AD Rates Don’t Have to Be Accurate to an Exporter’s 'Commercial Reality,' US Says

In April 3 oral arguments before the U.S. Court of Appeals for the Federal Circuit, the government said that the 1930 Tariff Act was recently amended to “explicitly not require” the Commerce Department to show that an exporter’s rate reflects its commercial reality (Pro-Team Coil Nail Enterprise v. U.S., Fed. Cir. # 22-2241).

In filling a gap in the record with adverse facts available, Commerce only needs to ensure that the exporter's rate has some relevance, DOJ attorney Sosun Bae said. CAFC has held in other cases that a rate being simply “too high” is not enough to show that it is illegal, she said.

The oral arguments come in a case regarding the use of facts available against a Tawainese steel nails exporter, Unicatch Industrial, that failed to submit a complete cost reconciliation in the way the Commerce Department required. All of the requested information, however, was already on the record, the exporter says.

CAFC asked Bae why Commerce hadn’t mentioned Unicatch’s missing cost reconciliation in its third supplemental request for information from the exporter -- the error that resulted in it catching AFA.

She said that she couldn’t speculate why Commerce hadn’t mentioned its dissatisfaction with Unicatch’s data in its third questionnaire, but that Unicatch had already had three chances to respond to the department's questions completely and, by law, “Commerce wasn’t required to give them a fourth bite at the apple.”

“Commerce, using the roadmap Unicatch gave it, tried to finish this reconciliation, tried to fill the gap in the record, went above and beyond and still couldn’t do it,” she said.

CAFC turned to Adam Gordon, attorney for petitioner Mid Continent Steel and Wire, again raising the issue of the third questionnaire.

The court asked, “Perhaps they thought that they had cleaned up their act because the third supplemental request didn’t request further information about reconciliation?”

It also said that the error hadn’t been intentional, and that that was a relevant consideration when assigning AFA.

CAFC also asked Ned Marshak, the attorney representing plaintiff-appellants Unicatch Industrial, TC International, Hor Liang Industrial and Romp Coil Nails Industries, what he made of the fact that Commerce hadn’t mentioned any concern about Unicatch’s cost reconciliation in its third questionnaire.

The department’s first supplemental request didn’t mention it, he said. Its second, he said, “mentioned it in a cryptic manner,” and its third again didn’t bring it up. Saying he was speculating before the court, Marshak argued that “somebody, someplace had a change of heart” that resulted in Unicatch’s AD margin jumping from 34.2% to an AFA-based 78.17% between Commerce’s preliminary and final results.

“I don’t know who,” he said. “But you shouldn’t do that. You don’t give somebody the death penalty after you originally say it’s OK … . It wasn’t complete originally, but somebody in Commerce, the people who are looking at the data, saw that it was enough.”