Domestic Trade Committee Says CVD Costs Should Be Deducted From Exporters’ US Prices

A number of Canadian lumber exporters moved for judgment upon the agency record in a softwood lumber case April 5. So did defendant-intervenors led by a domestic petitioner group, which said that the Commerce Department should have subtracted countervailing duty costs from the exporters’ U.S. prices (Government of Canada v. U.S., CIT Consol. # 23-00187).

Domestic petitioners led by the Committee Overseeing Action for Lumber International Trade Investigations or Negotiations said in their motion that the exporters’ AD rates were too low. Commerce should have deducted respondents’ countervailing duty costs from their export prices because those costs resulted from the shipment of the respondents’ goods to the United States, they said. The department's failure to do so, they said, was “inconsistent with the plain language of the statute.”

“The COALITION’s case brief cited record evidence demonstrating that CVDs are, in fact, costs incident to bringing softwood lumber from Canada to the United States,” they said.

They also argued that Commerce should have calculated a general and administrative costs ratio for Canfor based on the financial information of Canadian Forest Products, the entity that actually produced the company’s like product in Canada.

Meanwhile, the Canadian exporters’ motion addressed an issue specific to Canfor, their lead and a respondent to the underlying administrative review on softwood lumber products from Canada. They argued that Commerce made a number of errors while calculating Canfor’s costs.

First, they said, the department wrongly included an unrepresentative legacy contract in its calculation of Canfor’s cost reimbursements by its sale of a byproduct, woodchips.

To estimate how much Canfor usually made by selling its woodchips, Commerce compared Canfor’s average per-unit sales to unaffiliated and affiliated parties, then “adjusted downward the revenues earned on sales to affiliated parties by the difference between that amount and the average of the revenue earned on sales to unaffiliated parties” under the transactions disregarded rule.

However, by doing so, Commerce “unreasonably” increased Canfor’s costs, the exporters said. They said that because Canfor had contracted in 2012 with two nonaffiliated paper companies to provide woodchips at less than fair market value, those sales “should not be included in Commerce’s benchmark for establishing market prices for chips.”’

Commerce also erroneously viewed what Canfor called a “bookkeeping convenience” as a transaction between Canfor’s affiliates made at less than fair market value, the plaintiff-intervenors said.