Wind Tower AD Respondent Appeals Use of d Test and Cost Smoothing to CAFC

The Court of International Trade erred by sustaining the Commerce Department’s conclusions regarding cost smoothing, cost reconciliation, and differential pricing in the antidumping duty investigation on wind towers from Canada, respondent Marmem said in a July 10 opening brief at the U.S. Court of Appeals for the Federal Circuit (Marmen v. U.S., Fed. Cir. # 2023-1877).

Marmen is appealing CIT's March decision that upheld Commerce's refusal to factor Marmem's alleged losses related to nonconversion of expenses from U.S. to Canadian dollars into the cost of manufacturing wind towers from Canada (see 2303200066).

Commerce repeatedly cited incorrect values for steel plate and relied on allegedly mislabeled information from the petitioner in its calculations, Marmen said. CIT then sustained Commerce's determination to weight-average Marmen's steel plate costs and failed to address Marmen's argument that the department had not followed its "cost-smoothing" practice. CIT also affirmed Commerce's determination that Marmen's steel suppliers didn't charge different prices for plates of different grade, thickness, width or length except for “high thickness range plates,” and that differences in plate prices were related to timing of production, despite contradictory evidence, Marmen said. In determining that Marmen’s reported plate costs did not “reasonably reflect the costs associated with the production and sale” of wind towers, Commerce both disregarded its standard practice and drew conclusions unsupported by record evidence, Marmen said.

In addition, Commerce unreasonably rejected what Marmen said was a "minor correction" to one line of a cost reconciliation worksheet. Although the correction was "necessary to ensure that all values in the reconciliation were expressed in the same currency," Commerce "illogically concluded" that acceptance would result in double counting, Marmen argued. CIT then "simply accepted Commerce’s explanation" without addressing Marmen’s contradictory evidence, the company argued.

Finally, Marmen argued that Commerce used an average-to-transaction (A-T) price comparison method despite its inapplicability. The department can use an A-T- method only when "there is a pattern of export prices for comparable merchandise that differ significantly ...," Marmen said. Commerce found such a pattern based on the Cohen's d test, but Commerce should not have relied on that test when price differences were not significant on their face at less than 1%, Marmen said. CIT then failed to address any of the academic literature on the limitations of the d test, Marmen said. In that situation, use of the d test tends to artificially inflate the dumping margins, Marmen said, citing the court's opinion in Stupp Corp. v. U.S.