DONGBU STEEL CO., LTD. v. US

• Decision Date: 04 February 2010
• Docket Number: Slip Op. 10-13. Court No. 07-00125.
• Parties: DONGBU STEEL CO., LTD. and Union Steel Manufacturing Co., Ltd., Plaintiffs, v. UNITED STATES, Defendant, and ArcelorMittal USA Inc. and United States Steel Corporation, Defendant-Intervenors.
• Court: U.S. Court of International Trade

677 F.Supp.2d 1353

DONGBU STEEL CO., LTD. and Union Steel Manufacturing Co., Ltd., Plaintiffs, v. UNITED STATES, Defendant, and ArcelorMittal USA Inc. and United States Steel Corporation, Defendant-Intervenors.

Slip Op. 10-13. Court No. 07-00125.

United States Court of International Trade.

February 4, 2010.

Troutman Sanders LLP (Donald B. Cameron, Julie C. Mendoza, Jeffrey S. Grimson, R. Will Planert, Brady W. Mills, and Mary S. Hodgins), for Plaintiffs.

Tony West, Assistant Attorney General; Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Claudia Burke); Jonathan Zielinski, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, Of Counsel; for Defendant.

Stewart and Stewart (Terence P. Stewart and William A. Fennell), for Defendant-Intervenor ArcelorMittal USA, Inc.

Skadden, Arps, Slate, Meagher & Flom LLP (Robert E. Lighthizer, John J. Mangan, Jeffrey D. Gerrish, and Jared R. Wessel), for Defendant-Intervenor United States Steel Corporation.

OPINION

RIDGWAY, Judge.

In this action, Plaintiffs Dongbu Steel Co., Ltd. and Union Steel Manufacturing Co., Ltd.—Korean manufacturers and exporters of the subject merchandise (collectively the "Korean Producers")—contest the final results of the U.S. Department of Commerce's twelfth administrative review of the antidumping duty order covering certain corrosion-resistant carbon steel flat products from the Republic of Korea. See Notice of Final Results of the Twelfth Administrative Review of the Antidumping Duty Order on Certain Corrosion-Resistant Carbon Steel Flat Products from the Republic of Korea, 72 Fed.Reg. 13,086 (Mar. 20, 2007) ("Final Results"); Certain Corrosion-Resistant Carbon Steel Flat Products from the Republic of Korea; Notice of Amended Final Results of the Twelfth Administrative Review, 72 Fed. Reg. 20,815 (Apr. 26, 2007).

Pending before the Court is the Motion for Judgment on the Agency Record filed by the Korean Producers, which raises a single challenge to Commerce's Final Results. Specifically, the Korean Producers assert that Commerce's use of its controversial "zeroing" methodology in the administrative review at issue was not permissible because the agency has ceased use of zeroing in certain original antidumping investigations. The Korean Producers therefore ask that this matter be remanded to Commerce with instructions to recalculate their dumping margins without using zeroing. See generally Brief in Support of the Motion of Plaintiffs Dongbu Steel Co., Ltd. and Union Steel Manufacturing Co., Ltd. for Judgment Upon the Agency Record ("Pls. Brief"); Reply Brief of Plaintiffs Dongbu Steel Co., Ltd. and Union Steel Manufacturing Co., Ltd. ("Pls. Reply Brief").

The Korean Producers' motion is opposed by the Government, as well as domestic steel producers ArcelorMittal USA Inc. and United States Steel Corporation (collectively, the "Domestic Producers"). The Government and the Domestic Producers urge that Commerce's Final Results be sustained in all respects. See generally Defendant's Response in Opposition to Plaintiffs' Motion for Judgment Upon the Agency Record ("Def. Brief"); Defendant-Intervenor ArcelorMittal's Opposition to Motion for Judgment on the Agency Record of Plaintiffs Dongbu Steel Co., Ltd. and Union Steel Manufacturing Co., Ltd. ("ArcelorMittal Brief"); Memorandum in Opposition to Plaintiffs' Motion for Judgment on the Agency Record filed by Defendant-Intervenor United States Steel Corporation ("U.S. Steel Brief").

Jurisdiction lies under 28 U.S.C. § 1581(c) (2000).¹ For the reasons set forth below, the Korean Producers' Motion for Judgment on the Agency Record must be denied.

I. Background

Dumping takes place when goods are imported into the United States and sold at a price lower than their normal value. See 19 U.S.C. §§ 1673, 1677(34).² Under the antidumping laws, Commerce is required to impose antidumping duties on dumped merchandise, to offset the effects of dumping. Antidumping duty investigations (referred to herein as "original" investigations) are initiated to determine in the first instance "whether the elements necessary for the imposition of an antidumping duty . . . exist." 19 U.S.C. § 1673a. In addition, the statute provides for periodic (annual) administrative reviews of antidumping duty orders (at the request of an interested party), to update the applicable antidumping duty rate. See 19 U.S.C § 1675.³ The instant case challenges the results of such an administrative review.

