CIT Again Finds No PMS Adjustment to Cost of Production in Sales-Below-Cost Test

The Court of International Trade ruled once again Sept. 27 that the Commerce Department cannot make a particular market situation adjustment to the cost of production for the sales-below-cost test when calculating normal value. Judge Jennifer Choe-Groves remanded the case to Commerce, finding that nothing in the statute permits such an adjustment.

The ruling comes in a case over the 2017-18 administrative review of the antidumping duty order on circular welded non-alloy steel pipe (CWP) from South Korea. In the review, Commerce found that a particular market situation existed for hot-rolled steel coil, a key input of CWP, based on four factors alleged by the antidumping duty petitioner. The four factors consisted of "(1) Korean subsidies of hot-rolled steel coil; (2) Korean imports of hot-rolled steel coil from the People’s Republic of China; (3) strategic alliances between Korean hot-rolled steel coil producers and CWP producers; and (4) distortions in the Korean electricity market."

Commerce then made an adjustment for this PMS to mandatory respondent NEXTEEL Co.'s cost of production when conducting a sales-below-cost test for calculating normal value. But, the law does not permit this, the court said.

"Sales made at less than cost, between affiliates, and in a particular market situation are excluded from the definition of 'ordinary course of trade' in Section 1677(15)," the opinion said. "Thus, sales in those three categories are disregarded for purposes of calculating normal value based on market sales. Nothing in the statute grants Commerce the authority to modify the sales-below cost test to permit a particular market situation analysis or adjustment, and the specificity of the sales-below-cost test leaves no ambiguity."

(NEXTEEL Co., Ltd., et al. v. United States, Slip Op. 21-132, CIT Consl. #20-03868, dated 09/27/21, Judge Jennifer Choe-Groves. Attorneys: J. David Park of Arnold & Porter for plaintiff NEXTEEL; Robert Kiepura for defendant U.S. government)