Shandong Huarong Mach. Imp. & Exp. Co. v. United States , 33 Ct. Int'l Trade 810 ( 2009 )

Slip Op. 09-64
UNITED STATES COURT OF INTERNATIONAL TRADE
:
SHANDONG MACHINERY IMPORT & :
EXPORT COMPANY :
:
Plaintiff, :
: Before: Richard K. Eaton, Judge
v. :
: Court No. 07–00355
UNITED STATES, :
: Public Version
Defendant, :
:
and :
:
AMES TRUE TEMPER and :
COUNCIL TOOL COMPANY, INC., :
:
Def.-Ints. :
:
OPINION AND ORDER
[Department of Commerce’s final results sustained in part and
remanded]
Dated: June 24, 2009
Hume & Associates LLC (Robert T. Hume) for plaintiff.
Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director; Patricia M. McCarthy, Assistant Director, Civil
Division, Commercial Litigation Branch, United States Department
of Justice (Courtney E. Sheehan); Office of Chief Counsel for
Import Administration, United States Department of Commerce
(Nithya Nagarajan), of counsel, for defendant.
Wiley Rein LLP (Eileen P. Bradner, Timothy C. Brightbill and
Maureen E. Thorson), for defendant-intervenor Ames True Temper.
Kelley Drye & Warren, LLP (Eric McClafferty), for defendant-
intervenor Council Tool Company, Inc.
Court No. 07-00355 Page 2
Eaton, Judge: This action is before the court on plaintiff
Shandong Machinery Import & Export Company’s (“SMC”) USCIT R.
56.2 motion for judgment upon the agency record. See Pl.’s Mem.
Supp. Mot. J. Agency R. (“Pl.’s Mem.”). Defendant United States
together with defendant-intervenors Ames True Temper and the
Council Tool Company, Inc. oppose this motion. See Def.’s Resp.
to Pl.’s Mot. for J. Agency R. (“Def.’s Resp.”); Def.-Int.’s Br.
in Resp. to Pl.’s Mot. for J. Agency R.; Resp. Br. of Def.-Int.
Council Tool Company, Inc.
By its motion, SMC challenges the final results of the
United States Department of Commerce’s (“Commerce” or the
“Department”) fifteenth administrative review of antidumping duty
orders covering heavy forged hand tools (“HFHTs”) from the
People’s Republic of China (“PRC”) for the period of review
beginning on February 1, 2005, and ending on January 30, 2006
(“POR”). See HFHTs, Finished or Unfinished, With or Without
Handles, From the PRC, 72 Fed. Reg. 51,787 (Dep’t of Commerce
Sept. 11, 2007) (final results) and the accompanying Issues and
Decision Memorandum (Dep’t of Commerce Sept. 4, 2007) (“Issues &
Dec. Mem.”) (collectively, “Final Results”). United States
imports of HFHTs are subject to individual antidumping duty
orders covering separate categories of goods, including those at
issue here: bars/wedges; hammers/sledges; and axes/adzes. Id.In the Final Results, Commerce found that plaintiff failed
Court No. 07-00355 Page 3
to rebut the non-market economy (“NME”) presumption of government
control.1 As a result, Commerce applied country-wide antidumping
duty rates (“PRC-wide rates”) to SMC’s exports. See Issues &
Dec. Mem. at Comment 1; HFHTs, Finished or Unfinished, With or
Without Handles, From the PRC, 72 Fed. Reg. 10,492 (Dep’t of
Commerce Mar. 8, 2007) (“Prelim. Results”). The PRC-wide rates
assigned by Commerce were: 139.31 percent for bars/wedges, 45.42
percent for hammers/sledges, and 189.37 percent for axes/adzes.
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c)
and 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006). For the following
reasons, the court sustains Commerce’s Final Results in part and
remands the rate for hammers/sledges to Commerce for further
findings consistent with this opinion.
1
A non-market economy includes “any foreign country that
the administering authority [Commerce] determines does not
operate on market principles of cost or pricing structures, so
that sales of merchandise in such country do not reflect the fair
value of the merchandise.” 19 U.S.C. § 1677(18)(A) (2006);
Shandong Huarong Gen. Group Corp. v. United States, 28 CIT 1624,
1625 n.1, Slip Op. 04-117 at 3 n.1 (2004) (not reported in the
Federal Supplement).
