Commerce Picks New Surrogate Company in Steel Nail AD Case, Drops Dumping Margin

The Commerce Department tapped a new third-country company's financial statement to use for surrogate values in an antidumping duty review after the Court of International Trade remanded its decision for a third time. Submitting its remand results to CIT on April 12, the agency halved mandatory respondent Oman Fasteners' dumping margin from 9.10% to 4.22% (Mid Continent Steel & Wire Inc. v. United States, CIT Consol. #15-00214).

The case, originally brought by Mid Continent Steel & Wire, concerns an AD administrative review on steel nails from Oman. In the review, Commerce sought to calculate constructed value, using the financial statements from Thai steel screw manufacturer Hitech, as suggested by Mid Continent. Oman Fasteners challenged in court Commerce's choice of Hitech's financial statements despite evidence of a subsidy. On appeal, the Federal Circuit said Commerce had to address the subsidy allegations for Hitech.

In its second remand results back at CIT, Commerce largely reiterated its prior conclusions about Hitech's subsidy situation, arguing that there was nothing on the record to back the conclusion that Hitech received a countervailable subsidy. Oman Fasteners argued that finding ran counter to the Federal Circuit's remand, pushing the trade court to also remand the surrogate finding for lack of evidence. The court did just that, finding that Commerce failed to justify its reliance on Hitech's data (see 2112230022).

On remand again, Commerce dropped its reliance on Hitech, going instead with Indian manufacturer Sundram Fasteners Limited. When weighing surrogate picks, Commerce sorts through four criteria, it said. They are (1) the similarity between the surrogate company and the respondent's operations and products, (2) the extent to which the surrogate has U.S. and home market sales, (3) the contemporaneity of the data and (4) the similarity of the customer base. Since neither Hitech nor Sundram have sales in Oman, the second criteria was discarded.

Looking to the remaining three criteria, Commerce also dubbed the fourth criteria a wash. On the first criteria, the agency said that Sundram made products other than fasteners while Hitech only made various types of fasteners, giving the edge to Hitech. However, the calculation came down to which data was more contemporaneous. Hitech's data had no overlap with the review period at all, while Sundram's was an exact match, ultimately leading Commerce to pick Sundram.

"The record contains two companies with imperfect data which produce and sell comparable merchandise," the remand results said. "Sundram’s FS are the only contemporaneous FS on the record reflecting production, sale, and profit from the sale of comparable merchandise. Therefore, when weighing the quality of the data against the criteria ... including accounting for the potential distorting effects of production of dissimilar merchandise, record evidence indicates that the profit of Sundram more closely reflects the experience of a nail producer during the POI than Hitech."