China Nat. Machinery Import v. U.S.

• Citation: 264 F.Supp.2d 1229
• Decision Date: 13 February 2003
• Docket Number: No. 01-01114.,SLIP OP. 03-16.,01-01114.
• Parties: CHINA NATIONAL MACHINERY IMPORT & EXPORT CORPORATION, Plaintiff, v. UNITED STATES, Defendant, and The Timken Company, Defendant-Intervenor.
• Court: U.S. Court of International Trade

264 F.Supp.2d 1229

CHINA NATIONAL MACHINERY IMPORT & EXPORT CORPORATION, Plaintiff, v. UNITED STATES, Defendant, and The Timken Company, Defendant-Intervenor.

SLIP OP. 03-16.

No. 01-01114.

United States Court of International Trade.

February 13, 2003.

Crowell & Moring L.L.P., Washington, DC (Jeffrey L. Snyder), Alexander H. Schaefer, for Plaintiff.

Robert D. McCallum, Jr., Assistant Attorney General, United States Department of Justice, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, Lucius B. Lau, Assistant Director, (Ada E. Bosque), Trial Attorney; Scott D. McBride, Office of the Chief Counsel for Import Administration, United States Department of Commerce, for Defendant, of counsel.

Stewart and Stewart, Terence P. Stewart, McLean, VA (Wesley K. Caine), Amy A. Karpel, for Defendant-Intervenor.

Before: Judge JUDITH M. BARZILAY.

OPINION

BARZILAY, Judge.

I. INTRODUCTION

Before the court is Plaintiff China National Machinery Import & Export Corporation's ("CMC") Motion for Judgment upon an Agency Record pursuant to UCIT R. 56.2. CMC challenges certain aspects of the United States Department of Commerce's ("Commerce" or "Defendant") determination in Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China; Final Results of 1999-2000 Administrative Review, Partial Rescission of Review, and Determination Not to Revoke Order in Part, 66 Fed.Reg. 57,420 (Nov. 15, 2001) ("Final Results"). The court has jurisdiction pursuant to 28 U.S.C. § 1581(c).

II. BACKGROUND

Plaintiff CMC is an exporter of tapered roller bearings and parts thereof, finished and unfinished ("TRBs"), from the People's Republic of China ("PRC" or "China") to the United States. The antidumping duty order concerning TRBs from the PRC was issued on May 27, 1987. See Tapered Roller Bearings from the People's Republic of China; Final Determination of Sales at Less Than Fair Value, 52 Fed.Reg. 19,748 (May 27, 1987). Commerce designated the PRC as a non-market economy ("NME") country.¹ See Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China: Preliminary Results of 1999-2000 Antidumping Duty Administrative Review, Partial Rescission of Review, and Notice of Intent Not to Revoke Order in Part, 66 Fed.Reg. 35,937, 35,938 (July 10, 2001) ("Preliminary Results"). At issue in this case are the 1999-2000 sales of TRBs from the PRC, which constitute sales made during the thirteenth administrative review of the antidumping duty order ("POR"). Specifically, CMC challenges Commerce's rejection of the actual market prices that CMC paid for steel used in the production of the TRBs, in favor of using surrogate values for steel in the final calculation of normal value ("NV") to determine dumping margins.²

On July 7, 2000, Commerce published the preliminary results of the twelfth administrative review, which showed a zero dumping margin for CMC. See Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China; Preliminary Results of 1998-1999 Administrative Review, Partial Rescission of Review, and Notice of Intent to Revoke Order in Part, 65 Fed. Reg. 41,944, 41,949 (July 7, 2000). On July 31, 2000, Commerce initiated the thirteenth administrative review. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 65 Fed.Reg. 46,687 (July 31, 2000), amended by 65 Fed. Reg. 48,968 (Aug. 10, 2000). On February 26, 2001, Commerce published the amended final results of the twelfth administrative review, which reflected a jump from zero to 0.82% (despite remaining de minimis)³ of CMC's dumping margin determined in the preliminary. See Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China; Amended Final Results of 1998-1999 Administrative Review and Determination to Revoke in Part, 66 Fed.Reg. 11,562, 11,564 (Feb. 26, 2001). Commerce changed its methodology regarding the prices for steel input in midreview in the twelfth administrative review.⁴

On July 10, 2001, Commerce published the preliminary results of the thirteenth administrative review. See Preliminary Results. Commerce found a 4.79% dumping margin for CMC in this preliminary investigation and therefore denied CMC's revocation request. See id. at 35,941. On November 15, 2001, Commerce published the final results and found a 4.64% dumping margin for CMC. See Final Results at 57,422. Commerce's reasons for its determinations are found in the accompanying Issues and Decision Memo for the 1999-2000 Administrative Review of Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People's Republic of China; Final Results ("Issues and Decision Memo"), A-570-601, Pub. Doc. DAS J/1:JG (Nov. 7, 2001), in app. 14 to PI. `s Mem. in Supp. of Mot. for J. upon an Agency R. ("Pl's Br."). As it cannot meet the standard of three consecutive years of sales at not less than fair value, see 19 C.F.R. § 351.222(b)(1)(i)(A) (2000), CMC remains subject to the antidumping duty order regarding TRBs from the PRC.