“Any determination that a foreign country is a nonmarket
economy country shall remain in effect until revoked by the
administering authority.” 19 U.S.C. § 1677(18)(C)(i) (2006).
The PRC has been determined to be an NME country. The Department
has treated the PRC as a non-market economy country in all past
antidumping investigations. Zhejiang Native Produce & Animal By-
Products Imp. and Exp. Corp. v. United States, 27 CIT 1827, 1834
n.14, Slip Op. 03-151 at 12 n.14 (2003) (not reported in the
Federal Supplement) (citations omitted).
Court No. 07-00355 Page 4
STANDARD OF REVIEW
When reviewing Commerce’s final antidumping determinations,
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) (2006).
DISCUSSION
I. PRC-Wide Rate
A. Legal Framework
When conducting an investigation or review of an NME
country, Commerce employs a presumption of state control. See
Coal. for the Pres. of Am. Brake Drum & Rotor Aftermarket Mfrs.
v. United States, 23 CIT 88, 100, 44 F. Supp. 2d 229, 242 (1999).
To rebut this presumption and thus qualify for a separate rate,
an exporter must “affirmatively demonstrate its entitlement to a
separate, company-specific margin . . . .” Sigma Corp. v. United
States, 117 F.3d 1401, 1405 (Fed. Cir. 1997) (“Sigma”) (citation
and quotation omitted).
To establish that a firm is sufficiently independent from
government control to be entitled to a separate rate, the
Department requires respondents to demonstrate the absence of
both de jure and de facto government control over export
activities. See Peer Bearing Co.-Changshan v. United States, 32
Court No. 07-00355 Page 5
CIT __, __, 587 F. Supp. 2d 1319, 1324 (2008) (“Peer Bearing”);
see also Sparklers from the PRC, 56 Fed. Reg. 20,588, 20,589
(Dep’t of Commerce May 6, 1991) (final determination of sales at
less than fair value).
Absence of de jure government control can be
demonstrated by reference to legislation and
other governmental measures that decentralize
control. Absence of de facto government
control can be established by evidence that
each exporter sets its prices independently
of the government and of other exporters, and
that each exporter keeps the proceeds of its
sales.
Sigma, 117 F.3d at 1405 (citations omitted).
When a company fails to rebut the presumption of state
control, Commerce employs that presumption and applies the PRC-
wide rate to its products. See Id. at 1405.
B. Application of PRC-Wide Rate to SMC
In the Final Results, Commerce stated that SMC failed to
“supply the Department with all the information and documentation
necessary for it to demonstrate that it is eligible for separate
rates.” Issues & Dec. Mem. at Comment 1. Moreover, it found
that
[d]espite being given several opportunities,
SMC failed to provide complete or consistent
responses to our questions, rendering it
impossible to adequately determine whether or
not SMC’s business operations are free from
de jure or de facto government control. We
are unable to definitively determine who owns
Court No. 07-00355 Page 6
SMC, who controls SMC, and the nature of
SMC’s relationship with the national,
provincial, and local governments.2
Issues & Dec. Mem. at Comment 1. Accordingly, Commerce concluded
that plaintiff failed to rebut the presumption of government
control and failed to establish its eligibility for a rate
separate from the PRC-wide rate.
By its motion, plaintiff contends that Commerce wrongfully
applied the PRC-wide rates to its sales of bars/wedges,
hammers/sledges and axes/adzes because it demonstrated absence of
government control and qualified for separate rates. Pl.’s Mem.
12-16. Plaintiff makes several arguments to support its
position. Specifically, the company states that the PRC Foreign
Trade Law, PRC Whole People Law, its business license and its
export license demonstrate de jure independence from state
control. Pl.’s Mem. 13-14. Moreover, plaintiff asserts that it
demonstrated de facto independence, particularly by producing
proof that the Shandong Foreign Trade Economic Committee had no
role in its export activities and that the Committee has never
provided any capital to plaintiff. Pl.’s Mem. 16.
