stanley firms as AR5's mandatory respondents. It sent antidumping questionnaires to them, to which they responded in a timely manner. ITA circulated a letter to interested parties inviting comments on surrogate country selection and SV data, to which it received comments and rebuttal comments. It thereafter issued supplemental questionnaires to which Xi'an Metals and Stanley also timely responded.

ITA published notice of the preliminary results of AR5 sub nom. Certain Steel Nails from the People's Republic of China, 79 Fed.Reg. 58744 (Sept. 30, 2014), PDoc 304. See accompanying preliminary decision memorandum ("PDM"), PDoc 224. Employing its differential pricing analysis, the agency preliminarily calculated a weighted-average dumping margin of 6.69 percent for Stanley and 72.40 percent for Xi'an Metals. As part of its analysis, ITA concluded that there was a pattern of export prices for comparable merchandise that differed significantly among purchasers, regions, or time periods. See id. at 17–18. For Stanley, it found that the average-to-average ("A–A") methodology did not appropriately account for such differences and applied the average-to-transaction ("A–T") methodology to some Stanley U.S. sales and applied A–A to its other United States sales (reflecting a "mixed" alternative methodology). See id. For Xi'an Metals, ITA concluded that the A–A methodology appropriately accounted for such differences and applied it to calculate that firm's weighted-average dumping margin. See id. at 18. The agency also selected Thailand as the primary surrogate country for FOP valuation and surrogate financial ratios in constructing normal value. See PDoc 226.

During the course of its verification of the Stanley United States sales database and FOP, ITA accepted minor corrections that were brought to its attention. In February 2015, the agency requested that Stanley submit new sales and FOP databases to reflect the corrections that were revealed during verification. PDoc 257. Stanley did so timely. Whereafter ITA disclosed to the parties its calculations for AR5. On April 7, 2015, ITA received a ministerial error allegation from Stanley that urged the agency to correct a transcription error that Stanley had made in its revised FOP database. ITA declined to do so.

The AR5 final results were published the next day. Based on the differential pricing analysis and the use of Thai SV data, ITA calculated a weighted-average dumping margin of 13.19 percent for Stanley and 72.52 percent for Xi'an Metals. In those results, the agency used the consolidated customer code (field CCUSCODU) in the Stanley margin program after determining that the use of individual customer codes (field CUSCODU) for the Preliminary Results had been erroneous. See IDM at 45–46. This correction altered the results of the differential pricing analysis, leading ITA to apply the A–T methodology to all of the Stanley U.S. sales.

II

For its AR5 final results, ITA continued to select Thailand as the primary surrogate country. Plaintiff Xi'an argues the substantial evidence of record shows that that country is unsuitable as a surrogate in this case, that the Thai steel wire rod values are aberrant, and that either the Philippines or Ukraine is a superior primary surrogate country for valuing FOP.

A

Plaintiff Xi'an argues reports compiled by the U.S. Trade Representative in 2011, 2012 and 2013, the U.S. Department of Commerce, and FedEx International Resource Center all constitute substantial evidence of record showing that Thai customs officials routinely manipulate the entered values of imported merchandise, that such manipulation is pervasive across all sectors, and that therefore the Thai import data are tainted. Plaintiff Xi'an further argues that the average Thai import price for steel wire rod ("SWR") during the POR of $916 per metric ton is not only the highest SWR price of record but exceeds "by far" the benchmarks it provided therefor. Xi'an's benchmarks included SWR data from the World Bank Global Economic Monitor ("GEM"), world steel prices published by MEPS (International) Ltd., MEPS Asian Market SWR prices, official Thai domestic steel prices, SWR prices for Thai domestic and export sales from TATA Steel, "UN Comtrade" (i.e., United Nations International Trade Statistics Database) import prices for other countries at a comparable level of economic development as the PRC (including the Philippines and Ukraine), and world market prices published by Asian Metal and Metal Expert.

The AR5 final results explain that, in order to value an input accurately, ITA examines all relevant price information on the record, including any appropriate benchmark data; that in any given case the agency's current practice is to examine available import data for potential surrogate countries and/or data from the same HTS category for the surrogate country over multiple years to determine if the current data appear aberrational compared to historical values; and that the existence of higher prices alone is not a sufficient basis for concluding that the price data for a particular SV are distorted or misrepresentative. On the record for AR5, ITA concluded that none of the datasets suggested by Xi'an Metals serve as reliable benchmark data to determine whether Thai wire rod import data are aberrational¹ , and that Xi-an Metals' HTS data analysis, submitted to support concluding that the Thai import data for SWR are distorted and should be disregarded because they are higher than export prices, does not permit "an appropriate comparison in order to determine if the data [are] aberrational" because Xi'an's analysis is at the six-digit HTS level and "does not include any of the 11–digit HTS categories used to value wire rod at the Preliminary Results". IDM at 16.

Plaintiff Xi'an contends defendant's reasoning conflates the use of such benchmarks to evaluate the suitability of the average Thai import price with using such benchmarks as SVs in their own right; that the defensive responses² of it and the intervenor-defendant do nothing to dispel such "serious deficiencies" in ITA's choice of Thailand as the primary surrogate country; that because the defendant and ITA acknowledge that Thai customs officials arbitrarily increase some import values the record evidence provides reason to believe or suspect that the import values of the inputs used as SVs for Xi-an Metals' inputs were manipulated; and that defendant's claim that the agency "believe or suspect" analysis "hinges on specific and objective evidence on which [ITA] would rely in determining that a country's surrogate value data were unreliable" is not supported in practice.

Assuming...