CHINA NAT. METALS & MIN. IMPORT & EXPORT v. US

• Decision Date: 24 November 1987
• Docket Number: Court No. 86-06-00719.
• Citation: 11 CIT 859,674 F. Supp. 1482
• Parties: CHINA NATIONAL METALS & MINERALS IMPORT & EXPORT CORPORATION, China National Machinery & Equipment Import & Export Corporation, China National Machinery Import & Export Corporation, Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

674 F. Supp. 1482

11 CIT 859

CHINA NATIONAL METALS & MINERALS IMPORT & EXPORT CORPORATION, China National Machinery & Equipment Import & Export Corporation, China National Machinery Import & Export Corporation, Plaintiffs, v. UNITED STATES, Defendant.

Court No. 86-06-00719.

United States Court of International Trade.

November 24, 1987.

Graham & James, Lawrence R. Walders, Washington, D.C., Denis H. Oyakawa, Los Angeles, Cal., and Jeffrey L. Snyder, Washington, D.C., for plaintiffs.

Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, Elizabeth C. Seastrum, for defendant, of counsel: Mary Patricia Michel, Atty. Advisor, U.S. Dept. of Commerce, Washington, D.C.

MEMORANDUM OPINION AND ORDER

TSOUCALAS, Judge:

This action challenges the decision by the Department of Commerce, International Trade Administration (Commerce) in Certain Iron Construction Castings from the People's Republic of China; Final Determination of Sales at Less Than Fair Value, 51 Fed.Reg. 9483 (March 19, 1986). Plaintiffs contend that it was error for Commerce to determine foreign market value (FMV) based on prices from a basket of countries which were not economically comparable to the PRC, alleging that price information from a comparable surrogate country was available. The action is before the Court on plaintiffs' motion for judgment upon the administrative record.

BACKGROUND

Plaintiffs are manufacturers and exporters of iron construction castings from the People's Republic of China (PRC), and were subject to the antidumping investigation, which resulted in the final determination of sales at less than fair value (LTFV). 51 Fed.Reg. 9483. To determine FMV in the PRC, which, for purposes of the investigation, is a state-controlled, non-market economy (NME), Commerce was required to find an appropriate surrogate country, from which prices or constructed value could be derived. 19 U.S.C. § 1677b(c); 19 C.F.R. § 353.8. In its preliminary determination, Commerce used the prices in India, as estimated in the petition, for determining FMV in the PRC. 50 Fed.Reg. 43594 (October 28, 1985). For its final determination, Commerce identified eight potential non-state controlled countries which could serve as a surrogate country: Egypt, India, Indonesia, Morocco, Pakistan, Philippines, Sri Lanka, and Thailand. However, when requested to complete the questionnaires supplied by Commerce each country refused to cooperate except Indonesia, whose responses were inadequate. Commerce thus used the average f.o.b. import values of iron construction castings from all countries exporting this merchandise to the United States, which were not subject to antidumping or countervailing duty orders or investigations, and which did not exhibit price aberrations. This yielded Italy, Japan, Switzerland, Taiwan, and the United Kingdom.

Plaintiffs challenge this selection, as the least preferable method, claiming it was error for Commerce not to use prices from a surrogate country of comparable economic development, as required by the regulations. Plaintiffs contend that India is comparable to the PRC in economic development, whereas the market basket is comprised of countries at a far more advanced stage of economic development. Plaintiffs proffer three sources from which price information from India was available: (1) home market price information from the concurrent investigation on iron construction castings in India; (2) U.S. sales price of Indian imports based on Customs' invoices; or (3) average unit values of this product imported from India as reflected in U.S. import statistics (IM 146-data).

However, Commerce concluded that use of the first two sources would constitute a breach of its duty to not disclose confidential information submitted in a concurrent investigation; and because of these confidentiality restrictions, adjustments necessary to the third alternative could not be made, thus this method would not fall within the hierarchy set forth in 19 C.F.R. § 353.8.

The issue is whether Commerce's conclusion is supported by substantial evidence and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B). Substantial evidence:

`means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.' ... It `is something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence.'

Matsushita Elec. Indus. Co., Ltd. v. United States, 750 F.2d 927, 933 (Fed.Cir.1984). (Citations omitted).

