Filed: Aug. 01, 2007
Latest Update: Mar. 26, 2017
Summary: Slip Op. 07-117 UNITED STATES COURT OF INTERNATIONAL TRADE : MITTAL STEEL USA, INC. : (formerly INTERNATIONAL : STEEL GROUP, INC.), : : Plaintiff, : : v. : : UNITED STATES, : Before: Richard K. Eaton, Judge : Defendant, : Consol. Court No. 05-00308 : Public Version and : : UNION STEEL MANUFACTURING : CO., LTD.; DONGBU STEEL CO., : LTD.; POSCO; and HYUNDAI : HYSCO CO., LTD., : : Deft.-Ints. : : OPINION [United States Department of Commerce’s final results of the tenth administrative review of the
Summary: Slip Op. 07-117 UNITED STATES COURT OF INTERNATIONAL TRADE : MITTAL STEEL USA, INC. : (formerly INTERNATIONAL : STEEL GROUP, INC.), : : Plaintiff, : : v. : : UNITED STATES, : Before: Richard K. Eaton, Judge : Defendant, : Consol. Court No. 05-00308 : Public Version and : : UNION STEEL MANUFACTURING : CO., LTD.; DONGBU STEEL CO., : LTD.; POSCO; and HYUNDAI : HYSCO CO., LTD., : : Deft.-Ints. : : OPINION [United States Department of Commerce’s final results of the tenth administrative review of the ..
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Slip Op. 07-117
UNITED STATES COURT OF INTERNATIONAL TRADE
:
MITTAL STEEL USA, INC. :
(formerly INTERNATIONAL :
STEEL GROUP, INC.), :
:
Plaintiff, :
:
v. :
:
UNITED STATES, : Before: Richard K. Eaton, Judge
:
Defendant, : Consol. Court No. 05-00308
: Public Version
and :
:
UNION STEEL MANUFACTURING :
CO., LTD.; DONGBU STEEL CO., :
LTD.; POSCO; and HYUNDAI :
HYSCO CO., LTD., :
:
Deft.-Ints. :
:
OPINION
[United States Department of Commerce’s final results of the
tenth administrative review of the antidumping duty order
applicable to corrosion-resistant carbon steel flat products from
Korea sustained.]
Dated: August 1, 2007
Stewart and Stewart (Wesley K. Caine, Caryn B. Schenewerk and
Sarah V. Stewart), for plaintiff.
Peter D. Keisler, Assistant Attorney General; Jeanne E. Davidson,
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice; Patricia M. McCarthy, Deputy
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice (Stephen C. Tosini); Office of the
Chief Counsel for Import Administration, United States Department
of Commerce (Ada Loo and Irene H. Chen), of counsel, for
defendant.
Troutman Sanders LLP (Donald B. Cameron and Brady W. Mills), for
defendant-intervenors Union Steel Manufacturing Co., Ltd. and
Consol. Court No. 05-00308 Page 2
Dongbu Steel Co., Ltd.
Akin, Gump, Strauss, Hauer & Feld, LLP (Spencer S. Griffith,
Warren E. Connelly, Jaehong D. Park, Jarrod M. Goldfeder, Jason
A. Park and Lisa W. Ross), for defendant-intervenors POSCO and
Hyundai HYSCO Co., Ltd.
Eaton, Judge: This consolidated action1 is before the court
on plaintiff Mittal Steel USA, Inc.’s (“Mittal”) motion for
judgment upon the agency record pursuant to USCIT Rule 56.2. By
its motion, plaintiff contests certain aspects of the United
States Department of Commerce’s (“Commerce” or the “Department”)
final results of the tenth administrative review of the
antidumping duty order applicable to imports into the United
States of corrosion-resistant carbon steel flat products (“CORE”)
from Korea made during the period of review (“POR”) August 1,
2002, to July 31, 2003. See Certain CORE from the Republic of
Korea, 70 Fed. Reg. 12,443 (Dep’t of Commerce Mar. 14, 2005)
(tenth admin. rev.) (“Final Results”). In addition, plaintiff
contests portions of the Department’s conclusions with respect to
Hyundai HYSCO Co., Ltd.’s (“HYSCO”) new shipper review, which was
part of the same determination. See 19 U.S.C. § 1675(a)(2)(B)
(2000). Jurisdiction is had pursuant to 28 U.S.C. § 1581(c)
1
This action includes court numbers 05-00308 and 05-
00309. See Mittal Steel USA ISG, Inc. v. United States, Consol.
Ct. No. 05-00308 (Oct. 5, 2005) (order granting plaintiff’s
consent motion to consolidate cases). Court number 05-00309
involved plaintiff’s challenge to the final results of the new
shipper review.
Consol. Court No. 05-00308 Page 3
(2000), and 19 U.S.C. § 1516a(a)(2)(B)(iii). For the reasons set
forth below, Commerce’s Final Results are sustained.
BACKGROUND
Plaintiff is a domestic producer of CORE products. On
August 19, 1993, Commerce published the antidumping duty order
applicable to imports into the United States of CORE from Korea.
See Certain CORE From Korea, 58 Fed. Reg. 44,159 (Dep’t of
Commerce Aug. 19, 1993) (“CORE Order”). After having conducted
nine prior administrative reviews of the CORE Order, Commerce, on
August 1, 2003, published notice that it would consider requests
for what would be the tenth review. See Certain CORE from Korea,
68 Fed. Reg. 45,218 (Dep’t of Commerce Aug. 1, 2003) (notice).
Thereafter, on August 29, 2003, plaintiff asked Commerce to
conduct an administrative review with respect to the behavior and
market activities of certain Korean respondents including: POSCO;
Dongbu Steel Co., Ltd. (“Dongbu”); and Union Steel Manufacturing
Co., Ltd. (“Union”). The tenth administrative review was
initiated on September 30, 2003. See Initiation of Antidumping
and Countervailing Duty Reviews, 68 Fed. Reg. 56,262, 56,263–64
(Dep’t of Commerce Sept. 30, 2003) (notice). In addition, during
the proceeding, HYSCO sought a new shipper review of its sales of
CORE to the United States pursuant to 19 U.S.C. § 1675(a)(2)(B),
which Commerce initiated on October 3, 2003. See Certain CORE
Consol. Court No. 05-00308 Page 4
from Korea, 68 Fed. Reg. 57,423 (Dep’t of Commerce Oct. 3, 2003)
(notice).
On March 14, 2005, Commerce published the Final Results of
both the tenth administrative review and HYSCO’s new shipper
review. See Final Results, 70 Fed. Reg. at 12,443. Based on its
analysis, Commerce assigned subject imports from POSCO a 2.34
percent dumping margin; Union and Dongbu received de minimis
margins;2 and HYSCO, as a result of the new shipper review,
received a margin of zero. See id. at 12,445.
STANDARD OF REVIEW
When reviewing a final antidumping determination the court
“shall hold unlawful any determination, finding, or conclusion
found . . . to be unsupported by substantial evidence on the
record, or otherwise not in accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i). “Substantial evidence is ‘such relevant
evidence as a reasonable mind might accept as adequate to support
a conclusion.’” Huaiyin Foreign Trade Corp. (30) v. United
States, 322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Consol.
2
Under the statute, Commerce is required to “disregard
any weighted average dumping margin that is de minimis as defined
in section 1673b(b)(3) of this title.” 19 U.S.C. § 1673d(a)(4).
“[A] weighted average dumping margin is de minimis if the
administering authority determines that it is less than 2 percent
ad valorem or the equivalent specific rate for the subject
merchandise.” 19 U.S.C. § 1673b(b)(3). Thus, Union and Dongbu
were not required to pay antidumping duties on their entries.
Consol. Court No. 05-00308 Page 5
Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). The existence of
substantial evidence is determined “by considering the record as
a whole, including evidence that supports as well as evidence
that ‘fairly detracts from the substantiality of the evidence.’”
