T.T. Int'l Co. v. United States

• Decision Date: 11 May 2020
• Docket Number: Slip Op. 20-63,Court No. 19-00071
• Citation: 439 F.Supp.3d 1370
• Parties: T.T. INTERNATIONAL CO., LTD., Plaintiff, v. UNITED STATES, Defendant, and The American HFC Coalition et al., Defendant-Intervenors.
• Court: U.S. Court of International Trade

439 F.Supp.3d 1370

T.T. INTERNATIONAL CO., LTD., Plaintiff,

v.UNITED STATES, Defendant,andThe American HFC Coalition et al., Defendant-Intervenors.

Slip Op. 20-63

Court No. 19-00071

United States Court of International Trade.

May 11, 2020

Matthew T. McGrath and Mert E. Arkan, Barnes, Richardson & Colburn, LLP, of Washington, DC, for plaintiff T.T. International Co., Ltd.

Joseph H. Hunt, Assistant Attorney General, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. With him on the brief were Jeanne E. Davidson, Director, Claudia Burke, Assistant Director, and Mollie L. Finnan, Trial Attorney. Of counsel on the brief was Daniel J. Calhoun, Assistant Chief Counsel, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce.

James R. Cannon, Jr. and Ulrika K. Swanson, Cassidy Levy Kent (USA) LLP, of Washington, DC, for defendant-intervenors Arkema Inc., The Chemours Company FC LLC, Honeywell International Inc., Mexichem Fluor Inc., and the American HFC Coalition.

OPINION AND ORDER

Kelly, Judge:

This action is before the court on motion for judgment on the agency record. See Pl.'s R. 56.2 Mot. J. Agency Rec., Nov. 12, 2019, ECF No. 23 ("Pl.'s Mot."). Plaintiff T.T. International Co., Ltd. ("TTI") challenges various aspects of the U.S. Department of Commerce's ("Department" or "Commerce") final results in the 2016–2017 administrative review of the antidumping duty ("ADD") order on hydrofluorocarbon blends ("HFC") from the People's Republic of China ("PRC"), covering the period of review February 1, 2016 through July 31, 2017 ("POR"). See [HFC] from the [PRC], 84 Fed. Reg. 17,380 (Dep't Commerce Apr. 25, 2019) (final results of [ADD] admin. review and final determination of no shipments; 2016–2017) ("Final Results"), and accompanying Issues and Decision Memo. for the [ADD] Admin. Review, A-570-028, (Apr. 19, 2019), ECF No. 18-5 ("Final Decision Memo.").

TTI challenges four aspects of Commerce's determination as unsupported by substantial evidence and not in accordance with law. See Memo. Points and Authorities Supp. [TTI's] Mot. J. Agency Rec. at 1–2, Nov. 12, 2019, ECF No. 23-1 ("Pl.'s Br."); see also Compl. at ¶¶ 13–38.¹ First, TTI alleges that Commerce erroneously selected Mexico over Brazil as the primary surrogate country, when surrogate values from Mexico result in aberrational import values and result in excessive margins that do not reflect commercial or economic reality. Id. at 1, 8–11. Second, TTI contends that the use of Global Trade Atlas ("GTA") import data from Mexico ("Mexican GTA data") yields aberrational surrogate values ("SVs") to value the inputs R-134a (1,1,1,2-tetrafluoroethane) and R-32 (difluoromethane) under the Mexican Harmonized Schedule ("HS") subheading 2903.39.99, the input anhydrous hydrogen fluoride ("AHF") under the HS subheading 2811.11.01, and the byproduct hydrochloric acid ("HCl"). Id. at 1–2, 11–15. Third, TTI argues that Commerce erroneously rejected certain financial statements in calculating surrogate financial ratios. Id. at 2, 15–18. Fourth, TTI challenges the 285.73 percent margin assigned to it as commercially and economically unrealistic, contrary to the legal standard established in Baoding Fine Chemistry v. United States, 39 CIT ––––, 113 F. Supp. 3d 1332 (2015) (" Baoding I"). Id. at 1, 5–8; see also Reply Br. Supp. [TTI's] R. 56.2 Mot. J. Agency R. at 1–10, Mar. 6, 2020, ECF No. 32 ("Pl.'s Reply Br."). Defendant and Defendant-Intervenors Arkema Inc., The Chemours Company FC LLC, Honeywell International Inc., Mexichem Flour Inc., and the American HFC Coalition counter that Commerce's determination is supported by substantial evidence and in accordance with law, and request the court to uphold the Final Results in its entirety. See Def.'s Resp. to [Pl.'s Mot.] at 1, 7–8, Feb. 7, 2020, ECF No. 28 ("Def.'s Br."); Resp. Br. [Def.-Intervenors], 2–5, 7, Feb. 7, 2020, ECF No. 29 ("Def.-Intervenors' Br."). For the reasons set forth below, the court sustains Commerce's Final Results.

