Changzhou Wujin Fine Chem. Factory Co. v. United States

• Decision Date: 17 December 2012
• Docket Number: No. 2011–1080.,2011–1080.
• Parties: CHANGZHOU WUJIN FINE CHEMICAL FACTORY CO., LTD., Plaintiff, and Jiangsu Jianghai Chemical Group, Ltd., Plaintiff–Appellant, v. UNITED STATES, Defendant–Appellee, and Compass Chemical International, LLC, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

701 F.3d 1367

CHANGZHOU WUJIN FINE CHEMICAL FACTORY CO., LTD., Plaintiff,andJiangsu Jianghai Chemical Group, Ltd., Plaintiff–Appellant,

v. UNITED STATES, Defendant–Appellee,andCompass Chemical International, LLC, Defendant–Appellee.

No. 2011–1080.

United States Court of Appeals, Federal Circuit.

Dec. 17, 2012.

David J. Craven, Riggle and Craven, of Chicago, IL, argued for plaintiff-appellant.

Antonia R. Soares, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With her on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Ahran Kang McCloskey, Office of Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC.

Jeffrey S. Levin, Mondial Trade Compliance Services & Solutions Inc., of Bethesda, Maryland, argued for defendant-appellee Compass Chemical International, LLC.

Before DYK, CLEVENGER, and REYNA, Circuit Judges.

Opinion for the Court filed by Circuit Judge DYK. Dissenting opinion filed by Circuit Judge REYNA.

DYK, Circuit Judge.

Jiangsu Jianghai Chemical Group, Ltd. (“Jiangsu Jianghai”) appeals a decision of the United States Court of International Trade that the Department of Commerce (“Commerce”) did not exceed the scope of a remand order when it recalculated the U.S. price and that the explanation given by Commerce for its calculation of the separate rate on remand was not unreasonable. We affirm in part, and reverse and remand in part.

Background

When merchandise is sold in the United States at less than fair value, Commerce is authorized by statute to impose antidumping duties. These duties are equal to the amount by which the price of the merchandise in the exporting country (“normal value”) exceeds the price of the merchandise in the United States (“export price” or “U.S. price.”). See19 U.S.C. §§ 1673e(a)(1), 1677b(a)(1), 1677a(a). The statute provides that Commerce will generally determine individual dumping margins for each known exporter or producer, but if that is not practicable, Commerce may individually investigate a reasonable number of respondents. 19 U.S.C. § 1677f–1(c)(1)–(2). Those not individually investigated are assigned a separate rate, sometimes referred to as the “all-others” rate. 19 U.S.C. § 1673d(c)(1)(B)(ii). In proceedings involving non-market economy countries, including China, Commerce presumes that exporters and producers are state-controlled, and assigns them a single state-wide rate. See19 C.F.R. § 351.107. This presumption is rebuttable; a company that demonstrates sufficient independence from state control may apply to Commerce for a separate rate. Here, Commerce concluded that the appellant was entitled to a separate rate. The central issue concerns the calculation of that separate rate.

This underlying proceeding involves an investigation of imports of 1–hydroxyethylidene–1, 1–diphosphonic acid (“HEDP”) from the People's Republic of China, initiated in response to a petition filed by Compass Chemical International, LLC (“Compass Chemical”). Commerce sent initial quantity and value (“Q & V”) questionnaires to ten known HEDP exporters and producers identified in the petition. 1 Hydroxyethylidene 1, 1 Diphosphonic Acid from the Republic of India and the People's Republic of China, 73 Fed.Reg. 62,470 n. 1 (Dep't of Commerce Oct. 21, 2008) (“Preliminary Determination”). Five companies responded: Changzhou Wujin Fine Chemical Factory Co., Ltd. (“Wujin Fine Chemical”); Changzhou Kewei Fine Chemical Factory (“Kewei”); BWA Water Additives U.S. LLC (“BWA”); Nanjing University of Chemical Technology Changzhou Wujin Water Quality Stabilizer Factory Ltd. (“Wujin Water”); and Jiangsu Jianghai. Because Jiangsu Jianghai was not one of the ten companies identified in the petition, Commerce did not send it an initial Q & V questionnaire; thus, its response was voluntary.

The questionnaire responses indicated that BWA was one of the largest exporters of HEDP from China to the U.S. during the period of investigation. However, Commerce did not select BWA as a mandatory respondent because BWA refused to permit public disclosure of its supplier, and was therefore ineligible to be individually investigated. Commerce instead selected Wujin Water and Kewei as the mandatory respondents. Kewei subsequently notified Commerce that it would no longer participate in the investigation, leaving Wujin Water as the only cooperating mandatory respondent. Wujin Water, Wujin Fine Chemical, and Jiangsu Jianghai all responded to Commerce's supplemental questionnaires, and Jiangsu Jianghai and Wujin Fine Chemical requested that Commerce assign them separate, company-specific rates. Because it refused to supply the necessary information, BWA was ineligible to apply for a separate, company-specific rate.