Id. (quoting Atl. Sugar, Ltd. v. United States,
744 F.2d 1556,
1562 (Fed. Cir. 1984)).
In addition, “[a]s long as the agency’s methodology and
procedures are reasonable means of effectuating the statutory
purpose, and there is substantial evidence in the record
supporting the agency’s conclusions, the court will not impose
its own views as to the sufficiency of the agency’s investigation
or question the agency’s methodology.” Ceramica Regiomontana,
S.A. v. United States, 10 CIT 399, 404–05, 636 F. Supp. 961, 966
(1986), aff’d,
810 F.2d 1137, 1139 (Fed. Cir. 1987).
DISCUSSION
I. Model Match Methodology
Plaintiff’s first claim is that the Department unreasonably
denied its request that respondents be asked to provide more
detailed product data for use in Commerce’s model match
criteria.3 The agency employs these criteria to ensure that the
3
The criteria include: type; reduction process; metallic
coating process; clad material/coating metal; quality; yield
strength; metallic coating weight; minimum thickness; width;
form; temper rolling; and leveling. Letter from Stewart and
(continued...)
Consol. Court No. 05-00308 Page 6
merchandise sold in the U.S. market is being compared “with a
suitable home-market product” for purposes of calculating
antidumping duties. Koyo Seiko Co. v. United States, 66 F.3d
1204, 1209 (Fed. Cir. 1995); see also 19 U.S.C.
§ 1677(16)(C)(iii).
Commerce maintains that, in accordance with its practice, it
chose the model match criteria during the initial sales at less
than fair value investigation and has used them in each review
since in order to provide a “consistent methodology from review
to review” upon which respondents could rely. Def.’s Resp. Pl.’s
Mot. J. Agency R. (“Def.’s Resp.”) 9; see also Certain CORE From
Korea, 58 Fed. Reg. 37,176 (Dep’t of Commerce July 9, 1993).
It is plaintiff’s position that, had respondents been asked
for more specific product data, it would have been able to
conduct a more detailed analysis and possibly uncover a
compelling reason for changing the criteria, thus enabling
Commerce to produce more accurate results. See Pl.’s Mem. Supp.
Mot. J. Agency R. (“Pl.’s Mem.”) 12 (“Commerce refused even to
request that respondents submit the more precise data. This
precluded Mittal from analyzing detailed sales information that
might have substantiated Mittal’s fair concerns . . . .”)
3
(...continued)
Stewart, Wesley K. Caine, to Commerce (May 28, 2004) Ex. A, at A-
2.
Consol. Court No. 05-00308 Page 7
(emphasis omitted).4
For Commerce, the need for consistency in the model match
criteria stems from its duty to calculate antidumping rates as
accurately as possible. See, e.g., Lasko Metal Prods., Inc. v.
United States, 43 F.3d 1442, 1446 (Fed. Cir. 1994). Because
consistency is, according to Commerce, linked inextricably to
accuracy, the Department maintains that it changes its model
match criteria only if a participant can demonstrate a
4
For instance, plaintiff states:
Commerce defined “widths” by reference to the
following four measurement groups: (a) >= ½"
but <24"; (b) >=24" but <40"; (c) >=40" but
<60"; and (d) >=60". Similarly, it defined
“thickness” by reference to these 11 separate
groups: (a) <0.014"; (b) >=0.014" but
<0.015"; (c) >=0.015" but <0.016; (d)
>=0.016" but <0.018"; (e) >=0.018" but
<0.022"; (f) >=0.022" but <0.028"; (g)
>=0.028" but <0.044"; (h) >=0.044" but
<0.060"; (i) >=0.060" but <0.085"; (j)
>=0.085" but <0.130"; and (k) >=0.130".
Thus, to identify goods for price
comparisons, Commerce would treat as
“identical” articles all CORE within a given
range, so far as the particular criterion was
concerned. Put differently, articles with
different physical dimensions could still be
treated as “identical,” and Commerce could
directly compare their prices in antidumping
margin calculations.
Pl.’s Mem. 6. In Mittal’s view, requiring respondents to
provide product data on a narrower range of dimensions might have
provided a compelling reason to change the criteria. That is,
more specific data could, according to plaintiff, have
demonstrated a substantial difference between the subject
merchandise and the purportedly comparable foreign like product.
Consol. Court No. 05-00308 Page 8
“compelling reason” for the modification. Def.’s Resp. 9; see
also Mem. from Eric B. Greynolds, Program Manager, Office of
AD/CVD Enforcement VI, to Melissa G. Skinner, Dir., Office of
AD/CVD Enforcement VI (Aug. 27, 2004) (“Model Match Mem.”) at 5
(citing Steel Wire Rope From Malaysia, 66 Fed. Reg. 12,759 (Dep’t
of Commerce Feb. 28, 2001); Antifriction Bearings (Other than
Tapered Roller Bearings) and Parts Thereof From France; et al.,
57 Fed. Reg. 28,360, 28,366 (Dep’t of Commerce June 24, 1992);
Tapered Roller Bearings, Finished and Unfinished, and Parts
Thereof, From Japan, 56 Fed. Reg. 41,508, 41,509 (Dep’t of
Commerce Aug. 21, 1991)).
Plaintiff first introduced its concerns in a letter from its
counsel to Commerce. See Letter from Stewart and Stewart, Wesley
K. Caine, to Commerce (May 28, 2004) (“May 28 Letter”). By this
letter, plaintiff sought to demonstrate the necessity of
demanding more specific data by claiming that the product ranges
in Commerce’s questionnaire, for thickness, width, type and
quality did not correspond with the actual data contained in
Union’s, Dongbu’s and POSCO’s pricing sheets. See May 28 Letter
at 2. To bolster its position that Commerce should have asked
respondents for additional product and pricing information,
plaintiff compared merchandise within Commerce’s ranges to the
Consol. Court No. 05-00308 Page 9
prices charged.5 Mittal concluded that Commerce’s ranges
produced a variance in prices sufficient to warrant the agency’s
issuance of a supplemental questionnaire. See Pl.’s Mem. 27
(“This should have prompted the agency to at least request more
precise data, which would have allowed it and Mittal to pursue
the matching issues more deeply via computer analysis. However,
the agency refused to request the information, much less perform
analyses, which left valid issues un-addressed.”) (emphasis
omitted); see also Pl.’s Mem. 27 (citing Freeport Minerals Co. v.
United States, 776 F.2d 1029, 1033 (Fed. Cir. 1985)). Before the
court, plaintiff continues to press this claim insisting,
5
Specifically, plaintiff [[
]] Pl.’s
Mem. 8. For instance, with respect to thickness, plaintiff
contends that it examined
[[
]]
Pl.’s Mem. 8 (emphasis omitted). Plaintiff contends that it
found similar results after analyzing [[
]]. See Pl.’s Mem. 8–10.
Consol. Court No. 05-00308 Page 10
however, that it is not “asking the Court at this point to rule
categorically that Commerce’s methodology completely fails as a
matter of law.” Pl.’s Mem. 27 n.13.
According to Commerce, it found the issuance of a
supplemental questionnaire was not required because plaintiff’s
May 28 Letter, and the various price analyses contained therein,
failed to establish its necessity. As Commerce stated in its
Model Match Memorandum:
Regarding the price lists cited by
[plaintiff] in [its] submission, we find
there is no evidence indicating that the
price lists reflect actual transaction
prices, and, thus, we find that they do not
necessarily reflect the Korean respondents’
actual sales and pricing practices. In
addition, several of the price lists cited by
[plaintiff] are exclusive to the Korean
respondents’ home market and, thus, offer no
information on how the products are sold in
the U.S. market. Therefore, we find that the
internal pricing guidelines cited by
[plaintiff]: (1) fail to indicate a change in
the Korean respondents’ production/pricing
practices and (2) do not necessarily reflect
the norms of the Korean respondents.
