Trade Court Says Commerce Lawfully Excluded NME Data From Affiliated Supplier Context

The Court of International Trade on May 16 said that the Commerce Department lawfully excluded imports from non-market economy and export-subsidizing countries from the datasets it used when calculating input cost of production and market price under the major input and transactions disregarded rules.

Judge Gary Katzmann had previously remanded the issue so that the agency could explain why it didn't apply its presumptive exclusion of data from NME nations in the "unaffiliated supplier versus affiliated supplier contexts" (see 2302270076). On remand, Commerce applied this presumption "with equal force in both contexts."

The judge said, as a result, the agency didn't need to "articulate affirmative reasons to deviate from its practice" and that its decision was proper since it relied on the court's prior reasoning. Thus, "such exclusion is a reasonable extension of the general presumption of NME and export-subsidizing unreliability," the opinion said.

The decision ultimately upheld Commerce's AD investigation on mattresses from Cambodia in which the agency used the major input and transactions disregarded rule to nix transactions between affiliated parties if they failed to reflect market prices. Commerce's remand led to a 103.79% dumping rate for all respondents.

The trade court previously remanded Commerce's use of Cambodia as the "market under consideration" under its use of these rules, since the respondents used affiliated suppliers located outside of Cambodia. In again picking Cambodia as the market under consideration, the agency said it used data which reflected what a party in Cambodia would pay to get its inputs, whether by importing them into Cambodia or otherwise. Since the petitioners, led by Brooklyn Bedding, dropped this challenge on remand, Katzmann sustained the agency's position.

On remand, exporters Best Mattresses International Co. and Rose Lion Furniture International Co. challenged for the first time Commerce's use of a simple average, instead of a weighted one, of the six-nation Global Trade Atlas data to "calculate input cost of production values under the Major Input Rule." The judge threw out the claim since it wasn't raised administratively when it could have been.

Katzmann then turned to Best Mattresses and Rose Lion's myriad challenges to Commerce's averaging of Indian mattress maker Emirates Sleep Systems and Grand Twins International (Cambodia)'s financial statements "for calculating constructed value profit and selling expenses."

On remand, Commerce reopened the record to ask the petitioners about how they got the Emirates statement since the court questioned whether it was publicly available. Best Mattresses and Rose Lion said the agency unlawfully did so, claiming that the "burden to develop the record lies with particular parties, not Commerce." The judge said this bar would apply to any remand for lack of substantial evidence, which, "of course, is not the rule."

While Commerce could have rejected the petitioners' factual statements about the public availability of the Emirates statement, that "decision would be subject to its own review for being in accordance with law," the judge said. To say that Commerce "was required to not reopen the record" would instead "turn a judicial remand for reconsideration into an order that functionally directs an outcome for Plaintiffs." The decision to reopen the record was valid in light of the court's remand, the decision said.

Katzmann sustained the finding that the Emirates statement was publicly available after Commerce noted that the statement was available on the websites of the Indian Ministry of Corporate Affairs and private information provider Zauba Corp. While the exporters claimed that the petitioners didn't supply information regarding the Indian consultant they used to get this information, the judge said this information didn't "constitute information that meaningfully addresses Commerce’s underlying concern" when evaluating public availability, which is ultimately about the data's integrity or reliability.

The trade court lastly sustained Commerce's decision to average Emirates and Grand Twins' statements after previously remanding, since the Emirates data was missing an annexure that could hypothetically include an Indian tax credit. The agency noted that both the Emirates and Grand Twins statements are flawed -- the latter since it's missing comparability evidence to the subject merchandise -- but that neither flaw is so vital as to warrant scrapping the entire statements.

The court agreed, finding that "Emirates’s balances with government authorities were not so vital and critically important as to compel Commerce’s rejection of the statements.”

(Best Mattresses Internaitonal Co. v. United States, Slip Op. 24-59, CIT Consol. # 21-00281, dated 05/16/24; Judge: Gary Katzmann; Attorneys: Sarah Wyss of Mowry & Grimson for plaintiffs Best Mattresses and Rose Lion; Kara Westercamp for defendant U.S. government; Chase Dunn of Cassidy Levy for defnedant-intervenors led by Brooklyn Bedding)