Borusan Mannesmann Boru Sanayi Ve Ticaret A.S. v. United States

• Decision Date: 17 February 2021
• Docket Number: Slip Op. 21-18,Court No. 20-00015
• Citation: 494 F.Supp.3d 1365
• Parties: BORUSAN MANNESMANN BORU SANAYI VE TICARET A.S. and Borusan Mannesmann Pipe U.S. Inc., Plaintiffs, v. UNITED STATES, Defendant, and Wheatland Tube and Nucor Tubular Products Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

494 F.Supp.3d 1365

BORUSAN MANNESMANN BORU SANAYI VE TICARET A.S. and Borusan Mannesmann Pipe U.S. Inc., Plaintiffs,

v.UNITED STATES, Defendant,andWheatland Tube and Nucor Tubular Products Inc., Defendant-Intervenors.

Slip Op. 21-18

Court No. 20-00015

United States Court of International Trade.

February 17, 2021

Julie C. Mendoza and Mary S. Hodgins, Morris, Manning & Martin LLP, of Washington D.C. argued for Plaintiffs Borusan Mannesmann Boru Sanayi ve Ticaret A.S. and Borusan Mannesmann Pipe U.S. Inc. With them on the brief were Donald B. Cameron, Brady W. Mills, Edward J. Thomas, III, Eugene Degnan, Jordan L. Fleischer, Rudi W. Planert, Sabahat Chaudhary and William H. Barringer.

Robert R. Kiepura, Trial Attorney, Civil Division, U.S. Department of Justice, of Washington D.C., argued for the Defendant. With him on the brief were Ethan P. Davis, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of counsel on the brief was Rachel A. Bogdan, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

Elizabeth J. Drake, Schagrin Associates, of Washington D.C. argued for Defendant-Intervenors Wheatland Tube Company and Nucor Tubular Products Inc. With her on the brief were Roger B. Schagrin, Schagrin Associates, of Washington D.C. for Defendant-Intervenor Wheatland Tube Company and Alan H. Price, Robert E. DeFrancesco, III, Cynthia C. Galvez, and Theodore P. Brackemyre, Wiley Rein LLP, of Washington D.C. for Defendant-Intervenor Nucor Tubular Products Inc.

OPINION

Restani, Judge:

Before the court is a motion for judgment on the agency record pursuant to United States Court of International Trade ("USCIT") Rule 56.2, in an action challenging a final determination of the United States Department of Commerce ("Commerce"). The final determination at issue results from Commerce's findings during an administrative review of the antidumping ("AD") order covering circular welded carbon steel standard pipe and tube ("CWP") products from Turkey. Issues and Decision Memorandum for the Final Results of the 2017-2018 Administrative Review of the Antidumping Duty Order on Circular Welded Carbon Steel Standard Pipe and Tube from Turkey, A-489-501, POR 5/1/2017-4/30/2018 (Dep't Commerce Jan. 14, 2020) ("I & D Memo"). Plaintiffs Borusan Mannesmann Boru Sanayi ve Ticaret A.S. and Borusan Mannesmann Pipe U.S. Inc. (collectively, "Borusan") challenge the calculation of both sides of the basic comparison of home market sales with sales in the United States market. See 19 U.S.C. §§ 1677a, 1677b.

BACKGROUND

On July 12, 2018, Commerce initiated the May 1, 2017 – April 30, 2018, administrative review of the AD Order covering CWP products from Turkey. Initiation of Antidumping and Countervailing Duty Administrative Reviews, 83 Fed. Reg. 32,270 (Dep't Commerce July 12, 2018) ("Initiation of Investigation"). On August 8, 2018, Commerce selected Borusan Mannesmann Boru Sanayi ve Ticaret A.S. and Toscelik Profil ve Sac Endustrisi A.S., as two mandatory respondents to be individually reviewed. See Commerce's Respondent Selection Memorandum, C.R. Doc. 3, P.R. Doc. 12 (Aug. 8, 2018). Commerce issued its Preliminary Results and accompanying Decision Memorandum on July 10, 2019. Decision Memorandum for Preliminary Results of Antidumping Duty Administrative Review: Circular Welded Carbon Steel Standard Pipe and Tube Products from Turkey; 2017-2018, A-489-501, POR 5/1/2017-4/30/2018 (Dep't Commerce July 10, 2019) ("Prelim I & D Memo"). The Preliminary Results were published in the Federal Register on July 18, 2019. Circular Welded Carbon Steel Standard Pipe and Tube Products from Turkey: Preliminary Results of Antidumping Duty Administrative Review and Preliminary Determination of No Shipments; 2017-2018, 84 Fed. Reg. 34,345 (Dep't Commerce July 18, 2019) ("Preliminary Results"). Commerce issued the Final Results on January 22, 2020, resulting in a 9.99% margin for Borusan. Circular Welded Carbon Steel Standard Pipe and Tube Products From Turkey: Final Results of Antidumping Duty Administrative Review and Final Determination of No Shipments; 2017-2018, 85 Fed. Reg. 3,616, 3,617 (Dep't Commerce Jan. 22, 2020) ("Final Results").

a. PMS determination and adjustment

On January 29, 2019, Wheatland Tube ("Wheatland") filed a particular market situation ("PMS") allegation arguing that the cost of hot-rolled-coil ("HRC") is distorted and, because HRC is a component of CWP, the cost of production ("COP") of CWP in Turkey does not reflect the COP in the ordinary course of trade. Wheatland's Particular Market Situation Allegation at 4–5, P.R. Docs. 77-80 (Jan. 29, 2019). As a result, Wheatland requested that Commerce make an upward adjustment to Borusan's actual COP for CWP when conducting its sales-below-cost test for calculating normal value of CWP. Id. at 1, 9, 18. Normal value is based on home market sales or a substitute. 19 U.S.C. § 1677b(a)(B)(i)–(ii). Here, home market sales were used. Prelim I & D Memo at 16.

