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

• Decision Date: 01 August 2013
• Docket Number: Court No. 11–00399.,Slip Op. 13–95.
• Citation: 929 F.Supp.2d 1352
• Parties: CAMAU FROZEN SEAFOOD PROCESSING IMPORT EXPORT CORPORATION, et al., Plaintiffs, v. UNITED STATES, Defendant, and Ad Hoc Shrimp Trade Action Committee and American Shrimp Processors Association, Defendant–Intervenors.
• Court: U.S. Court of International Trade

929 F.Supp.2d 1352

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

v.UNITED STATES, Defendant,andAd Hoc Shrimp Trade Action Committee and American Shrimp Processors Association, Defendant–Intervenors.

Slip Op. 13–95.

Court No. 11–00399.¹

United States Court of

International Trade.

July 31, 2013.

As Amended Aug. 1, 2013.

Matthew R. Nicely, Hughes Hubbard & Reed LLP, of Washington, DC, on behalf of Plaintiffs Camau Frozen Seafood Processing Import Export Corp.; Minh Phu Seafood Corp.; Minh Phat Seafood Co., Ltd.; Minh Qui Seafood Co., Ltd.; and Viet I–Mei Frozen Foods Co., Ltd.

Joshua E. Kurland, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, on behalf of Defendant. With him on the brief were Stuart F. Delery, Principal Deputy Assistant Attorney General; Jeanne E. Davidson, Director; and Patricia M. McCarthy, Assistant Director. Of counsel on the briefs was Mykhalo A. Gryzlov, Senior Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Andrew W. Kentz, Jordan C. Kahn, Nathaniel M. Rickard, and Nathan W. Cunningham, Picard Kentz & Rowe LLP, of Washington, DC, for the Defendant–Intervenor Ad Hoc Shrimp Trade Action Committee.

Terence P. Stewart, Geert M. De Prest, and Elizabeth J. Drake, Stewart and Stewart, of Washington, DC, and Edward T. Hayes, Leake & Andersson, LLP, of New Orleans, LA, for the Defendant–Intervenor American Shrimp Processors Association.

OPINION

POGUE, Chief Judge:

This case returns to court following remand by Camau Frozen Seafood Processing Import Export Corp. v. United States, ––– CIT ––––, 880 F.Supp.2d 1348 (2012) (“Camau I ”). Camau I reviewed challenges to the final results of the fifth administrative review (“AR”) of the antidumping duty order covering certain frozen warmwater shrimp from the Socialist Republic of Vietnam (“Vietnam”).²Id. at 1351. Specifically, Camau I rejected a facial challenge to Commerce's use, in the fifth AR, of its New Labor Methodology,³ but remanded the Final Results for Commerce to further explain or reconsider its determination to value labor solely on the basis of data from the Bangladesh Bureau of Statistics (“BBS”) in light of Commerce's prior surrogate labor policy and the apparent discrepancy between the Bangladeshi labor data and the Philippine labor data on the record. Id. at 1358–61. In the Final Results of Redetermination Pursuant to Court Remand, A–552–802, ARP 09–10 (Apr. 12, 2013), ECF No. 90 (“ Remand Results ”), Commerce determined that it would continue to value labor solely on the basis of the BBS data.

For the reasons that follow, the court will order a second remand for Commerce to further explain or reconsider its determination to value labor in this case solely on the basis of the BBS data.

The court has jurisdiction pursuant to § 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006)⁴ and 28 U.S.C. § 1581(c) (2006).

STANDARD OF REVIEW

“The court will sustain the Department's determination upon remand if it complies with the court's remand order, is supported by substantial evidence on the record, and is otherwise in accordance with law.” Jinan Yipin Corp. v. United States, ––– CIT ––––, 637 F.Supp.2d 1183, 1185 (2009) (citing 19 U.S.C. § 1516a(b)(1)(B)(i)).

DISCUSSION ⁵

Prior to adoption of the New Labor Methodology, Commerce used multi-country averaging to value labor because “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.... As a result, we find reliance on wage data from a single surrogate country to be unreliable and arbitrary.” ⁶ When Commerce adopted the New Labor Methodology, it did not repudiate this reasoning. Rather, Commerce acknowledged in the New Labor Methodology that “[d]ue to the variability in wage rates among economically comparable [market economy countries], the Department has tried to include wage data from as many countries as possible that were also economically comparable to the [nonmarket economy country (“NME”) ] and significant producers of comparable merchandise....” New Labor Methodology, 76 Fed.Reg. at 36,093;see also Camau I, 880 F.Supp.2d at 1358–59. But, based on its experience in light of Dorbest Ltd. v. United States, 604 F.3d 1363 (Fed.Cir.2010) (“ Dorbest IV ”) and Shandong Rongxin Import & Export Co. v. United States, ––– CIT ––––, 774 F.Supp.2d 1307 (2011), ⁷ Commerce concluded that “the base for an average wage calculation would be so limited that there would be little, if any, benefit to relying on an average of wages from multiple countries for purposes of minimizing the variability that occurs in wages across countries.” New Labor Methodology, 76 Fed.Reg. at 36,093. Camau I held this to be a reasonable basis for Commerce's change in policy, 880 F.Supp.2d at 1358; therefore, the decision to change the labor valuation policy is not before the court on review of the Remand Results. Nonetheless, insofar as Commerce maintains that (1) valuing labor based on a single surrogate country may be distortive given the variability in wage rates among countries that Commerce considers to be economically comparable and (2) the variability in wage rates corresponds to variability in GNI, the recordin this case presents the possibility of just such a distortion.