In response, Commerce first argues that it was unable to
determine who owned or controlled plaintiff based on plaintiff’s
2
Here, because the court finds that SMC has failed to
demonstrate that it is free of national governmental control, it
makes no finding with respect to provincial or local governmental
control.
Court No. 07-00355 Page 7
responses to a series of questionnaires. Def.’s Resp. 15.
Commerce states that, in its original questionnaire, it asked
plaintiff to “describe and explain” who owned the company,
including the “full name and address of the individual(s),
corporation(s), or entities that own your company.” SMC’s Resp.
to Commerce’s Section A Questionnaire dated May 11, 2006
(“Original Section A Resp.”) 8. Plaintiff responded, “SMC is
owned by its shareholders[,]” but failed to include the full name
or address of any of these “shareholders.” Original Section A
Resp. 8.
Dissatisfied with plaintiff’s response, Commerce then issued
its first supplemental questionnaire. See SMC’s Resp. to
Commerce’s Supp. Sections A, C, and D Questionnaires dated May
23, 2006 (“First Supp. Resp.”) 3-4. The first supplemental
questionnaire asked whether any other person or party had ever
owned plaintiff, whether plaintiff traded publicly, how many
shareholders plaintiff had, who held more than 1.99 percent of
plaintiff’s shares, and asked for a description of the classes of
plaintiff’s shares together with a “detailed text explanation of
the ownership of SMC.” First Supp. Resp. 3-4. Plaintiff
responded to the first supplemental questionnaire by stating that
it was “all-people owned, which means each member of SMC is
responsible for his or her gain and loss. SMC is not a limited
liability company. To the extent that shareholders refer to the
Court No. 07-00355 Page 8
employees at SMC; SMC currently has [a certain number of]
employee ‘shareholders.’” First Supp. Resp. 4. Plaintiff also
stated that it was independent from the central and provincial
governments, a “private enterprise,” “not publicly traded,” and
that it did “not have classes of shares.” First Supp. Resp. 3-4.
Commerce remained unsatisfied with plaintiff’s questionnaire
responses and issued a second supplemental questionnaire. In
this second supplemental questionnaire, Commerce asked plaintiff
whether “all-people owned” meant that “SMC [was] owned by all the
people of the [PRC].” SMC’s Resp. to Commerce’s Supp. Sections
A, C, and D Questionnaires dated Jan. 22, 2007 (“Second Supp.
Resp.”) 1. Plaintiff responded that “state-owned” and “all
people-owned” had “the same meaning and [were] interchangeable.”
Second Supp. Resp. 1. With its response to the second
supplemental questionnaire, plaintiff also included a letter from
the Shandong Province Foreign Economic Trade Cooperation Bureau
(“SPFETCB”) “certifying the ownership status of SMC.” Second
Supp. Resp. 1. The letter states, “Shandong Machinery Import &
Export Group Corp. is [an] all-people owned enterprise, the
description shown on its business license is state-owned
enterprise, all-people owned and state-owned enterprises are the
same in term[s] of character.” Second Supp. Resp. at Ex. 1.
In the second supplemental questionnaire, Commerce also
asked plaintiff to “[p]rovide a detailed text explanation of the
Court No. 07-00355 Page 9
difference between the terms ‘all-people owned’ and ‘whole people
owned,’ as cited in” plaintiff’s response to the first
supplemental questionnaire. Second Supp. Resp. 1. Plaintiff
responded by referencing Article 6 of the PRC Constitution and
stating that “all-people owned” meant “collective ownership by
the working people.” Second Supp. Resp. 1.
According to Article 6 of the Constitution
Law of the PRC, “the basis of the socialist
economic system of the PRC is the socialist
public ownership of the means of production,
namely, ownership by the whole people and
collective ownership by the working people.”
The terms “state-owned” enterprise, “all
people-owned” enterprise, and “whole people-
owned” enterprise have the same meaning and
are interchangeable. In order to clarify
SMC’s ownership status as an all people-owned
enterprise, Shandong Province Foreign
Economic Trade Cooperation Bureau has
provided an official letter certifying the
ownership status of SMC.
Second Supp. Resp. 2.