Model Match Mem. at 5–6.
Commerce further argues that plaintiff “overstates the case
that narrower bands for model matches will necessarily create
more accurate results.” Def.’s Resp. 14. The Department insists
that “the more bands that are applied, the fewer actual sale to
sale matches there will be -- requiring Commerce to resort to
constructed value for additional United States sales.” Def.’s
Consol. Court No. 05-00308 Page 11
Resp. 14.
As has been noted, plaintiff does not demand a change in the
Department’s methodology. Mittal’s sole claim is that Commerce
should have sought more information from the respondents. The
stated purpose of plaintiff’s request is to uncover additional
information that it hopes will provide a basis for a challenge to
Commerce’s model match criteria. Therefore, the court is asked
to determine whether Commerce supported with substantial evidence
its decision not to issue a supplemental questionnaire seeking
additional model match data. The court finds that Commerce has
justified its decision.
First, as noted by Commerce, the price lists plaintiff
references are just what they appear to be — price lists. This
being the case, Commerce was justified in finding that they did
not necessarily reflect actual sales. Commerce, on the other
hand, had obtained actual sales data from the questionnaire
responses upon which it reasonably relied. Also, Commerce
observed that some of plaintiff’s evidence of respondents’
pricing practices related solely to home market sales, which shed
no light on the price of CORE sold by respondents in the United
States. Moreover, Commerce was not unreasonable in finding that
plaintiff’s demand to narrow the range of dimensions compared
would create more inaccuracies in dumping calculations because
fewer actual sales would be available for direct comparison.
Consol. Court No. 05-00308 Page 12
Thus, because plaintiff has not made out a sufficient case
for the issuance of a supplemental questionnaire and because the
Department had in its possession all of the information needed to
make a fair and reasonable product comparison, the court sustains
Commerce’s decision not to seek additional product and sales
data.
II. Constructed Export Price: Deduction of Selling Expenses
A. Location of Incurred Costs
Plaintiff next insists that Commerce unlawfully failed to
deduct from constructed export price (“CEP”)6 certain “core
6
Constructed export price (“CEP”) is
the price at which the subject merchandise is
first sold (or agreed to be sold) in the
United States before or after the date of
importation by or for the account of the
producer or exporter of such merchandise or
by a seller affiliated with the producer or
exporter, to a purchaser not affiliated with
the producer or exporter, as adjusted under
subsections (c) and (d) of this section.
19 U.S.C. § 1677a(b). CEP, or U.S. price, is then compared to
normal value to calculate the dumping margin. Normal value is
defined as
the price at which the foreign like product
is first sold (or, in the absence of a sale,
offered for sale) for consumption in the
exporting country, in the usual commercial
quantities and in the ordinary course of
trade and, to the extent practicable, at the
same level of trade as the export or
constructed export price . . . .
(continued...)
Consol. Court No. 05-00308 Page 13
selling expenses7 associated with resale transactions of subject
merchandise in the United States . . . merely because [the
expenses] involved activities that occurred ‘outside’ the United
States.” Pl.’s Mem. 33. More specifically, plaintiff asserts
that Commerce committed legal error by its unwillingness to make
a downward adjustment to CEP equal to the claimed selling
expenses incurred by the Korean parents in facilitating the
resales of CORE to unaffiliated U.S. customers.8 See Pl.’s Mem.
12–13. For plaintiff, under 19 U.S.C. § 1677a(d),9 if “the
6
(...continued)
19 U.S.C. § 1677b(a)(1)(B)(i).
7
Plaintiff’s reference to “core” selling functions is
apparently intended to describe such activities as negotiating
price, entering into sales contracts and approving resales;
however, neither the statute nor the regulations define the
phrase. See Pl.’s Mem. 39 (suggesting that Commerce define
“core” functions, if necessary).
8
The Korean parent companies are respondents: Union,
Dongbu, POSCO and HYSCO.
9
Subsection 1677a(d) provides, in pertinent part:
[T]he price used to establish [CEP] shall
also be reduced by——
(1) the amount of any of the
following expenses generally
incurred by or for the account of
the producer or exporter, or the
affiliated seller in the United
States, in selling the subject
merchandise (or subject merchandise
to which value has been added)——
(A) commissions for
(continued...)
Consol. Court No. 05-00308 Page 14
activities and associated expenses relate to the resales in the
United States,” the deduction must be made regardless of when and
where the expenses were incurred. Pl.’s Mem. 12.
With respect to plaintiff’s legal contention, Commerce does
not disagree. That is, the Department maintains that it makes
justified CEP deductions no matter where expenses are incurred or
paid. See Def.’s Resp. 16 (noting that Commerce deducts from CEP
selling expenses that “relate directly to the sale to an
unaffiliated purchaser, even if, for example, the foreign parent
of the affiliated U.S. importer pays those expenses”) (internal
quotation marks & citation omitted). Rather, Commerce urges that
its decision here not to deduct certain costs from CEP was
9
(...continued)
selling the subject
merchandise in the United
States;
(B) expenses that result
from, and bear a direct
relationship to, the
sale, such as credit
expenses, guarantees and
warranties;
(C) any selling expenses
that the seller pays on
behalf of the purchaser;
and
(D) any selling expenses
not deducted under
subparagraph (A), (B), or
(C) . . . .
19 U.S.C. § 1677a(d)(1).
Consol. Court No. 05-00308 Page 15
appropriate because the amounts expended by respondents related
to sales to affiliated U.S. importers and not to unaffiliated
U.S. customers. See Def.’s Resp. 14; see also 19 C.F.R.
§ 351.402(b) (2005);10 Issues & Decisions for the Final Results
of the Antidumping Duty New Shipper Review and the Antidumping
Duty Administrative Review of Certain CORE from Korea (Dep’t of
Commerce Mar. 7, 2005) (“Issues & Decs. Mem.”) at 10.
Moreover, at no point does Commerce state that it did not
deduct the expenses because they were incurred in Korea. Rather,
it is apparent that Commerce’s justification for its decision to
not deduct from respondents’ CEP certain expenses is its
conclusion that selling expenses can only be deducted from CEP
when they are incurred in connection with the sale of merchandise
to an unaffiliated U.S. customer. Thus, plaintiff’s legal
argument that Commerce acted unlawfully by refusing to deduct
10
The regulation provides:
In establishing [CEP] under section 772(d) of
the Act, the Secretary will make adjustments
for expenses associated with commercial
activities in the United States that relate
to the sale to an unaffiliated purchaser, no
matter where or when paid. The Secretary
will not make an adjustment for any expense
that is related solely to the sale to an
affiliated importer in the United States,
although the Secretary may make an adjustment
to normal value for such expenses under
section 773(a)(6)(C)(iii) of the Act.
19 C.F.R. § 351.402(b).
Consol. Court No. 05-00308 Page 16
from CEP selling expenses incurred by respondents simply because
those expenses were from activities taking place outside the
United States is without merit.
B. Costs Related to Resales of CORE to Unaffiliated U.S.
Purchasers
Plaintiff also raises the factual argument that respondents
did, in fact, incur core selling expenses “associated with
commercial activities in the United States that relate to the
sale to an unaffiliated purchaser . . . .” 19 C.F.R.
§ 351.402(b). Commerce’s failure to deduct those expenses from
CEP was, in Mittal’s view, unsupported by substantial evidence.
To buttress its point, plaintiff sets forth what it believes
were the selling functions performed by each respondent in the
resale of its merchandise in the United States. For instance,
with respect to Union’s relationship with its affiliate DKA,
plaintiff states:
Union sold CORE to DKA, its U.S. affiliate,
who in turn resold the merchandise to
unrelated U.S. buyers in reportable CEP
transactions. The record shows that Union,
the parent, performed many selling functions
in the affiliate’s U.S. re-sales. In fact,
describing the affiliate’s limited role,
Union reported that DKA was the importer of
record for all of Union’s U.S. sales and
acted as a communications liaison between
U.S. customers and Union and as a processor
of sales-related documentation. Thus, while
DKA receives inquiries from customers and may
propose a price for the purchase, it does not
have the authority to accept or reject the
order. In fact, DKA does not even take
possession of the imported goods; rather,
Consol. Court No. 05-00308 Page 17
Union ships the goods directly to DKA’s U.S.
customer.
