Trade Court Upholds Expected Method for Non-Selected Respondents in Steel Nail AD Review

The Commerce Department properly used the expected method to determine the non-selected respondent's rate in an antidumping duty review of steel nails from Taiwan, the Court of International Trade said in a June 16 opinion. Judge Mark Barnett ruled that the burden was on the plaintiffs, led by PrimeSource Building Products, to establish that the expected method -- the practice of averaging adverse facts available rates in the absence of non-AFA, zero or de minimis margins -- should not be used. The judge ruled that the plaintiffs gave no evidence to back their claim that the expected method was not reasonably reflective of their actual margins.

In the review, Bonuts Hardware Logistics Co. and Create Trading Co. were picked as the mandatory respondents, but Bonuts did not respond to Commerce's questionnaires and Create said it didn't have any U.S. sales. Create was then dropped for Pro-Team Coil as a respondent, which in turn also did not reply to Commerce's questionnaires. As a result, both companies were hit with an AFA rate from a previous review, and the non-selected respondent's rate was determined by weight-averaging the AFA rates.

In the CIT case, none of the plaintiffs challenged the AFA rate given to Bonuts and Pro-Team; rather, they went after the use of the expected method. DOJ said that "there should be no serious question as to the lawfulness of Commerce’s reliance on the expected method," relying on the Statement of Administrative Action from the Uruguay Round Agreements Act and the Court of Appeals for the Federal Circuit's decision in Albemarle v. U.S. (see 2108240045).

In that decision, the appellate court laid out two circumstances under which Commerce can depart from using the expected method: when Commerce gets contemporaneous data to establish that the market and margins for the merchandise changed so the prior rates could be considered reflective of current rates and where the agency can consider deterrence as a factor by presuming that a prior dumping margin in a previous review continues to be valid if the exporter fails to cooperate in a later review.

Barnett held that case, along with later cases affirming the ruling, recognize an "important assumption" built into Commerce's respondent selection, which is that the largest exporters by volume are meant to be representative of the non-selected companies. This means the largest exporters' rates are meant to be used to establish the rates for the other respondents. The judge then explained that the burden is on the plaintiffs to establish that the expected method should not be used.

On that question, Barnett ruled that the plaintiffs offered no evidence to back their claim that the expected method was not "reasonably reflective" of their dumping margins. While the plaintiffs knew that a past AFA rate would be used "no non-selected respondent provided a timely voluntary questionnaire response or timely evidence that the mandatory respondents were in any way not representative of the remaining respondents (such as operating in a different market segment ('commodity' versus 'high-end niche') or other evidence that might provide the agency with cause to question the representativeness of the mandatory respondents)," the opinion said.

Commerce also looked at whether prior rates might be representative of current rates and found that there wasn't enoughevidence to rebut the presumed representativeness of the mandatory respondents' rate from the review, the judge held. "Thus, Plaintiffs’ arguments in favor of carrying forward prior rates as a preferable method are unpersuasive," the opinion said.

Barnett wrapped up the opinion by addressing an attempt to distinguish exporter Liang Chyuan from the other non-selected respondents in its bid for a separate rate by noting that the company was willing to submit a response and had been a respondent in a past review and received a separate rate. The judge ruled the attempt to distinguish Liang Chyuan failed since the company did not respond to the same questionnaire issued to the mandatory respondents within the same time frame. The exporter did not need Commerce's permission to submit the questionnaire responses.

(PrimeSource Building Products v. United States, Slip Op. 22-73, CIT Consl. #20-03911, dated 06/16/22, Judge Mark Barnett. Attorneys: Bryan Cenko of Mowry & Grimson for plaintiff PrimeSource; Kelly Slater of Appleton Lufffor consolidated plaintiffs; Sosun Bae for defendant U.S. government; Adam Gordon of The Bristol Group for defendant-intervenor Mid Continent Steel & Wire)