BACKGROUND

On October 16, 2017, Commerce initiated an administrative review of the ADD order on HFC from the PRC. See Initiation of Antidumping and Countervailing Duty Admin. Reviews, 82 Fed. Reg. 48,051, 48,055 –56 (Dep't Commerce Oct. 16, 2017). Given that Commerce considers the PRC to be a non-market economy ("NME"), Commerce calculated TTI's dumping margin based on its factors of production ("FOPs") to produce HFC by using prices from a surrogate market economy country. See 19 U.S.C. § 1677b(c)(1), (4) (2012).² When valuing FOPs, Commerce prefers to rely on a single or a primary surrogate country ("primary surrogate country"). See 19 C.F.R. § 351.408(c)(2) (2018). To select that primary surrogate country, Commerce invited interested parties to comment on the list of potential surrogate countries, which included Romania, Mexico, Brazil, Bulgaria, Thailand, and South Africa. See Letter from USDOC to File Pertaining to Interested Parties Surrogate Country Letter, PD 63–65, bar codes 3670978-01–03 (Feb. 8, 2017).³ In reply, TTI acknowledged that Commerce had used Mexico as a primary surrogate country in the underlying investigation and noted that Brazil may also be used. See Letter from Barnes Richardson & Colburn to Sec of Commerce Pertaining to TTI Surrogate Country Seln. Cmts. at 2, PD 74, bar code 3679309-01 (Mar. 5, 2018) ("TTI Surrogate Country Cmts."); see also Letter from Barnes Richardson & Colburn to Sec of Commerce Pertaining to TTI Surrogate Cmts., PD 80–101, bar codes 3685071-01–22 (Mar. 20, 2018) ("TTI SV Cmts."); Letter from Barnes Richardson & Colburn to Sec of Commerce Pertaining to TTI Additional Surrogate Cmts, PD 119–121, bar codes 3740023-01–03 (Aug. 6, 2018). TTI submitted information from Mexico to value nearly all its FOPs,⁴ see TTI SV Cmts. at Exs. 1–2, and placed, on the record, the financial statements of Mexichem SAB de CV ("Mexichem") to calculate surrogate financial ratios. See id. at Ex. 7.

On September 11, 2018, Commerce issued its preliminary results. See [HFC] from the [PRC], 83 Fed. Reg. 45,890 (Dep't Commerce Sept. 11, 2018) (prelim. results [ADD] admin. review and prelim. determination of no shipments; 2016–2017) ("Prelim. Results"), and accompanying Decision Memo. for the Prelim. Results, A-570-028, PD 137, bar code 3750975-01 (Aug. 31, 2018) ("Prelim. Decision Memo."). Commerce explained that both Mexico and Brazil were at the same or comparable level of economic development as the PRC and significant producers of HFC. Prelim. Decision Memo. at 11–12. However, Commerce found that only Mexico offered sufficient data to value all of TTI's FOPs, and that the data were country-wide, publicly available, product-specific, representative of broad market averages, generally contemporaneous with the POR, and tax exclusive. Id. at 12. Commerce therefore selected Mexico as the primary surrogate country and calculated normal value using Mexican SVs. See Prelim Decision Memo. at 12, 17–21. To value TTI's inputs and to account for byproducts from processing HFC,⁵ Commerce selected Mexican GTA data. Id. at 12, 18. Further, Commerce used the financial statements of CYDSA SAB de CV ("CYDSA") to calculate surrogate financial ratios, rejecting the financial statements of Mexichem. Id. at 20. Commerce preliminarily assigned TTI a weighted average dumping margin of 283.63 percent. See Prelim. Results, 83 Fed. Reg. at 45,891.

On April 19, 2019, Commerce issued its final results, where it continued to use Mexico as the primary surrogate country and to rely on Mexican data to value TTI's inputs, byproducts, and financial ratios. See Final Results, 84 Fed. Reg. at 17,380 ; Final Decision Memo. at 17–31. After accounting for ministerial errors, Commerce assigned TTI a weighted average dumping margin of 285.73 percent. See Final Results, 84 Fed. Reg. at 17,381 ; Final Decision Memo. at 4.

JURISDICTION AND STANDARD OF REVIEW

The court exercises jurisdiction pursuant to section 516A of the Tariff Act of 1930, 19 U.S.C. § 1516a, and 28 U.S.C. § 1581(c) (2012), which grant the Court authority to review final determinations in an ADD administrative review. "The court shall hold unlawful any determination, finding, or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

I. Surrogate Country Selection

TTI argues that Commerce erroneously designates Mexico as the primary surrogate country, when record evidence indicates that Mexican GTA import data result in aberrational SVs. See Pl.'s Br. at 8–11. Instead, TTI advocates for the selection of Brazil as the primary surrogate country. See id. at 10–11. Defendant and Defendant-Intervenors counter that TTI failed to exhaust administrative remedies, because TTI did not raise this argument during the underlying administrative proceeding; and, notwithstanding the failure to exhaust, Commerce reasonably selects Mexico as the primary surrogate country. See Def.'s Br. at 10–13; Def.-Intervenor's Br. at 11–13. For the following reasons, TTI failed to exhaust its challenge to Commerce's surrogate country selection.

In an antidumping proceeding, if Commerce considers an exporting country to be an NME, like the PRC, it will identify one or more market economy countries to serve as a "surrogate" for that NME country in the calculation of normal value.⁶ See 19 U.S.C. § 1677b(c)(1), (4). Normal value is determined on the basis of FOPs from the surrogate country or countries used to produce subject merchandise. See id. at § 1677b(c)(1).⁷ By statute, Commerce must value FOPs "to the extent possible ... in one or more market economy countries that are ... at a level of economic development comparable to that of the [NME], and ... significant producers of comparable merchandise." Id. at § 1677b(c)(4)(A)–(B).⁸ When several countries are both at a level of economic development...