Ak Steel Corp. v. U.S., Slip Op. 98-159.
| Citation | 34 F.Supp.2d 756 |
| Decision Date | 22 December 1998 |
| Docket Number | Slip Op. 98-159.,Court No. 97-05-00865. |
| Parties | AK STEEL CORPORATION, Inland Steel Industries, Inc., Bethlehem Steel Corporation, U.S. Steel Group—a Unit Of USX Corporation, LTV Steel Co., Inc. National Steel Corporation, Plaintiffs, v. UNITED STATES, Defendant, and Pohang Iron and Steel Co. Ltd., Pohang Coated Steel Co. Ltd., and Pohang Steel Industries Co. Ltd., Defendant Intervenor, and Union Steel Manufacturing Co. Ltd., Defendant Intervenor, and Dongbu Steel Co. Ltd., Defendant Intervenor, and Union Steel Manufacturing Co. Ltd., Defendant Intervenor, and Dongbu Steel Co. Ltd., Defendant Intervenor. |
| Court | U.S. Court of International Trade |
Dewey Ballantine LLP (Michael H. Stein, Bradford L. Ward, Elizabeth A.B. McMorrow, Kristen M. Neller, and Jennifer Danner Riccardi), Washington, DC, for plaintiffs.
Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Lucius B. Lau), Bernd G. Janzen, Attorney, Office of the Chief Counsel of Import Administration, United States Department of Commerce, of counsel, Washington, DC, for defendant.
Akin, Gump, Strauss, Hauer & Feld, L.L.P. (Sukhan Kim, Spencer S. Griffith, and Samuel C. Straight), Washington, DC, for defendant-intervenors Pohang Iron and Steel Co. Ltd., Pohang Coated Steel Co. Ltd., and Pohang Steel Industries Co. Ltd.
Kaye, Scholer, Fierman, Hays & Handler, LLP (Donald B. Cameron, Julie C. Mendoza, Raymond Paretzky, and John P. Healy), Washington, DC, for defendant-intervenors Union Steel Manufacturing Co. Ltd. and Dongbu Steel Co. Ltd.
This matter is before the court on a Motion for Judgment on the Agency Record pursuant to USCIT Rule 56.2, filed by AK Steel Corporation, Inland Steel Industries, Inc., Bethlehem Steel Corporation, U.S. Steel Group—A Unit of USX Corporation, LTV Steel Co., Inc., National Steel Corporation (collectively "AK Steel" or "Domestic Producers"), who challenge certain aspects of Commerce's antidumping duty administrative review in Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea, 62 Fed.Reg. 18404 (Dep't Commerce 1997) (final results of antidumping administrative review) [hereinafter "Final Results"]. Pohang Iron and Steel Co. Ltd. ("POSCO"), Pohang Coated Steel Co. Ltd. ("POCOS"), and Pohang Steel Industries Co. Ltd. ("PSI");1 Dongbu Steel Co. Ltd. ("Dongbu"); and Union Steel Manufacturing Co. Ltd ("Union") appear as Defendant-Intervenors (collectively "Foreign Producers") to the Domestic Producers' Motion.
The Department of Commerce ("Commerce") issued an antidumping duty order on certain cold-rolled and corrosion-resistant carbon steel flat products from Korea. Certain ColdRolled Carbon Steel Flat Products and Certain Corrosion-Resistant Carbon Steel Flat Products from Korea, 58 Fed.Reg. 44159 (Dep't Commerce 1993) [hereinafter "Certain Steel Products from Korea"]. In response to the August 31, 1995, request of petitioner AK Steel and respondents Dongbu, Union, and POSCO/POCOS/PSI, Certain Steel Products from Korea, 61 Fed.Reg. 51882, 51883 (Dep't Commerce 1996) (preliminary results of antidumping administrative review) [hereinafter "Preliminary Results"], Commerce initiated an administrative review of the antidumping duty orders for the period from August 1, 1994, through July 31, 1995, Certain Steel Products from Korea, 60 Fed.Reg. 46817 (Dep't Commerce 1995) (notice of initiation of administrative review). This review involves four producer-exporters: POSCO, POCOS, Union, and Dongbu.2
The court has jurisdiction to review the final results of an antidumping duty administrative review pursuant to 19 U.S.C. § 1516a(a)(1)(D) (1994).
The court upholds the final results of an antidumping duty administrative review unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B) (1994).
In questions of statutory interpretation, the court determines first whether Congress has spoken directly to the precise question at issue. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Where a statute is clear and on point, the court gives direct effect to Congress' intent, but where a statute is silent or ambiguous, the court defers to an agency's reasonable interpretation of its statutory mandate. Id. at 842-43, 104 S.Ct. 2778.
