Asociacion Colombiana De Exportadores v. U.S.

Decision Date16 March 1999
Docket NumberSlip Op. 99-24.,Court No. 96-09-02209.
Citation40 F.Supp.2d 466
PartiesASOCIACION COLOMBIANA DE EXPORTADORES DE FLORES, et al., Plaintiffs, v. UNITED STATES, Defendant, Floral Trade Council, Defendant-Intervenor.
CourtU.S. Court of International Trade

Akin, Gump, Strauss, Hauer & Feld, L.L.P. (Patrick F.J. Macrory, Spencer S. Griffith, Lee Harriss Roberts, J. David Park), for plaintiffs Eden Floral Farms, Equiflor, Espirit Miami, Floralex Ltda., the Agrodex Group, the Caicedo Group, and the Santana Group.

White & Case (Alan M. Dunn, Kristina Zissis), for plaintiffs the HOSA Group.

David W. Ogden, Acting Assistant Attorney General, Civil Division, U.S. Department of Justice; David M. Cohen, Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Velta A. Melnbrencis, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Lucius B. Lau, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of counsel; Karen L. Bland, Jeffrey C. Lowe, Bernd G. Janzen, Sanjay J. Mullick, Attorney-Advisors, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, for defendant United States.

Stewart and Stewart (Terence P. Stewart, James R. Cannon, Jr., Amy S. Dwyer), for defendant-intervenor Floral Trade Council.

OPINION

POGUE, Judge.

On March 25, 1998, this Court remanded certain aspects of the Department of Commerce's ("Commerce" or the "Department") final determination in Certain Fresh Cut Flowers From Colombia, 61 Fed.Reg. 42,833 (Dep't Commerce 1996) (final results antidumping duty admin. reviews) ("Final Results"). Asociacion Colombiana de Exportadores de Flores v. United States, 22 CIT ___, 6 F.Supp.2d 865 (1998) ("Asociacion Colombiana").1

The remand Order directed Commerce to reconsider the following aspects of the Final Results: (1) the methodology for the treatment of imputed credit expense; (2) the conclusion that U.S. selling expenses are a reasonable surrogate for selling expenses incurred on home market sales for purposes of calculating constructed value; and (3) the use of best information available ("BIA") for Santa Helena, a member of the Florex Group. The Court also instructed Commerce to correct its omission of a company-specific margin for Flor Colombia, S.A., for the seventh period of review. Plaintiffs Asocolflores, AFIF, and 81 individual Colombian producers of flowers, Florex2, and Santa Helena3 ("Plaintiff"), object to each aspect of Commerce's remand determination.

Discussion
1. Imputed Credit

In the underlying administrative review, Commerce made a circumstance of sale adjustment to foreign market value to account for imputed credit expenses incurred on U.S. sales. For those respondents that had actual U.S. loans during the period of review, Commerce calculated the U.S. credit expense using interest rates associated with those loans. Final Results, 61 Fed.Reg. at 42,848. For those respondents that did not have actual U.S. dollar-denominated loans, Commerce used a peso-based interest rate for the U.S. credit calculation. Commerce used the respondent's actual peso borrowing rate and adjusted that rate for the devaluation of the peso against the U.S. dollar. Id. at 42,849. This Court upheld as reasonable Commerce's determination that the Colombian producers' borrowing experience was an appropriate surrogate for the cost of extending credit to their U.S. customers. Asociacion Colombiana, 22 CIT at ___, 6 F.Supp.2d at 878. The Court, however, remanded the issue to the Department to "cite evidence to support the conclusion that its methodology — adjusting for the devaluation of the peso against the dollar — is well founded." Id. Specifically, the Court directed Commerce to explain "why it simply subtracted the devaluation rate from the peso-borrowing rate." Id.

Commerce states in the final results of redetermination ("Remand Determination"), that in order "to calculate the cost of financing the U.S. sale, we subtract the amount by which the Colombian peso was devalued vis-a-vis the U.S. dollar from the peso-denominated interest rate." Remand Determination at 4. Commerce explains its rationale noting, "[w]e are attempting to measure the opportunity cost of a sale, not the effective cost of a loan." Id. at 6. To illustrate, Commerce modifies an example provided by Plaintiff in its initial brief. See Initial Mem. of Pls. Asocolflores in Supp .Mot.J. Agency R. (April 21, 1997) at 22-23.

In the example, Commerce assumes that a company makes a sale of 10,000 U.S. dollars and that the exchange rate on the date of sale is 589.14 pesos per dollar. Remand Determination at 4. The customer pays the company one year later and the exchange rate on the date of payment is 725.17 pesos per U.S. dollar. Id. The company then borrows 10,000 pesos at an annual interest rate of 40%, with the principal and interest due one year later. Id.

In this example, had the customer paid on the date of sale, the company would have received 5,891,400 pesos and would not have accrued any interest expense. Because the customer actually paid a year later, the company accrues 2,356,560 pesos of interest (40% times 5,891,400). Id. at 4. Because the peso has been devalued against the U.S. dollar during that period of time, however, the company when it is paid actually receives 7,251,700 pesos (the date-of-payment exchange rate, 725.17, times the dollar amount of the sale, 10,000). Id. at 5. Thus, the company receives 1,360,300 pesos more than it would have received if the customer paid on the date of sale. Id. Therefore, the actual interest expense for the sale is 996,260 pesos (the amount of interest owed at the conclusion of the loan, 2,356,560, minus the additional revenue received as a result of devaluation, 1,360,300). Significantly, Commerce determines the imputed interest amount by dividing the actual interest expense for the sale, 996,260, by the value of the sale at the time of the sale, 5,891,400 pesos, which is 16.91% of 5,891,400 pesos. Id. This percentage equals the annual interest rate (40%) minus the rate of devaluation (23.09%). Id.

