Commerce Sticks With Use of AD Respondent's Acquisition Costs as Proxy for Suppliers' COP

The Commerce Department continued on remand to use antidumping duty respondent Nexco's acquisition costs as a proxy for the cost of production of beekeeper-suppliers as part of the antidumping duty investigation on raw honey from Argentina. Submitting its remand results to the Court of International Trade on Oct. 13, Commerce also stuck by its decision to compare Nexco's U.S. sale prices with normal values based on Nexco's third-country sale prices to Germany on a monthly basis instead of a quarterly basis (Nexco v. U.S., CIT # 22-00203).

On the use of Nexco's acquisition costs as a proxy, Commerce said it is using the actual cost incurred by the price setter, in this case Nexco, when setting the prices to the U.S. and comparison markets. As for the comparison period between Nexco's U.S. and German sales, the agency told the court that "the price in Germany is driven by the costs in Argentina and that there is a correlation between the change in costs and the prices." In addition, price adjustments are "dependent on monthly indexed values," requiring the monthly comparison period, the brief said.

The trade court issued its opinion in June, sustaining and remanding elements of the AD proceeding (see 2306070028). While the court found it reasonable to shed its traditional practice of collecting cost data directly from the beekeepers -- given that there were thousands of them -- it took umbrage with the use of Nexco's acquisition costs as a substitute for the suppliers' costs.

Commerce stuck with its decision, proposing a "reasonableness test" to find if the collected costs suggested that the beekeepers might be contributing to the dumping of raw honey below their own costs. Through this test, used via the acquisition costs, Commerce found that the beekeepers' prices exceeded their costs. However, the court asked whether the test was "overinclusive of costs." To this, the agency said it doesn't believe that using Nexco's acquisition costs overstates the honey's costs of production.

Nexco has no reason to set prices based on unaffiliated suppliers' costs, the remand results noted. Commerce's admittedly limited test work didn't show that unaffiliated suppliers were selling below their costs. As a result, the agency stuck with its use of Nexco's acquisition costs.

Commerce then addressed the comparison period between Nexco's U.S. and German sales after noting that the trade court sustained the comparison with third-country values generally given the effect of Argentina's inflation on the respondent's home market prices. On remand, Nexco argued that its U.S. and German sale prices were both designated in U.S. dollars and should thus be compared on a quarterly basis.

The agency said that it didn't believe the comparison of monthly average U.S. prices with U.S. dollar-denominated comparison prices "is unreasonable or unlawful." Characterizing Nexco's argument as "simplistic," the agency said the respondent focused on one aspect of the high inflation methodology: the comparison of U.S. prices with German prices on a monthly basis. The respondent failed to see the context of the high inflation methodology to address "potential distortions in the margin calculations due to high inflation in the exporting country," the remand results said.

The costs of production are listed on a monthly, indexed basis, so it stands to follow that comparison costs must follow suit. "The period of such a weighted-average normal value based on comparison market prices must be for an averaging period no greater than the period for which the COPs are defined, i.e., a monthly weighted-average comparison market price," the remand results said. Nexco's quarterly argument fails to see the interrelationships of the margin calculations, potential distortions caused by high inflation and the holistic approach of the high inflation methodology, the remand results said.