In its administrative review, Commerce classified all U.S. sales of subject merchandise as Export Price ("EP") sales, pursuant to 19 U.S.C. § 1677a(a) (1994). Final Results, 62 Fed.Reg. at 18434. Commerce based this decision on an application of the three-part test developed in PQ Corp. v. United States, 11 CIT 53, 63-65, 652 F.Supp. 724, 733-35 (1987). This test requires EP (formerly known as "purchase price" ("PP")) classification of sales made prior to import and through affiliated entities in the U.S. where the following criteria are satisfied:
(1) The subject merchandise was shipped directly from the manufacturer to the unrelated buyer, without being introduced into the inventory of the related shipping agent;
(2) direct shipment from the manufacturer to the unrelated buyer was the customary channel for sales of this merchandise between the parties involved; and
(3) the related selling agent in the United States acted only as a processor of sales-related documentation and a communication link with the unrelated U.S. buyer.
Final Results, 62 Fed.Reg. at 18423 [hereinafter "P.Q. test"]. Where all elements of the test are satisfied, Commerce "consider[s] the exporter's selling functions to have been relocated geographically from the country of exportation to the United States, where the sales agent performs them." Id.
Domestic Producers dispute Commerce's use of the P.Q. test at all, arguing that Congress intended, through the EP and Constructed Export Price ("CEP") provisions, 19 U.S.C. §§ 1677a(a, b) (1994), that Commerce classify as CEP sales transactions which have associated U.S. indirect selling expenses. Thus, Domestic Producers request a remand on this issue. Defendant and Foreign Producers contend that Commerce's use of the P.Q. test is in accordance with law and should be affirmed.
Domestic Producers further dispute Commerce's specific application of the P.Q. test to these facts, contending that Commerce's classification of U.S. sales by the Foreign Producers as EP sales is not supported by substantial evidence. Specifically, they claim that each Foreign Producer's U.S. affiliate performs services beyond the mere document processing and information conduit functions described by the P.Q. test's third prong. Defendant requests a remand to reconsider its classification of the sales as EP because Commerce allegedly did not consider all record evidence. Foreign Producers oppose a remand. The facts individually relevant to POCOS, POSCO, Union, and Dongbu are discussed separately, in that order.
To meet a U.S. production order, producer-exporter POCOS first sells subject merchandise to an affiliated Korean trading company, XYI,3 which takes title. POSCO's Section A Questionnaire Response (Oct. 17, 1995), at A-25, C.R. Doc. 3, Pl.'s App., Tab 1, at 14. XYI resells the merchandise to another POCOS affiliate, XYA,4 located in the United States, id., which takes title and acts as importer of record, Letter from POSCO to Commerce (Feb. 27, 1996), at 24, C.R. Doc. 41, Pl.'s App., Tab 9, at 2 ("POSCO's Letter"). XYA then resells the merchandise to the unaffiliated customer. POSCO's Section A Questionnaire Response, at A-25, Pl.'s App., Tab 1, at 14.
The essential terms of sale are established prior to exportation of subject merchandise from Korea. Customers contact XYA and negotiate the preliminary terms of sale. POSCO's Letter, Ex.8, at 9, Pl's App., Tab 9, at 8. There are no published price lists for POCOS' products. POSCO's Section A Questionnaire Response, at A-47, Pl.'s App, Tab 1, at 21. Instead, POCOS provides XYA with quarterly base and other price lists5 to which XYA adds overhead and brokerage and handling fees to provide a price quotation. Id. at A-41, A-47. XYA transmits the price quotation to POCOS for confirmation. POSCO's Letter, Ex.8, at 9, Pl's App., Tab 9, at 8. Upon receipt of POCOS' confirmation, XYA issues a sales contract to the customer. POSCO's Section A Questionnaire Response, at A-41, Pl.'s App., Tab 1, at 18.
In addition, XYA arranges and pays for marine insurance, U.S. transportation, U.S. customs clearance, and brokerage and handling services for individual shipments of subject merchandise. Id., at A-33, Pl.'s App., Tab 1, at 17. XYA collects payment directly from the customers. POSCO's Letter, at 24, Pl.'s App., Tab. 9, at 2.
Domestic Producers contend that XYA has wide latitude in setting price and that POCOS does not exercise control when it confirms XYA's price, but rather simply "rubber stamps" the sale. This sharply contrasts with Commerce's characterization of the relation—placing control over the sale fully with POCOS—implicit in its decision to classify these as EP sales. Specifically, Commerce explained that
the selling functions of [XYA] ... are of a kind that would normally be undertaken by the exporter in connection with these sales. The role of [XYA] ... in the payment of cash deposits of antidumping and countervailing duties, their arrangement of certain movement-related expenses, their involvement in contracts with customers and commissionaires and in activities related to customer payment, are consistent with EP classification and are a relocation of routine selling functions from Korea to the United States.
Final Results, 62 Fed.Reg. at 18433.
Producer-exporter POSCO first sells subject merchandise destined for the United...
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