Pl.’s Mem. 13 (internal quotation marks & citations omitted)
(emphasis in original). In addition, plaintiff states that Union
engaged in other activities aimed at selling CORE to unrelated
U.S. customers including handling claims for defective CORE sold
in the U.S. and sending company engineers directly to a
customer’s plant in order to assist that customer with
streamlining its facility. See Pl.’s Mem. 13.11 Thus, it is
plaintiff’s contention that the costs absorbed by Union in the
resale of CORE to an unaffiliated U.S. customer should have been
deducted from CEP.
Plaintiff makes similar claims with regard to POSCO, Dongbu
and HYSCO. Based on its construction of the facts, plaintiff
maintains that the record reveals a substantial level of
involvement by the respondents in the resale of CORE to
unaffiliated U.S. purchasers. That is, Mittal insists that the
respondents incurred selling expenses related to the resale of
CORE to unaffiliated buyers in the United States and, thus, in
accordance with 19 U.S.C. § 1677a(d)(1) and 19 C.F.R.
§ 351.402(b), Commerce is required to deduct the costs from CEP.
See Pl.’s Mem. 33, 37–38.
11
Moreover, plaintiff suggests that Union [[
]] Pl.’s Mem. 13.
Consol. Court No. 05-00308 Page 18
Despite plaintiff’s contentions, the court finds that
Commerce supported with substantial evidence its decision to
refrain from deducting the selling expenses identified by
plaintiff as being associated with the resale of CORE to
unaffiliated purchasers in the United States. Commerce must
deduct from the starting price only those expenses that are
“associated with commercial activities in the United States that
relate to the sale to an unaffiliated purchaser . . . .” 19
C.F.R. § 351.402(b). Commerce, however, “will not make an
adjustment [to CEP] for any expense that is related solely to the
sale to an affiliated importer in the United States . . . .” Id.
Here, “Commerce requested and received from respondents
information regarding all business or operational relationships
affecting the development, product, sale or distribution of the
subject merchandise,” verified that information, and found that
respondents’ expenses did not relate to sales to unaffiliated
U.S. buyers. Def.’s Resp. 16. For example, verification of
Dongbu’s questionnaire responses revealed:
[S]ales negotiations begin with Dongbu USA
[Dongbu’s United States affiliate] and the
U.S. customer. Dongbu USA informs Dongbu of
the sales order, then Dongbu inputs the sales
order into Dongbu’s sales system, at which
time the merchandise is produced to order.
Company officials stated that Dongbu ships
directly to the port of the customer’s
request, which is stated in the sales
contract between Dongbu USA and customer.
Company officials added that the shipment
arrangements are made by Dongbu according to
Consol. Court No. 05-00308 Page 19
the terms that are negotiated between the
customer and Dongbu USA. . . . Company
officials also stated that Dongbu USA clears
the merchandise through Customs and arranges
for the payments of the customs broker and
customs duties. . . . Company officials
stated that Dongbu USA generally issues the
invoice to the customer after it has been
shipped, but before it arrives to the United
States. . . . They stated that the customer
pays Dongbu USA . . . .
Dongbu Verification Mem. (Dep’t of Commerce Feb. 1, 2005) at 29;
see also id. at 30 (“We reviewed the list of selling activities
performed by Dongbu and Dongbu USA for each market, and
distribution channel. We also reviewed the list of selling
activities and confirmed with company officials the level of
activity in each market . . . . We noted no discrepancies.”).
The Department understood this evidence to indicate that Dongbu’s
U.S. affiliate, not Dongbu, incurred the selling expenses
resulting from U.S. resales of CORE. Because “[t]here is no
evidence on the record to suggest [Dongbu’s] reported . . .
selling expenses are directly attributable to U.S. sales,”
Commerce concluded that these expenses were not deductible from
CEP. Issues & Decs. Mem. at 10.
Commerce made similar findings with respect to the level of
involvement in resales of CORE to unaffiliated U.S. purchasers
upon verifying Union’s, POSCO’s and HYSCO’s responses and
likewise found the reported incurred expenses to be unrelated to
those sales. See Union Verification Mem. (Dep’t of Commerce Feb.
Consol. Court No. 05-00308 Page 20
1, 2005) at 20; Sales Verification Rep. for POSCO (Dep’t of
Commerce Feb. 1, 2005) at 26; Verification of Sales and Cost
Information Submitted by HYSCO (Dep’t of Commerce Feb. 1, 2005)
at 9.
As discussed above, plaintiff interprets the record evidence
to indicate a higher level of involvement by the respondents in
the resale of CORE than that found by the Department. Commerce,
however, considered the verification data and determined that
there was “no evidence on the record to suggest respondents’
reported . . . selling expenses [were] directly attributable to
U.S. sales.” Issues & Decs. Mem. at 10. In fact, after
verifying respondents’ questionnaire responses, the Department
found that the expenses respondents incurred in selling CORE to
their affiliates in the United States were general and not
related to resales of CORE to unaffiliated buyers. See id.
An examination of Commerce’s analysis and of the evidence
submitted by plaintiff confirms that Commerce was justified in
its findings. That is, plaintiff has not made a case that the
selling functions performed by the parent companies were
mischaracterized by Commerce. In addition, Commerce has
adequately explained its conclusions. Thus, despite plaintiff’s
claim to the contrary, the court finds that the Department
“articulate[d] a[] rational connection between the facts found
and the choice made.” Burlington Truck Lines, Inc. v. United
Consol. Court No. 05-00308 Page 21
States, 371 U.S. 156, 168 (1962).
Based on the foregoing, the court sustains as supported by
substantial evidence Commerce’s refusal to deduct selling
expenses from CEP because the Department reasonably concluded
that respondents’ reported expenses were not directly associated
with resales of CORE to unaffiliated purchasers in the United
States.
III. Dongbu and POSCO CEP Offset Adjustments
Next, plaintiff takes issue with Commerce’s grant of a CEP
offset to normal value to both POSCO and Dongbu to adjust for
their home-market sales having been made at a more advanced stage
of distribution than their sales in the United States.12 See 19
U.S.C. § 1677b(a)(7)(B). Specifically, plaintiff asserts that
“Commerce acted unreasonably when it allowed the . . . ‘CEP
offsets’ to respondents who failed to provide full descriptions
of all selling activities at the CEP [level of trade].” Pl.’s
Mem. 24. For these purposes, CEP sales involve the resale of
12
The Federal Circuit has stated that “the level of trade
adjustment is designed to ensure that the normal value and U.S.
price are being compared . . . at the same level of trade, that
is, at the same marketing stage in the chain of distribution that
begins with the manufacturer.” Micron Tech., Inc. v. United
States, 243 F.3d 1301, 1314 (Fed. Cir. 2001). Indeed, an
adjustment to normal value is necessary because “[e]ach more
remote level of trade must be characterized by an additional
layer of selling activities, amounting in the aggregate to a
substantially different selling function.” Id. (internal
quotation marks, alteration & citation omitted).
Consol. Court No. 05-00308 Page 22
goods from the U.S. affiliate to an unaffiliated U.S. buyer.
