Jiaxing Brother Fastener Co. v. United States

• Citation: 822 F.3d 1289
• Decision Date: 21 April 2016
• Docket Number: No. 2015–1161.,2015–1161.
• Parties: JIAXING BROTHER FASTENER CO., LTD., aka Jiaxing Brother Standard Parts Co., Ltd., aka RMB Fasteners Ltd., aka IFI & Morgan Ltd., Plaintiff–Appellant v. UNITED STATES, Vulcan Threaded Products, Inc., Defendants–Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

822 F.3d 1289

JIAXING BROTHER FASTENER CO., LTD., aka Jiaxing Brother Standard Parts Co., Ltd., aka RMB Fasteners Ltd., aka IFI & Morgan Ltd., Plaintiff–Appellant

v.UNITED STATES, Vulcan Threaded Products, Inc., Defendants–Appellees.

No. 2015–1161.

United States Court of Appeals, Federal Circuit.

April 21, 2016.

Gregory S. Menegaz, DeKieffer & Horgan, PLLC, Washington, DC, argued for plaintiff-appellant. Also represented by John J. Kenkel, James Kevin Horgan, Alexandra H. Salzman.

Alexander V. Sverdlov, Commercial Litigation Branch, Civil Division, United

States Department of Justice, Washington, DC, argued for defendant-appellee United States. Also represented by Elizabeth Anne Speck, Benjamin C. Mizer, Jeanne E. Davidson, Patricia M. McCarthy ; Lisa W. Wang, Office of the Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, Washington, DC.

Frederick Paul Waite, Vorys, Sater, Seymour & Pease LLP, Washington, DC, argued for defendant-appellee Vulcan Threaded Products, Inc. Also represented by Kimberly Young.

Before O'MALLEY, REYNA, and CHEN, Circuit Judges.

REYNA

, Circuit Judge.

Appellants appeal a decision of the U.S. Court of International Trade that affirmed a U.S. Department of Commerce determination to select Thailand as the surrogate country for China in the second administrative review of an antidumping duty order on certain steel threaded rod from China.¹ We hold that the U.S. Department of Commerce decision to use surrogate values from Thailand to value certain factors of production in calculating normal value for the subject merchandise was in accordance with law, not arbitrary or capricious, and supported by substantial evidence. We affirm.

Background

Appellants are Jiaxing Brother Fastener Co., Ltd. (aka Jiaxing Brother Standard Parts Co., Ltd.), IFI & Morgan Ltd., and RMB Fasteners Ltd. (collectively, “Appellants” or “Jiaxing”). Jiaxing Brother Fastener Co., Ltd. is a Chinese manufacturer of steel threaded rod, while IFI & Morgan Ltd. and RMB Fasteners Ltd. are Chinese exporters of the steel threaded rod produced by Jiaxing Brother Fastener Co., Ltd. Appellants are affiliated parties. J.A. 8. Appellants challenge the U.S. Department of Commerce (“Commerce”) decision to select Thailand as the surrogate country to establish normal value in the second administrative review of the antidumping duty order on certain steel threaded rod from China. See Certain Steel Threaded Rod from the People's Republic of China: Notice of Antidumping Duty Order, 74 Fed. Reg. 17,154 (Dep't of Commerce Apr. 14, 2009)

.

In antidumping proceedings involving nonmarket economy countries, such as China, the Tariff Act requires Commerce to calculate normal value of the subject merchandise based on surrogate values offered in a comparable market economy. See 19 U.S.C. § 1677b(c)(1)

. Commerce calculates the surrogate values by valuing certain “factors of production” used in producing the merchandise in a comparable market economy.²

Id. § 1677b(c)(4). In essence, Commerce seeks to construct a hypothetical normal value for the merchandise that is uninfluenced by the nonmarket economy. See

Nation Ford Chem. Co. v. United States, 166 F.3d 1373, 1375 (Fed.Cir.1999) ; see also

19 U.S.C. § 1677(18)(A) (defining “nonmarket economy country”). To do this, Commerce selects a market economy country as the primary surrogate country. 19 C.F.R. § 351.408(c)(2). The process of choosing a market economy country to value the factors of production is known as surrogate country selection. See

Dorbest Ltd. v. United States, 604 F.3d 1363, 1368 (Fed.Cir.2010).

As early as 2004, Commerce has followed a four-step process to select a surrogate country:

(1) the Office of Policy (“OP”) assembles a list of potential surrogate countries that are at a comparable level of economic development to the [non-market economy] country; (2) Commerce identifies countries from the list with producers of comparable merchandise; (3) Commerce determines whether any of the countries which produce comparable merchandise are significant producers of that comparable merchandise; and (4) if more than one country satisfies steps (1)–(3), Commerce will select the country with the best factors data.

Vinh Hoan Corp. v. United States, 49 F.Supp.3d 1285, 1292 (Ct. Int'l Trade 2015)

(internal quotation marks omitted) (quoting Import Admin., U.S. Dep't of Commerce, Non–Market Economy Surrogate Country Selection Process, Policy Bulletin 04.1 (2004), http://enforcement.trade.gov/policy/bull04–1.html (last visited Feb. 11, 2014)).