In addition, in the second supplemental questionnaire,
Commerce asked plaintiff to explain material on certain websites
that suggested SMC might be a “nationalized business,” “state-
owned business” or “state-owned enterprise.” Second Supp. Resp.
2, 4-5. Rather than explaining the website material, plaintiff
responded by referencing Article 6 of the PRC Constitution and
the SPFETCB letter. Second Supp. Resp. 2, 4-5. Additionally, in
the second supplemental questionnaire, Commerce asked plaintiff
to explain the word “private” in its first supplemental
Court No. 07-00355 Page 10
questionnaire response that it was an “‘all-people owned’ private
enterprise.” Second Supp. Resp. 3. Plaintiff responded, “SMC
regrets the use of the word ‘private’ in its prior response and
hereby retracts the use of this word. SMC merely meant to convey
that SMC is non-public.” Second Supp. Resp. 3.
Further, in the second supplemental questionnaire, Commerce
again asked plaintiff to “[l]ist and provide the address of any
and every entity or person who holds more than 1.99 percent of
the shares of SMC.” Second Supp. Resp. 3. In its response,
plaintiff referred to “Shandong Foreign Trade Economic
Committee.” Second Supp. Resp. 4.3 Plaintiff attempted to
qualify its response by stating that the Committee “merely
provides a supervisory function to SMC.” Second Supp. Resp. 4.
As the foregoing demonstrates, plaintiff failed to rebut the
presumption of de jure government control, i.e., it has not
demonstrated that it is not owned or controlled by the PRC.
Indeed, rather than demonstrating the absence of state control,
plaintiff’s answers suggest that the company was, in fact, under
state control. This being the case, because both de jure and de
facto independence must be shown in order to qualify for a
separate rate, the court need not address plaintiff’s claims of
3
Plaintiff stated that “Shandong Foreign Trade Economic
Committee . . . is SMC’s investor and the department in charge.”
Second Supp. Resp. 4.
Court No. 07-00355 Page 11
de facto independence from governmental control. See Peer
Bearing, 32 CIT at __, 587 F. Supp. 2d at 1324.
Because SMC has failed to rebut the presumption that it is
controlled by the Chinese government it is not entitled to a
separate rate. See Shandong Huarong Gen. Group Corp. v. United
States, 27 CIT 1568, 1591, Slip Op. 03-135 at 37 (2003) (not
reported in the Federal Supplement). As a result, Commerce may
apply the PRC-wide rate to that company’s exports. Id. at 38.
II. Selection of PRC-Wide Rates for Bars/Wedges,
Hammers/Sledges, and Axes/Adzes
A. Legal Framework
In seeking a PRC-wide rate based on AFA, the Department may
use information derived from the petition, a final determination
in the investigation, any prior administrative review, or any
other information placed on the record. See 19 U.S.C.
§ 1677e(b); Statement of Admin. Action accompanying the Uruguay
Round Agreements Act, H.R. Rep. 103-316 at 870, reprinted in 1994
U.S.C.C.A.N. 4040, 4199 (stating that secondary information is
“information derived from the petition that gave rise to the
investigation or review, the final determination concerning the
subject merchandise, or any previous review under [19 U.S.C.
§ 1675] concerning the subject merchandise”). Where, as here,
Commerce relies on secondary information such as calculated rates
Court No. 07-00355 Page 12
from previous reviews, rather than information obtained in the
course of a current investigation or review, the Department must
“to the extent practicable, corroborate that information from
independent sources that are reasonably at [its] disposal.” 19
U.S.C. § 1677e(c); see 19 C.F.R. § 351.308(d). To corroborate
secondary information, Commerce must “examine whether the
secondary information to be used has probative value.” See 19
C.F.R. § 351.308(d).
Probative value means that the rate must be both a) reliable
and b) relevant. See Ferro Union, Inc. v. United States, 23 CIT
178, 202, 44 F. Supp. 2d 1310, 1333 (1999) (“Ferro Union”).
Commerce must do more than assume “any prior calculated margin
for the industry is reliable and relevant.” Id. at 204, 44 F.
Supp. 2d at 1334. Indeed, “[i]n order to comply with the statute
and the [Statement of Administrative Action]’s statement that
corroborated information is probative information, Commerce must
assure itself that the margin it applies is relevant, and not
outdated, or lacking a rational relationship to [the
respondent].” Id. at 205, 44 F. Supp. 2d at 1335.