Because it is often the case that the U.S. affiliate will absorb
the majority of the selling expenses and perform most, if not all
of the selling functions in the resale to an unaffiliated buyer,
Commerce looks to the “sale to the affiliate, not the affiliate’s
resale transaction” for purposes of determining the CEP level of
trade (“LOT”). Pl.’s Mem. 18 (emphasis in original); see also
Certain Hot-Rolled Carbon Steel Flat Products from Romania, 70
Fed. Reg. 72,984, 72,987 (Dep’t of Commerce Dec. 8, 2005)
(prelim. results) (stating that “[f]or CEP sales, the U.S. level
of trade is the level of the constructed sale from the exporter
to the affiliated importer”).13 Because neither Dongbu nor POSCO
13
While CEP is statutorily defined as “the price at which
the subject merchandise is first sold . . . in the United States
before or after the date of importation by . . . a seller
affiliated with the producer or exporter, to a purchaser not
affiliated with the producer or exporter,” 19 U.S.C. § 1677a(b),
for purposes of comparing the level of trade for CEP sales,
Commerce examines the selling functions performed by the foreign
producer or exporter in selling the merchandise to its U.S.
affiliate. See Preamble to Final Rule, 62 Fed. Reg. 27,296,
27,370 (Dep’t of Commerce May 19, 1997) (“[T]he Department will
base the LOT of CEP on the U.S. affiliate’s starting price in the
United States . . . .”).
In an unrelated investigation, Commerce explained its
procedure for determining the CEP LOT:
First, the indirect selling expenses incurred
in the United States by [U.S. affiliate]
CIC’s sales departments are, pursuant to [19
U.S.C. § 1677a(d)(1)(D)], properly excluded
from the price calculated for the U.S. CEP
sales. Pursuant to this and other . . .
adjustments, [the U.S. affiliate]’s price to
(continued...)
Consol. Court No. 05-00308 Page 23
reported any selling expenses incurred for sales to their U.S.
affiliates, plaintiff insists that the record does not support
Commerce’s grant of a CEP offset.
Commerce is required by statute to make an LOT adjustment to
normal value to account for the price differential resulting from
a respondent’s sales in the home market being made at a more
advanced LOT than its sales to the United States.14 See 19
U.S.C. § 1677b(a)(7)(A). The statute further provides that the
Department only makes an LOT adjustment to normal value if “the
difference in [LOT] . . . is demonstrated to affect price
comparability, based on a pattern of consistent price differences
between sales at different [LOTs] in the country in which normal
value is determined.” 19 U.S.C. § 1677b(a)(7)(A)(ii).
13
(...continued)
its unaffiliated customer (the “starting
price”) is transformed into a constructed
export price, i.e., a constructed equivalent
of a market-based sale by [foreign
producers/exporters] Cinsa or ENASA to CIC
[the U.S. affiliate]. This is the point at
which the level of trade comparison is made.
Porcelain-on-Steel Cookware From Mexico, 63 Fed. Reg. 38,373,
38,378 (Dep’t of Commerce July 16, 1998) (final results).
14
The Federal Circuit has noted that “[n]either the
statute nor the accompanying Statement of Administrative Action
. . . defines the phrase ‘same level of trade.’” Micron Tech.,
243 F.3d at 1305 (citation omitted). Nonetheless, the Court has
interpreted the term “to mean comparable marketing stages in the
home and United States markets, e.g., a comparison of wholesale
sales in Korea to wholesale sales in the United States.” Id.
Consol. Court No. 05-00308 Page 24
Where the record contains insufficient data to make an LOT
adjustment, a CEP offset to normal value may be granted.15
When normal value is established at a[n]
[LOT] which constitutes a more advanced stage
of distribution than the [LOT] of the [CEP],
but the data available do not provide an
appropriate basis to determine under
subparagraph (A)(ii) a[n] [LOT] adjustment,
normal value shall be reduced by the amount
of indirect selling expenses incurred in the
country in which normal value is determined
on sales of the foreign like product . . . .
19 U.S.C. § 1677b(a)(7)(B). Unlike an LOT adjustment, then, the
CEP offset does not demand evidence of an effect on price
comparability. Indeed, the CEP offset can only be used in the
absence of such evidence. See 19 C.F.R. § 351.412(f)(3) (“Where
available data permit the Secretary to determine under paragraph
(d) of this section whether the difference in [LOT] affects price
15
Congress anticipated the situation where the record
would support a finding that sales were made at different levels
of trade but would fall short of establishing that the difference
had a measurable effect on price comparability and thus created
the CEP offset adjustment. See Statement of Administrative
Action, Uruguay Round Agreements Act, accompanying H.R. Rep. No.
103-316, 656, 830–31 (1994), reprinted in 1994 U.S.C.C.A.N. 4040,
4169 (“SAA”).
The constructed export price offset
adjustment will only be made where normal
value is established at a level of trade more
remote from the factory than the level of
trade of the constructed export price; i.e.,
where the [LOT] adjustment . . . if it could
have been quantified, would likely have
resulted in a reduction of the normal value.
Id. at 831, 1994 U.S.C.C.A.N. at 4169.
Consol. Court No. 05-00308 Page 25
comparability, the Secretary will not grant a [CEP] offset. In
such cases, . . . the Secretary will make a[n] [LOT]
adjustment.”).
Finding sales to be at a more advanced stage of distribution
can be shown by evidence that the foreign producer or exporter
performs more selling activities, and thus incurs more selling
expenses, in its home market than it does in the United States.
See Micron Tech., Inc. v. United States, 243 F.3d 1301, 1305
(Fed. Cir. 2001) (“The effect [of the CEP offset] is to reduce
the price of the more advanced level of trade by ‘indirect
selling expenses’ that have been included in the price on the
apparent theory that such costs would not have been incurred if
the sale had been made on a less advanced [LOT].”).
Here, Commerce allowed both Dongbu and POSCO a CEP offset.
In reaching its decision to grant the offset, Commerce examined
the data submitted by each respondent for its home-market and
United States sales.
After comparing Dongbu’s selling functions in the home
market to its selling functions in the United States, the
Department “found a less advanced level of trade in the U.S.
market.” Calculation Mem. for Dongbu (Dep’t of Commerce Aug. 30,
2004) (“Dongbu Offset Mem.”) at 2. For that reason, Commerce
found warranted the grant of a CEP offset in order to “match[]
the U.S. CEP sales to sales at the same level of trade in the
Consol. Court No. 05-00308 Page 26
home market.” Id.
The Department also reviewed POSCO’s reported home-market
selling activities and
granted a CEP offset because we found that
the home market sales16 were at a different
stage of distribution compared to sales to
the U.S. [stage of distribution] with respect
to the [home market] [stage of distribution].
Because the [stage of distribution] of the
U.S. sales is different than the home market
[stage of distribution] and there is no home
market [stage of distribution] comparable to
that of the CEP sales, there is no reliable
basis for quantifying a[n] LOT adjustment
. . . . Therefore, a CEP offset was applied
to [normal value] for the [normal value]-CEP
comparisons.
Id. at 10.
Plaintiff’s principal claim is that Commerce lacked evidence
sufficient to justify a CEP offset. See Pl.’s Mem. 39–40.
Mittal argues that “[i]n its initial questionnaire Commerce
instructed all respondents to identify all selling activities
relevant to claims for any LOT adjustments, ergo CEP
offsets. . . . Both POSCO and Dongbu responded to Commerce’s
questionnaire. They did not, however, provide information
regarding selling activities in sales at the CEP LOT.” Pl.’s
Mem. 40. In other words, plaintiff maintains that the absence of
information regarding respondents’ selling expenses incurred in
16
Commerce calculated net home market price using a
formula set forth in the POSCO Offset Memorandum. The formula
appears to have taken into account various expenses including
packing, credit and rebates. POSCO Offset Mem. at 5–6.
Consol. Court No. 05-00308 Page 27
making CORE sales to their U.S. affiliates should have prompted
Commerce to ask respondents for that data before granting the
respondents a CEP offset.