Plaintiff challenges Commerce's methodology, arguing that Commerce's formula "in fact measures only the effective cost of the loan in peso terms; it did not measure the opportunity cost of the dollar sale." Pl.'s Comments Opposing Remand Determination ("Pl.'s Comments") at 19-20. Specifically, Plaintiff maintains that Commerce erroneously calculates the credit expense by using the exchange rate at the time of the sale.4 Id. at 20. Plaintiff contends that the opportunity cost to the company, in dollar terms is the net credit expense measured at the exchange rate on the date the company paid the interest and repaid the loan.5 Id. at 20. Plaintiff maintains that the Department's calculation overstates the opportunity cost to the company of financing the sale. The Court agrees.

Commerce's methodology appears to measure only the effective cost of the loan in peso terms6, not the opportunity cost of the dollar sale. This is apparent by continuing with the Department's example. Commerce would calculate the imputed credit expense by applying the 16.91% to the sales value in dollars ($10,000), yielding a credit expense for the sale of $1,691. This approach, however, overstates the opportunity cost to the company. On the date of payment the company must pay a total of 8,247,960 pesos, or $11,374 (total peso amount that the company must pay back divided by the date-of-payment exchange rate). Thus, if the company sets aside $11,374 on the date of sale, it can make the payment.7

Commerce's conclusion that the cost is 16.91% of the sales value suggests that the company would have to set aside $11,691 (net credit expense divided by the original peso value of the sale) at the beginning of the year. If the company set aside this amount, however, it could pay the hypothetical loan at the end of the year, and still have $317 left over. Therefore, Commerce's example does not support its rationale — "[w]e are attempting to measure the opportunity cost of a sale" — for simply subtracting the devaluation rate from the peso-borrowing rate. Accordingly, the Court remands this issue to Commerce to apply a methodology that supports its rationale of calculating the opportunity cost of the sale.

2. U.S. Selling Expenses in Calculating Constructed Value

In the preliminary results of the underlying administrative review, Commerce used U.S. selling expenses incurred in Colombia (on export sales) for purposes of calculating a surrogate value for home-market selling expenses in calculating constructed value. Final Results, 61 Fed. Reg. at 42,843. In the Final Results Commerce used all U.S. selling expenses regardless of where the expenses were incurred as the surrogate for home-market selling expenses. Id. This Court upheld Commerce's decision to use the entire universe of U.S. selling expenses in its calculations.8 See Asociacion Colombiana, 22 CIT at ___, 6 F.Supp.2d at 880. The Court, however, remanded this issue to the Department for reconsideration stating that "Commerce failed to cite evidence to support the conclusion that expenses incurred on sales in the United States would be a reasonable surrogate for selling expenses incurred for home-market sales." Id.

Upon remand, Commerce explains, "[t]he selling expenses incurred in the United States on U.S. sales are mainly commissions (to unrelated commissionaires), overhead expenses, such as refrigeration, sales office expenses, directors' salaries, communication expenses (i.e., telephone, facsimile), office supplies, and travel expenses similar to those which likely would be incurred on sales of flowers to any market." Remand Determination at 7 (emphasis added). Commerce concludes "the record shows that there are no unusual...

To continue reading

Request your trial
6 cases
  • Elkem Metals Co. v. U.S., Court No. 99-10-00628.
    • United States
    • U.S. Court of International Trade
    • June 18, 2003
    ...States, 16 CIT 619, 623, 799 F.Supp. 110, 114 (1992) (citations omitted); see also Asociacion Columbiana de Exportadores de Flores v. United States, 23 CIT 148, 158, 40 F.Supp.2d 466, 476 (1999) (noting agency's "broad discretion in determining what information to use once it establishes th......
  • Rebar Trade Action Coal. v. United States, Slip Op. 19-107
    • United States
    • U.S. Court of International Trade
    • August 8, 2019
    ...in administering the statute, make justifiable inferences on the record before it," Asociacion Colombiana de Exportadores de Flores v. United States , 23 C.I.T. 148, 153, 40 F. Supp. 2d 466, 472 (1999) (citing Radio Officers' Union of Commercial Telegraphers Union, A.F.L. v. N.L.R.B. , 347 ......
  • Maverick Tube Corp. v. United States, Slip Op. 16 - 16
    • United States
    • U.S. Court of International Trade
    • February 22, 2016
    ...meaningful to this investigation. Speculation is not substantial evidence. See, e.g., Asociacion Columbiana Exportadores de Flores v. United States, 23 CIT 148, 153-54, 40 F. Supp. 2d 466, 472 (1999). Cf. Olympic Adhesives, Inc. v. United States, 899 F.2d 1565, 1572 (Fed. Cir. 1990) (Commer......
  • Reiner Brach Gmbh & Co.Kg v. U.S., Court No. 01-00055.
    • United States
    • U.S. Court of International Trade
    • June 4, 2002
    ...of its ability, Commerce may make justifiable inferences based on the record before it. See Association Colombiana de Exportadores de Flores v. United States, 40 F.Supp.2d 466, 472 (CIT 1999). This Court has acknowledged that "Commerce must necessarily draw some inferences from a pattern of......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT