China Nat'L. Mach. Import & Export Corp. v. U.S., Slip Op. 03-133.

• Decision Date: 15 October 2003
• Docket Number: Slip Op. 03-133.,Court No. 01-01114.
• Citation: 293 F.Supp.2d 1334
• 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

Page 1334

293 F.Supp.2d 1334

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

Slip Op. 03-133.

Court No. 01-01114.

United States Court of International Trade.

October 15, 2003.

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

Peter D. Keisler, Assistant Attorney General, United States Department of Justice, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, Patricia M. McCarthy, Assistant Director, (Ada E. Bosque), Trial Attorney; Amanda L. Blaurock, Office of the Chief Counsel for Import Administration, United States

Department of Commerce, for Defendant, of counsel.

Stewart and Stewart, Terence P. Stewart, (Wesley K. Caine), Washington, DC, for Defendant-Intervenor.

OPINION

BARZILAY, Judge.

This case is before the court following remand to the United States Department of Commerce ("Commerce" or "Defendant" or "Department"). In China National Machinery Import & Export Corp. v. United States, 27 CIT ___, 264 F.Supp.2d 1229 (2003) ("CMC I"), familiarity with which is presumed, the court sustained in part and remanded in part the Department's determination with respect to Plaintiff China National Machinery Import and Export Corporation ("CMC" or "Plaintiff") 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").

Plaintiff CMC is an exporter of the subject merchandise, tapered roller bearings ("TRBs"), from the People's Republic of China, a non-market economy ("NME") country. The dispute involves the prices of a steel input, hot-rolled alloy steel bar, which CMC purchased from its supplier in [[ ]], a market economy country, and used in the production of TRBs sold to the United States.¹ In CMC I, the court held that, if Commerce had "reason to believe or suspect" that the supplier's prices were subsidized, Commerce could employ surrogate values instead of actual prices in normal value ("NV") calculations of dumping margins where it determines that such prices are best information available under the statute. See CMC I, at 1238; see also 19 U.S.C. § 1677b(c)(1) (2000) (providing the use of "the best available information" concerning the values for factors of production of an exporter in an NME country); H.R. Conf. Rep. No. 100-576, at 590 (1988), reprinted in 1988 U.S.C.C.A.N. 1547, 1623 ("House Report") (instructing Commerce to avoid using any price "which it has reason to believe or suspect may be dumped or subsidized") (emphasis supplied). In CMC I, the court stated that it will "affirm Commerce's actions if, given the entire record as a whole, there is substantial, specific, and objective evidence which could reasonably be interpreted to support a suspicion that the prices CMC paid to its market economy supplier were distorted." CMC I, at 1240. Applying the standard to the facts of the case, the court found that Commerce did not sufficiently explain and highlight evidence in support of its determinations in the Final Results. Id. Consequently, the court remanded the case to Commerce to review and augment the administrative record and explain its determinations further. See id. at 1243.

Pursuant to the court's order, Commerce issued its Final Results of Redetermination Pursuant to Remand (May 13, 2003) ("Remand Results"). Plaintiff CMC and Defendant-Intervenor The Timken Company ("Timken") timely responded to the Remand Results. In this matter the court has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court must uphold Commerce's determination if it is supported by substantial evidence and is otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i). After reviewing the parties' submissions, the administrative record, and all other papers and proceedings the court is satisfied that the Remand Results are in adequate compliance with the court's order. Accordingly, the court sustains the Remand Results.

I.

Commerce has a duty to calculate dumping margins as accurately as possible and should typically refrain from using surrogate values (which in themselves are imperfect substitutes) in dumping margin calculations where market-determined values are available. See Lasko Metal Prods., Inc. v. United States, 43 F.3d 1442, 1446 (Fed.Cir.1994). Consistent with this mandate, the applicable regulation advises Commerce to employ actual market values, where available, for NV calculations of an NME exporter, under normal circumstances. See 19 C.F.R. § 351.408(c)(1) (2000). On the other hand, as this court pointed out in CMC I, Commerce cannot be compelled to use actual prices where it has reason to believe or suspect that such prices are subsidized. See CMC I, at 1238. The court must look to the facts of record in the case to determine whether Commerce has sufficient reasons to suspect that actual prices are distorted such that the substitution of actual prices with surrogate values is warranted.