The statute directs Commerce to value the factors of production through “the best available information” in the market economy. 19 U.S.C. § 1677b(c)(1)

. We have noted that Commerce has discretion to determine what constitutes the best available information, as this term is not defined by statute. QVD Food Co. v. United States, 658 F.3d 1318, 1323 (Fed.Cir.2011). “Commerce generally selects, to the extent practicable, surrogate values that are publicly available, are product-specific, reflect a broad market average, and are contemporaneous with the period of review.” Qingdao Sea–Line Trading Co. v. United States, 766 F.3d 1378, 1386 (Fed.Cir.2014).

Using the best available information, Commerce “shall [value the factors of production] to the extent possible ... in one or more market economy countries that are—(A) at a level of economic development comparable to that of the nonmarket economy country, and (B) significant producers of comparable merchandise.” § 1677b(c)(4)(A)–(B)

(emphases added). The statute does not define “comparable”; nor does it require Commerce to use any particular methodology in determining which countries are sufficiently comparable. To partially fill the statutory gap, Commerce promulgated 19 C.F.R. § 351.408(b), which emphasizes per capita Gross Domestic Product (“GDP”) as a measure of economic comparability:

In determining whether a country is at a level of economic development comparable to the non-market economy under [19 U.S.C. § 1677b(c)(1)(B)

] or [19 U.S.C. § 1677b(c)(4)(A) ] of the Act, the Secretary will place primary emphasis on per capita GDP as the measure of economic comparability.

19 C.F.R. § 351.408(b)

.

At least by 2007, Commerce began relying on per capita Gross National Income (“GNI”), as opposed to per capita GDP, for determining sufficiently comparable countries. According to Commerce, “while the two measures are very similar, per capita GNI is reported across almost all countries by an authoritative source (the World Bank),” and Commerce “believes that the per capita GNI represents the single best measure of a country's level of total income and thus level of economic development.” Vinh Hoan, 49 F.Supp.3d at 1293 n. 5

(quoting Antidumping Methodologies in Proceedings Involving Non–Market Economy Countries: Surrogate Country Selection and Separate Rates, 72 Fed. Reg. 13246, 13246 n. 2 (Dep't of Commerce Mar. 21, 2007) ).

Following its preference to use one surrogate country as the reference point, 19 C.F.R. § 351.408(c)(2)

, when several countries are both at a level of economic development comparable to the nonmarket economy country and significant producers of comparable merchandise, Commerce evaluates the reliability and completeness of the data in the similarly-situated surrogate countries and generally selects the one with the best data as the primary surrogate country.³

In April 2008, Commerce instituted the underlying antidumping duty investigation on certain steel threaded rod from China.⁴ In April 2009, Commerce made a final affirmative determination that a U.S. industry was materially injured by sales at less-than-fair value of the merchandise subject to the scope of the investigation.⁵ In 2009, Commerce issued an antidumping duty order on the subject merchandise.⁶ For purposes of both the preliminary and final determinations, Commerce selected India as the surrogate country on which to base the Chinese producers' factors of production.⁷ Appellants were respondents in the investigation and were assigned antidumping duty rates of 55.16%.⁸

The Second Administrative Review

On May 27, 2011, Commerce initiated a second administrative review for the period of review from April 1, 2010, though March 31, 2011.⁹ The second administrative review is the subject of this appeal.

At the outset of the second administrative review, Commerce proposed seven countries as potential surrogate countries on the basis that they had a per capita GNI close to China:

CountryPer Capita GNI, 2010(USD) China$4,260   Philippines$2,050 Indonesia$2,580 Ukraine$3,010 Thailand$4,210 Peru$4,710 Columbia$5,510 South Africa$6,100

J.A. 28–29. With a per capita GNI of $1,340, India was not included on the list. J.A. 27–29.¹⁰

After publishing the list of surrogate country candidates, Commerce invited interested parties to comment on the selection of an appropriate surrogate country for China.¹¹ Vulcan Threaded Products, Inc. (“Vulcan”) submitted data from Thailand, arguing that Thailand was the best choice. Jiaxing urged Commerce to use India as the surrogate country.¹² J.A. 61–62, 821. Of the additional countries proposed by other parties, none were within the per capita GNI range noted on the list. J.A. 25, 821, 1384–85.

In its April 2012 preliminary decision on the second administrative review, Commerce selected Thailand as the most appropriate market economy to act as the surrogate country to China. J.A. 811–35.¹³ Commerce evaluated Global Trade Atlas (“GTA”) data and determined that all countries on the surrogate country list exported significant quantities of steel threaded rod and could be considered significant producers of comparable merchandise. J.A. 820–21. After considering the reliability and availability of surrogate value data, Commerce chose Thailand as the primary surrogate country because the Thai information on record was “complete,” allowing Commerce to value material inputs, energy, movement expenses,...