AD Rates for Two China Wood Flooring Cos. May Drop to Zero
The Court of International Trade again told the Commerce Department to reexamine the antidumping duty rates it assigned in the original investigation of wood flooring from China. CIT had remanded the results of investigation in August 2013 (see 13080202). In response, Commerce lowered the AD rates it assigned to Layo and Samling to zero, which if affirmed would exclude those companies from AD duties. CIT declined to affirm, however, because at the same time that Commerce lowered the rates for the two individually-reviewed companies, it “incongruously” raised the rates for 74 non-individually reviewed companies.
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The 74 companies at issue had demonstrated independence from Chinese government control, but Commerce decided not to investigate them individually because of the amount of work that would entail. Instead, it chose three companies -- Layo, Samling, and Yuhua -- and assigned the 74 companies an average of those rates. Commerce had found a zero AD rate for Yuhua, and rates of 3.98% and 2.63% to Layo and Samling, so it assigned the 74 non-individually reviewed companies an average rate of 3.31%. When, on remand, Commerce also found zero rates for Layo and Samling, it declined to also lower the average rate to zero. Instead, it added the 25.62% punitive rate for non-cooperative companies into the mix, and by doing so raised the AD rate for the non-individually reviewed companies to 6.41%.
The court found that it is not in itself unreasonable for Commerce to use an average of the zero rates and the punitive rate for non-cooperative companies. The agency just has to have a good explanation for doing so. In this case, it did not, said CIT. In its remand redetermination, Commerce explained that it included the punitive rates because it had to account for all of those non-cooperative companies somehow. But Commerce did not explain why those non-cooperative companies’ artificial rates are useful for arriving at some semblance of a representative rate for companies that cooperated but that Commerce chose not to review. Nor did Commerce make any connection between the 25.62% punitive margin and the non-reviewed cooperative companies’ pricing practices.
“While the use of the [punitive] rate in the calculation of the separate rate may be reasonable in some circumstances (so long as supported by substantial evidence), here the seemingly gratuitous inclusion of this transaction-specific rate in the separate rate calculation, to increase the resultant rate, is incongruous,” said CIT. “Upon remand, all relevant rates — mandatory, transaction- specific and [punitive] -- decreased, suggesting a decreased likelihood of dumping. But Commerce made the choice to use a method that increased the separate rate both from the zero that would have resulted from the expected method and from the 3.31 percent in Commerce’s original determination. Commerce did not explain why it made this choice or how the result was in any way reasonably reflective of Plaintiffs’ economic reality.”
(Baroque Timber Industries (Zhongshan) Co. v. U.S., Slip Op. 14-35, dated 03/31/14, Judge Pogue)