Florida Tomato Exchange v. United States , 255 F. Supp. 3d 1362 ( 2017 )

Slip Op. 17–114
UNITED STATES COURT OF INTERNATIONAL TRADE
____________________________________
:
THE FLORIDA TOMATO EXCHANGE, :
:
Plaintiff, :
:
v. :
:
UNITED STATES, :
:
Defendant, :
:
and : Before: Richard K. Eaton, Judge
:
CAADES SINALOA, A.C., CONSEJO : Court No. 13-00148
AGRÍCOLA DE BAJA CALIFORNIA, :
A.C., ASOCIACIÓN MEXICANA DE :
HORTICULTURA PROTEGIDA, A.C., :
UNIÓN AGRÍCOLA REGIONAL DE :
SONORA PRODUCTORES DE :
HORTALIZAS FRUTAS Y :
LEGUMBRES, and CONFEDERACIÓN :
NACIONAL DE PRODUCTORES DE :
HORTALIZAS, :
:
Defendant-Intervenors. :
____________________________________:
OPINION and ORDER
[United States Department of Commerce’s Remand Results are remanded.]
Dated: August 25, 2017
Terence P. Stewart, Stewart and Stewart, of Washington, DC, argued for plaintiff. With
him on the brief were Geert De Prest and Nicholas J. Birch.
Mikki Cottet, Senior Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, argued for defendant. With her on the brief were
Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director,
and Franklin E. White, Jr., Assistant Director. Of Counsel on the brief was Henry J. Loyer,
Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department
of Commerce, of Washington, DC.
Court No. 13-00148 Page 2
Thomas B. Wilner and David L. Earnest IV, Shearman & Sterling LLP, of Washington,
DC, argued for defendant-intervenors. With them on the brief was Robert S. LaRussa.
Eaton, Judge: This case involves a determination by the United States Department of
Commerce (“Commerce” or the “Department”) to enter into a suspension agreement with
exporters of fresh tomatoes from Mexico to “eliminate completely the injurious effect of exports
to the United States of the subject merchandise,” pursuant to 19 U.S.C. § 1673c(c) (2012). 1
Fresh Tomatoes From Mexico: Suspension of Antidumping Investigation, 78 Fed. Reg. 14,967,
14,968 (Dep’t Commerce Mar. 8, 2013) (“2013 Suspension Agreement” or “2013 Agreement”).
In Florida Tomato Exchange v. United States, 39 CIT __, 107 F. Supp. 3d 1342 (2015) (“Tomato
Exchange I”), the court held that Commerce had failed to comply with the notice, comment, and
consultation requirements of 19 U.S.C. § 1673c(e) prior to entering into the 2013 Suspension
Agreement, and remanded to Commerce.
Before the court are Commerce’s final results of redetermination following remand. See
Final Results of Redetermination Pursuant to Court Remand, ECF No. 84-1, P.R. 62-65 at bar
code 3476104-01 to -04 (“Remand Results”). During remand proceedings, Commerce provided
interested parties with notice, and an opportunity for comment and consultations, regarding
certain Department memoranda whose purpose was to explain the bases for its determination that
the 2013 Agreement would eliminate completely the injurious effect of imports of the Mexican
tomatoes. In the Remand Results, Commerce continued to determine that the agreement met the
requirements of 19 U.S.C. § 1673c(c).
1
Further citations to the Tariff Act of 1930, as amended, are to the relevant
provisions of Title 19 of the U.S. Code, 2012 edition, and any applicable supplements.
Court No. 13-00148 Page 3
Plaintiff the Florida Tomato Exchange 2 (“plaintiff” or the “Tomato Exchange”)
challenges, as unsupported by substantial evidence or otherwise not in accordance with law,
several of Commerce’s determinations on remand, including (1) that the 2013 Agreement will
limit dumping to the level permitted by statute; and (2) that the agreement will prevent price
suppression or undercutting and thereby eliminate completely the injurious effect of the subject
imports. Plaintiff asks the court to again remand this matter to Commerce with instructions either
to comply with subsection 1673c(c)’s requirements or to terminate the 2013 Suspension
Agreement. See Pl.’s Cmts. Opp’n Final Results of Redetermination on Remand, ECF No. 86
(“Pl.’s Cmts.”) 1-3.
The United States (“defendant”), on behalf of Commerce, argues that the Remand Results
are supported by substantial evidence and otherwise in accordance with law. See Def.’s Resp.
Cmts. Remand Redetermination, ECF No. 96 (“Def.’s Resp. Cmts.”). Defendant-intervenors
CAADES Sinaloa, A.C., et al. 3 (collectively, “defendant-intervenors”), the Mexican signatories
to the 2013 Agreement, join the defendant in urging the court to sustain the Remand Results. See
Def.-Int.’s Mem. Supp. Def.’s Final Results of Redetermination, ECF No. 90.
2
The Florida Tomato Exchange is “a trade association representing growers and
first handlers of the domestic like product of the subject merchandise.” Tomato Exchange I, 39
CIT at __, 107 F. Supp. 3d at 1344.
3
Defendant-intervenors CAADES Sinaloa, A.C., Consejo Agrícola de Baja
California, A.C., Asociación Mexicana de Horticultura Protegida, A.C., Unión Agrícola
Regional de Sonora Productores de Hortalizas Frutas y Legumbres, and Confederación Nacional
de Productores de Hortalizas represent producers and exporters in Mexico that account for
substantially all of the subject tomatoes imported into the United States. See 2013 Suspension
Agreement, Section II (U.S. Import Coverage).
Court No. 13-00148 Page 4
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2012), and 19 U.S.C.
§ 1516a(a)(2)(B)(iv). For the reasons set forth below, the court remands this matter to
Commerce.
LEGAL FRAMEWORK
Commerce is authorized, under limited circumstances, to suspend an antidumping
investigation by entering into a suspension agreement with exporters and producers of particular
merchandise, or a foreign government. 4 Generally, suspension agreements are entered into where
Commerce has made an affirmative preliminary dumping determination. See 19 C.F.R.
§ 351.208(f)(1)(i)(A) (2012) (proposed suspension agreement must be submitted to Commerce
within 15 days of the preliminary determination); id. § 351.208(g)(1)(i) (Commerce may accept a
suspension agreement within 60 days of issuance of a preliminary determination). “[I]n a
suspension agreement, the exporters and producers or the foreign government agree to modify their
behavior so as to eliminate dumping . . . or the injury caused thereby.” Id. § 351.208(a).
Suspension agreements are an atypical remedy in antidumping cases. See S. Rep. No. 96-
249, at 71 (1979), reprinted in 1979 U.S.C.C.A.N. 381, 457 (“[S]uspension is an unusual action
which should not become the normal means for disposing of cases.”). Congress, in providing for
such agreements, intended that they be used “as a means of achieving the remedial purposes of the
4
Compare 19 U.S.C. § 1673c(b) (authorizing suspension upon the acceptance of an
agreement to cease exports or revise prices from exporters of the subject merchandise “who
account for substantially all of the imports of that merchandise” into the United States), and
§ 1673c(c)(1) (authorizing suspension if the “exporters of the subject merchandise who account for
substantially all of the imports of that merchandise into the United States” agree to meet certain
statutory requirements), with § 1673c(l)(1) (authorizing suspension of “an investigation . . . upon
acceptance of an agreement with a nonmarket economy country to restrict the volume of imports
into the United States of the merchandise under investigation,” where certain criteria are met).
