Trade Court Upholds Use of AFA, Sends Back AFA Rate in Wood Flooring AD Review Case

The Commerce Department properly used adverse facts available for antidumping duty respondent Sino-Maple, but the agency did not properly derive the AFA rate, the Court of International Trade ruled in a Dec. 22 opinion made public Jan. 13. Judge Richard Eaton said that Commerce properly used AFA due to Sino-Maple's failure to provide constructed export price information on a per transaction basis for U.S. sales made to its U.S. affiliate by third-country manufacturers. The judge, however, sent back the AFA rate itself, finding that the agency cannot use the highest transaction-specific margin for the other respondent when setting the AFA rate. Eaton also upheld Commerce's decisions to reject separate rate applications from Scholar Home and Baishan Huafeng.

The case concerns the sixth administrative review of the antidumping duty order on multilayered wood flooring from China, in which Sino-Maple and Jiangsu Senmoa Bamboo and Wood Industry Co. served as mandatory respondents. After Sino-Maple reported that it only made sales to unaffiliated buyers in the U.S., it later came out that the respondent made sales to third-country manufacturers, which then sold merchandise to Sino-Maple's affiliate, Alpha Floors. Commerce told the respondent that those sales should be listed in the database as constructed export price sales.

Sino-Maple asked for an extension to fully submit its sales database to include the shipments of wood flooring made in third countries using the company's plywood cores and imported by Alpha Floors. The agency denied the request, citing time restraints.The result was a zero percent margin for Senmao and a 85.13% margin for Sino-Maple. Since both of these rates were found using either zero or AFA margins, Commerce departed from its expected method and took a simple average of the marks to come up with the separate rate for those companies deemed free of Chinese government control.

Sino-Maple, among other companies, took to the trade court to contest the review, with the respondent railing against the use of AFA and the AFA margin. Eaton sided with Commerce, however, finding that the use of adverse facts available was backed by substantial evidence. The judge upheld the agency's decision to disregard all of Sino-Maple's information, seeing as the failure to provide the constructed export price information on a per transaction basis deprived the agency of carrying out a key part of its analysis.

"There is little doubt that Sino-Maple failed objectively to produce the information Commerce requested," the opinion said. "… Also, Sino-Maple failed subjectively to put forth its maximum effort to investigate and obtain the requested information. In the Final Results, the Department found that Sino-Maple was ‘well-aware prior to its initial questionnaire response that certain third country sales would be directly relevant to its reporting in this review, and yet, Sino-Maple withheld all of this information.’" Since Commerce asked the respondent repeatedly to report all of its U.S. sales during the review, "it was not unreasonable to expect Sino-Maple to make the necessary inquiries to accurately answer Commerce’s questions about these sales," the judge said.

The actual AFA rate that Commerce used, however, was sent back by the trade court. The statute lets Commerce use the highest dumping margin from any "segment of the proceeding" as the AFA rate. The agency took this to mean it could use the highest transaction-specific dumping margin calculated for the other respondent in the review. "This is not a lawful interpretation of the statute," Easton said. A segment means a reviewable part of the proceeding, meaning the margin must be able to be reviewed. Since a transaction-specific margin cannot be reviewed, it may not be used in this context.

The judge also ruled that Commerce properly rejected Scholar Home's and Baishan Huafeng's separate rate applications. Baishan Huafeng failed to exhaust its administrative remedies while Scholar Home submitted a supplemental questionnaire response 62 days after it was due. "Of significance, when the company [Scholar Home] finally did produce a response, it provided no reason to justify its late submission," the opinion said. "Instead, it merely claimed that it answered the questionnaire as soon as it became aware of Commerce’s request for additional information regarding certain deficiencies found in the company’s separate rate application. One would think that Scholar Home would have become aware of the request when it was made seventy-six days before the company’s response. Scholar Home simply made no real effort to explain its delay."

(Fusong Jinlong Wooden Group Co. v. United States, Slip Op.22-155, CIT Consol. #19-00144, dated 12/22/22, Judge Richard Eaton. Attorneys: Alexandra Salzman of deKieffer & Horgan for plaintiffs led by Fusong Jinlong; Daniel Witkowski of Akin Gump for consolidated plaintiff Sino-Maple (Jiangsu) Co.; David Craven of Craven Trade Law for consolidated plaintiffs led by Huzhou Chenghang Wood Co.; Adams Lee of Harris Bricken for consolidated plaintiff Zhejiang Dadongwu GreenHome Wood Co.; Lizbeth Mohan of Fox Rothschild for consolidated plaintiff Baishan Huafeng Wooden Product Co.; Kavita Mohan of Grunfeld Desiderio for consolidated plaintiff Scholar Home (Shanghai) New Material Co.; Sara Wyss of Mowry & Grimson for consolidated plaintiff Yihua Lifestyle Technology Co.; Gregory McCue of Steptoe & Johnson for consolidated plaintiffs Struxtur and Evolutions Flooring; Mark Ludwikowski of Clark Hill for plaintiff-intervenor Lumber Liquidators Services; Sonia Orfield for defendant U.S. government; Stephanie Bell of Wiley Rein for defendant-intervenor American Manufacturers of Multilayered Wood Flooring)