Importantly, in the NME situation, there is no requirement
that the rate based on AFA relate specifically to the individual
company. See Peer Bearing Co., 32 CIT at __, 587 F. Supp. 2d at
1327. Rather, “the rate must be corroborated according to its
reliability and relevance to the countrywide entity as a whole.”
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Id. at __, 587 F. Supp. 2d at 1327 (citation omitted). Thus, the
rates Commerce selects in this case must be reliable and relevant
to the PRC-wide entity,4 not specifically to SMC.
B. Corroboration of Secondary Information
Commerce argues that the secondary information it used is
reliable and relevant such that it has probative value. It
states:
[T]o corroborate secondary information, the
Department will, to the extent practicable,
examine the reliability and relevance of the
information used. However, unlike other
types of information . . . there are no
independent sources for calculated dumping
margins. The only sources for calculated
margins are administrative determinations.
These rates are applied to the PRC-wide
entity, i.e., only to companies not eligible
for a separate rate with regard to the
individual class or kind of merchandise. No
information has been presented in the current
review that calls into question the
reliability of the information used for these
AFA rates. Thus, the Department continues to
find that the information is reliable.
Issues & Dec. Mem. at Comment 3. Plaintiff challenges the
reliability and relevance of the rates. Pl.’s Mem. 23.
Specifically, plaintiff argues that the Department “did not
utilize any measure to verify independently the reliability of
4
In antidumping proceedings, the PRC-wide entity and all
of its components are considered to be a single respondent. See
Sigma, 117 F.3d at 1405-07.
Court No. 07-00355 Page 14
the Bars/Wedges or Hammers/Sledges rates” and that the
“Department failed to verify and corroborate the calculated PRC-
wide and AFA rate” applied to axes/adzes. Pl.’s Mem. 31.
The court finds that substantial evidence supports the
conclusion that two of the selected AFA rates, i.e., 139.31
percent for bars/wedges and 189.37 percent for axes/adzes, were
properly corroborated as being reliable and, because of the
application of AFA, are relevant to the PRC as a whole. As an
initial matter, the court finds reasonable the Department’s
decision to base the PRC-wide rates on AFA. Each of the four
respondents were found to have been subject to an AFA rate and
nothing has been placed on the record to indicate that the
country-wide entity would not similarly be found to be subject to
AFA. See AFA and Corroboration Memo. for Company Rates dated
Feb. 28, 2007 (“AFA and Corroboration Memo.”) at 12.
With respect to the rates themselves, when faced with
determining a country-wide rate based on what it calls “total
AFA,”5 Commerce faces a difficult task. Unlike rates that are
5
Commerce references “total adverse facts available,”
which is not referenced in either the statute or the agency’s
regulations. The phrase can be understood, within the context of
this case, as referring to Commerce’s application of adverse
facts available not only to the facts pertaining to specific
sales for which information was not provided, but to the facts
respecting all of respondents’ sales encompassed by the relevant
antidumping duty order. See Shandong Huarong Mach. Co. v. United
States, 30 CIT 1269, 1271 n.2, 435 F. Supp. 2d 1261, 1265 n.2
(2006), (citing Gerber Food (Yunnan) Co., Ltd. v. United States,
Court No. 07-00355 Page 15
calculated using responses to questionnaires, Commerce cannot
calculate an AFA rate for the PRC as a whole, because there are
no questionnaire responses from the PRC itself on which to rely.
What the record does contain is the questionnaire responses from
SMC and the other respondents in this review. However, because
Commerce found all of the respondents to be subject to the
application of total AFA, the responses themselves were deemed
non-probative. Indeed, for Commerce, the only value of the
responses is to confirm that this country-wide rate should be
based on AFA. It is worth noting that the decision to apply AFA
to the country-wide entity has not been contested by any party.
Thus, the decision to apply an AFA rate to the PRC as a whole is
reasonable and is sustained.