In an administrative review, Commerce determines the antidumping duties to be imposed by first calculating the "dumping margin" for each of a foreign producer/exporter's individual U.S. transactions (i.e., entries), which is the amount by which the normal value of the imported subject merchandise exceeds the "export price" or the "constructed export price" of that merchandise. See 19 U.S.C. §§ 1673, 1677(35)(A).⁴ Next, Commerce calculates the "weighted-average dumping margin," by "dividing the aggregate dumping margins determined for a specific exporter or producer by the aggregate export prices and constructed export prices of such exporter or producer." 19 U.S.C. § 1677(35)(B).

Commerce uses the "zeroing" methodology when calculating the weighted-average dumping margin (discussed above). See NSK Ltd. v. United States, 510 F.3d 1375, 1379 (Fed.Cir.2007); Corus Staal BV v. United States, 502 F.3d 1370, 1372 (Fed. Cir.2007) ("Corus Staal II"); Timken Co. v. United States, 354 F.3d 1334, 1338 (Fed. Cir.2004). Specifically, Commerce "zeros" negative dumping margins (dumping margins with a value less than zero) by replacing the negative figure with a value of zero prior to inputting the data into the weighted-average dumping margin calculation. See NSK, 510 F.3d at 1379; Corus Staal II, 502 F.3d at 1372; Timken, 354 F.3d at 1338. In other words, if the export price or constructed export price for a particular transaction is higher than normal value, Commerce assigns a margin of zero—rather than a negative margin—to that transaction.

As a result, "only positive dumping margins (i.e., margins for sales of merchandise sold at dumped prices) are aggregated, and negative margins (i.e., margins for sales of merchandise sold at nondumped prices) are given a value of zero." Corus Staal BV v. United States, 395 F.3d 1343, 1345-46 (Fed.Cir.2005) ("Corus Staal I"). Use of Commerce's zeroing methodology thus prevents negative dumping margins from reducing the overall sum of the dumping margins. See NSK, 510 F.3d at 1379; Corus Staal II, 502 F.3d at 1372 ("when Commerce calculates the weighted average dumping margin, the dumping margins for sales below normal value are not offset by `negative dumping margins' for those sales made above normal value"). In short, zeroing—in effect—increases a producer/exporter's dumping margin (resulting in higher antidumping duties), or results in a finding of dumping where (absent the use of zeroing) dumping would not be found.

Commerce's zeroing methodology has spawned a cottage industry of litigation, both at home and abroad. The agency's "long-standing practice" has withstood repeated attack here at home. See NSK, 510 F.3d at 1379. Under a deferential Chevron step two analysis, the Court of Appeals has upheld as reasonable Commerce's original interpretation of the statute as authorizing zeroing in both original antidumping investigations and administrative reviews. Thus, in an unbroken line of decisions, the Court of Appeals has sustained Commerce's use of zeroing both in original antidumping investigations, see, e.g., Corus Staal I, 395 F.3d at 1347, and in administrative reviews, see, e.g., Koyo Seiko Co. v. United States, 551 F.3d 1286, 1291 (Fed.Cir.2008); NSK, 510 F.3d at 1380; Timken, 354 F.3d at 1342-44.⁵

But the situation abroad is quite a different story. The World Trade Organization ("WTO") Dispute Settlement Body has repeatedly ruled that Commerce's use of zeroing—in both original investigations and administrative reviews—is inconsistent with the United States' obligations under the WTO antidumping agreements. See generally, e.g., NSK, 510 F.3d at 1379 (discussing WTO rulings); U.S. Steel Corp. v. United States, 33 CIT ___, 637 F.Supp.2d 1199, 1206-07 (2009) (discussing additional WTO rulings), appeal docketed, No. 2009-1572 (Fed.Cir. Sept. 16, 2009). In accordance with Sections 123 and 129 of the Uruguay Round Agreements Act ("URAA"), Commerce has implemented aspects of these adverse WTO rulings.⁶ Of particular relevance here, in its "Section 123 Determination" promulgated in response to one of the WTO rulings, Commerce announced its decision to discontinue the use of zeroing in certain original antidumping investigations. See Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin During an Antidumping Investigation; Final Modification, 71 Fed.Reg. 77,722 (Dec. 27, 2006) ("Section 123 Determination").⁷ In that same Section 123 Determination, however, Commerce expressly declined to cease the use of zeroing in any other context—including antidumping administrative reviews, such as the administrative review at issue in this action. See Section 123 Determination, 71 Fed.Reg. at 77,724.

Since the Section 123 Determination issued, courts have sustained Commerce's continued use of zeroing in administrative reviews while ceasing the practice in certain original antidumping investigations. See, e.g., Corus Staal II, 502 F.3d at 1373-74; JTEKT Corp. v. United States, 33 CIT ___, 675 F.Supp.2d 1206, 2009 WL 4897287 at * 3-6 (2009); Union Steel v. United States, 33 CIT ___, 645 F.Supp.2d 1298, 1305-09 (2009); Fujian Lianfu Forestry Co. v. United States, 33 CIT ___, 638 F.Supp.2d 1325, 1356-57 (2009); Corus Staal BV v. United States, 32 CIT ___, 593 F.Supp.2d 1373, 1382-87 (2008) ("Corus Staal-CIT 2008"), appeal docketed, No. 2009-1425 (Fed.Cir. ...