Court No. 13-00148 Page 5
[antidumping] law in as short a time as possible and with a minimum expenditure of resources by
all parties involved.” H.R. Rep. No. 96–317, 96th Cong., 1st Sess. 53 (1979); see also PPG Indus.,
Inc. v. United States, 11 CIT 344, 355, 662 F. Supp. 258, 267 (1987), aff’d, 928 F.2d 1568 (Fed.
Cir. 1991) (noting “congressional desire that suspension agreements lead to rapid resolution of
the issues”).
The availability of suspension agreements is circumscribed by statute. See 19 U.S.C.
§ 1673c(b), (c), (l). 5 The most common type is an agreement entered into pursuant to 19 U.S.C.
§ 1673c(b) (“subsection (b) agreement”), by which exporters that account for “substantially all” of
the imports of subject merchandise into the United States agree to cease exports to the United
States or revise their prices to eliminate all dumped sales. Following the publication of its
preliminary dumping determination, however, Commerce entered into a second type of agreement
found in 19 U.S.C. § 1673c(c) (“subsection (c) agreement”). Unlike subsection (b) agreements, the
goal of subsection (c) agreements is not to eliminate all dumped sales. Rather, subsection (c)
agreements seek to eliminate the injurious effect of exports of subject merchandise. 19 U.S.C.
§ 1673c(c)(1).
For the Department to enter into a subsection (c) agreement, “extraordinary circumstances”
must be present. 19 U.S.C. § 1673c(c)(1). The statute defines extraordinary circumstances as those
“in which . . . (i) suspension of an investigation will be more beneficial to the domestic industry
than continuation of the investigation, and (ii) the investigation is complex.” 19 U.S.C.
§ 1673c(c)(2)(A). An investigation is considered complex when either “(i) there are a large number
5
The 2013 Suspension Agreement was entered into pursuant to 19 U.S.C.
§ 1673c(c). For clarity, neither § 1673c(b) nor § 1673c(l) is applicable here. Subsection (b)
governs agreements to eliminate all dumped sales; subsection (l) governs agreements with
nonmarket economy countries.
Court No. 13-00148 Page 6
of transactions to be investigated or adjustments to be considered, (ii) the issues raised are novel, or
(iii) the number of firms involved is large.” 19 U.S.C. § 1673c(c)(2)(B).
Once Commerce determines that extraordinary circumstances are present, it may suspend
its investigation “upon the acceptance of an agreement to revise prices from exporters of the
subject merchandise who account for substantially all of the imports of that merchandise into the
United States,” if certain conditions are met. 19 U.S.C. § 1673c(c)(1). Specifically, Commerce
may enter into a subsection (c) agreement if (1) “the agreement will eliminate completely the
injurious effect of exports to the United States of that merchandise,” (2) “the suppression or
undercutting of price levels of domestic products by imports of that merchandise will be
prevented,” 6 and (3) dumping will not exceed a statutorily prescribed limit. Id. This last condition
provides that:
for each entry of each exporter the amount by which the estimated normal value
exceeds the export price (or the constructed export price) will not exceed 15 percent
of the weighted average amount by which the estimated normal value exceeded the
export price (or the constructed export price) for all [dumped] entries of the
exporter examined during the course of the investigation.
19 U.S.C. § 1673c(c)(1)(B).
In other words, a significant feature of a subsection (c) agreement is that Commerce must
be satisfied that the agreement will prevent the “suppression or undercutting” of U.S. prices for the
domestic like product, and the estimated dumping margin of each entry of subject merchandise of
6
Notably, the effect of imports on domestic prices is a relevant factor in material
injury determinations made by the United States International Trade Commission following the
initiation of a dumping investigation. See 19 U.S.C. § 1677(7)(C)(ii). It is Commerce, however,
that makes these findings when determining whether to enter into a suspension agreement under
19 U.S.C. § 1673c(c). See 19 U.S.C. § 1673c(c)(1)(A) (authorizing Commerce to enter into a
suspension agreement “if . . . the suppression or undercutting of price levels of domestic products
by imports of that merchandise will be prevented,” and where certain other criteria are met).
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each exporter will not exceed 15 percent of the weighted average dumping margin preliminarily
determined for that exporter, or the all-others rate in the case of exporters that were not selected for
individual examination by Commerce. Finally, Commerce may not enter into a suspension
agreement of any kind unless “(1) it is satisfied that suspension of the investigation is in the public
interest, and (2) effective monitoring of the agreement by the United States is practicable.” 19
U.S.C. § 1673c(d).
Commerce may suspend an investigation only after considering the comments of the
petitioner who sought the unfair trade investigation, and other interested parties. Thus, before an
investigation may be suspended, Commerce must (1) “notify . . . and consult with the petitioner
concerning, its intention to suspend the investigation, and notify other parties to the investigation
and the [United States International Trade Commission (the “Commission” or “ITC”)]”;
(2) “provide a copy of the proposed agreement to the petitioner at the time of the notification,
together with an explanation of how the agreement will be carried out and enforced, and of how
the agreement will meet the requirements of . . . subsections . . . (c) and (d)”; and (3) “permit all
interested parties . . . to submit comments and information for the record . . . .” 19 U.S.C.
§ 1673c(e)(1)-(3).
Even after an investigation has been suspended, interested parties have an ongoing role to
play. For example, either exporters or domestic interested parties may ask Commerce to continue
the suspended investigation. If Commerce receives a request for continuation of the investigation
“within 20 days after the date of publication of the notice of suspension of an investigation” from
“exporters accounting for a significant proportion of exports to the United States of the subject
merchandise, or . . . an interested party . . . which is a party to the investigation, then [Commerce]
and the Commission shall continue the investigation.” 19 U.S.C. § 1673c(g). Additionally,
Court No. 13-00148 Page 8
interested parties may request an annual review by Commerce of “the current status of, and
compliance with, any agreement by reason of which an investigation was suspended, and review
the amount of any . . . dumping margin involved in the agreement . . . .” 19 U.S.C. § 1675(a)(1)(C).
Last, for subsection (c) agreements, domestic interested parties are afforded an additional
tool to secure compliance with the terms of the agreement by the foreign signatories and to ensure
that the agreement is achieving its intended goal of eliminating the injurious effect of exports of
subject merchandise: “Within 20 days after the suspension of an investigation[,] . . . an interested
party which is a party to the investigation . . . may, by petition filed with the [ITC] and with notice
to [Commerce], ask for a review of the suspension.” 19 U.S.C. § 1673c(h)(1); see Imperial Sugar
Co. v. United States, 40 CIT __, __, 181 F. Supp. 3d 1284, 1293 n.14 (2016), appeal dismissed per
agreement, No. 17-1320 (Fed. Cir. May 31, 2017) (noting that the ITC determination under review
was “the first time the Commission has been asked to review a suspension agreement pursuant to
subsection (h)”). Following the receipt of such a petition, the ITC “shall, within 75 days after the
date on which the petition is filed with it, determine whether the injurious effect of imports of the
subject merchandise is eliminated completely by the agreement.” 19 U.S.C. § 1673c(h)(2).