Plaintiff further argues that this absence of information
does not mean that there were no such expenses and that the
inclusion of these expenses would likely indicate that the home-
market LOT was not more advanced than that at the CEP level. See
Pl.’s Mem. 43. For plaintiff,
both POSCO and Dongbu actively assist their
U.S. affiliates in reselling merchandise in
the United States. Since those resales are
affiliates’ sales, it is fair to conclude
that the Korean parents perform the
activities to promote their own sales to the
affiliates at the CEP LOT. Therefore,
Commerce should have weighed the activities
in the analysis of offset claims.
Pl.’s Mem. 42 (emphasis in original); see also Pl.’s Mem. 42–43.
Despite plaintiff’s arguments, the court finds Commerce’s
grant of a CEP offset to POSCO and Dongbu supported by
substantial evidence and in accordance with law. In particular,
the court concludes that the Department, while not having
sufficient evidence to make an LOT adjustment, reasonably relied
on evidence of the selling functions performed by POSCO’s and
Dongbu’s U.S. affiliates in deciding to grant the companies a CEP
offset.
In making its determination, the Department “review[ed] the
distribution system in each market (i.e., the ‘chain of
Consol. Court No. 05-00308 Page 28
distribution’) [for both Dongbu and POSCO] including selling
functions, class of customer (“customer category”) and level of
selling expenses for each type of sale.” Issues & Decs. Mem. at
11.
With respect to Dongbu, Commerce’s analysis of that
company’s verified questionnaire responses revealed that in its
home market, “Dongbu sold [CORE] through two channels of
distribution to two customer categories, and claimed one level of
trade in the home market.” Dongbu Offset Mem. at 2. Commerce
determined that, although Dongbu reported selling CORE in Korea
through two channels of distribution, “the two home market
channels of distribution . . . constitute one of level of trade.”
Id. Plaintiff does not dispute this finding.
Commerce also analyzed Dongbu’s sales to the United States
for purposes of determining whether an offset was necessary. Of
importance here are two findings. First, as plaintiff
acknowledges, Dongbu completed Commerce’s questionnaire asking
that it “list . . . all the selling and activities performed and
services offered in the U.S. market and the foreign market.”
Pl.’s Mem. 40. Plaintiff claims that Dongbu’s answers were
deficient even though Commerce verified the answers. See Pl.’s
Mem. 40; Def.’s Resp. 21. That is, plaintiff insists that Dongbu
must have had more selling expenses with respect to its sales at
the CEP LOT, i.e., sales to its U.S. affiliate, Dongbu USA, than
Consol. Court No. 05-00308 Page 29
it reported. Commerce, though, in verifying Dongbu’s responses,
found only that “Dongbu’s activities for U.S. sales are limited
to foreign movement expenses.” Dongbu & Union Br. Opp’n Pl.’s R.
56.2 Mot. J. Agency R. 40 (quoting Dongbu’s Section A Resp. at
18). Thus, while plaintiff may insist that there were other
unlisted expenses, the verified evidence on the record indicates
otherwise.
Commerce further found that “Dongbu made only CEP sales
through its U.S. affiliate, Dongbu USA, to unaffiliated customers
in two customer categories, end-users and distributors, and had
only one level of trade for U.S. sales.” Dongbu Offset Mem. at
2. Noting that Dongbu USA “perform[ed] most of the selling
functions in the United States,” Commerce concluded that Dongbu’s
sales in the United States were at a less advanced stage of
distribution than its sales in its home market of Korea, and
granted Dongbu the CEP offset. See id.
After performing the same analysis for POSCO, Commerce found
that the company sold CORE in Korea to three different types of
customer categories through three channels of distribution. See
POSCO Offset Mem. at 9. Commerce concluded that because the
selling activities undertaken in each of the three channels of
distribution “differed only slightly, . . . the home market
channels of distribution constituted one level of trade.” Id. at
10.
Consol. Court No. 05-00308 Page 30
Commerce also “examined the sales to [POSCO’s] affiliated
resellers and examined the selling functions performed by
POSCO . . . on behalf of its affiliate and found only one level
of trade.” Id. The Department found that, “[i]n the U.S.
market, [POSCO] made only CEP sales of subject merchandise,”
through only one channel of distribution. Id. Further, sales
were made by POSCO’s affiliate to unaffiliated U.S. trading
companies. Id. Plaintiff does not dispute these findings.
POSCO, too, submitted timely and complete responses to
Commerce’s questionnaire and the Department subsequently verified
the answers. See POSCO & HYSCO Opp’n Pl.’s R. 56.2 Mot. J.
Agency R. (“POSCO & HYSCO Br.”) 28. POSCO’s questionnaire
responses showed that the company performed a substantial number
of selling activities when selling CORE in Korea, but did not
perform these activities when selling CORE in the United States.
See POSCO & HYSCO Br. 28 (listing home-market selling activities
including, but not limited to “sales and marketing; freight and
delivery arrangement; market research; quality control; computer,
legal, and accounting assistance and business-systems development
assistance; . . . [and] sales force development and end user
contact and support”). Based on this verified information,
Commerce found that “the home market sales were at a different
stage of distribution compared to sales to the U.S. LOT.” POSCO
Offset Mem. at 10.
Consol. Court No. 05-00308 Page 31
As has been noted by defendant, plaintiff’s objections do
not amount to much more than speculation. Indeed, plaintiff’s
contention that Commerce unreasonably granted a CEP offset
because “a reasonable mind would recognize, as a matter of common
commercial sense, that affiliates engage in numerous inter-
company activities when performing complementary and overlapping
roles in marketing goods internationally,” finds no evidentiary
support. Pl.’s Mem. 42–43. Commerce issued Dongbu and POSCO
questionnaires, the respondents provided timely and complete
answers, the Department then verified those responses and found
no discrepancies. As a result, Commerce determined that the
hypothetical costs Mittal insisted had to exist simply did not.
Further, plaintiff’s related claim that Commerce lacked
sufficient evidence to grant the CEP offset because of Dongbu’s
and POSCO’s incomplete submissions is directly contradicted by
Commerce’s verification of the companies’ questionnaire
responses, which revealed no inconsistencies and which provided
sufficient evidence with respect to selling activities in both
the home and U.S. markets. The court cannot, therefore, credit
plaintiff’s unsubstantiated assertion that commercial realities
render insufficient the evidence Commerce relied upon in making
its decision to grant Dongbu and POSCO a CEP offset.
Thus, the court sustains as supported by substantial
evidence and in accordance with law the Department’s grant of a
Consol. Court No. 05-00308 Page 32
CEP offset to both POSCO and Dongbu.
IV. Duty Drawback Adjustment
Plaintiff further contends that Commerce should not have
allowed for a duty drawback adjustment to CEP because it claims
the Korean drawback system is susceptible to manipulation.17 As
part of this claim, plaintiff maintains that Commerce’s current
standard for making drawback adjustments amplifies the potential
for distorted dumping margins on Korean products, in part,
because a Korean exporter is not required to allocate its total
rebates over all of its shipments. Mittal’s specific complaint
is that the Department acted unlawfully by refusing to ask
respondents for further data thus “allowing for fair and
appropriate allocations” of the rebate received to the total lot
of respondents’ shipments of CORE. Pl.’s Mem. 45 (emphasis
omitted).
The antidumping statute provides that “[t]he price used to
establish . . . [CEP] shall be . . . increased by . . . the
17
Generally, a “drawback” is “[a] government allowance or
refund on import duties when the importer reexports imported
products rather than selling them domestically.” Black’s Law
Dictionary 532 (8th ed. 2004); see also E.I. du Pont Nemours &
Co. v. United States, 24 CIT 1045, 1046 n.2, 116 F. Supp. 2d
1343, 1345 n.2 (2000) (“[D]uty drawback” generally, is the refund
of duties paid on goods imported into the United States when
those goods, or domestic goods of the same kind and quality, are
used in the manufacture or production of articles which are
subsequently exported.”).
