General Housewares Corp. v. US, 87-01-00020

• Decision Date: 30 January 1992
• Docket Number: 87-01-00022.,No. 87-01-00020,87-01-00020
• Citation: 783 F. Supp. 1408
• Parties: GENERAL HOUSEWARES CORP., Plaintiff, v. UNITED STATES of America and United States Department of Commerce, Defendants. TROQUELES Y ESMALTES, S.A. and Cinsa, S.A., Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

783 F. Supp. 1408

GENERAL HOUSEWARES CORP., Plaintiff, v. UNITED STATES of America and United States Department of Commerce, Defendants.

TROQUELES Y ESMALTES, S.A. and Cinsa, S.A., Plaintiffs, v. UNITED STATES, Defendant.

Nos. 87-01-00020, 87-01-00022.

United States Court of International Trade.

January 30, 1992.

Kilpatrick & Cody, Atlanta, Ga. (Joseph W. Dorn, Martin M. McNerney and Gregory C. Dorris), for General Housewares Corp.

Brownstein Zeidman and Schomer, Washington, D.C. (Irwin P. Altschuler, David R. Amerine, Ronald M. Wisla and Jeff P. Manciagli), for Troqueles y Esmaltes, S.A. and Cinsa, S.A.

Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice (M. Martha Ries); and Office of Chief Counsel for Import Admin., U.S. Dept. of Commerce (Craig R. Giesse), Washington, D.C., of counsel, for defendants.

OPINION

AQUILINO, Judge:

These actions contest certain aspects of the Final Determination of Sales at Less Than Fair Value: Porcelain-On-Steel Cooking Ware From Mexico, 51 Fed.Reg. 36,435 (Oct. 10, 1986), of the International Trade Administration ("ITA").¹

I

The defendant has interposed a motion to dismiss part of action No. 87-01-00022 on the ground that publication of Porcelain-On-Steel Cooking Ware From Mexico; Final Results of Antidumping Duty Administrative Review, 55 Fed.Reg. 21,061 (May 22, 1990), has rendered the matter moot as to TRES.² That is, while challenge to the determination could result in revocation of the antidumping-duty order as to Cinsa, it could only reduce, not eliminate, the margin determined for TRES. As the final results of the administrative review govern assessment, the defendant argues, a recalculation of the original TRES margin would have no effect.

TRES and Cinsa recognize the point³ but counter that they are challenging the validity of the underlying order:

If the ITA remand determination were to exclude CINSA from the final affirmative LTFV determination, the Court would have the authority to remand the case to the Commission to redetermine whether Mexican imports excluding CINSA ... were the cause of material injury to the domestic industry. Moreover, a remanded ITA determination as to TRES resulting in significantly reduced LTFV margins may also impact a Commission redetermination of injury. Accordingly, the Defendant is incorrect in asserting that TRES is merely seeking to adjust an irrelevant duty deposit rate. For TRES, the establishment of an accurate antidumping margin in the original investigation will impact a possible Commission redetermination as to whether TRES' imports caused material injury to the domestic industry. Thus, the controversy involving the foreign exchange rates used by the ITA in its final LTFV determination could very well determine the validity of the antidumping duty order as it applies to both CINSA and TRES.

Plaintiffs' Memorandum in Opposition to Defendant's Partial Motion to Dismiss, pp. 4-5, citing Borlem S.A.-Empreedimentos Industriais v. United States, 13 CIT 231, 710 F.Supp. 797 (1989).

In Borlem, the ITC had determined that the industry in question was threatened with material injury. That determination, however, was based on an ITA finding of sales at less than fair value, and judicial remand of that finding resulted in a de minimis margin for one of the two respondents. They thereupon sought remand to the Commission to reconsider its threat determination in light of its "long-standing practice of excluding from an original final injury determination import volume, pricing or other data for any firm excluded by Commerce from the scope of Commerce's original final determination." 13 CIT at 235, 710 F.Supp. at 800 (emphasis in original). The Court of International Trade granted remand, but the ITC then concluded that it had no authority to reconsider its original determination. On return to court, that conclusion was reversed. Borlem S.A.-Empreedimentos Industriais v. United States, 13 CIT 535, 718 F.Supp. 41 (1989), aff'd, 913 F.2d 933 (Fed.Cir.1990).

Relying on the Borlem decisions, the plaintiffs suggest that, if this court were to remand, and ITA recalculation were to result in the exclusion of Cinsa, remand to the Commission might be appropriate. Their suggestion is well-taken. Although publication of the results of a final administrative review generally renders actions based on prior determinations moot⁴, where the validity of the order underlying that review, rather than the duty for dumping, is at issue, a party continues to be possessed of "a legally cognizable interest in the outcome." Nuove Industrie Elettriche di Legnano S.p.A. v. United States, 14 CIT ___, ___, 739 F.Supp. 1567, 1569 (1990), quoting Powell v. McCormack, 395 U.S. 486, 496, 89 S.Ct. 1944, 1950, 23 L.Ed.2d 491 (1969). This is true of TRES, and defendant's motion to dismiss it from action No. 87-01-00022 must therefore be denied.

