Tomato Exporter Challenges Commerce's Findings in Review of AD Suspension Deal

The Commerce Department's new methodology for evaluating compliance with a 2019 antidumping duty suspension agreement's requirement to eliminate 85% of dumping has forced industry players to "bet their compliance" on "speculation and estimation," exporter International Greenhouse Produce (IGP) argued in a complaint at the Court of International Trade. The exporter added that Commerce also erred by "treating certain transactions involving U.S. brokers as U.S. sales," jettisoning the definition of "broker" seemingly settled in the 1960s (International Greenhouse Produce v. U.S., CIT # 23-00093).

IGP filed its suit to contest Commerce's review of the 2019 agreement suspending the AD order on fresh tomatoes from Mexico, covering entries from 2020-21, in which the exporter was a mandatory respondent. IGP said Commerce made "two novel" findings in the review that resulted in a finding that Commerce did not comply with a requirement to eliminate 85% of dumping.

First, Commerce compared each of the exporter's 30 lowest-priced sales of Round tomatoes and 30 lowest-priced sales of Roma tomatoes sold in the U.S. over a two-month period to weighted-average normal values set using sales made by IGP to Canada during the review period. Second, the agency found that "unaffiliated brokers based in the United States and involved in certain IGP sales operated as the first unaffiliated customer in the United States – i.e., as a 'Buyer' under the 2019 Agreement." For these transactions, Commerce examined the transaction between IGP's two selling agents and the unaffiliated U.S. broker, "regardless whether the selling agents directly shipped the merchandise to the U.S. brokers’ customers based in Canada." Because of this finding, Commerce said that the first sale to an unaffiliated U.S. customer happened in the U.S. and not Canada.

Also, as "a result of this novel and incorrect predicate finding, Commerce determined that the unaffiliated U.S. broker (and not the U.S. broker’s customer) must request any destination inspections that could form the basis of an adjustment pursuant to Appendix D of the 2019 Agreement," IGP said.

The complaint said Commerce erroneously departed from the average-to-average comparison method to analyze the exporter's dumping as part of the review. While the agency defended its action by saying the law allows it to use a different methodology when calculating dumping margins in administrative reviews of suspension agreements, "Commerce unlawfully rests its interpretation on an isolated statutory passage" instead of "considering the statute as a whole and how it previously interpreted the operative phrase 'for each entry,'" the complaint said.

IGP also argued against Commerce's altered definition of broker. "Commerce’s decision to ignore this decades-old definition eviscerates the industry’s settled understanding of the role of brokers, who have long connected signatories and selling agents to downstream customers without acting as a 'buyer' of the subject merchandise," the brief said. "Indeed, Commerce’s unlawful determination imposes entirely new restrictions on sales of non-subject merchandise to which the signatories never agreed when they negotiated the 2019 Agreement."