Should the ITC make a negative determination, Commerce is directed to resume its investigation
“on the date of publication of notice of such determination as if the affirmative preliminary
determination . . . had been made on that date.” 19 U.S.C. § 1673c(h)(2).
BACKGROUND
The pertinent background facts are set out in the court’s opinion in Tomato Exchange I,
and are supplemented here.
Court No. 13-00148 Page 9
I. SUSPENSION AGREEMENTS ON FRESH TOMATOES FROM MEXICO
In April 1996, in response to a petition filed by the Tomato Exchange and other domestic
interested parties, Commerce and the ITC commenced their respective investigations of fresh
tomatoes from Mexico that allegedly had been dumped in the United States. See Fresh Tomatoes
From Mexico, 61 Fed. Reg. 18,377 (Dep’t Commerce Apr. 25, 1996) (initiation of antidumping
duty inv.).
In May 1996, the ITC made an affirmative preliminary injury determination, and so
notified the Department. See Fresh Tomatoes from Mexico, USITC Pub. 2967, Inv. No. 731- TA-
747 (May 1996) (“ITC Prelim. Injury Determination”); Fresh Tomatoes From Mexico, 61 Fed.
Reg. 28,891 (ITC June 6, 1996) (prelim. determination).
Commerce proceeded with its antidumping investigation and, several months later, on
October 28, 1996, preliminarily determined that fresh tomatoes from Mexico were being dumped
in the United States during the period of investigation, i.e., March 1, 1995 to February 29, 1996.
Fresh Tomatoes From Mexico, 61 Fed. Reg. 56,608, 56,610 (Dep’t Commerce Nov. 1, 1996)
(affirmative prelim. dumping determination and postponement of final determination)
(“Preliminary Determination”). Based on information supplied by the Mexican respondents
during the investigation, Commerce calculated weighted-average dumping margins for several
individual exporters, as well as an all-others rate, that ranged from 4.16 percent to 188.45
percent. See Preliminary Determination, 61 Fed. Reg. at 56,615.
On the same day the Preliminary Determination was issued, Commerce entered into a
subsection (c) agreement with Mexican exporters accounting for substantially all fresh tomatoes
imported into the United States from Mexico, thereby suspending the antidumping investigation.
Fresh Tomatoes From Mexico, 61 Fed. Reg. 56,618, 56,619, App. I (Dep’t Commerce Nov. 1,
Court No. 13-00148 Page 10
1996) (“1996 Suspension Agreement” or “1996 Agreement”). In the 1996 Agreement, each
exporter agreed that its tomatoes would be sold at or above an established reference price, and
that, for each entry of subject merchandise, dumping would not exceed 15 percent of the
weighted-average dumping margin preliminarily determined for that exporter in the antidumping
investigation. See 1996 Suspension Agreement, 61 Fed. Reg. at 56,619, App. I, Section IV (Basis
for the Agreement). Accordingly, Commerce determined that the 1996 Suspension Agreement
would “(1) [e]liminate completely the injurious effect of exports to the United States of the
subject merchandise; and (2) prevent the suppression or undercutting of price levels of domestic
fresh tomatoes by imports of that merchandise from Mexico.” 1996 Suspension Agreement, 61
Fed. Reg. at 56,618.
Over the course of approximately the next seventeen years, Commerce continued to
suspend its antidumping investigation of fresh tomatoes from Mexico by way of subsection (c)
agreements. Thus, in addition to the 1996 Agreement, Commerce entered into suspension
agreements in 2002, 2008, and 2013. See 1996 Suspension Agreement, 61 Fed. Reg. at 56,619;
Fresh Tomatoes From Mexico, 67 Fed. Reg. 77,044, 77,046 (Dep’t Commerce Dec. 16, 2002);
Fresh Tomatoes From Mexico, 73 Fed. Reg. 4831, 4833 (Dep’t Commerce Jan. 28, 2008); 2013
Suspension Agreement, 78 Fed. Reg. at 14,968. Each of these agreements contained pledges by
Mexican signatories to adhere to established minimum reference prices to prevent price
suppression or undercutting and to limit dumping of subject merchandise to the level permitted
by statute. Also, each agreement was determined by Commerce to eliminate completely the
injurious effect of subject imports.
At issue in this case is the 2013 Suspension Agreement, pursuant to which the Mexican
signatories pledged not to sell their tomatoes in the United States for less than established
Court No. 13-00148 Page 11
reference prices in order to prevent price suppression or undercutting. 7 As in past agreements,
signatories also pledged to limit their dumping to permissible levels in accordance with 19
U.S.C. § 1673c(c)(1)(B). 8 See 2013 Suspension Agreement, 78 Fed. Reg. at 14,969. Appendices
A and B to the agreement set forth the reference prices and the methods used to calculate normal
value and export price. See 2013 Suspension Agreement, 78 Fed. Reg. at 14,972. The agreement
also contained provisions permitting Commerce and other government agencies to monitor and
enforce its terms and conditions. See 2013 Suspension Agreement, 78 Fed. Reg. at 14,969-71.
Accordingly, Commerce “determined that the 2013 Suspension Agreement [would] eliminate
completely the injurious effect of exports to the United States of the subject merchandise and
7
The agreement established both summer season and winter season reference
prices for four categories of tomatoes: (1) open field and adapted environment, other than
specialty (winter: $0.31 per pound; summer: $0.2458 per pound); (2) controlled environment,
other than specialty (winter: $0.41 per pound; summer: $0.3251 per pound); (3) specialty—
loose (winter: $0.45 per pound; summer: $0.3568 per pound); and (4) specialty—packed (winter:
$0.59 per pound; summer: $0.4679 per pound). See 2013 Suspension Agreement, 78 Fed. Reg. at
14,972.
8
While Commerce has entered into relatively few subsection (c) agreements,
previous agreements have included similar pledges. See, e.g., Sugar From Mexico, 79 Fed. Reg.
78,039, 78,042 (Dep’t Commerce Dec. 29, 2014) (suspension agreement) (“Each Signatory
individually agrees that for each entry the amount by which the estimated normal value exceeds
the export price (or the constructed export price) will not exceed 15 percent of the weighted
average amount by which the estimated normal value exceeded the export price (or constructed
export price) for all less-than-fair-value entries of the producer/exporter examined during the
course of the investigation, in accordance with the Act and the Department’s regulations and
procedures, including but not limited to the calculation methodologies described in Appendix II
of this Agreement.”); Potassium Chloride From Canada, 53 Fed. Reg. 1393, 1394 (Dep’t
Commerce Jan. 19, 1988) (“In order to satisfy the requirements of section 734(c) of the Act, each
signatory producer/exporter of potassium chloride from Canada, individually, agrees that the
price it will charge for each entry of potassium chloride exported to the United States from
Canada for consumption in the United States will be such that any amount by which the
estimated foreign market value exceeds the United States price will not exceed 15 percent of the
weighted-average amount by which the estimated foreign market value exceeded the United
States price for all less-than-fair-value entries by such signatory producer/exporter that were
examined during the Department’s investigation.”).