To determine an AFA rate, Commerce turned to its often used
methodology of choosing the highest rate from the original
investigation or from prior reviews. See AFA and Corroboration
Memo.; Shanghai Taoen Int’l Trading Co. v. United States, 29 CIT
189, 360 F. Supp. 2d 1339 (2005) (upholding the AFA rate as
application of the highest available dumping margin from a
different respondent in a prior administrative review); Kompass
Food Trading Int’l v. United States, 24 CIT 678, 683 Slip Op. 00-
29 CIT __, __, 387 F. Supp. 2d 1270, 1285 n.3 (2005)).
Court No. 07-00355 Page 16
90 (2000) (not reported in the Federal Supplement) (affirming the
Department’s use of the highest available dumping margin from a
different, fully cooperative respondent in the less than fair
value investigation).
For bars/wedges, Commerce assigned the 139.31 percent rate
as the PRC-wide margin. Def.’s Mem. 28; Issues & Dec. Mem. at
Comment 3. This is the rate calculated using verified
information provided by Tianjin Machinery Import & Export
Corporation, another respondent, in the eighth administrative
review of the bars/wedges order. See HFHTs, Finished or
Unfinished, With or Without Handles, From the PRC, 71 Fed.
Reg. 54,269 at Comment 2 (Dep’t of Commerce Sept. 14, 2006)
(final results). Commerce recently found this AFA and PRC-wide
rate to be sufficiently corroborated for use in the fourteenth
administrative review. Def.’s Mem. 28; Issues & Dec. Mem. at
Comment 3; HFHTs, Finished or Unfinished, With or Without
Handles, From the PRC, 71 Fed. Reg. 54,269 at Comment 2 (Dep’t of
Commerce Sept. 14, 2006) (final results).
For axes/adzes, Commerce used the calculated 189.37 percent
rate for Shandong Huarong Machinery Co., Ltd., based on its
verified sales and production data from the fourteenth
administrative review. See Def.’s Mem. 28; Issues & Dec. Mem. at
Comment 2; HFHTs, Finished or Unfinished, With or Without
Handles, From the PRC, 71 Fed. Reg. 54,269 at Comment 9 (Dep’t of
Court No. 07-00355 Page 17
Commerce Sept. 14, 2006) (final results). Commerce then applied
this rate as AFA for the PRC-wide entity here. See HFHTs,
Finished or Unfinished, With or Without Handles, From the PRC, 71
Fed. Reg. 54,269 at Comment 9 (Dep’t of Commerce Sept. 14, 2006)
(final results).
As noted, Commerce is required to corroborate secondary
information “to the extent practicable.” 19 U.S.C. § 1677e(c).
Here, because the 139.31 percent rate for bars/wedges and the
189.37 percent rate for axes/adzes: (1) are from earlier reviews
of the same categories of merchandise; (2) are based on verified
information taken from similar companies; (3) have not been found
either unsupported by substantial evidence nor contrary to law by
any court; and (4) with the exception of plaintiff’s
subsidization argument, have not been challenged by any record
evidence,6 Commerce has satisfied its corroboration requirement.
The court thus upholds Commerce’s determination that the 139.31
percent rate for bars/wedges and 189.37 percent rate for
6
While it might seem a heavy burden on the plaintiff to
anticipate the use of these rates for assignment pursuant to AFA,
and to interpose objections to them, these rates have been used
as AFA consistently in past reviews. See, e.g., HFHTs, Finished
or Unfinished, With or Without Handles, From the PRC, 71 Fed.
Reg. 54,269 (Dep’t of Commerce Sept. 14, 2006) (final results)
(fourteenth review); HFHTs, Finished or Unfinished, With or
Without Handles, From the PRC, 70 Fed. Reg. 54,897 (Dep’t of
Commerce Sept. 19, 2005) (final results)(thirteenth review);
HFHTs, Finished or Unfinished, With or Without Handles, From the
PRC, 69 Fed. Reg. 55,581 (Dep’t of Commerce Sept. 15, 2004)
(final results) (twelfth review).
Court No. 07-00355 Page 18
axes/adzes are reliable.
