Commerce Rejects 'Alternative Pathways' to Making PMS Adjustment to Sales-Below-Cost Test

The Commerce Department rejected arguments from antidumping duty petitioners, led by Ellwood City Forge Co., regarding "alternative pathways" for the agency to make a particular market situation adjustment for two inputs of forged steel fluid end blocks from Germany. Submitting its remand results to the Court of International Trade on Nov. 21, Commerce said that while it reversed course on its ability to make a cost-based PMS adjustment, it won't be able to make a sales-based PMS adjustment since it was untimely filed (Ellwood City Forge Co. v. United States, CIT # 21-00077).

On remand, the agency also corrected calculation errors in the AD rate for respondent BGH Edelstahl Siegen as part of the AD investigation on forged steel fluid end blocks from Germany. The result was a lowered dumping rate for the exporter, along with the all-others rate, from 4.79% to 3.08%.

In the suit, Commerce dropped its cost-based PMS adjustment to the sales-below-cost test regarding ferrochrome and electricity inputs following the U.S. Court of Appeals for the Federal Circuit's key decision in Hyundai Steel v. U.S., which made such an adjustment illegal. The trade court remanded the proceeding to Commerce so the agency could address the petitioners' two alternative pathways for making a PMS adjustment (see 2307240061).

In the first pathway, the petitioners said Commerce could still reject distorted sales prices that pass the sales-below-cost test by finding a sales-based PMS. The agency said the sales-based PMS allegation was untimely, adding that it is incorrect to claim that Commerce need only state that a cost-based PMS found under § 773(e) of the Trade Act of 1930 also prevents a proper comparison under § 773(a) of the Trade Act.

The agency also said that instead of providing evidence that distorted costs in Germany led to distorted prices, the petitioners merely alleged that BGH is assumed to spread its costs savings "strategically in markets where BGH stands to benefit the most in terms of gaining market share and customs." However, substantial evidence needs more than "guesswork," the brief said.

The petitioner's second path is based on § 773(f)(1)(A) of the Trade Act, which says that an exporter's costs shall be calculated based on their records and reasonably reflect costs linked with production of the subject goods. Commerce said it disagreed with the petitioners' claim that since a distortion was found in the cost-based PMS analysis, the agency can disregard BGH's books and records.

Ellwood City has the statutory analysis "backwards," the brief said, since the statute clearly requires an analysis that starts with the respondent's records. "The Coalition has not pointed out anything unreasonable in BGH’s books and records, but rather, has merely restated our finding that certain costs are distorted," Commerce said. The agency added that the petitioners also misunderstood the PMS finding, since it is "market-based, not necessarily respondent-specific."