Stanley Works (Langfang) Fastening Sys. Co. v. United States

• Decision Date: 13 August 2018
• Docket Number: Court No. 17-00071,Slip Op. 18–99
• Citation: 333 F.Supp.3d 1329
• Parties: The STANLEY WORKS (LANGFANG) FASTENING SYSTEMS CO., LTD. and Stanley Black & Decker, Inc., Plaintiffs, v. UNITED STATES, Defendant, and Mid Continent Steel & Wire, Inc., Defendant-Intervenor.
• Court: U.S. Court of International Trade

333 F.Supp.3d 1329

The STANLEY WORKS (LANGFANG) FASTENING SYSTEMS CO., LTD. and Stanley Black & Decker, Inc., Plaintiffs,

v. UNITED STATES, Defendant,andMid Continent Steel & Wire, Inc., Defendant-Intervenor.

Slip Op. 18–99

Court No. 17-00071

United States Court of International Trade.

Dated: August 13, 2018

Lawrence J. Bogard, Neville Peterson, LLP, of Washington, DC, argued for plaintiffs. With him on the brief was Peter J. Bogard.

Sosun Bae, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With her on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Jessica R. DiPietro, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

Ping Gong, The Bristol Group PLLC, of Washington DC, argued for defendant-intervenor. With her on the brief was Adam H. Gordon.

OPINION

Eaton, Judge:

Before the court is The Stanley Works (Langfang) Fastening Systems Co., Ltd. and Stanley Black & Decker, Inc.'s (collectively, "Stanley" or "plaintiff") motion for judgment on the agency record challenging the final results of the United States Department of Commerce ("Commerce" or the "Department") in Certain Steel Nails From the People's Republic of China , 82 Fed. Reg. 14,344 (Dep't Commerce Mar. 20, 2017), P.R. 290, bar code 3551507-01, ECF No. 34 ("Final Results"), as amended by 82 Fed. Reg. 19,217 (Dep't Commerce Apr. 26, 2017), P.R. 307, bar code 3566359-01, ECF No. 34 ("Amended Final Results"), and accompanying Issues and Decision Memorandum, P.R. 289, bar code 3551476-01, ECF No. 34 ("Final I & D Memo").

Stanley objects to the Final Results on three grounds, claiming that (1) Commerce contravened 19 C.F.R. § 351.414(f) (2008) by, among other things, self-initiating a targeted dumping analysis; (2) the differential pricing analysis manifests an unreasonable interpretation of 19 U.S.C. § 1677f–1(d)(1)(B) primarily because the Cohen's d test is not reasonably used to evaluate targeted dumping and is incorrectly calculated; and (3) the World Trade Organization ("WTO") Appellate Body has held that the differential pricing analysis contravenes U.S. obligations under the antidumping agreement, thereby calling into question Commerce's arguments regarding the reasonableness of its differential pricing analysis. See Pls.' Mem. Supp. Mot. J. Admin. R., ECF No. 29-1 ("Pls.' Br.") 2-3, 46.

Defendant, the United States (the "Government" or "defendant"), on behalf of Commerce, argues that (1) 19 C.F.R. § 351.414(f) (2008) does not apply to administrative reviews; (2) many of Stanley's arguments have been foreclosed by the Federal Circuit; and (3) Stanley's WTO argument notwithstanding, Commerce was reasonable in interpreting the relevant statute and regulations when conducting its differential pricing analysis to reach the conclusion that an alternative comparison method should be used to calculate Stanley's dumping margin. See Def.'s Resp. Opp'n Pls.' Mot. J. Agency R., ECF No. 31 ("Def.'s Br.") 4-5.

For its part, Defendant-Intervenor, Mid Continent Steel & Wire, Inc., argues that Commerce's implementation of the differential pricing analysis is reasonable and adds that "[t]he WTO decision ... is not binding on the United States unless and until Congress and the Administration implement it pursuant to the statutory scheme." Def.-Int.'s Resp. Br., ECF No. 30 ("Def.-Int.'s Br.") 2, 4.

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2012). For the reasons set forth below, Commerce's Final Results are sustained.

LEGAL FRAMEWORK

In an administrative review of an antidumping duty order, Commerce determines the amount of any antidumping duty by first determining "the normal value^{[1 ]} and export price^{[2 ]}(or constructed export price^{[3 ]}) of each entry of the subject merchandise" and then calculates "the dumping margin for each such entry." 19 U.S.C. § 1675(a)(2)(A)(i)-(ii) (2012). A "dumping margin" is "the amount by which the normal value exceeds the export price or constructed export price of the subject merchandise." 19 U.S.C. § 1677(35)(A). In an antidumping investigation, there are three methods by which Commerce may compare normal value with export price to determine whether merchandise is being sold for less than fair value (i.e. , whether it is being dumped). See 19 U.S.C. § 1677f–1(d). Generally, Commerce uses one of two methods: (1) a comparison of the weighted-average of an exporter's normal values to the weighted-average of its export prices for comparable merchandise (the "A-A" method), or (2) a comparison of the normal values of an exporter's individual transactions to the export prices of an exporter's individual transactions for comparable merchandise (the "T-T" method).⁴ See 19 U.S.C. § 1677f–1(d)(1)(A)(i)-(ii).