Court No. 13-00148 Page 12
prevent the suppression or undercutting of price levels of domestic fresh tomatoes by imports of
that merchandise from Mexico.” 2013 Suspension Agreement, 78 Fed. Reg. at 14,968.
II. THE COURT’S OPINION IN TOMATO EXCHANGE I
In Tomato Exchange I, the court agreed with plaintiff that the Tomato Exchange was
“depriv[ed] . . . of procedural rights afforded to it by the suspension agreement statute” because
Commerce failed to make two of the three explanatory memoranda on the record regarding
extraordinary circumstances, price suppression, and the public interest (the “Explanatory
Memoranda”) 9 available until after it had entered into the 2013 Suspension Agreement. Tomato
Exchange I, 39 CIT at __, 107 F. Supp. 3d at 1354. Holding that Commerce’s failure to comply
with the statute’s notice, comment, and consultation requirements compelled remand, the court
directed the Department to reopen the record, afford plaintiff the opportunity to comment on
Commerce’s determinations in the Explanatory Memoranda, consult with plaintiff about the
comments if appropriate, and make any appropriate revisions to the agreement after giving
meaningful consideration to plaintiff’s arguments. Id. at __, 107 F. Supp. 3d at 1354-56.
III. THE REMAND RESULTS
On remand, Commerce invited interested parties to comment on the Explanatory
Memoranda in accordance with the court’s instructions in Tomato Exchange I. Remand Results
at 6. In response to a request by plaintiff, Commerce placed on the record the United States
9
The Explanatory Memoranda are: (1) the “Extraordinary Circumstances
Memorandum,” P.R. 4 at bar code 3413166-04 (Mar. 4, 2013); (2) the “Price Suppression
Memorandum,” P.R. 5 at bar code 3413166-05 (Apr. 18, 2013); and (3) the “Public Interest
Memorandum,” P.R. 3 at bar code 3413166-03 (Mar. 4, 2013).
Court No. 13-00148 Page 13
Department of Agriculture’s (“USDA”) Tomato Fax Report, which contained data for the 2008 –
2009, 2009 – 2010, and 2010 – 2011 growing seasons—data that Commerce had examined
previously in the Price Suppression Memorandum. See Remand Results at 6.
Commerce received comments on the Explanatory Memoranda from one domestic
interested party—plaintiff, the Tomato Exchange. Commerce also received comments from one
Mexican exporter based in the United States, and the Mexican signatories to the 2013
Suspension Agreement. Additionally, the Mexican signatories and the Tomato Exchange
requested consultations with Commerce. 10 See Remand Results at 6-7.
After these consultations, and having considered the parties’ comments on the
Explanatory Memoranda, Commerce produced a draft of the remand results and invited
comments. Upon consideration of comments received on the draft, Commerce concluded that the
2013 Suspension Agreement as previously drafted met the requirements of § 1673c(c) and (d)
and that no revisions to the agreement were necessary. See Remand Results at 7-8.
STANDARD OF REVIEW
“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).
10
There is no dispute that on remand Commerce complied with the notice,
comment, and consultation requirements of 19 U.S.C. § 1673c(e) in accordance with the court’s
order in Tomato Exchange I.
Court No. 13-00148 Page 14
DISCUSSION
Central to Commerce’s decision to enter into the 2013 Suspension Agreement were its
determinations that the agreement would (1) limit dumping, on an entry-by-entry basis, to no
more than 15 percent of the weighted-average dumping margins preliminarily determined during
the investigation; and (2) prevent price suppression or undercutting through the use of minimum
reference prices. Remand Results at 58, 41. For the reasons that follow, the court sustains the
Department’s determination that the 2013 Agreement would limit dumping to the level permitted
by statute, but remands for further explanation its determination that the agreement would
prevent price suppression or undercutting. Since Commerce’s price suppression determination
formed the basis of its “injurious effect” determination and, in part, its “extraordinary
circumstances” determination, Commerce’s explanation will necessarily affect those
determinations, too.
I. LIMITATION OF DUMPING IN ACCORDANCE WITH 19 U.S.C. § 1673C(C)(1)(B)
Commerce may enter into a subsection (c) agreement if it will limit dumping as provided
in 19 U.S.C. § 1673c(c)(1)(B). See 19 U.S.C. § 1673c(c)(1)(B) (stating, as a condition to
entering into a subsection (c) agreement, that “for each entry of each exporter the amount by
which the estimated normal value exceeds the export price (or the constructed export price) will
not exceed 15 percent” of the weighted average dumping margins determined in the
investigation). As the parties acknowledge, § 1673c(c) is silent as to the particular method that
Commerce must use to determine whether § 1673c(c)(1)(B) is satisfied. See Pl.’s Cmts. 7
(acknowledging that the statute does “not direct Commerce to use a particular method to
determine the level of dumping” under a subsection (c) agreement); Def.’s Resp. Cmts. 18
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(noting that “the statute is silent with respect to the method by which Commerce may [determine
whether § 1673c(c)(1)(B) is satisfied]”). This being the case, the court will uphold Commerce’s
method so long as it is “sufficiently reasonable” and consistent with congressional intent,
“giv[ing] due weight to the agency’s interpretation of the statute it administers . . . .” Ipsco, Inc.
v. United States, 899 F.2d 1192, 1194-95 (Fed. Cir. 1990) (internal quotation marks and citations
omitted); see also Parkdale Intern., Ltd. v. United States, 31 CIT 1229, 1245, 508 F. Supp. 2d
1338, 1355 (2007) (“Commerce has authority to fill gaps in a legislative scheme it is entrusted to
administer, even where Congress has not provided a direct statement delegating rulemaking
authority.” (citing Viraj Group v. United States, 476 F.3d 1349, 1357 (Fed. Cir. 2007)).
Here, Commerce determined that the 2013 Suspension Agreement satisfied the
requirements of § 1673c(c)(1)(B) by relying on a particular provision of the agreement—the
pledge made by the exporters:
In order to satisfy the requirements of [19 U.S.C. § 1673c(c)(1)(B)], each
signatory individually agrees that for each entry the amount by which the
estimated normal value exceeds the export price (or the constructed export price)
will not exceed 15 percent of the weighted average amount by which the
estimated normal value exceeded the export price (or the constructed export price)
for all less-than-fair-value entries of the producer/exporter examined during the
course of the investigation, in accordance with the Act and the Department’s
regulations and procedures, including but not limited to the calculation
methodologies described in Appendix B of this Agreement.