In the Preliminary Results, Commerce determined that a PMS existed in Turkey that distorted the COP of CWP based on the factors alleged in Wheatland's PMS allegation. Prelim I & D Memo at 25. Thus, Commerce made an upward adjustment to Borusan's COP for purposes of the sales-below-cost test set forth in 19 U.S.C. § 1677b(b). Id. at 19, 25. During the agency briefing and hearing period, Borusan argued that Commerce's adjustment to COP when conducting the sales-below-cost test violates the plain language of the statute and is not in accordance with law. Re-submission of Case Br. of Borusan Mannesmann Boru Sanayi ve Ticaret A.S. and Borusan Istikbal Ticaret at 2–8, C.R. Doc. 302, P.R. Doc. 277, (Sept. 24, 2019) ("Borusan Re-submission of Case Br."); Circular Welded Carbon Steel Pipes and Tubes from Turkey: Hearings Before Office IV for Antidumping and Countervailing Duty Operations Import Administration, International Trade Administration, Department of Commerce at 11–15, P.R. 286 (Oct. 23, 2019) ("Hearing Transcript"). Borusan also contended that there is no evidence of distortion in the Turkish HRC market and no basis for finding a PMS in Turkey. Borusan Re-submission of Case Br. at 8–19; Hearing Transcript at 15. In its final determination, Commerce continued to find that a PMS existed in Turkey and made an upward adjustment to Borusan's costs for purposes of the sales-below-cost test. I & D Memo at 5–7, 11–18, 22–27.

b. Treatment of Section 232 duties

On March 8, 2018, the President exercised his authority under Section 232 of the Trade Expansion Act of 1967, as amended, and mandated the imposition of a global tariff of 25 percent on imports of steel articles from all countries, except Canada and Mexico. Proclamation No. 9705 of March 8, 2018, 83 Fed. Reg. 11,625, 11,626 (Mar. 15, 2018) (" Proclamation 9705"). The Section 232 duties went into effect on March 23, 2018. Id. at 11,627 –28. The President subsequently altered aspects of Proclamation 9705.¹ The later Proclamations did not affect the applicable duty rate in Turkey under Proclamation 9705 during the period of review ("POR").² See supra note 1. Under this Proclamation, imports of CWP produced by Borusan on and after March 23, 2018, were subject to the 25 percent ad valorem import duty imposed on imports from Turkey over and above any existing import duties that might be applicable to CWP. Proclamation 9705 83 Fed. Reg. at 11,627. According to its terms, Proclamation 9705 was issued in order to "enable domestic steel producers to use approximately 80 percent of existing domestic production capacity and thereby achieve long-term economic viability through increased production" and to "ensure that domestic producers can continue to supply all the steel necessary for critical industries and national defense." See id. at 11,625 –26; see also 19 U.S.C. § 1862(d).³

In the Preliminary Results, Commerce treated the Section 232 duties paid by Borusan as "United States import duties" under 19 U.S.C. § 1677a(c)(2)(A) and therefore deducted the Section 232 duties on the United States price side of the dumping comparison from Borusan's export price ("EP") and constructed export price ("CEP"). Prelim I & D Memo at 11–15. Commerce also applied facts available to Borusan's CEP sales during the POR because Borusan did not maintain records linking CEP sales to specific entries on which Section 232 duties were paid. Id. at 15. Borusan argued that Commerce should not deduct Section 232 duties paid by Borusan from EP and CEP because Section 232 duties are special duties, not "United States import duties" within the meaning of the AD statute. Borusan Re-submission of Case Br. at 24–38; Hearing Transcript at 20–23. As to its CEP sales, in the alternative, Borusan asserted that Commerce's application of facts available was not justified because Borusan provided sufficient information explaining its inability to link its CEP sales to the U.S. entry dates and proposed an average inventory turnover methodology to determine which CEP sales were subject to Section 232 duties. Borusan Re-submission of Case Br. at 39–40; Hearing Transcript at 51–53. In the Final Results, Commerce continued to deduct the Section 232 duties as "United States import duties" pursuant to § 1677a(c)(2)(A). I & D Memo at 30–33. Commerce determined that Section 232 duties are more akin to normal customs duties than to antidumping or countervailing ("AD/CV") duties,⁴ codified as 19 U.S.C. §§ 1671, 1673, or Section 201 duties, codified as 19 U.S.C. § 2251, which are not deducted. Id. Commerce also determined that Borusan's proposed average inventory turnover methodology was insufficient for determining which CEP sales prices included Section 232 duties, and thus, the use of facts available was warranted. Id. at 37–38. Commerce then deducted from the CEP calculation Section 232 duties that were paid on an entry after ...