CIT Upholds Surrogate Country Pick, Remands Financial Ratio Calculation in Wooden Cabinets AD Case

The Court of International Trade on July 12 upheld the Commerce Department's pick of Romania over Malaysia as a surrogate country in an antidumping case, but sent back to the agency the resulting financial ratio calculation of a Romanian company. Since Commerce failed to address the concerns of mandatory respondent Ancientree Cabinets, Judge Gary Katzmann directed Commerce to reconsider Ancientree's objections. Other aspects of the investigation under contention, namely the selection of Romania over Malaysia and Commerce's picks for product input surrogate values, were upheld by Katzmann.

The case stems from an antidumping investigation into wooden cabinets and vanities from China in which Commerce picked Ancientree as a mandatory respondent and Romania as the surrogate country for the review. Ancientree challenged the final determination on three grounds: the selection of Romania as the primary surrogate country, Commerce's financial ratio calculation and the selection of the Harmonized Tariff Schedule headings for the surrogate value inputs.

Commerce had chosen Romania due to the more detailed financial statements from the Romania company Sigstrat, though Malaysia had more comparable producers in quantity and quality of product (see 2104200067). Were Malaysia to have been selected, Commerce would have had data to review from three companies.

When it came to Commerce's financial ratio calculation for Sigstrat, Ancientree argued that the calculation did not match the agency's practice from the prior year's review. Ancientree submitted the calculation of Sigstrat's 2017 financial ratios to show that Commerce reduced the number of line items used for expenses from 15 to eight. Commerce did not specifically address this point in the final determination.

"Though Commerce’s prior determinations are not legally binding, its exercise of discretion is constrained by the need to provide an adequate explanation for any deviation from its past practice and interpretations," Katzmann said. The judge remanded the finding, saying that Commerce did not adequately explain its calculation in light of this objection and that the agency may reopen the record as necessary to properly respond to the argument.

For the remaining contentions, Katzmann found Commerce properly weighed the evidence and made supported conclusions as to the legitimacy of their Romania pick. Ancientree also unsuccessfully challenged three aspects of this decision: the reliability of the Romanian sawn-wood values, the supposed superiority of the Romanian financial statements, and the selection of Romania in light of the superiority of the Malaysian values for other inputs.

The respondent said the sawn-wood data was unreliable since it relied on too small quantities. In this case, Commerce is to analyze whether this leads to an aberrational average unit value. Since Ancientree failed to submit comparative data to "satisfy its burden to build the record, Commerce had no reason to reject the Romanian import quantities as inadequate," the court said. "While Commerce solely relied on the Romanian sawnwood quantity’s weight in deeming it commercially significant, it based its determination on a limited record."

(The Ancientree Cabinet Co., v. United States, Slip Op. 21-87, CIT # 20-00114, dated 07/12//21, Judges Katzmann. Attorneys: Gregory Menegaz of DeKieffer & Horgan for plaintiff The Ancientree Cabinet Co., Ltd.; Ioana Cristei for defendant U.S. government)