2013 Suspension Agreement, 78 Fed. Reg. at 14,969. When deciding to rely on the pledge
(rather than some other mechanism or standard), Commerce noted that an “extensive length of
time” had passed between Commerce’s 1996 antidumping investigation and the negotiation of
the 2013 Agreement, and the absence of contemporaneous information on the record regarding
whether Mexican tomato sales in the intervening years had complied with § 1673c(c)(1)(B):
The record does not include information regarding the level of dumping at which
subject merchandise sales were made in the year(s) prior to and around the time
Court No. 13-00148 Page 16
that negotiations regarding the 2013 Suspension Agreement occurred, and no such
evidence was submitted during this remand proceeding. As such, the Department
continues to find that an enforceable pledge by the signatory producers/exporters
to ensure that each and every one of their sales is made in accordance with [19
U.S.C. § 1673c(c)(1)(B)] is a reasonable basis to determine that the 2013
Suspension Agreement meets this statutory requirement.
Remand Results at 58-59.
In addition to relying on the pledge, Commerce cited various provisions under section IV
(Monitoring of the Agreement) and section V (Violations of the Agreement) of the 2013
Suspension Agreement that authorize the Department to monitor compliance by the signatories
with the limitation on dumping in § 1673c(c)(1)(B). See Remand Results at 59, 73-75.
Importantly, the Department also found that the absence of any evidence in the record of
dumping by the Mexican growers and exporters in excess of permitted levels under the 1996,
2002, and 2008 suspension agreements, which contained similar pledges, supported the
reasonableness of its reliance on the pledge in the 2013 Agreement. See Remand Results at 53
(“[T]here was no available evidence, including on the record of the 2008 Suspension Agreement,
indicating that the Mexican tomato growers/exporters made sales at prices exceeding the
permitted level of dumping . . . .”). Commerce further noted that no interested party has asked
the Department to continue its antidumping investigation, or perform an administrative review of
the 2013 Agreement (or any of the prior agreements) to determine whether sales of subject
merchandise were exceeding permissible dumping levels. See Remand Results at 53 (“[N]o
interested party ha[s] ever requested an administrative review of the prior agreements . . . to
determine whether sales of Mexican tomatoes were in compliance with [19 U.S.C.
§ 1673c(c)(1)(B)].”).
Despite acknowledging the statute’s silence on any particular method that Commerce
must apply to determine whether § 1673c(c)(1)(B) is satisfied, plaintiff insists that Commerce
Court No. 13-00148 Page 17
had a “duty to investigate” the level of dumping that would be eliminated by the 2013
Agreement. See Pl.’s Cmts. 4 (“Commerce has continued to refuse to make even a perfunctory
investigation into the level of dumping that will occur under the [2013] Suspension
Agreement.”), 6 (referring to Commerce’s “abdication of its duty to investigate”), 11-12
(referring Commerce’s “duty to investigate”). Plaintiff’s main argument is that Commerce
improperly delegated this duty to investigate to the Mexican signatories by relying on the pledge
in the 2013 Agreement. According to plaintiff, since “Commerce has collected no data to support
any determination on the level of dumping under the 2013 Suspension Agreement, . . . [the]
determination cannot be held to be supported by substantial evidence.” Pl.’s Cmts. 7.
The Tomato Exchange attempts to bolster its argument with case law. Specifically, it
relies on Timken Co. v. United States, 10 CIT 86, 630 F. Supp. 1327 (1986) as support for the
proposition that Commerce was required to collect data on whether the agreement would limit
dumping to permissible levels. Pl.’s Cmts. 12 (“‘The burden of ensuring such up-to-date review
should not rest upon a domestic party. Antidumping proceedings are investigatory, not
adjudicatory.’” (quoting Timken, 10 CIT at 92, 630 F. Supp. at 1333)). Plaintiff also cites this
Court’s decisions in Rhone-Poulenc, Inc. v. United States, 20 CIT 573, 927 F. Supp. 451 (1996)
and Weiland-Werke AG v. United States, 22 CIT 129, 4 F. Supp. 2d 1207 (1998), among others.
These cases, however, are not persuasive on the issue presented here. Timken does not
address Commerce’s obligations under § 1673c(c). Rather, Timken discusses Commerce’s
obligation to gather information in the context of a periodic review of an antidumping duty order.
Timken, 10 CIT at 92, 630 F. Supp. at 1333 (“The responsibility for making findings pursuant to
[19 U.S.C. § 1675 (1982), as amended] rests upon [Commerce].”). Likewise, Rhone-Poulenc
was a challenge to Commerce’s final affirmative dumping determination in a nonmarket
Court No. 13-00148 Page 18
economy case, and Weilend-Werke was a challenge to Commerce’s final decision not to revoke
an antidumping order in the context of a periodic review. In each of these cases, Commerce was
looking backward in time, at sales made during a particular period in the past, for use in
calculating dumping margins. The record in each of these cases, then, could be compiled using
facts already in existence.
By way of contrast, when determining whether 19 U.S.C. § 1673c(c)(1)(B) is satisfied,
Commerce’s perspective is forward-looking. This is borne out by the language of the statute,
which is put in the future tense. See 19 U.S.C. § 1673c(c)(1)(B) (“[T]he amount by which the
estimated normal value exceeds the export price . . . will not exceed 15 percent . . . .”) (emphasis
added); see also id. § 1673c(c)(1) (“[T]he agreement will eliminate completely the injurious
effect of exports to the United States . . . .”) (emphasis added); id. § 1673c(c)(1)(A) (“[T]he
suppression or undercutting of price levels of domestic products by imports of that merchandise
will be prevented . . . .”) (emphasis added). The facts about future dumping are, of course, not
known now. Thus, the reasoning found in the cases cited by plaintiff has no application here.
Further, it is difficult to credit plaintiff’s “duty to investigate” where the statute itself
provided a number of ways for interested parties to ask Commerce to investigate, once the 2013
Agreement had gone into effect and the facts of any dumping during its term could be
established; none of which the Tomato Exchange has availed itself of. As noted by Commerce,
neither the Tomato Exchange nor any other domestic interested party asked the Department to
continue its antidumping investigation, under 19 U.S.C. § 1673c(g), or conduct an annual
review, under 19 U.S.C. § 1675(a)(1)(C); nor has the Tomato Exchange petitioned the ITC to
review the suspension, under 19 U.S.C. § 1673c(h)(1). See Remand Results at 53.
