Surrogate Labor Rates Should Be Based on 21, Not 24, Days, Antidumping Petitioner Argues in CIT

The Commerce Department's decision to assume 24 working days per month for calculating surrogate labor rates, instead of 21 days, in an antidumping administrative review is unsupported, the Coalition for Fair Trade in Hardwood Plywood said in a June 24 motion for judgment in the Court of International Trade. The coalition said the agency failed to properly explain its switch to 24 working days after originally relying on 21 days in its preliminary determination (Coalition for Fair Trade in Hardwood Plywood v. United States, CIT #20-03930).

Commerce's alleged misstep comes from the first antidumping administrative review into hardwood plywood from China covering entries from 2017-18. For the review, Commerce selected Chengen and Lianyungang Yuantai International Trading Co. as the mandatory respondents. Yuantai backed out, leaving only Chengen for Commerce to determine the dumping rate. Since China is a non-market economy, the agency had to derive Chengen's normal value for the plywood using surrogate values. Commerce picked Malaysia as the primary surrogate country. Part of this calculation involves determining the surrogate labor rate to calculate the factors of production going into hardwood plywood production.

Originally, Commerce calculated the surrogate labor rate using 21 working days in a month, basing the decision on industry-specific wage data from the Malaysian Department of Statistics submitted by Chengen. The respondent then successfully argued for a swap to 24 working days for the calculation. Commerce agreed, saying that 24 working days was its standard agency practice and that it had “inadvertently” relied on the 21-day assumption.

Commerce did not address the coalition's arguments showing why a 21-working-days assumption is more appropriate, the brief said. The 21 days represents the number of Mondays through Fridays in a given month and does not account for any non-working days such as holidays or sick days, the coalition said. Since Commerce did not adequately explain why it picked 24 days, its finding is unsupported by the record, the coalition said.

The burden consistently held by CIT is that Commerce must explain the basis for its determinations, the coalition said. “Commerce has failed to meet this burden here. In modifying its calculation for the final determination, Commerce stated only that it had 'inadvertently' relied on 21 working days per month in the preliminary determination and that is has 'a stated practice of assuming 24 working days/month,'” the brief said. “Commerce provided no other reasoning or discussion.”