CIT Sends Back Commerce's Surrogate Picks in Plywood AD Case for Lack of Evidence

The Court of International Trade on April 19 sent back the Commerce Department's pick of Brazil as the primary surrogate country, and the use of Brazilian and Malaysian surrogate value data, in the 2019-20 review of the antidumping duty order on multilayered wood flooring from China. After already remanding once for Commerce's failure to cite evidence in making its surrogate choices, Judge Jennifer Choe-Groves said she "must now remand again for the same failure."

Choe-Groves said that Commerce failed to cite record evidence supporting the conclusion that the Brazilian and Malaysian data was "publicly available, contemporaneous with the period of review, representative of a broad market average, tax and duty-exclusive, and specific to the inputs being valued." Nor did the agency point to evidence that Brazil was appropriately tapped as the main surrogate country, the judge said.

Choe-Groves also remanded Commerce's decision to adjust the Brazilian plywood data by "removing the Spanish import data."

The trade court previously remanded the AD review for Commerce to reconsider its decision to apply Malaysian surrogate values for both oak and non-oak logs despite picking Brazil as the primary surrogate country to explain its departure from the standard practice of using one surrogate nation. On remand, the agency continued to use Brazil as the main surrogate, citing its preliminary determination memorandum and preliminary surrogate value memorandum to back its finding that the Brazilian and Malaysian surrogate values were appropriate.

Choe-Groves held that these memos are not record evidence, saying they "express the agency's views." Even if they could be considered, the memo doesn't cite record evidence and merely posits conclusory statements on the appropriateness of the data, the judge noted.

Commerce can't "simply declare that its determination is supported by substantial evidence, citing to its own determinations, without actually discussing any documents on the record that support its determinations," the court ruled. The court found that the agency similarly failed to discuss its pick of both Brazilian and Malaysian data.

The court also previously remanded Commerce's decision to adjust plywood surrogate values by removing a line of Spanish import data since it "cited evidence that was not on the record." On remand, Commerce said it complied with the court's order by attaching the evidence it used on the record and that this evidence shows the density of various wood species and standard conversion factors of wooden products.

The agency explained that this evidence supports the decision to remove an "erroneous line of Spanish import data from the plywood AUVs" since it shows that a "quantity of plywood expressed in [square meters] cannot be the same as the quantity expressed in [kg].”

Exporter Jiangsu Senmao Bamboo and Wood Industry Co. argued that Commerce's decision to continue adjusting the surrogate values violates its practice of adjusting the value after considering whether it's aberrational in the aggregate. Commerce's standard practice is to examine Harmonized Tariff Schedule data across potential surrogate nations and within the surrogate country over multiple years. Data is considered aberrationally high if it's "many times higher than import values from other countries."

The U.S. said it only uses the "aberrational in the aggregate" test when a party says a data point is unusually high or low and likely to distort the average value, but that in this case, the decision to remove the data was based on the fact that it expressed the quantities in different units.

Choe-Groves held that Commerce failed to show how the evidence it added to the record "demonstrates that a quantity of plywood expressed in [square meters] cannot be the same as the quantity expressed in kg." The agency added three exhibits to the record, but it "did not identify which of these exhibits it actually relied on to show how the density of various wood species and standard conversion factors demonstrate that the Spanish import data were erroneous."

The agency also "made a conclusory statement that removing the Spanish import data would enable Commerce to calculate the dumping margins as accurately as possible." The fact that the square meter and kg quantities can't be the same "does not support the automatic conclusion, without any explanation, that removal of erroneous data led to a more accurate dataset."

The court suggested that Commerce "should consider providing the parties with the opportunity to submit corrected information that will lead to a more accurate dumping margin calculation, rather than simply removing data from a larger dataset without explaining how removal is more accurate than allowing for the submission of corrected information."

Timothy Brightbill, counsel for petitioner American Manufacturers of Multilayered Wood Flooring, said that he believes Commerce's decisions "accurately reflected the amount of dumping of wood flooring by Chinese companies, and were reasonable and supported by substantial evidence. If the Court believes the explanation or evidence was insufficient, we are confident that Commerce will be able to provide further explanation to uphold its original decisions on remand.”

Jeffrey Neely, counsel for Senmao, said he appreciates "the Court’s careful review of the record" and is "hopeful that the Department of Commerce now will issue an appropriate revised decision.”

(Jiangsu Senmao Bamboo and Wood Industry Co. v. United States, Slip Op. 24-47, CIT # 22-00190, dated 04/19/24; Judge: Jennifer Choe-Groves; Attorneys: Jeffrey Neely of Husch Blackwell for plaintiff Jiangsu Senmao Bamboo and Wood Industry Co.; Matt Ludwikowski of Clark Hill for plaintiff-intervenor Lumber Liquidators Services; Kelly Geddes for defendant U.S. government; Timothy Brightbill of Wiley Rein for defendant-intervenor American Manufacturers of Multilayered Wood Flooring)