Court No. 13-00148 Page 19
Because there is nothing in the law placing on Commerce a “duty to investigate,” and in
light of the history of earlier agreements, the availability of measures to monitor and enforce the
2013 Agreement, and the statute’s silence as to any particular method that Commerce must use
to determine whether a suspension agreement will limit dumping to the level permitted by
§ 1673c(c)(1)(B), the Department’s decision to rely on the exporters’ pledge in the 2013
Agreement is in accordance with law. That is, the method chosen by Commerce is “sufficiently
reasonable” and consistent with Congress’ intent that suspension agreements be used “as a
means of achieving the remedial purposes of the [antidumping] law in as short a time as possible
and with a minimum expenditure of resources by all parties involved.” H.R. Rep. No. 96-317, at
53; see also PPG Indus., Inc., 11 CIT at 355, 662 F. Supp. at 267 (“A separate investigation of
[each exporter] would have impermissibly expanded the scope and duration of the investigation
and violated congressional desire that suspension agreements lead to rapid resolution of the
issues.”). Moreover, in light of the exporters’ apparent compliance with earlier pledges coupled
with the lack of contemporaneous evidence in the record regarding dumping levels, the
Department’s decision is supported by substantial evidence. Accordingly, Commerce’s
conclusion that the agreement satisfied the requirements of 19 U.S.C. § 1673c(c)(1)(B) is
sustained.
II. PREVENTION OF PRICE SUPPRESSION OR UNDERCUTTING AND THE ELIMINATION OF
INJURIOUS EFFECT OF IMPORTS
Commerce may enter into a subsection (c) agreement if it determines that, under the
agreement, “the suppression or undercutting of price levels of domestic products by imports of
that merchandise will be prevented . . . .” 19 U.S.C. § 1673c(c)(1)(A). Neither “suppression” nor
“undercutting” is defined by the statute or Commerce’s regulations.
Court No. 13-00148 Page 20
In the absence of a statutory or regulatory definition, Commerce sought to interpret the
phrase “suppression or undercutting” in § 1673c(c)(1)(A). To do so, Commerce looked to the
statutes governing the ITC’s determinations of material injury and threat of material injury for
guidance. See 19 U.S.C. § 1677(7)(C) (material injury determination), § 1677(7)(F) (threat
determination). These statutes require the ITC to consider the effects of imports on U.S. prices
when making its injury determinations. Commerce analyzed the pertinent provisions of 19
U.S.C. § 1677(7) in the Price Suppression Memorandum to arrive at a definition of “suppression
or undercutting”:
[I]n developing a reasonable definition of price suppression or undercutting, it is
instructive to examine [19 U.S.C. § 1677(7)], which references price suppression
and undercutting[11] in setting out the procedures that the [ITC] must follow in
making its material injury determinations.
Section [1677(7)(C)] directs the ITC to consider various factors when determining
whether a domestic industry is materially injured by imports of merchandise
subject to investigation, among which is price:
(ii) Price -- In evaluating the effect of imports of such merchandise on
prices, the {ITC} shall consider whether --
(I) there has been significant price underselling by the
imported merchandise as compared with the price of like
products of the United States, and
11
The term “undercutting” is not found in the material injury or threat provisions of
19 U.S.C. § 1677(7). However, the term “underselling,” does appear in the material injury
provision. See 19 U.S.C. § 1677(7)(C)(ii)(I) (“In evaluating the effect of imports of [subject]
merchandise on prices, the Commission shall consider whether . . . there has been significant
price underselling by the imported merchandise as compared with the price of domestic like
products of the United States . . . .”). The dictionary definitions of “undercutting” and
“underselling” indicate these words have similar meanings. Compare THE AMERICAN HERITAGE
DICTIONARY OF THE ENGLISH LANGUAGE 1945 (3d ed. 1996) (defining “undercut” as “[t]o sell at
a lower price than . . . a competitor . . .”), with id. at 1947 (defining “undersell” as “[t]o sell
goods at a lower price than . . . another seller . . .”). While Commerce does not offer its own
interpretation of “undercutting,” as it appears in § 1673c(c)(1)(A), it seems to use the terms
“undercutting” and “underselling” interchangeably. See Price Suppression Memorandum at 2-3.
Court No. 13-00148 Page 21
(II) the effect of imports of such merchandise otherwise
depresses prices to a significant degree or prevents price
increases, which otherwise would have occurred, to a
significant degree.
Similarly, when the ITC analyzes the threat of material injury, it considers, among
other factors, “whether imports of the subject merchandise are entering {the
United States} at prices that are likely to have a significant depressing or
suppressing effect on domestic prices, and are likely to increase demand for
further imports . . . .” See [19 U.S.C. § 1677(7)(F)(i)(IV)].
Assuming that subsections [1677(7)(C)(ii) and 1677(7)(F)(i)(IV)] were intended
to be parallel, a comparison of the phrase “depressing or suppressing” in
subsection [1677(7)(F)(i)(IV)] to “depresses prices . . . or prevents price increases
which otherwise would have occurred” in subsection [1677(7)(C)(ii)(II)] indicates
that price “suppression” generally encompasses practices and impacts which
prevent price increases which otherwise would have occurred. The legislative
history to section [1677(7)(C)] supports such an interpretation. The Senate
Report, for example, states that the ITC “would consider whether there has been
significant price undercutting . . . and whether such imports have depressed or
suppressed such prices to a significant degree.” S. Rep. 96-249 at 87, reprinted in
1979 U.S.C.C.A.N. 381, 473 (1979).
Assuming that a reasonable interpretation of the term “suppression” in section
[1673c(c)] is the “prevent{ion of} price increases which otherwise would have
occurred,” the Department may enter into a [subsection (c) agreement] if it
determines, inter alia, that imports of the subject merchandise allowed under the
agreement will not prevent price increases, or undercut price levels of the
affected domestic products.
Price Suppression Memorandum at 2-3 (underscoring and braces in original; italics and brackets
added).
Applying this rationale, Commerce concluded that the reference prices in the 2013
Suspension Agreement would prevent the suppression or undercutting of domestic U.S. tomato
prices by imports of Mexican tomatoes and thereby eliminate the injurious effect of those
imports. See Remand Results at 30 (determining that the 2013 Suspension Agreement
“eliminates injurious effects [of imports] because . . . the [agreement’s] reference prices
Court No. 13-00148 Page 22
eliminate price suppression or undercutting”). Commerce based this conclusion on information
in the USDA’s Tomato Fax Report.
With the Tomato Fax Report as a reference, the Department first considered the relative
pricing structure of the four tomato categories covered by the 2013 Suspension Agreement:
(1) open field and adapted environment, other than specialty (“open field”); (2) controlled
environment, other than specialty; (3) specialty—loose; and (4) specialty—packed. In doing so,
Commerce examined Mexican and U.S. prices for each category during the 2008 – 2012 winter
seasons and observed that “open field tomatoes were consistently priced below other tomatoes,
and that packed specialty tomatoes were higher-priced than loose specialty tomatoes . . . in all
years analyzed . . . and through all the price variations that characterize this market.” Price
Suppression Memorandum at 3. Thus, Commerce found that “elimination and prevention of
price suppression within the meaning of [19 U.S.C. § 1673c(c)(1)(A)] require[d] that the entire
relative price structure be raised to a sufficiently high level” to prevent price suppression. Price
Suppression Memorandum at 4. Since the relative price structure was “reasonably stable and
[gave] rise to a consistent rank ordering of the prices for open field and adapted environment,
controlled environment, specialty loose and specialty packed tomatoes,” Commerce determined
that “raising the structure . . . to a sufficiently high level require[d] only that the lowest price in
the structure [i.e., the winter reference price for open field tomatoes] be raised to a sufficiently
high level.” Price Suppression Memorandum at 4. In other words, for Commerce, it had only to
establish a “sufficiently high” winter reference price for open field tomatoes, based on which it
would then calculate reference prices for each of the other three tomato categories.
