Ashley Furniture Rips Commerce's Use of Statistical Test in Line With Recent CAFC Ruling in AD Case

The Commerce Department erred in using the Cohen's d test to identify potential masked dumping in an antidumping investigation, Ashley Furniture argued in a Nov. 19 motion for judgment at the Court of International Trade. Tapping a recent Court of Appeals for the Federal Circuit opinion that questioned the validity of the standardized mean difference test, Ashley Furniture argued that Commerce's use of the test in the AD investigation into welded line pipe from South Korea rests on the same faulty assumptions that the Federal Circuit already rejected (Ashley Furniture Industries, LLC, et al. v. United States, CIT #32-00283).

In antidumping duty investigations, Commerce seeks to identify goods that are dumped into the U.S. market through "targeted" or "masked" dumping. Since Commerce typically conducts its investigations by comparing the average home market price of the good in question to its U.S. price, certain exporters may work around this by dumping the goods in certain areas and selling them at a higher price in another place or at another time to get a non-dumped average U.S. price. To combat this, Commerce may compare the weighted average of sales in the home country to individual sales prices.

However, Commerce must first detect this masked dumping by gathering data on a company's export sales using a differential pricing analysis. The agency breaks down the U.S. sales data into sets based on comparable product groups. Once in the product group, Commerce then breaks that data into various subsets, including the region the U.S. sales took place, the purchasers involved in the sales and the time periods in which the sales took place. Commerce will then pick one subset as the "test group" while aggregating the remaining subset into the "comparison group." Commerce then uses Cohen's d test to determine if the test group is significantly different from the comparison group. If it is, Commerce applies a "ratio test" to see if the ratio of significantly different transactions warrants using the weighted average to individual transaction comparison.

In July, the Federal Circuit questioned the validity of this practice (see 2107150032). The appellate court said the test relies on certain statistical assumptions, such as a normal distribution of the data, that is routinely not satisfied in these antidumping investigations. The court remanded the issue to Commerce.

The opinion is now surfacing in other cases, such as Ashley Furniture's, where the plaintiffs attack the use of the Cohen's d test to get to a lower antidumping rate. "As in Stupp, Commerce failed to explain whether the Ashley Respondents’ sales data conformed with the underlying assumptions necessary for the Cohen’s d test, specifically whether the test and comparison groups were normally distributed, equally variable, and equally numerous," the brief said. "In fact, the test and comparison groups generated during the Cohen’s d test exhibited none of these characteristics."