Consol. Court No. 05-00308 Page 33
amount of any import duties imposed by the country of exportation
which have been rebated, or which have not been collected, by
reason of the exportation of the subject merchandise to the
United States . . . .” 19 U.S.C. § 1677a(c)(1)(B). Based on the
statute, Commerce has created a two-prong test that must be
satisfied prior to the grant of a drawback adjustment. The first
prong requires the exporter to establish that “the import duty
and rebate are directly linked to, and dependent upon, one
another.” Far East Mach. Co. v. United States, 12 CIT 972, 974,
699 F. Supp. 309, 311 (1988) (internal quotation marks & citation
omitted). The second prong demands that “the company claiming
the adjustment [must] demonstrate that there were sufficient
imports of imported raw materials to account for the duty
drawback received on the exports of the manufactured product.”
Id., 699 F. Supp. at 311; see also Issues & Decs. Mem. at 13.
For over twenty years, Commerce has consistently applied, and
this Court has consistently upheld, this test. See, e.g.,
Carlisle Tire & Rubber Co. v. United States, 11 CIT 168, 171,
657
F. Supp. 1287, 1290 (1987); Far East Mach. Co. v. United States,
12 CIT 428, 431–33,
688 F. Supp. 610, 612 (1988) (citation
omitted); Hornos Electricos de Venezuela, S.A. v. United States,
27 CIT 1522, 1525,
285 F. Supp. 2d 1353, 1358 (2003); Wheatland
Tube Co. v. United States, 30 CIT , ,
414 F. Supp. 2d 1271,
1286–87 (2006).
Consol. Court No. 05-00308 Page 34
Here, following verification, Commerce found that the
respondents had satisfied the two-prong test. See Issues & Decs.
Mem. at 13. Mittal does not fault this finding. Rather,
plaintiff questions the utility of the test as applied to exports
from Korea. According to plaintiff, “Korea’s duty drawback law
effectively allows exporters to choose the export shipments on
which they base drawback claims on exportations,” which in turn
permits an exporter to manipulate its dumping margin. Pl.’s Mem.
24. That is, for plaintiff, if an exporter is allowed to apply
its drawback claims solely to shipments intended for the United
States, CEP increases artificially and the dumping margin
decreases. Plaintiff insists that this potential for distorted
results should have induced the Department to ask respondents for
additional specific information relating to their drawback
claims, which, in turn, Commerce could have used “to determine
whether drawback claims were in fact disproportionate and
excessive.” Pl.’s Mem. 46.
In essence, Mittal seeks the addition of a third prong to
Commerce’s current two-prong test. That is, Mittal believes that
the opportunity for margin manipulation would diminish if an
exporter were required to demonstrate that it had allocated its
rebates across all of its shipments. Plaintiff observes that, as
in the United States, the Korean drawback scheme does not require
such an allocation and thus opens the door for inaccurate dumping
Consol. Court No. 05-00308 Page 35
calculations. In Mittal’s view:
Although unquestionably lawful in Korea, the
Korean system makes it possible to manipulate
U.S. antidumping results. . . . We can
assume that Korean “Producer X” produces only
one product, CORE, and that it uses steel
scrap as the basic input. We can further
assume that “X” imports 50 percent of its
scrap consumption (paying import duties on
the same) and obtains the balance locally.
We can finally assume that “X” sells 50
percent of its total production for export to
the United States and 50 percent to Canada.
Under these imagined circumstances, in
conjunction with the Korean law, “X” could
limit its claims for drawback solely to
shipments to the United States while claiming
nothing on shipments to Canada – with U.S.
antidumping motivations in mind.
Pl.’s Mem. 44–45. Thus, plaintiff insists that a required
shipment-wide allocation of drawback would eliminate the
distortion of dumping margins and maintain the integrity of the
antidumping statute.
The court finds that Commerce’s two-prong test is a
reasonable interpretation of 19 U.S.C. § 1677a(c)(1)(B) and that
it properly applied the test to the Korean respondents in this
case. As noted, pursuant to 19 U.S.C. § 1677a(c)(1)(B), there
are two requirements for adjusting upward CEP based on rebated
import duties. First, there must be “import duties imposed by
the country of exportation . . . .” 19 U.S.C. § 1677a(c)(1)(B).
Second, those duties must either be rebated or not collected by
the exporting country “by reason of the exportation of the
subject merchandise to the United States.” Id. As this Court
Consol. Court No. 05-00308 Page 36
has held previously, nothing in the statute requires an exporter
to demonstrate that it allocated its rebated or non-collected
duties across the totality of its subject shipments. See Far
East Mach. Co., 12 CIT at 979, 699 F. Supp. at 315 (finding that
Commerce’s “approach is not an unfair way of proceeding,” and
that the “method seems reasonably calculated to arrive at a
proper adjustment to price”); Avesta Sheffield, Inc. v. United
States, 17 CIT 1212, 1216, 838 F. Supp. 608, 612 (1993) (“As a
matter of policy in drawback cases, [Commerce] does not require
exporters to account for a sufficient amount of imported product
to cover all products sold to third countries, as well as to the
United States.”). Thus, the statute and the two-prong test put
the emphasis on proof of a direct link between the rebate of the
import duty and on evidence of sufficient imports to account for
the duty drawback and the exports of subject merchandise. The
court, therefore, agrees with defendant that “[t]here is no legal
basis for the argument that Commerce should not make a duty
drawback adjustment unless it can allocate the total pool of duty
drawback on a proportional basis among all countries to which
respondents export the subject merchandise.” Def.’s Resp. 24;18
18
The court notes that Commerce has sought public comment
on the two-prong test. See Duty Drawback Practice in Antidumping
Proceedings, 70 Fed. Reg. 37,764 (Dep’t of Commerce June 30,
2005) (request for comments). Plaintiff claims that “[i]f
Commerce’s practice might very well change, Mittal should get the
benefit now, not just in future reviews.” Pl.’s Mem. 48. As
(continued...)
Consol. Court No. 05-00308 Page 37
see also Pesquera Mares Australes Ltda. v. United States, 266
F.3d 1372, 1382 (Fed. Cir. 2001) (“[S]tatutory interpretations
articulated by Commerce during its antidumping proceedings are
entitled to deference under Chevron.”).
In addition, the court finds that the Department supported
with substantial evidence its decision to make an upward
adjustment to CEP to account for the drawback respondents
received from the Korean government on their imports of raw
materials. Commerce verified that respondents received drawback
for their imports of raw materials used to produce the subject
merchandise and that the amount of raw materials imported covered
the amount of the drawback. See Issues & Decs. Mem. at 13. In
other words, the Department reasonably concluded that respondents
satisfied the two-prong test and, thus, were entitled
to the CEP adjustment.
Based on the foregoing, the court sustains as supported by
substantial evidence and otherwise in accordance with law
Commerce’s duty drawback adjustment to respondents’ U.S. price of
CORE.
18
(...continued)
yet, however, Commerce has not altered its treatment of duty
drawback adjustments. Thus, “Commerce’s potential rulemaking has
no effect here.” Rhone-Poulenc, Inc. v. United States, 20 CIT
573, 584 n.5, 927 F. Supp. 451, 461 n.5 (1996).
Consol. Court No. 05-00308 Page 38
V. Section 201 Safeguard Duties
Plaintiff next insists that Commerce erred by declining to
deduct from CEP certain duties imposed on imports of steel into
the United States pursuant to Section 201 of the Trade Act of
1974, 19 U.S.C. § 2251 (“Section 201 Duties”).
In the Final Results, Commerce determined that the Section
201 Duties were not deductible from CEP under 19 U.S.C.
§ 1677a(c)(2)(A). Pursuant to that provision, when calculating
dumping margins, Commerce reduces U.S. price by “the amount, if
any, included in such price, attributable to any additional
costs, charges, or expenses, and United States import duties,
which are incident to bringing the subject merchandise from the
original place of shipment in the exporting country to the place
of delivery in the United States . . . .” 19 U.S.C.
