Weishan Hongda Aquatic Food Co. v. United States

• Decision Date: 05 March 2019
• Docket Number: 2018-1375
• Parties: WEISHAN HONGDA AQUATIC FOOD CO., LTD., Plaintiff China Kingdom (Beijing) Import & Export Co., Ltd., Shanghai Ocean Flavor International Trading Co., Ltd., Deyan Aquatic Products and Food Co., Ltd., Plaintiffs-Appellants v. UNITED STATES, Crawfish Processors Alliance, Defendants-Appellees
• Court: U.S. Court of Appeals — Federal Circuit

917 F.3d 1353

WEISHAN HONGDA AQUATIC FOOD CO., LTD., PlaintiffChina Kingdom (Beijing) Import & Export Co., Ltd., Shanghai Ocean Flavor International Trading Co., Ltd., Deyan Aquatic Products and Food Co., Ltd., Plaintiffs-Appellants

v.UNITED STATES, Crawfish Processors Alliance, Defendants-Appellees

2018-1375

United States Court of Appeals, Federal Circuit.

Decided: March 5, 2019

Yingchao Xiao, Lee & Xiao, San Marino, CA, argued for plaintiffs-appellants. Also represented by Douglas Campau.

Mollie Lenore Finnan, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee United States. Also represented by Joseph H. Hunt, Jeanne E. Davidson, Patricia M. McCarthy ; Brendan Saslow, Saad Younus Chalchal, Office of Chief Counsel for Trade Enforcement & Compliance, United States Department of Commerce, Washington, DC.

Will E. Leonard, Adduci, Mastriani & Schaumberg, LLP, Washington, DC, for defendant-appellee Crawfish Processors Alliance. Also represented by John Steinberger.

Before Dyk, Wallach, and Chen, Circuit Judges.

Wallach, Circuit Judge.

This appeal concerns the U.S. Department of Commerce's ("Commerce") final results of an administrative review and a new shipper review of the antidumping duty order on freshwater crawfish tail meat ("subject merchandise") from the People's Republic of China ("China"). See Freshwater Crawfish Tail Meat from the People's Republic of China , 81 Fed. Reg. 21,840, 21,840 (Dep't of Commerce Apr. 13, 2016) (final admin. review and new shipper review) ("Final Results "); see also Freshwater Crawfish Tail Meat from the People's Republic of China , 81 Fed. Reg. 23,457, 23,457 (Dep't of Commerce Apr. 21, 2016) (notice of correction to final admin. review and new shipper review) ("Amended Final Results ").¹ Appellants China Kingdom (Beijing) Import & Export Co., Ltd. ("China Kingdom"), Ocean Flavor, and Deyan Aquatic Products and Food Co., Ltd. ("Deyan") (collectively, "Chinese Respondents") argue the U.S. Court of International Trade ("CIT") erred in sustaining Commerce's calculations of weighted average dumping margins for each respondent. Weishan Hongda Aquatic Food Co. v. United States , 273 F.Supp.3d 1279, 1293 (Ct. Int'l Trade 2017) (sustaining the margins calculated in the " Final Results , as corrected by the Am [ended ] Final Results and as amended by the [Final Results of Remand Redetermination (‘Remand Results ’) ]"); see J.A. 733–43 (Remand Results );² see also J.A. 1–2 (Judgment).

The Chinese Respondents appeal. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5) (2012). We affirm.

BACKGROUND

I. Legal Framework

By statute, antidumping duties may be imposed on foreign merchandise sold, or likely to be sold, "in the United States at less than its fair value." 19 U.S.C. § 1673 (2012).³ At the conclusion of an investigation, if Commerce and the U.S. International Trade Commission have made the requisite findings, Commerce "shall publish an antidumping duty order" directing U.S. Customs and Border Protection officers to assess duties on imports of goods covered by the investigation. Id. § 1673e(a). Each year after the order is published, if Commerce receives a request for an administrative review of the order, it "shall" conduct such a review. Id. § 1675(a)(1). Similarly, if Commerce receives a request for a review by a new shipper of subject merchandise, it shall conduct such a review. See id. § 1675(a)(2)(B)(i) (requiring a review where "an exporter or producer" establishes that they "did not export" subject merchandise and are not affiliated with an exporter or producer that did export subject merchandise "during the period of investigation"); see also 19 C.F.R. § 351.214(a) (2016) (referring to these reviews as "new shipper reviews").

When conducting these reviews, Commerce typically must "determine the individual weighted average dumping margin for each known exporter and producer of the subject merchandise." 19 U.S.C. § 1677f–1(c)(1). A dumping margin reflects the amount by which the " ‘normal value’ (the price a producer charges in its home market) exceeds the ‘export price’ (the price of the product in the United States) or ‘constructed export price.’ "⁴

U.S. Steel Corp. v. United States , 621 F.3d 1351, 1353 (Fed. Cir. 2010) (footnote omitted) (citing 19 U.S.C. § 1677(35)(A) ).

