Commerce Drops Surrogate Labor Data Over Forced Labor Distortions in AD Case Remand

The Commerce Department swapped the surrogate labor data it used to calculate normal value in an antidumping investigation after it reconsidered evidence showing signs of forced labor in Malaysia's electrical and electronics [E&E] sector, according to July 8 remand results filed in the Court of International Trade. Finding that this forced labor unfairly skewed the labor costs for consideration as surrogate data, Commerce instead opted to use International Labor Comparisons data for Mexico in 2016 to determine the surrogate labor value (New American Keg v. United States, CIT #20-00008).

The litigation stems from a challenge to Commerce's final determination in the antidumping investigation of refillable stainless steel kegs from China brought by New American Keg and American Keg Company. In a March 30 order, CIT remanded three aspects of the determination, including an explanation as to why the Malaysian labor data was preferable to American Keg's preferred Brazilian labor data. Specifically, the court said that Commerce must explain "apart from its talismanic invocation of its single-country surrogate and contemporaneity preferences -- why the Malaysian data under this forced labor cloud are preferable to the Brazilian dataset."

Following the court's suggestion, Commerce then reconsidered why Malaysian labor data would be preferable to the other available options, and came to the conclusion that forced labor existed in Malaysia's E&E sector. "We determine that, given that the evidence on this record shows that forced labor is widespread throughout the Malaysian E&E subsector and given that subsector’s size in terms of number of employees relative to the Malaysian manufacturing sector, the demonstrated forced labor from this record evidence outweighs our single country and contemporaneity rationale, and therefore we find the Malaysian labor SV is not the best available information on the record," the remand results said.

This led to a recalculation the mandatory respondents' weighted-average dumping margins. All three respondents now would be assigned either de minimis or zero percent rates should the remand be sustained.