Commerce Again Averages AFA and de Minimis Marks to Find All-Others Rate, Despite CIT Opinion

The Commerce Department continued to find the all-others rate in an antidumping investigation by averaging a respondent's zero percent margin and the large China-wide adverse facts available rate, despite the most recent Court of International Trade opinion ruling against this position. Submitting its fourth remand results to CIT, Commerce said that it had to stick with this method for finding the all-others rate due to the scarcity and inadequacy of the alternatives (Linyi Chengen Import and Export Co., Ltd., et al. v. United States, CIT #18-00002).

In the case, 40 plaintiffs challenged the antidumping duty investigation into hardwood plywood products from China. Commerce had assigned the two mandatory respondents, Linyi Chengen and Dongfang, a zero percent and a 114.72% AFA China-wide dumping margin, respectively. The agency then established the rate assigned to the non-examined, separate rate companies involved in this litigation by departing from the expected method and averaging the two rates to a 57.36% rate.

In the fourth opinion in the case, Judge Jennifer Choe-Groves first upheld Commerce's decision to depart from the expected method, which is defined as averaging the zero and de minimis margins and margins determined based on facts available (see 2109240039). Following this method, the non-individually examined respondents would have received a zero percent dumping margin -- an outcome that Commerce said was not representative of the non-individually examined respondents' rates due to legitimate evidence showing a non-zero dumping margin.

Choe-Groves sustained the decision to jump ship from the expected method, given this evidence, but not the final rate that the agency landed on. Commerce can't simply average the zero and AFA rates because this would lead to a rate not based on any company's actual data and does not reasonably represent the all-other separate respondents' dumping margins, the judge held.

So, Commerce went back to the drawing board, but still came back with the decision that it had to average the zero percent margin and the AFA rate due to the lack of viable alternatives. For instance, in its third remand results, Commerce said that the dumping margins alleged in the petition are representative of the actual selling behavior of separate rate recipients and that this evidence distinguishes Chengen's selling behavior and that of the all-other rate recipients. So, the agency looked at the two antidumping rates, which were 104.06% and 114.72%.

Averaging these two rates, which would be Commerce's standard practice in this situation, would ignore additional evidence on the record of the investigation, precluding this possibility, the agency said. "While the Court sustained our determination that Chengen’s zero percent margin would not be reasonably reflective of the potential Separate Rate Plaintiff’s actual dumping margins, the record also indicates that separate rate companies had potential dumping margins during the [period of review] at levels of the highest Petition rate of 114.72," Commerce explained. "Based on this limited information, it is reasonable to conclude that the selling behavior of the separate rate companies, of which the Separate Rate Plaintiffs are a subset, varied during the [period of review]."

While the court required that the eventually chosen method be reasonable and based on record evidence, Commerce said that it believes it fulfilled this requirement by averaging the Chengen and AFA rates as opposed to averaging the petition rates.

In comments opposing this continued holding, a handful of the plaintiffs argue that this position violates the U.S. Court of Appeals for the Federal Circuit case Yangzhou Bestpak Gifts v. U.S. This key decision held that Commerce cannot assign a cooperative respondent a rate that was half of the China-wide rate when the respondent showed it was independent of government control and where the result may be punitive. In effect, the Federal Circuit ruled against Commerce's decision to assign cooperating separate rate respondents an average of the de minimis and AFA China-wide rate.

The agency defended its position from the invocation of the Bestpak case by pointing to a line in the decision that says that the law allows Commerce to factor both de minimis and AFA rates into the calculation methodology. "Based on the ruling in Bestpak, the CIT found in Baroque Timber that 'it is not per se unreasonable for Commerce to use a simple average of de minimis and AFA rates to calculate the separate rate antidumping duty margin,'" Commerce said. "This finding is in no way punitive, nor does it undercut 'the cooperation-promoting goal of the AFA statute,' given that the rate calculated for the Separate Rate Plaintiffs is based on the best available record information, reflects the reasonable inference based on the limited record information that the selling behavior of the separate rate companies (of which the Separate Rate Plaintiffs are a subset) varied during the [review period], and is not equal to the zero percent rate the Court agreed was unsuitable for use as the rate of the Separate Rate Plaintiffs."