II

The issues in action No. 87-01-00022 concern a business practice of TRES and Cinsa (and apparently of other manufacturers and exporters in Mexico⁵) which grew out of that country's foreign-exchange-control laws. In December 1982, the government of Mexico established a system of dual exchange rates: the official, or controlled rate, which had to be used in all export and most import transactions, and a free rate, which, according to a memorandum in the record, was to be used for tourism and transactions along the border⁶. Every business exporting goods exceeding one million U.S. dollars in value was further required to bring underlying invoice(s) to a bank prior to export for issuance of a certificate for the sale of foreign exchange (compromiso de ventas de divisas or "CVD") indicating that that sale was subject to the exchange controls of Mexico and dollars earned on the sale had to be repatriated within 90 days of its issuance for exchange at the official rate.⁷

A

During ITA verification, TRES and Cinsa explained that their U.S. customers would deposit money due in interest-bearing accounts in the United States. Eventually, the monies would be converted by plaintiffs' Mexican banks at the official rates in effect 90 days after issuance of the CVD's, thereby liquidating them. See R.Doc 112, p. 23; R.Doc 118, p. 23. Because of depreciation of the peso vis-à-vis the dollar, this practice resulted in receipt by TRES and Cinsa of more pesos than would have been received had the sales proceeds been repatriated earlier. According to the verification reports, Cinsa allocated the gains on a per-sale basis, while TRES's allocation was based on an average calculation. See ConfDoc 30, pp. 23-24; ConfDoc 35, p. 24.

Initially, the gains were claimed as a credit-expense adjustment to U.S. price. See, e.g., ConfDoc 2, pp. 12-13; R.Doc 30, pp. 18-19; R.Doc 31, p. 14. TRES and Cinsa then proposed three alternative methodologies for taking the gains into account: use of the free rate of exchange to convert as of the date of sale, use of the official rate on the 90th day, or a circumstances-of-sale adjustment pursuant to 19 C.F.R. § 353.15(a) (1986).

The ITA rejected a free-rate approach, stating that "firms must convert their foreign exchange to Mexican pesos at the official exchange rate. Therefore, we converted at the certified official rate in effect on the date of sale." 51 Fed.Reg. at 36,440. Rejecting any other adjustment for the post-sales gains, the agency stated:

While respondents may have received more pesos for their dollar earnings by waiting 90 days to repatriate those dollars, the purchasing power of those pesos would have been diminished by inflation that occurred in Mexico during that 90 day period. Therefore, if we were to allow these foreign exchange gains, without any adjustment for the diminishing purchasing power of the pesos, we would be overstating the return to the Mexican producers. Because changes in inflation and devaluation rates would, in general, be parallel, we would not anticipate the effect of the 90 day delay to be significant. Moreover, we verified that the change in the exchange rate was not predictable.

Id. at 36,438. Cinsa's margin was determined to be 17.47 percent; for TRES it was 58.73. See id. at 36,442.

Plaintiffs' position is that these margins are inflated as a result of the ITA's failure to discount their exchange gains.

B

As indicated, the agency made all currency conversions as of the dates of sale in accordance with 19 C.F.R. § 353.56(a), which stated:

(a) Rule for conversion. In determining the existence and amount of any difference between the United States price and the fair value or foreign market value for the purposes of this part or of the Act, any necessary conversion of a foreign currency into its equivalent in United States currency shall be made in accordance with the provisions of section 522 of the Tariff Act of 1930, as amended (31 U.S.C. 372):

(1) As of the date of purchase or agreement to purchase, if the purchase price is an element of the comparison. ...⁸

The plaintiffs argue that the agency should have chosen the certified free rates rather than the controlled rates as of the dates of sale because the free rates more closely approximated the official rates 90 days later. They rely on Pistachio Group of the Ass'n of Food Indus. v. United States, 11 CIT 668, 671 F.Supp. 31 (1987), and Luciano Pisoni Fabbrica Accessori Instrumenti Musicali v. United States, 10 CIT 424, 640 F.Supp. 255 (1986), claiming that the ITA's reliance on section 353.56(a) was an abuse of discretion.

In Pistachio Group, the court remanded for agency determination of whether use of the rate certified by the Federal Reserve, the official Iranian government rate, artifically created a margin of dumping⁹, having upheld section 353.56's delegation of authority to the Federal Reserve. The court concluded that

the policies of the antidumping law require that ITA's residual discretion include the ability to avoid

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