DISCUSSION

The regulations set out in 19 C.F.R. § 353.8, promulgated pursuant to 19 U.S.C. § 1677b(c) (1982), establish a hierarchy of methods for determining the FMV of a product from a NME. By identifying a surrogate country, which has a non-state-controlled-economy, the basis for FMV shall be either: (1) the prices for which this merchandise sold, either in that home market, or in third countries; or (2) the constructed value of this merchandise in that surrogate country. Although there is a preference for using prices over constructed value, to the extent possible, this surrogate country should be at a level of economic development comparable to the one under investigation. 19 C.F.R. § 353.8(b)(1). Further, if no comparable surrogate can be identified, then the basis for FMV shall be another non-state-controlled-economy country or countries, suitably adjusted for known differences in the cost of materials and labor. 19 C.F.R. § 353.8(b)(2).

Commerce, having ascertained that there was no comparable surrogate country, employed the "market basket" approach in 19 C.F.R. § 353.8(b)(2). However, concurrent with its investigation into iron construction castings from the PRC, Commerce was also investigating sales of this merchandise from India. See Certain Iron Construction Castings from India; Final Determination of Sales at Less Than Fair Value, 51 Fed.Reg. 9486 (March 19, 1986). As a result, plaintiffs allege that Commerce was in possession of adequate home market prices for iron construction castings in India, which should have been used to calculate FMV in the PRC, thus satisfying the first tier in the surrogate selection hierarchy.

Commerce rejected this alternative, relying on 19 U.S.C. § 1677f(b)(1) (1982 and Supp. II 1984), which mandates that proprietary information shall not be disclosed without the consent of the person submitting it, except: to the officer or employee directly involved in conducting the investigation for which it was submitted; or under protective order; or as provided for in subsection (a)(4)(A). This latter subsection permits disclosure of proprietary information received in the course of a proceeding, if it can be disclosed in a form which cannot be associated with, or otherwise be used to identify, the operations of a particular person. Accordingly, Commerce cited its established policy, not to use confidential information gathered in a concurrent investigation involving the same merchandise, without the consent of the submitting party. Commerce determined that such consent had been withheld on behalf of the Indian producers in that unrelated investigation.

The Court first addresses plaintiffs' contention that the record does not support Commerce's conclusion that India objected to use of its data. The record does not contain a separate request by Commerce to the producers in India for permission to use the information submitted in the concurrent investigation. Nevertheless, Commerce contacted the government in India initially to seek surrogate country data for purposes of this investigation as well as for an unrelated investigation into steel wire nails from the PRC. The response from the Indian government makes referrence to the dual request but explains that "it would not be possible for Indian firms to be used as surrogates in the Chinese industry, in connection with the anti-dumping investigation on steel wire nails." In support of that position, the letter cites the non-comparable costs of production as reflected in: differences in industrial base, infrastructural facilities, and relative factor endowments; as well as different political and economic management, and different priorities in industrial development. R.Doc. 30.

Concededly, the letter does not explicitly indicate the Indian government's objection to the use of its data in this PRC investigation. Nonetheless, it does not seem that consent may be implied based on the record evidence. In the first instance, the reasons offered by the Indian government in declining to be used as a surrogate are not factually specific to the steel wire nail investigation but refer to general distinctions between the countries. It is relevant at this juncture to note that in the majority of investigations involving the PRC, India has failed to respond to requests for information for the purpose of surrogate country comparison.¹ It is of further import that Commerce reported in its final investigation that the firms in India failed to respond to questionnaires when contacted for surrogate country data in this investigation. 51 Fed.Reg. 9484.

Finally, when plaintiffs herein, as respondents in the investigation below, sought access to the data in the Indian investigation, the Indian producers objected to that disclosure under protective order. R. Doc. 26. It is apparent that India has expressed its intent to not be used as a surrogate for the PRC. In determining whether the Court should sustain Commerce's conclusion that it did not have the consent of the Indian government to use its information, the question is whether the administrative conclusion is rational. Timken Co. v. United States, 11 CIT ___, ___, 673 F.Supp. 495, 500 (1987), (citing Matsushita Electrical Industrial Co. v. United States, 750 F.2d 927, 933 (Fed. Cir.1984...