In addition to its contentions as to the reliability and
relevance of the assigned rates, plaintiff insists that the MUTT®
scraper should be excluded from the calculated PRC-wide and AFA
rate for axes/adzes. Pl.’s Mem. 30-31. That is, “[i]n effect,
the . . . calculated rate [from the fourteenth review] for
Axes/Adzes is based solely on the MUTT® scraper submitted to the
Department for a scope review.” Pl.’s Mem. 30. Plaintiff
contends that there is “compelling evidence” that the
manufacturing process used in creating the MUTT® scraper should
preclude it from inclusion in the scope of the HFHTs category.
Pl.’s Mem. 30. According to plaintiff, if the MUTT® scraper
sales were eliminated from consideration, then Commerce would be
required to find a lower rate for axes/adzes. However, as
plaintiff also acknowledges, this Court has previously held that
the MUTT is, in fact, subject to the terms of the axes/adzes
order. Pl.’s Mem. 30; see Tianjin Mach. Imp. & Exp. Corp. v.
United States, 31 CIT __, __, Slip Op. 07-131 at 17 n.4 (Aug. 28,
2007) (not reported in the Federal Supplement) (“Tianjin”). That
being the case, there is no reason to exclude a rate based on
MUTT® exports.
With respect to hammers/sledges, the court reaches a
different conclusion. For this merchandise Commerce used the
45.42 percent rate calculated as the best information available
Court No. 07-00355 Page 19
(“BIA”)7 rate during a 1991 less than fair value (“LTFV”)
investigation of the China National Machinery Import & Export
Corporation. See Def.’s Mem. 28; Issues & Dec. Mem. at Comment
3; HFHTs, Finished or Unfinished, With or Without Handles, From
the PRC, 56 Fed. Reg. 241 (Dep’t of Commerce Jan. 3, 1991) (final
results). Commerce most recently used this rate as the AFA and
PRC-wide rate during the fourteenth administrative review. See
Def.’s Mem. 28; Issues & Dec. Mem. at Comment 3; HFHTs, Finished
or Unfinished, With or Without Handles, From the PRC, 71 Fed.
Reg. 54,269 (Dep’t of Commerce Sept. 14, 2006) (final results).
The rate, however, was not corroborated. Rather, the rate,
based on BIA, was calculated in the 1991 LTFV investigation of
the China National Machinery Import & Export Corporation. See
HFHTs, Finished or Unfinished, With or Without Handles, From the
PRC, 56 Fed. Reg. 241 (Dep’t of Commerce Jan. 3, 1991) (final
results) (“Because we have rejected CMC’s questionnaire response
and are using best information available for our determinations,
7
BIA is the predecessor to AFA. In the Statement of
Administrative Action of the Uruguay Round Agreements Act of
1994, Pub.L. No. 103-465, 108 Stat. 4809 (1994), Congress
explained that the Uruguay Round amended the prior law, which
“mandate[d] use of the best information available (commonly
referred to as BIA) if a person refuse[d] or [was] unable to
produce information in a timely manner or in the form required.”
H.R. Doc. No. 103-316 (1994) at 868, reprinted in 1994
U.S.C.C.A.N. 4040, 4198. Shandong Huarong Mach. Co. v. United
States, 30 CIT 1269, 1282 n.9, 435 F. Supp. 2d 1261, 1274 n.9
(2006).
Court No. 07-00355 Page 20
we did not verify CMC’s questionnaire response.”). Rather than
using verified information, the Department used information
submitted by the petitioner. Specifically, Commerce calculated
an average of the margins contained in the petition for each
class or kind of merchandise, as adjusted for calculation errors
in the petition. See Id. at Comment 4; HFHTs, Finished or
Unfinished, With or Without Handles, From the PRC, 55 Fed. Reg.
42,420 (Dep’t of Commerce Oct. 19, 1990) (preliminary
determination). Therefore, Commerce took no steps to corroborate
the information during the LTFV investigation. That being the
case, Commerce failed to comply with the corroboration
requirement found in 19 U.S.C. § 1677e(c) and 19 C.F.R.
§ 351.308(d). Consequently, the 45.42 percent rate is not
reliable, and the court directs Commerce, on remand, to assign a
different rate to hammers/sledges that has been “corroborated
according to its reliability and relevance to the country-wide
entity as a whole.” Peer Bearing, 31 CIT at __, 587 F. Supp. 2d
at 1327 (citation omitted).
