Commerce Wrongly Applied Cohen’s ‘d’ Test After Finding Cost Fluctuations, Exporter Says

An exporter says a government brief failed to address its argument that the Commerce Department had found in a review that the exporter experienced large enough swings in production costs to call for a quarterly analysis, then went on to determine it had used differential pricing with the Cohen's d test anyway (Universal Tube and Plastic Industries v. U.S., CIT # 23-00113).

Exporter Universal Tube and Plastic Industries said that, as a mandatory respondent, it had experienced major cost fluctuations that had affected its prices during the period examined in the 2020-2021 antidumping duty review on circular welded carbon-quality steel pipe from United Arab Emirates. Based on this, Commerce decided to use quarterly averages to value the exporter’s production costs. It also conducted a differential pricing analysis on Universal’s U.S. sales to determine whether it should calculate the exporter’s dumping margin using an average-to-average or an average-to-transaction method.

During this analysis, Universal said Commerce “defined purchasers based on consolidated customer codes, determined regions based on zip codes, and defined time periods by the quarter.” As a result, the department found that only a percentage of Universal’s sales passed a Cohen’s d test, the exporter said. It decided to use an average-to-transaction method to value those sales and an average-to-average method to value the remaining sales that hadn’t passed.

This, the exporter argued, was inappropriate because Commerce had already determined that Universal had experienced cost fluctuations. It said that the government’s “explanations for Commerce’s internally inconsistent sales comparisons cannot be ascribed to a difference in view or the product of agency expertise.”

“The conflicting approaches Commerce adopted when it calculated Universal’s dumping margin represented inconsistent action -- and thus necessarily were unsupported by substantial evidence -- and must be remanded for reconsideration,” it said.

The department “intentionally” changed up its usual approach in calculating the exporters’ margins by overriding "the normal hierarchy of contemporaneous months for price averaging” and by restricting price-to-price comparisons of quarterly sales of the same products, Universal said. It said Commerce did so intending to prevent comparisons of steel pipe sales across quarters.

It argued that the U.S., instead of addressing this point in its opposition to Universal's motion for judgment, only mentioned that the exporters were wrong and called that quarterly sales comparison “improper.”

To avoid the government objecting to its phrasing again, Universal said it was providing four other “descriptions of Commerce’s action” that “[the U.S.] might prefer,” including “Commerce intentionally rewrote its dumping program to make sure that cross-quarter sales comparisons would not be made” and “Commerce modified its margin calculation program so that inter-quarter sales comparisons would be impossible.”

“Any one of these descriptions might assuage Defendant’s concerns with rhetoric,” it said, citing the government’s opposition brief, “but none would change that Commerce adopted a specific approach to eliminate the comparisons of sales across quarters when calculating Universal’s dumping margin while Commerce continued to compare sales across quarters to determine the methodology it would use to calculate Universal’s dumping margin.”

Cases cited by the U.S. didn't offer precedent for resolving Universal’s claims because they involved whether or not Commerce was obligated to look into why an exporter’s prices might be fluctuating across geography or time, Universal said. The exporter said the U.S. “belittles Universal’s argument” by the comparison; Universal’s actual claim is that the department had already ruled on the cause of the exporter’s own price fluctuations, then ignored that in another part of the proceeding, it said.

“The Court has long held that it is unreasonable for Commerce to adopt positions that are internally inconsistent, and the Court should hold Commerce to the same standard in this case,” it said.