Camau Frozen Seafood Processing Import Export Corp. v. United States

• Decision Date: 10 March 2014
• Docket Number: Slip Op. 14–28.,Court No. 11–00399.
• Citation: 968 F.Supp.2d 1328
• Parties: CAMAU FROZEN SEAFOOD PROCESSING IMPORT EXPORT CORPORATION, et al., Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

968 F.Supp.2d 1328

CAMAU FROZEN SEAFOOD PROCESSING IMPORT EXPORT CORPORATION, et al., Plaintiffs,

v.UNITED STATES, Defendant.

Slip Op. 14–28.

Court No. 11–00399.¹

United States Court of

International Trade.

March 10, 2014.

Andrew W. Kentz, Jordan C. Kahn and Nathaniel Maandig Rickard, Picard Kentz & Rowe LLP, of Washington, DC, for Plaintiff Ad Hoc Shrimp Trade Action Committee.

Matthew R. Nicely and Alexandra B. Hess, Hughes Hubbard & Reed LLP, of Washington, DC, for Plaintiff Minh Phu Seafood Corporation.

Joshua E. Kurland, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant. Also on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Mykhaylo Gryzlov, Senior Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

OPINION AND ORDER

POGUE, Chief Judge:

This consolidated action returns to court following remand for a second redetermination of the final results of the fifth administrative review of an antidumping duty order covering certain frozen warmwater shrimp from the Socialist Republic of Vietnam (“Vietnam”).² At issue is the estimationby the United States Department of Commerce (“Commerce”) of a surrogate fair market labor wage rate for the shrimping industry in Vietnam, which Commerce treats as a non-market economy (“NME”).

In its 2d Remand Results, Commerce claims that the court's second remand order compelled the agency to use data from more than one country when calculating surrogate labor values in this review, contrary to Commerce's new labor rate policy. But Commerce's claim is incorrect. Rather, the court's prior decisions required that Commerce address, evaluate, and weigh the conflicting record evidence regarding the appropriateness of its surrogate data choices for valuing the relevant factors in this review, including labor. Commerce has yet to do so. Consequently, the 2d Remand Results must again be remanded for additional consideration, consistent with Camau I, Camau II, and this opinion.

BACKGROUND

Because Commerce treats Vietnam as an NME country,³ Commerce determines the normal value of merchandise from Vietnam by using surrogate market economy data to calculate production costs and profit. See19 U.S.C. § 1677b(c)(1) (2006). In doing so, Commerce's valuation of the factors of production (“FOPs”) must be “based on the best available information regarding the values of such factors in a market economy country or countries considered to be appropriate by the [agency].” Id. “[T]o the extent possible,” Commerce is required to use data from countries that are both economically comparable to the NME and significant producers of comparable merchandise. Id. at § 1677b(c)(4).

In the past, Commerce generally valued the labor FOP for NME countries by using “regression-based wage rates reflective of the observed relationship between wages and national income in market economy countries.” 19 C.F.R. § 351.408(c)(3) (2010).⁴ Regression-based NME wage rates “estimate[d] the linear relationship between yearly per capita gross national income (‘[GNI]’) and hourly wage rate (‘wage’)” to arrive at the wage for an NME country by using the NME's GNI.⁵

During the prior (fourth) administrative review of this antidumping duty order, however, 19 C.F.R. § 351.408(c)(3) was invalidated as contrary to the statute because it did not rely exclusively on data from economically comparable countries that are significant producers of comparable merchandise. ⁶ Consequently, in that prior fourth review Commerce used a new method for calculating the surrogate wage rate when determining the normal value of subject merchandise from Vietnam. Explaining its new method, Commerce specifically rejected proposals to calculate the surrogate wage rate using data solely from Bangladesh—the chosen primary surrogate country. Commerce declared:

While information from a single surrogate country can reliably be used to value other FOPs, wage data from a single surrogate country does not constitute the best available information for purposes of valuing the labor input due to the variability that exists between wages and GNI. While there is a strong world-wide relationship between wage rates and GNI, too much variation exists among the wage rates of comparable [market economies]. As a result, we find reliance on wage data from a single country to be unreliable and arbitrary.⁷

That is, Commerce rejected proposals to base Vietnam's surrogate wage rate on data from Bangladesh because, although Bangladesh is sufficiently economically comparable to Vietnam for the purpose of valuing the other FOPs, the observed strong linear relationship between wage rates and GNI suggests that data from Bangladesh, which has a GNI roughly half that of Vietnam,⁸ are unlikely to be representative of a fair market wage rate in Vietnam. The surrogate wage rate ultimately calculated for Vietnam in the fourth review was $0.89. AR4 I & D Mem. cmt. 9 at 31.