C. The Bars/Wedges Rate Is Not Punitive
Plaintiff also contends that the 139.31 percent rate for
bars/wedges is punitive. Pl.’s Mem. 27. In making its case,
plaintiff argues that this Court invalidated the 139.31 percent
rate for bars and wedges as punitive and aberrational in Shandong
Court No. 07-00355 Page 21
Huarong Gen. Corp. v. United States, 29 CIT 1227, Slip Op. 05-129
(2005) (not published in the Federal Supplement) (“Huarong III”).
In fact, in Huarong III, this Court remanded Commerce’s use of
the rate not because the rate was unreliable or irrelevant to the
PRC-wide entity, but because the rate lacked specific reliability
and relevance to the individual companies that were parties to
that case. Huarong III, 29 CIT at 1332, Slip Op. 05-129 at 12.
The Huarong III plaintiffs qualified for separate rates. Huarong
III, 29 CIT at 1228, Slip Op. 05-129 at 3. Here, SMC failed to
qualify for a separate rate and Commerce has no obligation to
corroborate the rate as to SMC itself. See Peer Bearing, 31 CIT
at __, 587 F. Supp. 2d at 1327. Thus, Huarong III does not
support plaintiff’s contention. Moreover, plaintiff cites to no
evidence on the record relating to what a calculated rate for the
PRC-wide entity might be. As such, plaintiff has made no
convincing argument that the assigned rate is punitive.
D. There Is No Evidence of Subsidization in the AFA/PRC-
Wide Rates
Lastly, plaintiff contends that the Department must
recalculate the margins from prior segments of these proceedings
in order to corroborate the AFA/PRC-wide rates. Specifically,
plaintiff contends that “[t]he Department previously determined
Indian export data cannot be used for surrogate values because of
Court No. 07-00355 Page 22
Indian subsidies and that South Korea, Thailand, and Indonesia
maintain broadly available, non-industry specific export
subsidies that may benefit all exporters to all export markets.”
Pl.’s Mem. 23-24 (citation omitted). Accordingly, plaintiff
argues, the Department must exclude: “1) any Indian imports of
steel from the United Kingdom, Belgium, Canada, or Germany in
calculating the AFA/PRC-wide rate for Hammers/Sledges and 2) the
Indian imports of steel from the United Kingdom, Belgium, and
Germany in calculating the AFA/PRC-wide rate for Axes/Adzes.”
Pl.’s Mem. 24. In addition, plaintiff argues that the Department
must also exclude United States data because the United States
subsidizes exports. Pl.’s Mem. 25.
Despite plaintiff’s contentions that the AFA/PRC-wide rates
applied to sales of bars/wedges and hammers/sledges are distorted
by subsidization, its claim must be rejected for two reasons:
first, because it is well settled that the “record for judicial
review should ordinarily not contain material from separate
investigations, including records of separate administrative
reviews arising out of the same antidumping duty order, as is the
case here,”(Sanyo Elec. Co. v. United States, 23 CIT 355, 361, 86
F. Supp. 2d 1232, 1239 (1999) (citations and quotation omitted));
and second, because this Court has continually rejected this
argument where, as here, plaintiffs have “provided no evidence to
support their assertion” that “the surrogate value Commerce
Court No. 07-00355 Page 23
employed was distorted by subsidies.” See Tianjin, 31 CIT at __,
Slip Op. 07-131 at 40 (“While plaintiffs insist that the
surrogate value Commerce employed was distorted by subsidies,
they have provided no evidence to support their assertion. Thus,
the court cannot credit plaintiffs’ subsidy objection.”).
Accordingly, plaintiffs’ assertion that the objected to values
were subsidized must be rejected.
CONCLUSION
For the foregoing reasons, the court sustains Commerce’s
final determination in part and remands for further findings,
consistent with this opinion, with respect to the calculated
45.42 percent rate for hammers/sledges. The remand results shall
be due on November 2, 2009; comments to the remand results shall
be due on December 7, 2009; and replies to such comments shall be
due on December 21, 2009.
/s/ Richard K.Eaton
Richard K. Eaton
Dated: June 24, 2009
New York, New York