Plywood Exporter Tells CAFC Separate AD Rate Must Reflect Economic Reality

The Court of International Trade properly rejected the Commerce Department's decision to set the separate rate respondents' antidumping duty margin by averaging a zero percent rate and an adverse facts available rate, exporter Zhejiang Dehua TB Import & Export Co. told the U.S. Court of Appeals for the Federal Circuit. Filing a reply brief July 17, the exporter said Commerce failed to support its use of the averaged rates and that the agency ultimately arrived at the correct determination: a zero percent margin for the separate rate companies (Linyi Chengen Import and Export Co. v. U.S., Fed. Cir. # 24-1258).

In the AD investigation on hardwood plywood from China, Commerce picked Linyi Chengen Import and Export Co. and Shandong Dongfang Bayley Wood Co. as the two mandatory respondents. The agency initially gave Chengen a 183.36% individual rate and said Bayley got the 114.72% China-wide rate for failing to show independence from the Chinese government.

Following proceedings at the trade court, Commerce dropped Chengen's rate to zero and set the separate rate respondents' margin by averaging the zero percent rate and the China-wide rate, resulting in a 57.36% mark. CIT rejected this move three separate times since the agency "failed to cite to substantial evidence" that the 57.36% rate "had any relationship to the actual dumping margins of separate rate respondents," Zhejiang Dehua said (see 2310100045).

The U.S. appealed, challenging the trade court's decisions regarding Chengen's rate and the separate rate respondents' AD rate (see 2405130033).

In response, Zhejiang Dehua, a separate rate company, said the facts of the case are similar to those in Yangzhou Bestpak Gifts & Crafts Co. v. U.S. In that case, one respondent got a de minimis mark and the other got the China-wide rate. The Federal Circuit said Commerce couldn't average the rates because the resulting margin didn't reflect economic reality and had no relationship to the separate rate respondents' actual margin.

Zhejiang Dehua said the situation here is the same. The trade court "reasonably rejected Commerce’s attempts to back-fill and cherry-pick the record to find a justification for its decision to assign separate rate respondents a margin other than zero percent," the brief said. The agency "could not find any substantial evidence" to justify the 57.36% mark or show it was "reflective of economic reality" or of the separate rate companies' "actual dumping experiences."

The exporter said it was "unreasonable" for the agency to hit companies that showed their independence from the Chinese government with a rate that was half-derived from the China-wide rate given to "an uncooperative respondent" that didn't show its independence from the Chinese state.

Zhejiang Dehua also argued that Commerce "created its own problem" by failing to set a "reasonable margin for separate rate respondents," given that it tapped only two companies to serve as mandatory respondents. This led to "sparse information on the record." Commerce's own failure "cannot be held against separate rate respondents," the brief said.