Commerce Limits AFA Use for Country of Origin Reliability Concerns Concurrent With CAFC Opinion

The Commerce Department will only partially apply adverse facts available for sales a diamond sawblade exporter made to its U.S. affiliate, which used a first-in-first-out methodology to keep track of its country of origin data when calculating the exporter's antidumping rate, it said in remand results filed by the agency July 13. The filing comes to the Court of International Trade after the U.S. Court of Appeals for the Federal Circuit left it up to the trade court to determine if a further remand was needed. The Federal Circuit held that a remand was appropriate for Commerce to determine if it could disregard the exporter's U.S. sales using the FIFO methodology (Diamond Sawblades Manufacturers' Coalition v. United States, CIT #17-00167).

The case, brought by the Diamond Sawblades Manufacturers' Coalition, stems from an administrative review of the antidumping duty order on diamond sawblades from China in which Bosun Tools Co. was a mandatory respondent. In the review, it was discovered that Bosun exported diamond sawblades from China and Thailand to its U.S. affiliates. However, the exporter did not maintain a record of the country of origin of each sawblade. Instead, Bosun identified the country of origin using three alternative sales identification methods, which included the particular product code, the unit price and the FIFO methodology for remaining goods. Commerce originally took the exporter at their word and found these unconventional COO tracking methods acceptable.

Following the initial litigation in CIT, Commerce reversed its position, applying AFA for Bosun's failure to keep track of the COO for the sawblades and hitting the exporter with an 82.05% dumping rate. The Federal Circuit, however, said there "appears to be no basis for Commerce to disregard the Bosun-supplied origin information for the sales to unaffiliated U.S. customers during the POR for which Bosun did not assign the country of origin using its FIFO methodology." The appeals court then remanded the first redetermination from the CIT case.

In response, Commerce reversed course on the application of AFA for Bosun's sales in which the exporter kept track of the COO using the product code and unit price. The agency maintained the application of AFA, however, on sales in which the FIFO methodology was employed. Such an adverse inference is warranted, Commerce said, since Bosun "failed to maintain full and complete records regarding country of origin, despite its apparent ability to do so, and despite its familiarity with Commerce proceedings and awareness of the need for distinguishing the country of origin of its merchandise for export."

Sales in which the FIFO methodology was employed was still assigned the 82.05% dumping margin. Commerce then combined the AFA margin for the FIFO sales with the calculated margins for the non-FIFO sales to end up with a final 28.31% dumping margin for Bosun. The exporter's margin, being the only one in the review not zero, de minimus or based entirely on facts available, was then used for all of the non-selected respondents eligible for a separate rate. The final remand margin for Bosun and all of the non-selected respondents would be 15.91% if sustained.

Bosun, in comments submitted to Commerce on the remand results, argues that the agency should only apply neutral facts available since it cooperated to the best of its ability. Since AFA is used to get firms to cooperate, if they do, then the tool has fulfilled its purpose, the exporter said. Commerce countered by saying that the Federal Circuit decision supports the finding that the FIFO methodology is unreliable for determining country of origin and that "Bosun’s failure to maintain country-of-origin information is inconsistent with acting to the best of its ability."