435 F.Supp.2d 1295 (CIT. 2006), 05-00056, Allied Pacific Food (Dalian) Co. Ltd. v. United States

Docket Nº:Court No. 05-00056.
Citation:435 F.Supp.2d 1295
Party Name:ALLIED PACIFIC FOOD (DALIAN) CO. LTD., Allied Pacific (H.K.) Co. Ltd., King Royal Investments, Ltd., Allied Pacific Aquatic Products (Zhanjiang) Co. Ltd., Allied Pacific Aquatic Products (Zhongshan) Co. Ltd., and Yelin Enterprise Co., Hong Kong, Plaintiffs, v. UNITED STATES, Defendant. Slip Op. 06-89.
Case Date:June 12, 2006
Court:Court of International Trade
 
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Page 1295

435 F.Supp.2d 1295 (CIT. 2006)

ALLIED PACIFIC FOOD (DALIAN) CO. LTD., Allied Pacific (H.K.) Co. Ltd., King Royal Investments, Ltd., Allied Pacific Aquatic Products (Zhanjiang) Co. Ltd., Allied Pacific Aquatic Products (Zhongshan) Co. Ltd., and Yelin Enterprise Co., Hong Kong, Plaintiffs,

v.

UNITED STATES, Defendant.

Slip Op. 06-89.

Court No. 05-00056.

United States Court of International Trade.

June 12, 2006

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Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP (Bruce M. Mitchell, Mark E. Pardo, Ned H. Marshak and William F. Marshall), New York City, for plaintiffs Allied Pacific Food (Dalian) Co. Ltd., et al.

Akin, Gump, Strauss, Hauer & Feld LLP (Spencer S. Griffith and Lisa W. Ross), Washington, DC, for plaintiff Yelin Enterprise Co., Hong Kong.

Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Commercial Litigation Branch, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, United States Department of Justice; Christine J. Sohar, Office of the Chief Counsel for Import Administration, United States Department of Commerce, of counsel, for defendant.

OPINION AND ORDER

STANCEU, Judge.

Plaintiffs Allied Pacific Food (Dalian) Co. Ltd., Allied Pacific (H.K.) Co. Ltd., King Royal Investments, Ltd., Allied Pacific Aquatic Products (Zhanjiang) Co. Ltd., Allied Pacific Aquatic Products (Zhongshan) Co. Ltd. (collectively "Allied Pacific") and Yelin Enterprise Co. Hong Kong ("Yelin") challenge two aspects of a final less-than-fair-value determination issued by the U.S. Department of Commerce ("Commerce" or the "Department") in an antidumping duty investigation conducted in 2004. The imported merchandise that was the subject of the antidumping investigation ("subject merchandise") was certain frozen and canned warmwater shrimp from the People's Republic of China ("China" or the "PRC"). Plaintiffs contend that the final determination and the amended final determination and order should not be upheld by the court because the Department's determinations of surrogate values for labor and for raw shrimp used in producing the subject merchandise were unsupported by substantial evidence on the record and were otherwise contrary to law.

Plaintiffs argue that in calculating the surrogate labor value, Commerce violated the statutory requirement to use data from countries that are economically comparable to China and are significant producers of the subject merchandise. They contend that the Department's use of labor wage rates from developed countries resulted in a surrogate labor wage rate that is more than 600 percent higher than the actual labor wage rate of Commerce's chosen surrogate country, India. Plaintiffs also argue that Commerce, in calculating the surrogate labor rate, should have used current, publicly available information as required by the Commerce regulations. Defendant requests a voluntary remand,

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acknowledging that Commerce may have erred in calculating the surrogate labor wage rate. The court remands this issue to Commerce for a redetermination of the labor rate, as requested by defendant, subject to the requirements of the Order accompanying this Opinion.

Accordingly, the court proceeds to consider plaintiffs' challenge to the Department's choice of a surrogate value for raw shrimp. Plaintiffs seek a remand directing Commerce to redetermine this surrogate value using information plaintiffs placed on the record in the investigation, which is count-size-specific data on shrimp prices collected by the Seafood Exporter's Association of India ("SEAI"). Plaintiffs contend that Commerce erred by instead basing the surrogate value for raw shrimp on data obtained from the financial statement of an Indian seafood producer, Nekkanti Sea Foods Ltd. ("Nekkanti"), which the petitioner in the antidumping investigation had submitted for the record.