As noted in Camau I, Commerce considered two wage rate values in the Final Results: one from Bangladesh, based on the BBS data, and one from the Philippines, based on Chapter 5B of the International Labor Organization Yearbook of Labour Statistics (“ILO Chapter 5B”). Id. at 1359–60 & n. 12. The wage rate value for the Philippines is several orders of magnitude larger than the wage rate value for Bangladesh. See Id. at 1360 (comparing GNI and wage rates of the Philippines and Bangladesh). In light of Commerce's prior policy and findings, it comes as no surprise that the Philippine GNI is also several times larger than the Bangladeshi GNI. Id. On these facts, Commerce's non-repudiated prior reasoning suggests that a single surrogate country value for labor could introduce distortion.⁸ While an averaging system that eliminates such distortion may not be possible, that fact alone is not a reasoned explanation for Commerce's choice between the two datasets. Therefore, Camau I remanded this issue for an explanation of why, in light of Commerce's prior reasoning and the record evidence in this case, valuing labor solely on the basis of the BBS data was reasonable and the best available information. Id.

Commerce justifies its decision in the Remand Results by invoking its policy of valuing all surrogate values from a single surrogate country when possible. Remand Results at 7–8. Commerce contends that using a single surrogate country to value all FOPs “better reflects the trade-off between labor costs and other factors' costs, including capital, based on their relative prices.” Id. at 8. This is the only affirmative basis Commerce offers to support its choice of the Bangladeshi data. Thus, Commerce argues that its policy of favoring a single surrogate country to value all FOPs, and the reasoning supporting that policy, is sufficient to value labor solely on the basis of the BBS data in this case.

This basis alone, however, is not sufficient to address the remand order in Camau I. Commerce's policy of valuing all factors of production from a single surrogate country when possible, see19 C.F.R. § 351.408(c)(2) (2011), may be reasonable because, among other reasons, it reduces surrogate value distortions introduced by out-of-market prices, see Clearon Corp. v. United States, Slip Op. 13–22, 2013 WL 646390, at *6 (CIT Feb. 20, 2013); nonetheless, Commerce has the statutory authority to use multiple surrogate countries, 19 U.S.C. § 1677b(c)(1), and has invoked that authority when it deemed such to be appropriate—specifically as part of its prior labor valuation methodology, see, e.g., Grobest & I–Mei Indus. (Viet.) Co. v. United States, ––– CIT ––––, 815 F.Supp.2d 1342, 1356–60 (2012) (affirming Commerce's decision to use multi-country averaging for surrogate labor valuation); Peer Bearing Co.-Changshan v. United States, ––– CIT ––––, 804 F.Supp.2d 1337, 1353 (2011) (noting Commerce's use of Indian and Thai data for different surrogate values in the same review). Therefore, it is not sufficient for Commerce to cite the policy of using a single surrogate country where, as here, there is reason to believe that the primary surrogate country may not provide the best available information for a particular FOP.

Case law repeatedly emphasizes that “use of a single surrogate country is justified when ... all other factors are fairly equal....” Clearon Corp., 2013 WL 646390, at *6 (internal quotation marks omitted); Peer Bearing, ––– CIT at ––––, 804 F.Supp.2d at 1353 (“[T]he preference for use of data from a single surrogate country could support a choice of data as the best available information where the other available data ‘upon a fair comparison, are otherwise seen to be fairly equal ....’ ”) (quoting Peer Bearing Co.-Changshan v. United States, ––– CIT ––––, 752 F.Supp.2d 1353, 1373 (2011)) (second alteration in original). In light of Commerce's prior reasoning with regard to labor values, however, the evidence on the record in this case cannot, without more, be considered fairly equal.⁹ Thus, because there is reason to doubt the primary surrogate country value, Commerce must address the conflicting evidence on the record that may counsel against the policy of valuing all FOPs from the primary surrogate country. Not addressing the conflicting evidence on the record, as noted in Camau I, fails the substantial evidence test because it does not take into account record evidence contrary to Commerce's determination. See ...