Dupont Teijin Films, Mitsubishi Polyester Film, Inc. v. United States, Slip Op. 14–86.

• Decision Date: 22 July 2014
• Docket Number: Court No. 12–00088.,Slip Op. 14–86.
• Citation: 997 F.Supp.2d 1338
• Parties: DUPONT TEIJIN FILMS, Mitsubishi Polyester Film, Inc., SKC, Inc., and Toray Plastics (America), Inc., Plaintiffs, v. UNITED STATES, Defendant, Tianjin Wanhua Co., Ltd., Fuwei Films (Shandong) Co., Ltd., and Sichuan Dongfang Insulating Material Co., Ltd., Defendant–Intervenors.
• Court: U.S. Court of International Trade

997 F.Supp.2d 1338

DUPONT TEIJIN FILMS, Mitsubishi Polyester Film, Inc., SKC, Inc., and Toray Plastics (America), Inc., Plaintiffs,

v. UNITED STATES, Defendant,Tianjin Wanhua Co., Ltd., Fuwei Films (Shandong) Co., Ltd., and Sichuan Dongfang Insulating Material Co., Ltd., Defendant–Intervenors.

Slip Op. 14–86. Court No. 12–00088.

United States Court of International Trade.

July 22, 2014.

Jeffrey I. Kessler, Ronald I. Meltzer, Patrick J. McLain, and David M. Horn, Wilmer, Cutler, Pickering, Hale & Dorr, LLP, of Washington, DC, for plaintiffs.

David F. D'Alessandris, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendant. With him 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 Whitney M. Rolig, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

David J. Craven and Saichang Xu, Riggle and Craven, of Chicago, IL, for defendant-intervenors.

OPINION

RESTANI, Judge:

This matter is before the court following a remand to the United States Department of Commerce (“Commerce”) in Dupont Teijin Films v. United States, 931 F.Supp.2d 1297 (CIT 2013) (“ Dupont Teijin Films II ”). Plaintiffs Mitsubishi Polyester Film, Inc. and SKC, Inc. (collectively, “Plaintiffs”) and Defendant–Intervenors Tianjin Wanhua Co., Ltd., Sichuan Dongfang Insulating Material Co., Ltd., and Fuwei Films (Shandong) Co., Ltd. (collectively, “Defendant–Intervenors”) challenge various aspects of the Final Results of Redetermination Pursuant to Court Order, ECF No. 70–1 (“ Second Remand Results ”). For the reasons set forth below, Commerce's Second Remand Results are sustained.

INTRODUCTION

The court assumes familiarity with the facts of this case as set out in the previous opinion. See generally Dupont Teijin Films II, 931 F.Supp.2d at 1299–1307. For ease of understanding, however, a brief summary is provided below.

This case involves challenges to Commerce's final results of redetermination in the second administrative review of the antidumping duty order of polyethylene terephthalate film, sheet, and strip (“PET film”) from the People's Republic of China (“PRC”). See Polyethylene Terephthalate Film, Sheet, and Strip from the People's Republic of China: Final Results of the 2009–2010 Antidumping Duty Administrative Review of the Antidumping Duty Order, 77 Fed.Reg. 14,493 (Dep't Commerce Mar. 12, 2012). Initially, Commerce calculated the dumping margins using India as the primary surrogate country. Id. at 14,494. Commerce calculated weighted-average dumping margins of 8.42% for Tianjin Wanhua Co., Ltd., 10.87% for Sichuan Dongfang Insulating Material Co., Ltd., and 8.48% for both Fuwei Films (Shandong) Co., Ltd. and Shaoxing Xiangyu Green Packing Co., Ltd. Id.

In its previous order in this case, the court instructed Commerce to reconsider its surrogate country selection using 2009 Gross National Income (“GNI”) data. Dupont Teijin Films II, 931 F.Supp.2d at 1307. Commerce ignored 2009 GNI data indicating that India was no longer economically comparable to the PRC, despite the data being on the record, claiming, very belatedly, that the data were not filed early enough in the proceedings. Id. at 1299, 1301, 1307. The court held that Commerce must consider record evidence and that the parties were not given a meaningful opportunity to comment on economic comparability. Id. at 1305.

On remand, Commerce utilized the 2009 GNI data to create a new list of potential surrogate countries and selected South Africa as the primary surrogate country to use in this administrative review because South Africa is at a similar level of economic development as the PRC, it is a significant producer of comparable merchandise, and there were reliable data that could be used to value the factors of production. Second Remand Results at 1–2.¹ The change in the primary surrogate country resulted in higher margins of 19.49% for Tianjin Wanhua Co., Ltd., 14.25% for Sichuan Dongfang Insulating Material Co., Ltd., and 19.35% for both Fuwei Films (Shandong) Co., Ltd. and Shaoxing Xiangyu Green Packing Co., Ltd. Id. at 34.

