AD Petitioner's Attempt to Distinguish Case From Hyundai Decision Falls Flat, Exporter Tells CAFC
Antidumping petitioner Wheatland Tube fails to distinguish its case from the key Hyundai Steel Co. v. U.S. matter in which the U.S. Court of Appeals for the Federal Circuit found the Commerce Department cannot make a particular market situation adjustment to the sales-below-cost test, exporter Saha Thai Steel Pipe argued in an Oct. 24 reply brief. Urging the Federal Circuit to issue summary affirmance in its case, Saha Thai said the issue "is cut and dry." That the government is no longer defending its position in this case demonstrates how tenuous Wheatland's argument is and the petitioner is pushing a legal theory that Commerce "has abandoned," the appellee said (Saha Thai Steel Pipe v. U.S., Fed. Cir. #22-11175).
The case concerns the 2017-2018 administrative review of the antidumping duty order on circular welded pipe from Thailand. In the review, Commerce said a PMS existed in Thailand so that the cost of the subject merchandise's production was distorted and didn't reflect sales made in the ordinary course of trade. The agency made a PMS adjustment to the sales-below-cost test, removing home market sales outside the ordinary course of trade. The Court of International Trade held that Commerce does not have the statutory authority to make the adjustment.
On remand, Commerce said conducting a sales-below-cost test without the PMS adjustment was meaningless and then based normal value on constructed value. The court again struck this down, finding Commerce did not follow the statutory framework and the agency could not exclude home market sales based on a cost-based PMS.
The trade court's position over Commerce's lack of authority to make a PMS adjustment to the sales-below-cost test was upheld in the Hyundai Steel decision at the Federal Circuit (see 2112100039). However, the court pointed out scenarios in which Commerce could address a cost-based PMS. Wheatland argued that during the first remand period at CIT, Commerce sought one of these exceptions. In arguing against summary affirmance, the petitioner said that when Commerce cannot find whether home market prices are in the ordinary course of trade, the agency can use constructed value (CV) for normal value (see 2209130070). The CV part of the statute lets the agency use any other methodology to account for the cost-based PMS, the appellant said.
In its reply, Saha Thai said this effort to distinguish the present case from Hyundai has "no basis in the plain meaning of the statute," as the Federal Circuit forbid the methodology adopted by Commerce in its first remand. Wheatland said that Commerce has "carte blanche" to find that home market sales are not made within the ordinary course of trade where it finds that a PMS tops the proper comparison with export price or export price. "This position is wrong," the appellee said. "In Hyundai this Court stressed the statutory need for an explicit link between a particular market situation for constructed value and the conspicuous absence of any parallel link for cost of production."
Saha Thai said a "superficial reading of the statute" can suggest a time when Commerce could make a cost-based adjustment by declaring all home market sales to be outside the ordinary course of trade. "The concept of 'ordinary course of trade' is not a backdoor through which Commerce can apply particular market situation adjustment to cost of production in ways prohibited by the statute," the appellee said.
The exporter further defended CIT's analysis of Commerce's first remand redetermination in which the agency based normal value on CV with a PMS adjustment. In its breakdown, the trade court looked to the two statutory provisions that related to PMS situations that impact costs and sales, with 19 U.S.C. 1677(15)(C) relating to sales and 19 U.S.C. 1677(b)(e) relating to cost. The court found that the statute cannot be seen to let Commerce make a PMS finding under Section 1677(15)(C) "on the basis of distorted cost of production." Thus, Commerce's use of CV under Section 1677(15)(C) "was inappropriate because that provision relates to particular market situations impacting sales, and not costs," the court ruled.
Wheatland "misstates what the Trade Court found," Saha Thai argued. "The Trade Court’s interpretation of the statute, and the relevant statutory provisions themselves, focused on the cost-based particular market situation finding in the specific review at issue in that case, not all particular market situations that could potentially exist," the brief said. "Specifically, the Trade Court found that Commerce’s analysis was flawed because it had 'not met the precondition of calculating constructed value when it made a particular market situation determination based on distorted cost of production.'"