Before the results of this (fifth) review were finalized, however, Commerce published its determination that, in light of the recent judicial decisions constraining the available dataset for calculating surrogate FOP values in NME cases,⁹ Commerce was changing its policy from a preference for using data from multiple market economies when constructing surrogate labor rates to a policy of relying on data from a single market economy to calculate all surrogate FOPs, including labor.¹⁰ For its final results of this review, therefore, Commerce employed the New Labor Rate Policy to arrive at the surrogate wage rate used to construct normal value. I & D Mem. cmt. 2I. Using data solely from the primary surrogate country, Bangladesh, Commerce calculated a surrogate wage rate for Vietnam's shrimping industry of $0.21.¹¹

Responding to the Ad Hoc Shrimp Trade Action Committee ¹² (“AHSTAC”)'s challenge to the application of Commerce's New Labor Rate Policy in this review, this Court held that although the New Labor Rate Policy is reasonable on its face, Commerce's conclusion that Bangladesh provided the best available data from which to value all FOPs in this review, including labor, could not be sustained without further evaluation and explanation. Camau I, ––– CIT at ––––, 880 F.Supp.2d at 1358–61. As the court explained, though Commerce may use a single surrogate country for all FOPs (which it is statutorily neither required to do nor prohibited from doing), the reasonableness of using that country's data must be explained where the evidence and factual findings on record may fairly detract from the weight of Commerce's determination. Id.¹³

Specifically, the court remanded the Final Results because the record evidence included Commerce's prior findings that 1) GNI is linearly correlated to wage rates ¹⁴; 2) Commerce's economic comparability analysis allows for a fairly wide range of GNI values to satisfy the economic comparability criterion for surrogate market economy countries ¹⁵; and 3) Bangladesh's GNI, equaling roughly half of Vietnam's, is sufficiently disparate from that of Vietnam that, given 1) above, using solely the wage rate data from Bangladesh would likely understate the estimate for a fair market wage rate in Vietnam.¹⁶ These are findings that fairly detract from the reasonableness of Commerce's conclusion that the $0.21 wage rate derived from Bangladeshi data provides the best information available regarding the market wage rate that would be Vietnam's if Vietnam were a market economy. Because Commerce did not address these findings and explain the continued reasonableness of its decision notwithstanding these factual circumstances, the court remanded Commerce's determination for additional consideration and/or more explanation. Camau I, ––– CIT at ––––, 880 F.Supp.2d at 1358–61.

Responding to the court's first remand order, Commerce continued to insist that, given the court's recent decisions directing the agency to keep within the bounds of its statutory authority, and given the relevant statutory constraints, the agency is now justified in using data, without further evaluation, that it had previously rejected as arbitrary. See 1st Remand Results.¹⁷ The court remanded again, again holding that Commerce must explain its conclusion to account for the evidence that using Bangladeshi wage data would likely significantly undervalue the surrogate wage rate due to the roughly 50 percent GNI disparity between Bangladesh and Vietnam. See Camau II, ––– CIT at ––––, 929 F.Supp.2d at 1354–58.

Now, in its second redetermination, Commerce has thrown up its proverbial hands, maintaining “under respectful protest” that the court's decisions have dictated to the agency to average data from multiple countries when determining surrogate labor FOP values, contrary to the New Labor Rate Policy. See 2d Remand Results at 7–8.

STANDARD OF REVIEW

This Court will uphold Commerce's determinations on remand if they are in accordance with law, consistent with the court's remand order, and supported by substantial evidence. See19 U.S.C. § 1516a(b)(1)(B)(i); Trust Chem Co. v. United States, ––– CIT ––––, 819 F.Supp.2d 1373, 1378 (2012). Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion,” Universal Camera, 340 U.S. at 477, 71 S.Ct. 456 (internal quotation marks and citation omitted), and the “substantiality of evidence must take into account whatever in the record fairly detracts from its weight.” Id. at 488, 71 S.Ct. 456.

Although “a court is not to substitute its judgment for that of the agency,” the court must ensure that the agency “examine[d] the relevant data and articulate[d] a satisfactory explanation for its action including a ‘rational connection between the facts found and the choice made.’ ” State...