Because China is considered to be a nonmarket economy country, the antidumping statute in this instance required Commerce to calculate the value of the factors of production utilized in producing the subject merchandise, including, specifically, the quantities of raw materials employed, using the best available information in one or more market economy countries that are at a level of economic development comparable to China and that are significant producers of comparable merchandise. The principal raw material used in producing the subject merchandise was raw, head-on, shell-on shrimp, i.e., "unprocessed" shrimp. Defendant does not dispute that the Nekkanti financial statement data appear to be based in part on materials other than unprocessed shrimp, including seafood other than shrimp and shrimp that has been partially processed. Defendant instead argues, inter alia, that Commerce acted within its statutory discretion in relying on those data. Commerce, however, was required to support with substantial evidence on the record its determination that the Nekkanti financial statement data were the best available information for valuing unprocessed shrimp. Yet Commerce made no findings as to the quantity of raw material consisting of seafood other than shrimp, or of partially processed shrimp, that was reflected in the Nekkanti data. Nor did Commerce adjust the surrogate value to account for these variances or explain how its methodology could have satisfied the statutory requirement to use the best available information.

Commerce also failed to explain how it came to conclude that other data sets were inferior to the Nekkanti financial statement data according to several criteria that the Department itself identified as indicative of "best available information." Commerce, in the underlying investigation, stated that it prefers to rely on surrogate data that represent a broad market average, are contemporaneous with the period of investigation, are specific to the input in question, and are publicly available. Commerce invoked these criteria to discredit the data sets other than the Nekkanti financial statement data and appears to have chosen the Nekkanti data because the financial statement was audited and publicly available. Commerce failed to explain why it did so even though the Nekkanti financial statement data did not better satisfy any of the other criteria. For these reasons, as discussed in further detail in this Opinion, the court finds that the Department's selection of the Nekkanti financial statement data as the "best available information," and its resulting calculation of the surrogate value for raw shrimp, were unsupported by substantial evidence on the record and, accordingly, were contrary to law.

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The court, exercising its jurisdiction under 28 U.S.C. § 1581(c) (2000), remands the final determination to Commerce for redetermination in accordance with this Opinion.

I. BACKGROUND

Plaintiffs Allied Pacific and Yelin challenge the surrogate values Commerce calculated for labor and raw shrimp in the final, and amended final, less-than-fair-value determinations that Commerce issued in its antidumping duty investigation of imports of certain frozen and canned warmwater shrimp from China. See Notice of Final Determination of Sales at Less Than Fair Value for Certain Frozen and Canned Warmwater Shrimp From the People's Republic of China, 69 Fed.Reg. 70,997 (Dec. 8, 2004) ("Final Determination"). In its amended final less-than-fair-value determination, Commerce calculated weighted average dumping margins of 80.19 percent for Allied Pacific and 82.27 percent for Yelin. Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order for Certain Frozen Warmwater Shrimp From the People's Republic of China, 70 Fed.Reg. 5149, 5151 (Feb. 1, 2005) ("Amended Final Determination and Order"). Plaintiffs assert that Commerce, in calculating these margins, failed to use the best available information when selecting data to calculate the raw shrimp surrogate value, erred in calculating the "standard" size raw shrimp surrogate value, and erred further in extrapolating count-size-specific prices from the standard value. Pl. Allied Pacific's Br. in Supp. of Mot. for J. on the Agency R. at 4 ("Allied Pacific's Br."); Pl. Yelin's Mem. in Supp. of Mot. for J. on the Agency R. at 5-6 ("Yelin's Br."). On April 4, 2005, pursuant to USCIT R. 56.2, plaintiffs moved for judgment on the agency record.

A. Constructed Value of the Foreign Like Product in a Nonmarket Economy Country

In an antidumping investigation, both Commerce and the U.S. International Trade Commission ("ITC" or "Commission") must issue affirmative findings before an order assessing antidumping duties may be issued. 19 U.S.C. § 1673 (2000). In its "less-than-fair-value" determination, Commerce determines whether imported subject merchandise is being unfairly traded by being "dumped," i.e., sold or likely to be sold in the United States for less than its "normal value," and also determines the degree of dumping, i.e., the "dumping margin." See 19 U.S.C. § 1673d(a)(1) (2000); 19 U.S.C. § 1677(34)-(35) (2000); 19 U.S.C. § 1677b(a) (2000). The ITC determines whether a domestic industry is suffering material injury or threat of material injury due to the importation and sale of the subject merchandise in the United States. See 19 U.S.C. § 1673d(b); 19 U.S.C. § 1677(7).

In an investigation, to determine whether and to what extent subject merchandise was "dumped," Commerce determines whether and to what extent the "normal value" (or "constructed normal value") of the "foreign like product" 1 exceeds the

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price at which the subject merchandise is sold in the United States (the "export price" or the "constructed export price"). 2 See 19 U.S.C. § 1677b(a). Under the antidumping duty law, Commerce must use a separate methodology for...

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