The statute explains how "normal value shall be determined" "[i]n order to achieve a fair comparison with the export price or constructed export price." 19 U.S.C. § 1677b(a). However, if Commerce determines the exporting country is a "nonmarket economy country"⁵ and "finds that available information does not permit the normal value of the subject merchandise to be determined under [ § 1677b(a) ]," then Commerce calculates normal value by valuing the "factors of production" used in producing the merchandise in a comparable "market economy country or countries." Id. § 1677b(c)(1). Specifically, Commerce must value the factors of production "to the extent possible ... in one or more market economy countries that are—(A) at a level of economic development comparable to that of the nonmarket economy country, and (B) significant producers of comparable merchandise." Id . § 1677b(c)(4). Accordingly, in selecting these so-called surrogate values to represent the factors of production, Commerce "attempts to construct a hypothetical market value of that product in the nonmarket economy." Downhole Pipe , 776 F.3d at 1375 (internal quotation marks, brackets, and citation omitted).

II. Procedural History

In 1997, Commerce, after conducting an investigation, issued an antidumping duty order that covers freshwater crawfish tail meat from China. See Freshwater Crawfish Tail Meat from the People's Republic of China , 62 Fed. Reg. 48,218, 48,219 (Dep't of Commerce Sept. 15, 1997) (antidumping duty order). Following timely requests, Commerce initiated an administrative review in October 2014, covering a period of review from September 1, 2013, to August 31, 2014. See Initiation of Antidumping and Countervailing Duty Administrative Reviews , 79 Fed. Reg. 64,565, 64,565, 64,567 (Dep't of Commerce Oct. 30, 2014) (initiation admin. review). Commerce limited its review to the two largest exporters of the subject merchandise by volume, thereby selecting China Kingdom and Deyan as mandatory respondents, while Ocean Flavor participated in the administrative review by seeking voluntary respondent status. J.A. 416; see J.A. 317–18 (deciding, by Commerce, to limit the review); see also 19 U.S.C. §§ 1677f–1(c)(2) (explaining when Commerce may limit its review to a "reasonable number of exporters or producers"), 1677m(a) (discussing the process for voluntary respondents). In addition, following timely requests, Commerce also initiated a new shipper review for three companies, including Weishan Hongda Aquatic Food Co., Ltd. ("Hongda"), covering the same period of review as the administrative review. See Initiation of Antidumping Duty New Shipper Reviews , 79 Fed. Reg. 64,749, 64,749 (Dep't of Commerce Oct. 31, 2014) (initiation of new shipper review). In November 2014, Commerce aligned the statutory time limits for issuance of the new shipper review with the deadlines of the concurrent administrative review. J.A. 314.

In October 2015, Commerce published the preliminary results of its administrative review and new shipper review. See Freshwater Crawfish Tail Meat from the People's Republic of China , 80 Fed. Reg. 60,624, 60,624 (Dep't of Commerce Oct. 7, 2015) (prelim. admin. review and new shipper review) ("Preliminary Results "); see also J.A. 415–30 (providing Commerce's decision memorandum accompanying the Preliminary Results ). For the Preliminary Results , Commerce explained in its accompanying decision memorandum that, before selecting surrogate values, it "determined that South Africa, Colombia, Bulgaria, Thailand, Ecuador, and Indonesia are countries that are at the same level of economic development to that of [China]" and further found that "Indonesia and Thailand are significant producers of comparable merchandise [to freshwater crawfish tail meat], processed seafood." J.A. 418–19 (footnotes omitted). Because of Commerce's regulatory preference "to value [factors of production] in a single country," Commerce selected "Thailand as the primary surrogate country," given "the availability of factor values in Thailand relative to Indonesia," "including, importantly, financial statements." J.A. 419 (footnote omitted); see 19 C.F.R. § 351.408(c)(2) ("Except for labor ... [Commerce] normally will value all factors in a single surrogate country."). Commerce selected surrogate values for factors of production and, relevant here, calculated three surrogate financial ratios to represent (1) manufacturing overhead, (2) selling, general, and administrative ("SG&A") expenses, and (3) profit, "by averaging the non-proprietary information taken from the 2012 financial statements of two Thai producers of processed seafood," Surapon Food Public Company Ltd. ("Surapon") and Kiang Huat Sea Gull Trading Frozen Food Public Company Ltd. ("Kiang Huat"). J.A. 429; see J.A. 686 (identifying the names of the two Thai producers of processed seafood).

Although the period of review covered September 1, 2013, to August 31, 2014, Commerce explained that it "[found] it appropriate to consider using the financial statement of ... two [Thai] seafood processors ... for calendar year 2012." J.A. 449. Commerce detailed that "the condition known as [Early Mortality Syndrome (‘EMS’) ] ... decimated shrimp populations in Thailand covering calendar years 2013 and 2014, [thereby] sharply restricting the profitability of seafood processors in that country ," but that calendar year 2012 was unaffected by EMS. J.A. 449 (emphasis added). Commerce noted that the Thai Financial Statements "do not identify energy expenses" and therefore Commerce was "unable to segregate and ... exclude energy costs...