Next, to construct a price for open field tomatoes that would be at a “sufficiently high”
level, Commerce examined pricing data for U.S. and Mexican tomatoes sold in the United States
Court No. 13-00148 Page 23
during the winter seasons of 2008 – 2012—years when the 2008 suspension agreement was in
effect. Commerce found that “relative to the other years, the average winter season prices for all
tomato types reported in the Tomato Fax Report were at their lowest during the 2011 – 2012
winter season.” Price Suppression Memorandum at 4 (emphasis added). Additionally,
Commerce found that during the 2011 – 2012 winter season, which ran from October 2011 –
June 2012, “the prices for open field tomatoes were at the minimum reference price for sustained
periods of time,” (i.e., the reference price found in the 2008 suspension agreement of $0.2169 per
pound) and that, as a result, U.S. tomato prices were suppressed. See Price Suppression
Memorandum at 4; Remand Results at 43.
The Price Suppression Memorandum illustrates average open field tomato prices during
the 2011 – 2012 winter season in U.S. dollars per pound as follows:
Price Suppression Memorandum, Attach. Based on this price information, Commerce found
that the average daily prices for Mexican open field tomatoes were lower than the
average daily prices for U.S. open field tomatoes during the 2011 – 2012 winter
season. The simple daily average price for the 2011 – 2012 winter season was
$0.3008 per pound for Mexican tomatoes and $0.3387 per pound for U.S.
tomatoes . . . .
Court No. 13-00148 Page 24
Price Suppression Memorandum at 5. Thus, Commerce concluded:
In light of the sustained pricing of open field tomatoes at the minimum reference
price and the price suppressive effects of such pricing, we chose the 2011 – 2012
winter season as the period for which to determine reference prices that
adequately prevent price suppression or undercutting.
Price Suppression Memorandum at 5. In other words, Commerce chose the 2011 – 2012 winter
season because it was a period when tomato prices from both Mexico and the United States were
at their lowest for sustained periods, and when Mexican tomatoes were sold at lower prices than
U.S. tomatoes. The Department then determined, as a new base reference price, one that would
have “adequately” prevented suppression or undercutting during the 2011 – 2012 winter season.
By way of explanation, Commerce stated that it sought to find a reference price for the
lowest price tomatoes (open field) that would achieve a “closer correlation” between Mexican
and U.S. prices:
[W]e examined the calculation of the simple average of the Mexican import prices
for open field tomatoes for the season to determine the price to which the lowest
Mexican prices would need to rise to bring about a closer correlation between
Mexican and U.S. prices. We found that we could achieve that correlation if the
lowest Mexican daily prices were raised to $0.31 per pound. Specifically, in those
instances where the average Mexican import price for a particular day was less
than $0.31, we set the Mexican import price to $0.31. Using the minimum price of
$0.31, we then recalculated the simple average Mexican price for the season. We
found that the simple average of the Mexican daily prices using the $0.31 per
pound minimum price resulted in a simple average of daily prices of $0.3473 per
pound.
Price Suppression Memorandum at 5 (emphasis added). Applying its rationale that it may enter
into a subsection (c) agreement “if it determines, inter alia, that imports of the subject
merchandise allowed under the agreement will not prevent price increases, or undercut price
levels of the affected domestic products,” Commerce then “determined that price suppression or
undercutting of prices for U.S. open field tomatoes . . . would have been prevented in the 2011 –
2012 winter season at a reference price of $0.31 per pound.” Price Suppression Memorandum
Court No. 13-00148 Page 25
at 3, 5; see also Remand Results at 45. The new reference price of $0.31 per pound for open field
tomatoes set the floor for the winter and summer reference prices of the other categories of
tomatoes covered by the agreement. 12 See Price Suppression Memorandum at 5; Remand Results
at 35 (setting out winter reference prices for controlled environment, specialty loose tomatoes,
and specialty packed tomatoes at $0.41 per pound, $0.45 per pound, and $0.59 per pound,
respectively).
Plaintiff does not challenge Commerce’s interpretation of the term “suppression” in
§ 1673c(c)(1)(A), i.e., the “prevent[ion of] price increases which otherwise would have
occurred.” Price Suppression Memorandum at 3. Nor does there appear to be any dispute
regarding the meaning of the term “undercutting,” i.e., the selling of imports at lower prices than
the domestic like product. Rather, plaintiff argues that Commerce’s conclusion that the new
reference price of $0.31 per pound would prevent price suppression is unsupported by substantial
evidence because Commerce unreasonably used the suppressed prices of the 2011 – 2012 winter
season to determine the sufficiency of the reference price. See Pl.’s Mem. Supp. Mot. J. Agency
R., ECF No. 30, 35 (“Commerce[] . . . only addresses how adherence to the 2013 reference price
would have raised import prices in the 2011-12 ‘winter’ season to a point where, on average,
they would no longer have undercut U.S. prices. Even accepting, arguendo, that this sufficiently
addresses the prevention of price undercutting, Commerce’s reasoning does not at all support a
12
Commerce determined summer reference prices for each category of tomato “by
applying the price differential between the summer and winter reference prices in the 2008
Suspension Agreement – 79.29 percent – to winter reference prices it had determined [for] each
category.” Remand Results at 35 (setting out summer reference prices of $0.2458 per pound for
open field and adapted environment tomatoes, other than specialty; $0.3251 per pound for
controlled environment tomatoes, other than specialty; $0.3568 per pound for specialty loose
tomatoes; and $0.4679 per pound for specialty packed tomatoes).
Court No. 13-00148 Page 26
conclusion that price suppression will be prevented.”). Put another way, plaintiff insists that the
price for U.S. tomatoes, used as the point of comparison with the Mexican prices, was itself
depressed. For plaintiff, Commerce’s determination that $0.31 per pound was a sufficiently high
reference price because it would have raised the average Mexican tomato price to $0.3473 per
pound, and therefore have permitted the price of U.S. tomatoes to rise from $0.3387 per pound to
the Mexican level, would not prevent future price suppression. Rather, it would merely raise the
price of Mexican tomatoes to a higher, but still low, price—a price that would not permit U.S.
producers to raise their prices to unsuppressed levels. See Pl.’s Cmts. 19 (“By setting a reference
price not intended to increase average seasons prices beyond that highly injurious 2011-2012
season average price, but instead specifically calculated to raise price levels only to that point,
Commerce not only failed to prevent price suppression with the 2013 Suspension Agreement, but
also failed to assure the Agreement performed the fundamental function of a [subsection (c)]
agreement: to eliminate injurious effect.”).
As an initial matter, the court finds reasonable the method used by Commerce to establish
a relative pricing structure for the four categories of tomatoes covered by the 2013 Agreement.
