AD Petitioner Makes Argument to CIT Over PMS Adjustment Despite CAFC Opinion

In its comments on the Commerce Department's remand results, antidumping review petitioner Nucor Tubular grappled with a recent U.S. Court of Appeals for the Federal Circuit opinion rejecting particular market situation adjustments for the sales-below-cost test. Arguing that since this decision is not yet binding as the mandate has not been issued, the Court of International Trade can still consider Nucor's position and rule in favor of the PMS adjustment (Garg Tube Export v. U.S., CIT #20-00026).

The comments come in a case over the 2017-2018 administrative review of the antidumping duty order on welded carbon steel standard pipes and tubes (CWP) from India. Garg Tube Export, a mandatory respondent to the proceedings, brought its case to CIT after Commerce made the PMS adjustment for hot-rolled coil, a key input for CWP and saddled the respondent with partial adverse facts available for the non-cooperation of the unaffiliated suppliers. Commerce determined a PMS existed for CWP in India due to global steel overcapacity, the Indian government's trade interventions and Garg's non-payment of antidumping and safeguard duties on hot-rolled coil imports.

The court ruled, as it has many times, that Commerce cannot make a PMS adjustment to the cost of production for a sales-below-cost test when calculating normal value -- such an adjustment can only be made when calculating constructed value. As a result, Commerce dropped the PMS adjustment. Following CIT's decision in this case, the Federal Circuit said in a precedential opinion that Commerce cannot make a PMS adjustment to the cost of production in the sales-below-cost test (see 2112100039). Instead, the appellate court said that such an adjustment is only permitted when calculating constructed value.

While this decision apparently nullifies the defense's case in the Garg Tube action, Nucor pressed ahead with its defense of Commerce's PMS adjustment, even after the agency had already dropped it. "Until the Hyundai Steel litigation has reached a final disposition, this Court is not bound by the Federal Circuit’s opinion," the brief said. "Instead, for the reasons explained in Nucor Tubular’s remand determination comments, the Court should reconsider its position on the application of PMS for the purposes of the sales-below-cost test."

Garg Tube, meanwhile, cited the recent Federal Circuit opinion to make the case that the trade court should uphold Commerce's remand results and reject Nucor's reasoning. "With this PMS issue resolved in favor of both this Court and Garg, the lone basis advanced by Nucor Tubular in opposition to the Remand is devoid of merit," the plaintiff said. "Accordingly, this Court should affirm the Remand’s declination to apply a PMS adjustment in the sales-below-cost test context as: in accord with the recent CAFC ruling on this precise issue; 'complian[t] with the court’s remand order'; and otherwise supported by substantial evidence."

CIT, in its Garg Tube opinion, also remanded the use of partial AFA because the court couldn't discern how Commerce is applying the law in its use of partial AFA. Since Commerce is attempting to get a non-cooperating supplier to cooperate with the proceedings, it needs to have substantial evidence that Garg has leverage over this supplier. In response, Commerce dropped the PMS adjustment and reliance on AFA, instead opting for neutral facts available to fill the gap in COP data caused by the non-cooperation. The calculation was based on the reported acquisition costs for pipe and tube that Garg Tube sourced from the supplier.

The Department of Justice argued, in its comments on the remand results, that the trade court should sustain both of these moves since all parties agree that they are in compliance with the court's instructions and not in violation of the law, the brief said. By dropping its particular market situation adjustment to the cost of production in the sales-below-cost test and relying on neutral facts available for certain COP data, Commerce followed the court's instructions, the brief said.