On October 21, 2008, Commerce published a preliminary determination that HEDP from China was, or was likely to be, sold in the United States at less than fair value, and assigned antidumping rates to Chinese producers of HEDP. ¹ Preliminary Determination 1. Cooperating mandatory respondent Wujin Water received a preliminary rate of 24.30%, based on the data it had submitted to Commerce. Id. When Commerce determines that a respondent has not cooperated to the best of its ability in supplying Commerce with requested information, Commerce may subject that respondent to “adverse facts available” (“AFA”) and employ an inference adverse to the respondent's interests when selecting among the facts available to determine its rate. See19 U.S.C. § 1677e(b). Applying AFA, Commerce assigned a preliminary rate of 72.42% to non-cooperating mandatory respondent Kewei. Kewei's AFA rate reflected the amount by which the petition's alleged normal value exceeded the petition's alleged export price. As required by section 1677e(c), Commerce corroborated Kewei's AFA rate using data submitted by Wujin Water.² Because Kewei had not demonstrated its independence from state control, Commerce treated Kewei as part of a “China-wide entity”; therefore, all Chinese exporters and producers that did not qualify for separate rates were likewise assigned the 72.42% rate.

Turning to Jiangsu Jianghai and Wujin Fine Chemical, Commerce determined that they had provided sufficient evidence of their independence from state control and qualified for a separate, company-specific rate. For preliminary purposes, Commerce assigned them “a weighted-average margin based on the experience of mandatory respondents and excluding any de minimis or zero rates or rates based on [AFA]”. 73 Fed.Reg. at 62,473;see also19 U.S.C. § 1673d(c)(5)(A). Because the AFA rate assigned to mandatory respondent Kewei was excluded from this calculation, Jiangsu Jianghai and Wujin Fine Chemical were assigned cooperating mandatory respondent Wujin Water's preliminary rate of 24.30%. Id.

Wujin Water provided Commerce with its final data submission in December of 2008. As a result, Commerce reduced Wujin Water's margin from 24.30% to de minimis.1–Hydroxyethylidene–1, 1–Diphosphonic Acid from the People's Republic of China: Final Determination of Sales at Less Than Fair Value, 74 Fed.Reg. 10,545 (Dep't of Commerce Mar. 11, 2009). Commerce continued to apply the single antidumping rate of 72.42% to all other Chinese exporters and producers, with the exception of Wujin Fine Chemical and Jiangsu Jianghai, which continued to qualify for a separate rate.

Under the trade statute, the separate rate for separate rate respondents like Wujin Fine Chemical and Jiangsu Jianghai is normally “an amount equal to the weighted average of the estimated weighted average dumping margins established for exporters and producers individually investigated, excluding any zero and de minimis margins, and any margins determined entirely [on the basis of AFA].” 19 U.S.C. § 1673d(c)(5)(A). Commerce determined that it was no longer appropriate to assign Wujin Water's rate to the separate rate applicants, because that rate had been reduced to de minimis. Commerce looked to section 1673d(c)(5)(B), which provides that when the margins established for all individually investigated respondents are zero, de minimis, or based entirely on AFA, Commerce “may use any reasonable method to establish the estimated all-others rate for exporters and producers not individually investigated, including averaging the estimated weighted average dumping margins determined for the exporters and producers individually investigated.” Id. Commerce explained that

because there are no rates other than de minimis [i.e., Wujin Water's] or those based on AFA [i.e., Kewei's], we have determined to take a simple average of the AFA and the de minimis rate calculated for Wujin Water as a reasonable method for purposes of determining the rate assigned to Wujin Fine Chemical and Jiangsu Jianghai.

74 Fed.Reg. at 10,546. Consequently, Wujin Fine Chemical and Jiangsu Jianghai were assigned a rate of 36.21%, representing a simple average of Kewei's 72.42% rate and Wujin Water's de minimis rate. Id. at 10,547.

On June 25, 2009, Jiangsu Jianghai and Wujin Fine Chemical filed an action in the Court of International Trade, in which they challenged Commerce's corroboration of the AFA rate used to calculate their separate rate, as well as the financial ratios and surrogate values used to calculate the AFA rate. They argued, inter alia, that using a flawed AFA rate in calculating a separate rate “would, in essence, punish a fully cooperative respondent and apply adverse inferences in the absence of any finding of a lack of cooperation.” Mot. J. Agency R. at 16, Changzhou Wujin Fine Chem. Factory Co. v. United States, No. 09–CV–0216 (Ct. Int'l Trade Sept. 21, 2009), ECF No. 25. The court granted the government's request for a partial voluntary remand, and issued an order authorizing...