CIT Says Commerce Misapplied Standard for Picking Surrogate Countries in AD Review on Fish Fillets

The Commerce Department "misapplied the statutory standard" for picking surrogate countries in the 2018-19 administrative review of the antidumping duty order on frozen fish fillets from Vietnam by excluding candidate countries that have a comparable level of economic development, the Court of International Trade ruled in a July 7 opinion made public July 17.

Judge M. Miller Baker said that while Commerce correctly identified that sameness and comparability are different concepts when picking surrogate nations, the agency misapplied this understanding and "has given no indication as to what criteria it employs" to find what constitutes either "the same" or "a comparable" level of economic development.

The petitioner, Catfish Farmers of America, argued in the review that Indonesia was the proper surrogate country instead of the agency's pick of India even though Indonesia did not even make Commerce's six-country shortlist. In explaining its pick, the agency said that Indonesia's per capita gross national income was $3,840 and Vietnam's was $2,400, meaning Indonesia "is not at the same level of economic development as Vietnam." Baker said this means that Commerce regarded the six countries on the potential surrogate list as being at the same level of economic development.

The judge noted that something that is "the same" is inherently "comparable," but that something can be "comparable" and yet not be "the same." The record shows that Commerce understands these different concepts but merely misapplied them here. Baker said that Commerce offered no information on what constitutes "the same" or "comparable" levels of economic development other than implying that any nation whose GNI per capita is within the two extremes showed by the six-country list should be considered to be the "same" level of economic development as Vietnam.

That led Baker to remand the issue for further explanation. The judge added that the government's claim that Indonesia is not economically comparable with Vietnam since its GNI per capita is 60% greater than Vietnam's "does not withstand scrutiny." The agency did not cite this percentage anywhere in its decision, making it "improper for the government to try to backfill the Department's analysis by using" the statistic.

The petitioner also argued that exporter Dotaseafood failed to cooperate to the best of its ability and should've received a higher rate via adverse facts available instead of the Vietnam-wide rate. Commerce disagreed, finding that once a company fails to rebut the presumption of state control, it is ineligible for a separate rate. Baker sustained the government's position, finding that the petitioner misconstrued the statute, which doesn't just let the agency use AFA on companies that fail to cooperate.

When using AFA, Commerce goes through a two-step process by which it identifies a hole in the record, then picks from facts otherwise available if a party is found to have failed to cooperate to the best of its ability. Thus, the use of AFA is limited by how Commerce employs facts otherwise available, the judge said. As a result, "the statute precludes the Department from applying an adverse inference unless it first finds one of the prerequisite conditions," the judge said. "Commerce did not find that any of those conditions existed here, and Catfish Farmers have nowhere argued otherwise" and instead "simply jump ahead to the adverse inference stage."

Catfish Farmers also claimed that Commerce should have denied exporter Nam Viet a separate rate, arguing that the firm did not report all of its affiliates. Baker refused to rule on behalf of the petitioner, finding that the trade group asked the court to reweight the evidence -- something the court cannot do.

Nam Viet was not totally out of the woods, however, since Catfish Farmers contested Commerce's calculation of the separate rate. The petitioner said that the agency illegally miscalculated the rate by "ignoring the rate assigned to Dotaseafood," raising the issue for the first time in a ministerial error allegation. The government said Catfish Farmers failed to exhaust their administrative remedies on this issue since the "error" was allegedly committed for the first time in the preliminary results and was not challenged in the petitioner's case brief. The U.S. added that the supposed error was not a ministerial error and thus did not belong in the ministerial error allegation.

Baker sided with the government, finding that "Catfish Farmers could and should have objected to Commerce’s chosen methodology for calculating Nam Viet’s rate in their case brief." The judge added that the petitioner "put all their eggs in the 'no separate rate' basket," and that this was their "intentional, considered choice, and the consequence is that they failed to exhaust their administrative remedies as to the separate-rate methodology."

(Catfish Farmers of America v. United States, Slip Op. 23-97, CIT #21-00380, dated 07/07/23; Judge: M. Miller Baker; Attorneys: Nazak Nikakhtar of Wiley Rein for plaintiff Catfish Farmers of America; Kara Westercamp for defendant U.S. government; Matthew McConkey of Mayer Brown for defendant-intervenors Vinh Hoan Corp. and Nam Viet Corp.; and Robert LaFrankie of Crowell & Moring for defendant-intervenors QMC Foods and Colorado Boxed Beef Co.)