Commerce Sticks With Surrogate Country in Activated Carbon AD Case Following CIT Remand

The Commerce Department continued to use Malaysia as its primary surrogate country in an antidumping administrative review after the Court of International Trade told the agency to further explain the departure from using Romania, Commerce said in June 30 remand results. The agency did, however, grant that Romania classifies as a "significant producer" of activated carbon, the subject merchandise, a departure from its final results. The agency also switched to using Malaysian surrogate values for a key input in activated carbon for most of the mandatory respondents' suppliers.

One of the mandatory respondents in the review, Carbon Activated Tianjin Co., along with four other non-individually examined respondents, brought the challenge to the final results of the 11th administrative review on activated carbon from China. Initially, Commerce relied on Malaysia as its surrogate country and used a financial statement from a Romanian company, Romcarbon, to calculate the surrogate financial ratios. In the final results, the agency continued to do both of these things, but also declared that Romania is not a significant producer of comparable merchandise.

On April 2, Chief Judge Mark Barnett remanded parts of these results to Commerce, finding that the agency needed to further explain its finding that Romania is not a significant producer. In the remand results, Commerce reversed course, continuing to rely on Malaysia as the main surrogate but use the financial statement from Romcarbon.

When picking surrogate countries to represent the factors of production of a specific good in a nonmarket economy, as is the case with activated carbon in China, Commerce picks a country found to be "economically comparable and a significant producer of comparable merchandise." Since now both Malaysia and Romania fit the bill, Commerce turned to the quality of the data. Malaysia's tariff schedule has a ten-digit subheading that is specific to a material consumed during the production process of activated carbon, making Malaysia the better pick for primary surrogate country, Commerce said.

However, the financial statements from three Malaysian companies do not break out data for raw material, labor and energy, unlike Romcarbon's financial statement. Thus, despite now finding Romania to be a significant producer, Commerce continued using Malaysia as the primary surrogate country but used Romcarbon's financial statement. "While the three Malaysian financial statements provide evidence that Malaysia is a producer of identical merchandise, they lack usable financial data in that none of them have separate line items breaking down the cost of raw materials and energy," Commerce said.

In a change from its final results, Commerce did use import data reported under a particular Malaysian tariff schedule subheading to value the bituminous coal input used by mandatory respondent Datong Juqiang, its supplier and one of Carbon Activated's suppliers. In their complaint, the plaintiffs challenged Commerce's finding that the tariff subheading only applied to Thailand's tariff code and wasn't applicable to all countries belonging to the World Customs Organization, including Malaysia. After CIT ordered further explanation, Commerce instead found that the Harmonized System code was applicable to Malaysia and therefore it used Malaysian import data for the respondents. However, Commerce continued to use the original Romanian import data for two of Carbon Activated's suppliers since the agency doesn't "have record evidence ... that would support valuing this input using imports under [the disputed subheading]."

The remand results led to a recalculated weighted-average dumping margin for the mandatory respondents and the non-individually examined respondents party to the litigation. The rate changes include a decrease from 1.02% to 0.94% for Carbon Activated, from 0.86% to 0.55% for Daton Juqiang, from 0.89% to 0.61% for Beijing Pacific Activated Carbon Products Co., from 0.89% to 0.61% for Ningxi Guanghua Cherishment Activated Carbon Co. and Ningxia Mineral & Chemical Limited, and from 0.89 to 0.61% for Shanxi Sincere Industrial Co.