US Paper Company Says Commerce Failed to Lower CEP by Exporter's AD Liability

The Commerce Department should have treated exporter Koehler's unpaid antidumping duty liability as a selling expense that lowered constructed export price (CEP) instead of as an increase to the cost of production, antidumping duty petitioner Domtar Corp. argued at the Court of International Trade. Filing a complaint on Aug. 1, Domtar said CEP should have been lowered since the expenses were "associated with commercial activities in the United States" (Domtar Corp. v. United States, CIT # 24-00113).

Domtar took part in the 2021-22 review of the AD order on thermal paper from Germany, in which Koehler served as a mandatory respondent. The petitioner said Koehler refused to pay around $200 million in AD duties due on its thermal paper entries subject to the previous AD order on German thermal paper. Interest "continued to accrue" on the company's AD laibilities during the 2021-22 review, Domtar claimed.

Commerce "captured these interest expenses within Koehler’s financial interest expense ratio," which is a part of the cost of production, the brief said. Koehler was saddled with a 0.76% AD rate.

Domtar claimed that Commerce's failure to lower the exporter's CEP by the amount of the interest on its outstanding AD duties is not in accordance with the law. The agency's regulations say the agency will adjust CEP for expenses linked with "commercial activities in the United States that relate to the sale to an unaffiliated purchase, no matter when or where paid."

The petitioner said the $200 million in AD liability clearly qualifies. Commerce refused to lower Koehler's CEP by this amount, since the "underlying liability arose from thermal paper imports subject to the 2008 Order rather than the current 2021 order." Domtar said Commerce failed to explain why this was "dispositive" under its regulations, adding that this interpretation is "unreasoanble" because the orders cover the same goods and there's "no disconnect between the interest accruing during the" 2021-22 review period and Koehler’s CEP sales during that same period.