US Defends Decision to Drop AFA for Problem Supplier, Rejects 'd' Test Claims

The U.S. on Sept. 20 defended its decision on remand to not apply partial adverse facts available against exporter Garg Tube, claiming that the exporter was "fully cooperative," having made multiple attempts to get cost information from an unaffiliated supplier. The government said Commerce couldn't find enough evidence to show that the potential leverage Garg Tube could exert over the supplier supports the use of AFA (Garg Tube Export v. U.S., CIT # 21-00169).

The U.S. added that Garg Tube failed to exhaust its administrative remedies regarding Commerce's differential pricing analysis, which is used to detect "masked" dumping, and has been subject to extensive litigation at the Court of International Trade.

The trade court previously remanded Commerce's use of AFA against Garg Tube in the 2018-19 review of the antidumping duty order on welded carbon steel standard pipes and tubes from India, telling the agency to invoke the specific statutory basis on which it relies to use AFA and explain either how the use of AFA boosts accuracy or how the exporter failed to respond to the best of its ability (see 2404160037). On remand, Commerce dropped its use of AFA related to Garg Tube's supplier's failure to submit certain cost information, prompting pushback from petitioner Nucor Corp. (see 2408090057).

Nucor said Commerce should have stuck with its adverse inference because this isn't the first review in which Garg Tube has failed to provide cost data from its suppliers and because the record shows that the company has leverage on these companies "but is unwilling to use it." In response, the U.S. said that while this is the second review in which Garg Tube has failed to submit this information from its suppliers, the second review was opened "well before the" final results of the prior review.

As a result, Commerce said it can't find that the exporter didn't "follow through on its threat to cease its business relationship" with the supplier or "continued to engage in business with" the supplier after it refused to supply cost information. "Nucor fails to demonstrate how the timeline described above demonstrates the potential control exerted by Garg Tube over Company A or otherwise supports the application of partial AFA," the brief said.

Garg Tube also contested the remand results, though the company argued that Commerce erred in failing to establish that it properly used the Cohen's d test in its differential pricing analysis. The agency said the court already said Garg Tube failed to exhaust its administrative remedies, since Commerce used the test in its preliminary results, but the exporter didn't challenge the use of the differential pricing analysis.

The respondent said its claims aren't barred by exhaustion because the U.S. Supreme Court's decision in Loper Bright Enterprises v. Raimondo, which eliminated deference to agencies' interpretations of ambiguous statutes, "constitutes an intervening legal authority." The U.S. said in response that "Garg Tube fails to demonstrate how Loper, which does not involve Commerce’s differential pricing methodology, 'would materially alter the result of the case.'"

Garg Tube doesn't claim that Commerce "misinterpreted particular words in the statute when applying its differential pricing methodology" but instead misapplied the d test by failing to account for conditions present in the statistical literature, the brief said. Also, a case on the test is pending before the U.S. Court of Appeals for the Federal Circuit, and "a case involving a legal precedent that is pending appeal does not eliminate stare decisis for any precedent that could be potentially impacted by the appellate court’s future ruling," the U.S. said.