Commerce Illegally Dropped Default Method for Finding Normal Value, AD Respondent Argues

The Commerce Department unlawfully used an alternate method for calculating normal value in an antidumping duty review on goods from China, respondent Hangzhou Ailong Metal Products argued in an Aug. 22 motion for judgment at the Court of International Trade. The exporter argued Commerce illegally based normal value on the price at which the subject merchandise, square tubes, is sold in other countries, rather than base normal value on the quantity of raw materials used to make the square tubes (Hangzhou Ailong Metal Products Co. v. U.S., CIT #22-00116).

The case concerns the 2019-2020 administrative review of the antidumping duty order on light-walled rectangular pipe and tube from China in which Ailong served as a respondent. Ailong argued that the statute lays out options to calculate normal value: the default method which bases normal value on the quantity of raw materials -- in this case steel plates -- labor, energy and capital used to make subject merchandise, and an alternative method, which bases normal value on the price of comparable merchandise.

In the review, Commerce used the alternative method without first finding that the available information was inadequate for finding normal value pursuant to the default method, Ailong said. "Surrogate value information for the steel plate [factor of production] was placed on the administrative record and Commerce made no finding that the default method could not be used," the brief said. "In addition, Commerce unlawfully rejected the surrogate values that could be used to value the steel plate FOP under the default method."

Ailong argued that Commerce violated the law in using square tube itself as the raw material for the production of square tubes because the statute doesn't allow the agency to use the subject merchandise itself as a cost element to make the same good. "Commerce has consistently determined that a raw material cannot be subject merchandise," the brief said. "Based on Commerce’s standard, Ailong is not the ultimate producer of the subject merchandise because the input used by Ailong (i.e., square tube) is itself subject merchandise."