AD Petitioners Challenge Commerce's Surrogate Pick in Hydrofluorocarbon AD Review

Antidumping duty petitioner American HFC Coalition took to the Court of International Trade to contest the Commerce Department's decision not to use Mexico as the primary surrogate nation in the 2021-22 review of the antidumping duty order on hydrofluorocarbon blends from China (The American HFC Coalition v. United States, CIT # 24-00071).

In the five-count complaint filed on May 6, the coalition said that, in contrast with the other countries found to be at the same level of economic development as China according to Gross National Income, Mexico was "economically comparable to China and a significant producer of identical merchandise."

As part of the review, Commerce identified six countries on its "GNI List," which were at a comparable level of economic development as China. From this list, the agency narrowed its potential primary surrogate countries to Romania, Malaysia and Turkey, since they all exported comparable merchandise during the review period. Commerce said it would only pick Mexico as the main surrogate nation if the data from the other three countries was "unsuitable."

The agency ultimately went with Romania as its main surrogate since it had "complete SV information" and the Romanian financial statements are more reliable because they are from a producer of comparable goods and don't have evidence of subsidies Commerce has previously found countervailable.

The coalition argued at the trade court that Commerce's decision that "Mexico, as compared to other GNI list countries, was not at 'the same' level of economic development as China" was not backed by substantial evidence. The complaint added that there was no direct evidence of actual HFC blends production in any of the GNI List countries aside from "export statistics showing that certain GNI List countries exported HFC blends or other fluorocarbon refrigerant gases" during the review period.

The brief said that the "legislative history" shows that the existence of "net" exports "may support an inference that the products were produced in the exporting country." The record here showed that each of the GNI List countries shipping HFC blends or other fluorocarbon refrigerant gases "were net importers, not net exporters," the company said.

The coalition called out Commerce's "Sequencing Procedure," which it uses to identify primary surrogate countries. The procedure "generally calls for the analysis of economic comparability before it considers merchandise comparability," though there's an exception the agency didn't invoke in the review for "unique or unusual" merchandise. The coalition said the exception should have been used given that "the chemical composition of HFC blends and other fluorocarbon refrigerant gases required the presence of fluorine, which was imparted to the finished merchandise through the use of fluorspar or hydrogen fluoride as a raw material in the production process" and that the "presence of fluorine and the form of the finished product, gas, was essential to the end-use of the merchandise."

The final count of the complaint highlighted the fact that Mexican chemical producer CYDSA had a joint venture with Honeywell International to make HFCs -- "identical merchandise" covered by the AD order. Despite this, the agency used the financial information of a Romanian producer of various chemicals, "none of which contain fluorine."