US Defends Commerce's Surrogate Data Pick at CAFC, Despite Presence of Subsidies

The Commerce Department properly used financial statements from Indian company Sundram as the source of surrogate financial data in the antidumping duty investigation on steel nails from Oman, despite evidence the company received countervailable subsidies, the U.S. told the U.S. Court of Appeals for the Federal Circuit. After Commerce winnowed potential surrogate companies from 11, the two remaining companies -- Hi-Tech Fastener Manufacturer and Sundram -- received subsidies. Since Sundram's data was contemporaneous with the investigation period and Hi-Tech's was not, Commerce legally went with Sundram, the government said in its reply brief (Mid Continent Steel & Wire v. United States, Fed. Cir. # 23-1039).

AD petitioner Mid Continent Steel & Wire also filed its reply to appellant Oman Fasteners' claims, telling the appellate court that the amount of subsidies received by Sundram was "so small as to be meaningless." The petitioner further said the pick of Sundram over Hi-Tech was legal given the contemporaneity of the Indian company's data, "rendering it a better choice."

Commerce initially went with Hi-Tech's data, though the Federal Circuit previously ruled in this case that the use of Hi-Tech's data was illegal given the foreign subsidy concerns. The agency switched to Sundram's data on remand (see 2204120060). The Court of International Trade upheld the move despite Oman Fasteners' insistence that the agency had other options, including Omani steelmaker Al Jazeera or steel nail producer LSI, that did not receive subsidies.

Both the U.S. and Mid Continent defended Commerce's selection of Sundram in their reply briefs, relying on the agency's standard set in proceedings on pure magnesium from Israel and certain color TV receivers from Malaysia. The government said it properly rejected financial data from the six Omani companies up for consideration since they "made dissimilar products," and data from LSI since it failed to "reflect reliably the profit experience of a steel nails producer."