Trade Court Remands Parts of Honey AD Investigation

The Court of International Trade remanded aspects of the final results of the Commerce Department's less-than-fair-value investigation of raw honey from Argentina, finding that Commerce's decision to use exporter Nexco's acquisition costs as a proxy for Argentinian beekeeper's production costs and its decision to compare Nexco's third-country sales and U.S. sales were not properly explained. However, the court did agree with Commerce's decision to compare Nexco's costs on a monthly basis for the purposes of the sales below cost test and sustained that aspect of the final determination.

"Commerce did not adequately explain its decision to use acquisition costs as a proxy for COP," Judge Claire Kelly said. The department has traditionally used the cost of production for producers as a stand in for exporters' production costs in raw honey from Argentina, in line with its unprocessed agricultural goods standard. Commerce had explained that it would have been difficult to obtain reliable responses from hundreds of honey producers and that those results would not have been representative (see 2303240051). However, the court found that "A lack of missing costs alone" did not make Commerce’s choice of a proxy reasonable, and Commerce gave no other justification for its decision, the court said.

Commerce also did not adequately explain its decision to use high inflation methodology when it compared Nexco's U.S. sales with sales to Germany on a monthly basis, the court said. Commerce failed to connect "significant cost changes" it found for Nexco during the period of investigation with the "significant price changes" required to use its high-inflation methodology, Kelly found. "Commerce does not specify what changes occurred in either German prices or U.S. prices, e.g., whether the prices increased, and these changes are not discernable from the record," she said.

Nexco had argued that Commerce’s decision to use monthly, rather than quarterly averaging, was not supported by Commerce’s high inflation methodology. However, the court found that Commerce had discretion to choose averaging periods for the sales-below-cost test. Nexco claimed that using monthly values was not supported by Commerce’s past practice, and that it failed to fully capture the increase in costs and prices in between quarters. However, the court found that it was not apparent how combining alternative cost and high inflation methodologies was unreasonable. Because Nexco failed to show that the department's choices were unreasonable, those choices are sustained, the court said.

(Nexco v. United States, Slip Op. 23-85, CIT # 22-00203, dated 06/07/23; Judge: Claire Kelly; Attorneys: Julie Mendoza of Morris Manning for plaintiff Nexco; Kara Westercamp for defendant U.S. government; and Melissa M. Brewer of Kelley Drye for defendent-intervenors American Honey Producers Association and Sioux Honey Association)