The merchandise at issue here is cups and cones which CMC sold in the United States. Tr. at 10:21-25 to ll:l-6.⁵ To manufacture cups and cones, CMC used hot-rolled alloy steel bar which it imported from another country paying in market currency.⁶ Pl's Br. at 9. CMC thus challenges Commerce's use of surrogate values for its hot-rolled alloy steel bar input instead of the actual price it paid. There is no indication on the record, nor is there an argument in the parties' briefs that CMC and its supplier are affiliated. The exporting country is a market economy country. Normally, to construct NV for the final product, Commerce uses actual prices which an NME producer pays for the input from a market economy country since actual market prices are the best approximation of the input's value. See 19 C.F.R. § 351.408(c)(1). However, in this case, both in the final stage of the twelfth administrative review and in the entire thirteenth administrative review, Commerce declined to use the actual prices CMC paid to the supplier for its steel because it claimed it had a "reason to believe or suspect" that the supplied steel was benefitting from subsidies, and the actual prices were thus distorted. See Preliminary Results at 35,940; Issues and Decision Memo at 9. To support its finding that the steel was subsidized, Commerce relied on an internal confidential memorandum, Market Economy Steel Memo (Nov. 7, 2001), in app. 4 to Pl's Br.

The Market Economy Steel Memo lists various affirmative antidumping and countervailing duty findings applying to various steel products from the market economy country at issue.⁷ Also listed in the Market Economy Steel Memo is a negative finding from 1999 relating to one particular steel product, [[ ]], from the market economy country: Final Negative Countervailing Duty Determination: [[ ]] ("Final Negative Determination"). There are no specific antidumping or countervailing duty findings regarding the hot-roiled alloy steel bar that is at issue here. See Market Economy Steel Memo; Tr. at 11:7-11. However, during these antidumping or countervailing duty investigations, Commerce "discovered ... not company specific" but generally available subsidies to steel producers in the concerned country, including directed credit, export industry facility loans, shortterm export financing, and investment tax credits. Market Economy Steel Memo. Commerce maintains without further elaboration that "in two of the three recent [pertinent] investigations, [these general subsidies] are greater than de minimis." Tr. at 16:2-4. There is no record evidence of a generally available subsidy verified in the case of hot-rolled alloy steel bar from the country in question as Commerce has never specifically investigated this merchandise. See Market Economy Steel Memo. In addition, Commerce never specifically verified whether CMC's supplier had ever taken advantage of any generally available subsidies for this or any other steel product. See Tr. at 17:21-25 to 18:1-16. Commerce nevertheless believes that CMC's supplier may have (or must have) benefitted from generally available subsidies resulting in a distortion in the prices of hot-rolled alloy steel bar and, therefore, such prices cannot properly be used in the NV calculations for the cups and cones CMC sold in the United States. The contention is that "as a matter of commonsense, we can assume that no one is going to leave money on the table. [Companies] are going to take advantage of a program that's out there and exists." Tr. at 30:24-25 to 31:1-3.

Given the designation of the PRC as an NME country, Commerce resorted to surrogate country analysis pursuant to its authority under 19 U.S.C. § 1677b(c)(4).⁸ Accordingly, Commerce selected India as surrogate and used adjusted weighted-averages of Japanese export prices to India for hot-rolled alloy steel bar based on the Japanese Ministry of Finance statistics. See Preliminary Results at 35,940. Commerce explained the selection of India as the surrogate country by pointing out that India was at a comparable level of economic development with the PRC and was the most significant producer and exporter of TRBs among other suitable countries, such as Pakistan, Indonesia, Sri Lanka, and the Philippines.⁹ See Selection of a Surrogate Country and Steel Value Sources Memo at 3 (July 2, 2001) ("Surrogate Country Memo"), in app. 14 to PL's Br.; see also 19 C.F.R. § 351.408(b) (basing comparability on per capita GDP). Finding India's own import statistics "unreliable," however, Commerce instead chose Japanese export data to India as "the best data" because "the Japanese tariff category [was] the narrowest category which could contain bearing quality steel, and because it [was] consistent with values contained in our U.S. benchmark category." Surrogate...