Commerce Justifies Differing Time Periods in Dumping Calculation, 'd' Test at CIT

The Commerce Department on Sept. 23 said that it can permissibly use "inter-quarter comparisons" in the Cohen's d test while detecting "masked" dumping while using "same-quarter comparisons" in its margin calculations. The agency said that "fluctuating production costs," which call for same-quarter comparisons in calculating antidumping duty margins, "do not introduce distortions into the comparison of U.S. prices with other U.S. prices in the Cohen's d test" (Universal Tube and Plastic Industries v. U.S., CIT Consol. # 23-00113).

The Court of International Trade previously remanded Commerce's use of the differing quarter comparisons in the 2020-21 review of the AD order on circular welded carbon-quality steel pipe from the United Arab Emirates (see 2407290019). In the review, Commerce decided to use an average of respondent Universal Tube and Plastic Industries' costs of production within individual quarters of the review period instead of using the company's annual production costs. The agency then used quarterly U.S. sales prices in its differential pricing analysis to detect masked dumping.

The court said Commerce must either make "consistent determinations" or explain the inconsistency. The agency opted for the second route, telling the court on remand that precedent from the U.S. Court of Appeals for the Federal Circuit backs its approach.

In JBF RAK v. U.S., the appellate court said 19 U.S.C. 777A(d)(1)(B) doesn't require the agency to determine why there's a pattern of export prices that differ greatly among "purchasers, regions, or time periods, nor does it mandate which comparison methods Commerce must use in administrative reviews." If Commerce finds that there are great price differences between purchasers, regions or time periods, there's "no explaining away these differences based on the reasons for them such that Commerce's finding is rendered invalid," the brief said.

What may have caused the differences can't excuse them under the statute, Commerce said. While changing production costs can affect changing prices, CAFC precedent says "Commerce need not evaluate the many possible causes for significantly changing prices between purchasers, regions, or time periods," the agency said.

In addition, CAFC in Borusan Mannesmann Boru Sanayi ve Ticaret v. U.S. said the statute doesn't require Commerce to find reasons why there's a pattern of export prices for comparable goods that differ among purchasers, regions or time periods, even when the changes in production costs are evidenced, the brief said. If the agency isn't then required to find the reasons for price differences, then those reasons "are not relevant to the price comparison analysis." Even if a respondent's differing prices can be partially explained by its changing production costs, "that does not make Commerce's 'inter-quarter comparison' as part of the Cohen's d test in any way distortive," the brief said.

Commerce also fleshed out its claim that the use of inter-quarter comparisons is reasonable because the alleged distortions due to production cost differences are "irrelevant for the Cohen's d test." The agency said finding that a pattern of differing prices exists "foretells nothing about whether masked dumping exists, nor does it have an impact on Commerce's individual margin calculations."

If the Cohen's d test is the "canary in the coal mine" to tell the agency that masked dumping may be distorting margin calculations, the finding of a pattern "is the equivalent of the canary lying lifeless on the floor of its cage," the brief said. If no pattern is found, "the canary is alive and well," and no masked dumping may be found. In assessing the "initial warning sign," it's "reasonable to compare U.S. prices between quarters" because any discovered differences show only whether "conditions exist where masked dumping might occur," not whether masked dumping exists.