If Commerce finds, however, that there is evidence of targeted dumping, i.e. , that "there is a pattern of export prices (or constructed export prices) for comparable merchandise that differ significantly among purchasers, regions, or periods of time," and "explains why such differences cannot be taken into account using" the A-A or T-T methods, it may use an alternative method and compare "the weighted average of the normal values to the export prices (or constructed export prices) of individual transactions" (the "A-T" method). 19 U.S.C. § 1677f–1(d)(1)(B).⁵

Commerce has promulgated a targeted dumping regulation to flesh out the statute, 19 C.F.R. § 351.414(f) (2008). See Antidumping Duties; Countervailing Duties , 62 Fed. Reg. 27,296, 27,373-76 (Dep't Commerce May 19, 1997) ("Final Rule"). The salient elements of this regulation are:

(f)(1) [Commerce] may apply the [A-T] method ... in an antidumping investigation if:

(i) As determined through the use of, among other things, standard and appropriate statistical techniques , there is targeted dumping in the form of a pattern of export prices (or constructed export prices) for comparable merchandise that differ significantly among purchasers, regions, or periods of time ... [ § 351.414(f)(1)(i) ] ....

(2) [Commerce] normally will limit the application of the [A-T] method to those sales that constitute targeted dumping ... [ § 351.414(f)(2) (2008) (i.e. , the Limiting Rule) ].

(3) [Commerce] normally will examine only targeted dumping described in an allegation .... Allegations must include all support factual information, and an explanation as to why the [A-A] or [T-T] method could not take into account any alleged price differences [ § 351.414(f)(3) (2008) ].

19 C.F.R. § 351.414(f)(1)-(3) (2008) (emphasis added). Notably, by their plain language, the statute and the regulation only address antidumping investigations. 19 U.S.C. § 1677f–1(d)(1)(A)-(B) ("In an investigation ... [Commerce] may determine whether subject merchandise is being sold in the United States at less than fair value by comparing the weighted average of the normal values to the export prices (or constructed export prices) of individual transactions for comparable merchandise ...."); 19 C.F.R. § 351.414(f) (2008) ("[Commerce] may apply the [A-T] method ... in an antidumping investigation ....").⁶

As to administrative reviews, although the statute and regulations give Commerce a framework for determining whether, in antidumping investigations, merchandise is being sold at less than fair value, or whether targeted dumping may be occurring, the section of the code addressing reviews ( § 1677f–1(d)(2) ) does not specify which comparison method it must use. See 19 U.S.C. § 1677f–1(d)(2).⁷ Commerce's regulations, however, state that it will apply the A-A method in both investigations and reviews "unless [Commerce] determines another method is appropriate in a particular case." 19 C.F.R. § 351.414(c)(1) (2015). To determine whether another method is appropriate, Commerce's practice, where there appears to be targeted dumping, is to use the same approach in administrative reviews that it does in investigations. See JBF RAK LLC v. United States , 790 F.3d 1358, 1364 (Fed. Cir. 2015). Thus, in an administrative review, Commerce will apply the A-T method when it (1) finds that there is evidence of targeted dumping, i.e. , "a pattern of export prices (or constructed export prices) for comparable merchandise that differ significantly among purchasers, regions, or periods of time," and (2) explains "why such differences cannot be taken into account using [the A-A or A-T methods]." 19 U.S.C. § 1677f–1(d)(1)(B)(i)-(ii).

In both investigations and reviews, when determining whether targeted dumping may be occurring in both investigations and reviews, and therefore, whether Commerce may apply the A-T method, Commerce uses the differential pricing analysis. See Timken Co. v. United States , 40 CIT ––––, ––––, 179 F.Supp.3d 1168, 1173 (2016) ; see also Certain Steel Nails From the People's Republic of China , 81 Fed. Reg. 62,710 (Dep't Commerce Sept. 12, 2016) ("Preliminary Results"), and accompanying Preliminary Issues and Decision Memorandum, P.R. 256, bar code 3503883-01, ECF No. 34 ("Preliminary I & D Memo") at 19. The differential pricing analysis is a two-stage process involving three separate "tests." In the first stage, Commerce uses what it calls the "Cohen's d test"⁸ together with the "ratio test" to determine whether there is "a pattern of export prices (or constructed export prices) for comparable merchandise that differ significantly among purchasers, regions, or periods of time." 19 U.S.C. § 1677f–1(d)(1)(B)(i) ; see Preliminary I & D Memo at 20.

If the results of these tests do not suggest that there is a pattern of prices that differ significantly for comparable merchandise among purchasers, regions, or periods of time, then Commerce may not consider the application of the A-T method. See Preliminary I & D Memo at 20-21. If, however, the results of...