The court notes that, until the twelfth administrative review of this antidumping duty order, Commerce employed actual prices paid in its dumping margin calculations. During the twelfth review, Commerce determined that such prices were likely to be distorted by subsidies and should therefore be abandoned in favor of surrogate values. Commerce based its determination on a generally available and counter available subsidy program in the exporting country, uncovered in countervailing duty investigations from the 1999-2000 period involving subject merchandise other than hot-rolled alloy steel bar and companies other than CMC's supplier. After remand, Commerce supplemented the record with an Office of Policy Memorandum (dated February 2002), which memorializes Commerce's decision to abandon steel-related factor input prices from the exporting country, as well as two other countries. In this memorandum, Commerce explains that these countries maintain "broadly available, non-industry specific export subsidies," and adds that, where Commerce already conducted a countervailing duty investigation, "the facts of the underlying investigation must be examined and taken into account." In the Remand Results, Commerce maintains that the exporting country provides "industry specific subsidies and non-industry specific export subsidies." Remand Results at 8.

In CMC I, this court articulated three specific grounds in finding Commerce's offered reasons insufficient. First, neither the subject merchandise in question, nor CMC's supplier was ever specifically investigated in a countervailing duty investigation. Accordingly, the level of distortion, if any, in the price of hot-rolled alloy steel bar by reason of subsidies was never determined. Second, in the Final Results Commerce relied on an internal confidential memorandum, Market Economy Steel Memo (Nov. 7, 2001), as justification for its change of methodology. The court was concerned that numbers tabulated (without explanation in that memorandum) as the level of subsidies for steel products from the exporting country appeared to be very low. In other words, it seemed to the court that, even in affirmative countervailing duty determinations for other steel products, the range of subsidy values barely exceeded de minimis amounts at the upper limit. Specifically, [[ ]]. Third, one of the countervailing duty investigations from the 1999-2000 period pertaining to the exporting country yielded a negative result. See [[ ]]. That is, Commerce found with respect to the merchandise subject to that investigation that the countervailable subsidy rate was de minimis. In sum, the court was reluctant to allow Commerce to choose imprecise surrogate values over actual prices without further justification where evidence of distortion in prices CMC paid to its market economy supplier fell short of substantial, specific evidence.

In the Remand Results, Commerce emphasizes that CMC's supplier is a "member of a subsidized industry" and "could have benefitted" from subsidies generally available in the exporting country for exporters of steel products, regardless of the type of product or company, and further emphasizes that such subsidies were specifically found to be utilized by several steel producers.² Remand Results at 9, 12-13. The existence of these subsidies was confirmed in the Department's 1999-2000 countervailing duty determinations. Commerce offers that there is no evidence in the record that CMC's supplier "was not eligible to participate" in subsidy programs. Id. at 14. Commerce points to its long standing agency policy to disregard suspected distorted prices. Id. at 9-10. Commerce and Defendant-Intervenor Timken further point out that the company subject to the negative countervailing duty determination constitutes an "anomaly" in that it is the largest steel producer in the exporting country and is government-controlled. Id. at 14-15 n. 16; Def.-Intervenor's Rebuttal to Pl.'s Comments on Commerce Dept's Remand Redetermination ("Timken Br.") at 4; see also CMC I at 1240 (dictating Commerce to explain why this producer's case is an anomaly). That company is also known to participate in the subsidy programs as a provider, such as engaging in [[ ]]. Commerce further states that companies that were recipients of the subsidy programs and that were subject to the Department's positive countervailing duty determinations are more representative of CMC's supplier. Remand Results at 9.

Commerce explains that it is reasonable to believe that "a market company operating under normal [i.e., competitive] market principles would take advantage of ... benefits" that are made available to it. Id. at 9, 13. Commerce stresses that export subsidy programs in the steel industry of the exporting country were...