CIT Remands Use of Mexican Wage Data for Keg Exporter's Labor Costs for 3rd Time

The Court of International Trade on Jan. 31 remanded for a third time the Commerce Department's use of Mexican wage data to calculate surrogate labor costs in the antidumping duty investigation on beer kegs from China. Judge M. Miller Baker said Commerce abused its discretion in rejecting Brazilian data, favored by petitioner American Keg, and continuing to use Mexican International Labour Organization data.

The court previously remanded the agency's use of a Mexican wage rate adjusted with Brazilian inflation data to calculate surrogate labor costs for respondent Ningbo Master International Trade Co. Baker asked Commerce to explain why it wasn't better to just use the Brazilian data.

On remand, the agency dropped its use of the Brazilian inflation data but reopened the record to use a new Mexican data set (see 2211140037). The new data, from the ILO, was contemporaneous with the record, whereas the previous Mexican data was not. Commerce again decided not to use the Brazilian data, explaining that Mexico made "identical" steel kegs, while Brazil did not.

American Keg argued that the decision to reopen the record was an abuse of discretion since the agency's purported reason for doing so -- "informational accuracy" -- didn't require reopening it and bucked Commerce's policy of "relying on the litigants to create the record." Baker agreed, noting that it's "undisputed that the Brazilian information on the record was correct," making the reopening of the record unjustified.

The judge rejected Commerce's argument that it reopened the record to get data from a country that makes identical merchandise and not just comparable goods. Baker ruled that the agency uses data from countries that make comparable goods when there are "data difficulties" with nations that make identical products. Here there were "data difficulties" with the initial Mexican data but not with the Brazilian data, he said.

Baker backed American Keg's claim that it's on the respondents to populate the record. The agency doesn't "reopen the record to admit evidence that it prefers, such as ILO data, when the parties have introduced otherwise-acceptable evidence that allows an accurate margin calculation," the opinion said. Commerce can only do that when it would be relying on "inaccurate data." Given the lack of showing that the Brazilian data was inaccurate, "Commerce abused its discretion in reopening the record to use Mexican ILO wage data," Baker held.

The court also sustained Commerce's decision to accept exporter Ulix's separate rate application after initially remanding the decision. Baker initially sent the issue back after questioning whether Ulix was affiliated with an unnamed U.S. company since the unnamed company was affiliated with Ulix's U.S. customer. The judge said Commerce cited evidence showing that Ulix was not affiliated with the unnamed company, holding that it is not for the court to reweigh this evidence.

"We are disappointed and studying the opinion, said Gregory Menegaz, counsel for Ningbo Master. "We briefed many cases where Commerce selected brand new surrogate value information on a record upon remand."

American Keg didn't comment.

(New American Keg v. United States, Slip Op. 24-11, CIT # 20-00008, dated 01/31/24; Judge: M. Miller Baker; Attorneys: Whitney Rolig of Picard Kentz for plaintiff New American Keg; Brian Boynton for defendant U.S. government; Gregory Menegaz of deKieffer & Horgan for defendant-intervenors led by Ningbo Master International Trade Co.)