§ 1677a(c)(2)(A) (emphasis added). Based on its interpretation
of the phrase “United States import duties,” Commerce customarily
deducts from CEP “normal customs duties”19 but does not deduct
either unfair trade duties or Section 201 Duties.
With respect to Section 201, that provision “permit[s] the
President of the United States to impose safeguard measures in
19
Commerce apparently understands the phrase “normal
customs duties” to include, inter alia, import duties as set out
in the Harmonized Tariff Schedule of the United States and the
Harbor Maintenance Tax. In other words, Commerce deducts from
CEP those permanent, generally applicable duties fixed at the
time of importation.
Consol. Court No. 05-00308 Page 39
reaction to threats posed to domestic industry by identified
imported items.” Wheatland Tube Co., 30 CIT at , 414 F. Supp.
2d at 1272 n.1. For example, the President “may, for purposes of
taking action under [19 U.S.C. § 2253(a)(1)] . . . proclaim an
increase in, or the imposition of, any duty on the imported
article . . . .” 19 U.S.C. § 2253(a)(3). The President may take
action, however, only “[i]f the United States International Trade
Commission [(“ITC” or “Commission”)] determines under [19 U.S.C.
§ 2252(b)] that an article is being imported into the United
States in such increased quantities as to be a substantial cause
of serious injury, or the threat thereof, to the domestic
industry . . . .” 19 U.S.C. § 2251(a). Thus, the President may
not act unilaterally to increase duties on imports. Rather,
there must first be an affirmative serious injury, or threat of
serious injury finding from the ITC.
At issue here is the 2002 Presidential Proclamation that
imposed duties to counteract a surge in steel imports. On
December 19, 2001, pursuant to 19 U.S.C. § 2252, the Commission
submitted to the President its affirmative determination that
certain steel products were “being imported into the United
States in such increased quantities as to be a substantial cause
of serious injury, or threat of serious injury, to the domestic
industries producing like or directly competitive articles.”
Presidential Proclamation 7529 To Facilitate Positive Adjustment
Consol. Court No. 05-00308 Page 40
to Competition From Imports of Certain Steel Products
(“Proclamation 7529”), 67 Fed. Reg. 10,553 (Mar. 5, 2002). As a
result, on March 5, 2002, the President, pursuant to 19 U.S.C.
§ 2253(a)(3)(A), imposed a duty of 15 percent ad valorem on,
among other things, imports into the United States of cold-rolled
steel “for a period of 3 years plus 1 day . . . .” Proclamation
7529, 67 Fed. Reg. at 10,555. This Section 201 Duty applied to
the CORE imports into the United States that were the subject of
the instant review. Upon entering their merchandise, respondents
paid to U.S. Customs and Border Protection (“Customs”) the
Section 201 Duty. There is no dispute over the amount of the
duty charged, nor is there any complaint that respondents failed
to pay the duty owed.
Here, as in the past, the Department concluded it would not
deduct Section 201 Duties from CEP
because 201 duties are not “United States
import duties” within the meaning of the
statute, and to make such a deduction
effectively would collect the 201 duties a
second time. Our examination of the
safeguard[] and antidumping statutes, and
their legislative histories indicates that
Congress plainly considered the two remedies
to be complementary and, to some extent,
interchangeable. Accordingly, to the extent
that 201 duties may reduce dumping margins,
this is not a distortion of any margin to be
eliminated, but a legitimate reduction in the
level of dumping.
Issues & Decs. Mem. at 15.
Consol. Court No. 05-00308 Page 41
Mittal insists that Commerce acted unreasonably in not
deducting the Section 201 Duties from U.S. price. Plaintiff’s
principal argument is that Section 201 Duties are closer to being
normal customs duties than they are to antidumping duties and
thus constitute “United States import duties,” which must be
deducted from CEP. See Pl.’s First Supplemental Br. 3. While
plaintiff does not dispute Commerce’s practice of not deducting
antidumping and countervailing duties from U.S. price under 19
U.S.C. § 1677a(c)(2)(A), it maintains that Section 201 Duties are
not of the same nature as those duties. In plaintiff’s view,
Section 201 Duties are more akin to normal customs duties because
they share a common purpose, i.e., “both types of duties are
protective in nature.” Pl.’s Supplemental Br. 3.
Since the completion of briefing in this case, the Federal
Circuit has considered the appeal of this Court’s decision in
Wheatland Tube Co., which held that Section 201 Duties must be
deducted from United States price when calculating a respondent’s
dumping margin under 19 U.S.C. § 1677a(c)(2)(A). Wheatland Tube
Co., 30 CIT at , 414 F. Supp. 2d at 1285–86. In reversing
Wheatland Tube Co., the Federal Circuit made two related
findings. First, it found that the Department’s “interpretation
that ‘United States import duties’ do not include § 201 safeguard
duties was the result of its formal notice-and-comment rulemaking
process,” and thus that Commerce’s interpretation “is entitled to
Consol. Court No. 05-00308 Page 42
deference as required by . . . [Chevron U.S.A. Inc. v. Natural
Resources Defense Council, Inc.,
467 U.S. 837 (1984)] if its
interpretation is reasonable.” Wheatland Tube Co. v. United
States, Nos. 2006-1524, 2006-1525,
2007 WL 2119824, at *4 (Fed.
Cir. July 25, 2007). Second, it concluded that,
[i]n light of the legislative history of the
Antidumping Duty Act of 1921, the
similarities between antidumping duties and
§ 201 safeguard duties, and the likelihood
that deducting § 201 safeguard duties from
the [United States price] would result in
collecting a double remedy, we hold that
Commerce’s interpretation that “United States
import duties” does not include § 201
safeguard duties for the purposes of
determining the [United States price] and
calculating the dumping margin is reasonable.
Wheatland Tube Co., 2007 WL 2119824, at *7. Thus, based on the
Federal Circuit’s holding in Wheatland Tube Co., the court
sustains as reasonable Commerce’s interpretation of “United
States import duties” to exclude Section 201 Duties and its
decision to not deduct those duties from United States price.
CONCLUSION
Based on the foregoing, the court sustains Commerce’s Final
Results. Judgment shall be entered accordingly.
/s/ Richard K. Eaton
Richard K. Eaton
Dated: August 1, 2007
New York, New York
UNITED STATES COURT OF INTERNATIONAL TRADE
:
MITTAL STEEL USA, INC. :
(formerly INTERNATIONAL :
STEEL GROUP, INC.), :
:
Plaintiff, :
:
v. :
:
UNITED STATES, : Before: Richard K. Eaton, Judge
:
Defendant, : Consol. Court No. 05-00308
: Public Version
and :
:
UNION STEEL MANUFACTURING :
CO., LTD.; DONGBU STEEL CO., :
LTD.; POSCO; and HYUNDAI :
HYSCO CO., LTD., :
:
Deft.-Ints. :
:
JUDGMENT
This case having been submitted for decision and the Court,
after deliberation, having rendered a decision therein; now, in
conformity with that decision, it is hereby
ORDERED that the United States Department of Commerce’s
final results of the tenth administrative review of the
antidumping duty order applicable to imports into the United
States of CORE from the Republic of Korea are sustained; and it
is further
ORDERED that this case is dismissed.
/s/ Richard K. Eaton
Richard K. Eaton
Dated: August 1, 2007
New York, New York
ERRATUM
Mittal Steel USA, Inc. (formerly International Steel Group, Inc.)
v. United States, Consol. Court No. 05-00308, Slip Op. 07-117,
dated August 1, 2007.
Page 1: The name “Julie C. Mendoza” is added after the name
“Brady W. Mills” as counsel for defendant-intervenors
Union Steel Manufacturing Co., Ltd. and Dongbu Steel
Co., Ltd.
September 17, 2007