Plaintiffs challenge Commerce's decision to use South Africa as the primary surrogate country for calculating the normal value of PET film, contending that South Africa is not a significant producer of comparable merchandise and that Commerce should instead use data from Thailand and/or Indonesia. Pls.' Cmts. on Commerce's Second Remand Determination 1–2, ECF No. 79 (“Pls.' Br.”). Plaintiffs argue that South Africa is not a significant producer of comparable merchandise due to its relatively low volume of exports under Harmonized Tariff Schedule (“HTS”) 3920.62, which covers PET film. ²Id. at 3–4. Additionally, Plaintiffs contend that Commerce acted unreasonably in relying on the financial statement of South African producer Astrapak to determine that South Africa is a significant producer of comparable merchandise. Pls.' Br. 5–8.

Defendant–Intervenors agree with Commerce's rejection of Thailand as the primary surrogate country.³ Cmts. of Def.-Intvnrs. on Second Remand Results 2, ECF No. 77 (“Def.-Intvnrs.' Br.”). Defendant–Intervenors also agree that Commerce properly selected South Africa as the primary surrogate country, but they argue that Commerce failed to use all of the South African financial statements on the record in calculating the financial ratios. Id. at 3–4.

Defendant United States (“the government”) responds that Commerce reasonably selected South Africa as the primary surrogate country and calculated the surrogate financial ratios in accordance with its policies and the law. Def.'s Resp. to Pls.' Cmts. Regarding the Remand Redetermination 4, ECF No. 82 (“Def.'s Br.”).

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2012). The court will not uphold any determination by Commerce that is “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

I. South Africa as the Surrogate Country

A. Background

Because the PRC is considered by Commerce to be a non-market economy ⁴ (“NME”), much of the antidumping investigation and subsequent administrative reviews have focused on selecting surrogates for valuing the various factors of production used in manufacturing PET film in order to calculate normal value. See19 U.S.C. § 1677b(c)(1). The statute requires that surrogate values be based, “to the extent possible,” on data from an economically comparable market economy country that is a “significant producer [ ] of comparable merchandise.” Id. § 1677b(c)(4).

“Comparable merchandise,” however, is not defined in the relevant statute or regulations, and Commerce asserts that it defines comparable merchandise on a case-by-case basis. Letter from Import Administration to All Interested Parties Attach II., SRPD 2 at barcode 3154951–01 (Sept. 17, 2013), ECF No. 80 (Apr. 7, 2014) (“Policy Bulletin 04.1”). Commerce considers factors such as physical differences in products, major inputs of production, whether the product is of low or high value added, and the production process. Id. In cases where the subject merchandise contains a major input that is specialized or used intensively in the production of the subject merchandise, comparable merchandise should be identified on the basis of a comparison of such major input. Id.

“Significant producer” also is not defined in the relevant statute or regulations. Id. Commerce alleges that it determines whether a country is a significant producer on a case-by-case basis as well. Id. A significant producer could be a top world producer of comparable merchandise or a country that is a net exporter of comparable merchandise, even if the country is not a top world producer. Id. Commerce, however, avoids assessing significant production relative to the NME country's production or the production of other potential surrogate countries, but instead Commerce assesses the output of the potential surrogate country in relation to world production and trade in comparable merchandise. Id. Commerce prefers to use world production data, but in many cases such data are not available and Commerce often will turn to export data. See Second Remand Results at 7–8; Def.'s Br. 12. Thus, the specific factual data relied on to make the determination of significant production will vary from case to case. Policy Bulletin 04.1; Second Remand Results at 10.

The surrogate values selected from an economically comparable significant producer are then used to compute the normal value, in this case the cost of production for a particular PET film producer from the PRC, as if that producer had operated in a hypothetical market economy. See19 U.S.C. § 1677b(c)(1).

In the case at hand, Commerce selected South Africa as the primary surrogate country after determining that South Africa was economically comparable to the PRC, was a significant producer of comparable merchandise, and had adequate data available, as explained. Second Remand Results at 2.

First, Commerce considered comparable merchandise to be products covered by HTS 3920.62 and other PET- and polymer-based products, and Commerce found that all six potential surrogate countries exported products falling under HTS 3920.62. Id. at 7–11. In addition to export data, Commerce also looked at the financial statement of Astrapak, a South African producer of packaging materials. Id. at 8, 10–11. Astrapak's Flexibles Division manufactures high-density polyethylene films, low density single- and multi-layered films, plain and printed films, co-extruded film, blown film, film for pallet stretch wrap, and industrial pallet shrink shroud. Id. at 10. All of these films are produced by melting and extruding plastics that are...