That is, using information from the Tomato Fax Report to establish what Mexican and U.S.
prices were during a particular period and then calculating a floor price that would permit U.S.
producers to raise their prices was reasonable. The court also finds reasonable the method used
by Commerce to calculate a base reference price high enough to prevent price suppression or
undercutting. Specifically, the court finds that raising the lowest price in the relative pricing
structure enough to achieve a “closer correlation” between average U.S. and Mexican prices for
all categories of tomatoes covered by the agreement was reasonable.
Court No. 13-00148 Page 27
The court agrees with plaintiff, however, that Commerce has failed to support with
substantial evidence its determination that suppression or undercutting of U.S. price levels would
be prevented by the 2013 Suspension Agreement. That is, it is difficult to understand how
Commerce reasonably could have concluded that the new base reference price would have been
sufficiently high to prevent price suppression or undercutting based on the evidence on which it
relied. The determination of whether the $0.31 per pound price was sufficiently high was based
on a comparison of what the average daily price of Mexican tomatoes would have been if sales
were made at $0.31 (i.e., $0.3473 per pound) with low U.S. prices.
Although not required to do so, Commerce chose to look retrospectively to determine a
new reference price. The chosen period, the 2011 – 2012 winter season, was especially
challenging for the domestic industry. It was a season that, according to plaintiff, led to an
attempt by the domestic industry to withdraw its petition, terminate the investigation, and
terminate the 2008 suspension agreement. Pl.’s Cmts. 18 (“Due to the financial ruin of the
2011-2012 season domestic producers sought to terminate the investigation entirely as it no
longer offered them protection from unfairly traded imports.”). Indeed, Commerce itself stated
that in the winter season of 2011 – 2012 Mexican tomato prices were at the minimum reference
price for prolonged periods, relative to other years, which suppressed U.S. prices. See Remand
Results at 43.
Commerce’s entire explanation for why it chose the 2011 – 2012 winter season is as
follows:
As explained in the Price Suppression Memo, the Department determined the
prices for open field tomatoes were at the 2008 Suspension Agreement winter
reference price ($0.2169/lb.) for sustained periods of time during the 2011 – 2012
winter season, and that this had price suppressive effects in the U.S. tomato
market. While sales made at the reference price are made in accordance with the
terms of a [subsection (c) agreement], we find that it is sustained periods of sales
Court No. 13-00148 Page 28
at the reference price that can cause price suppression, as occurred in the 2011 –
2012 winter season. In a typical season there are periods when [sales] are made at
the reference price, however usually sales are not made at the reference price for
prolonged periods of time. When [sales] are made at the reference price over a
significant period of time price increases may be less likely and may lead to
suppressed prices. This can clearly be seen by examining Tomato Fax Report
data. For example, from March 22, 2012 through May 10, 2012, the average daily
price of imports from Mexico was at or close to the then-current reference price of
$0.2169/lb. and all of those imports were at or below the current reference price
of $0.31/lb. The average price of imported Mexican tomatoes in April 2012 was
$0.227/lb. In contrast, while some sales were made at or below the reference price
during the same period of the 2009 – 2011 winter seasons, sales at the reference
price were not made for sustained periods of time. The average prices of Mexican
imports in April of those seasons were also markedly higher; in April 2010 the
average price of Mexican imports was $0.5247/lb. and in April 2011 they were
$0.95/lb. In all years we examined, sales were made at various points at the
reference price in effect at the time, however, the Department determined that it
was the prolonged periods of sales at the reference price that suppressed prices.
The price-suppressive pressure felt by the entire domestic tomato industry
culminated in the domestic producers’ request to withdraw the petition and
terminate the suspended investigation.
Remand Results at 43-44 (emphasis in original). This explanation falls short of supporting
Commerce’s determination that “[the 2013 Agreement’s] references prices eliminate price
suppression or undercutting” in the following respects. Remand Results at 30.
First, Commerce seems to believe, based on its observations that (1) Mexican prices were
at or near the 2008 reference price ($0.2169 per pound) for sustained periods during the 2011 –
2012 winter season, (2) during the same period, U.S. prices were at their lowest for the period
examined, and (3) U.S. prices necessarily were suppressed during the 2011 – 2012 winter season.
However, merely observing Mexican prices at the 2008 reference level and low U.S. prices does
not constitute an explanation. That is, observations do not constitute reasons. At best
Commerce’s explanation, and the evidence that supports it, merely demonstrates that, in a very
bad year, U.S. growers would not have been prevented from raising their prices had the reference
price been $0.31 per pound. Therefore, there is nothing in the explanation that would tend to
Court No. 13-00148 Page 29
demonstrate that the U.S. prices, were they to rise to the hypothetical Mexican price ($0.3473 per
pound), would not be suppressed or that there would not be undercutting during the term of the
2013 Suspension Agreement.
Second, Commerce does not offer an explanation as to how setting a reference price that
would result in average U.S. prices being only marginally higher than concededly low average
U.S. suppressed prices achieves the statutory goal of preventing price suppression or
undercutting. 19 U.S.C. § 1673c(c)(1)(A). In particular, Commerce does not cite to substantial
evidence tending to demonstrate that prices calculated using, as a point of comparison, a growing
season of low prices would prevent price suppression or undercutting going forward.
Finally, Commerce does not say why prices were not suppressed during the other winter
seasons. In other words, Commerce does not marshal evidence that says why the 2011 – 2012
winter season was a superior choice as a point of comparison than the winter seasons of other
years or a combination of years.
Accordingly, remand is appropriate so that Commerce may explain, in accordance with
this Opinion and Order, its determination that suppression or undercutting of U.S. tomato prices
will be prevented under the 2013 Agreement and support its redetermination on remand with
substantial record evidence. In doing so, Commerce may wish to take a page from the ITC’s
preliminary injury determination. There, the ITC considered U.S. and Mexican monthly average
prices and margins of overselling and underselling spanning a three-year period when
preliminarily determining the price effects of subject imports. See ITC Prelim. Injury
Determination at 29 (citing Part V (pricing data covered the period January 1993 – February
1996)).
Court No. 13-00148 Page 30
CONCLUSION
Based on the foregoing, it is hereby
ORDERED that Commerce’s Remand Results are remanded; it is further
ORDERED that, on remand, Commerce shall issue a redetermination that complies in all
respects with this Opinion and Order, is based on determinations that are supported by
substantial record evidence, and is in all respects in accordance with law; it is further
ORDERED that, on remand, should Commerce continue to find that sustained periods of
sales of Mexican tomatoes at or near the 2008 reference price ($0.2169 per pound) supports its
decision to choose the 2011 – 2012 winter season as the time period to compare Mexican and
U.S. prices, Commerce must cite substantial record evidence demonstrating that U.S. prices,
were they to rise to the hypothetical Mexican price ($0.3473 per pound), would not be
suppressed or that there would not be undercutting during the term of the 2013 Suspension
Agreement; it is further
ORDERED that, on remand, Commerce must cite to substantial evidence tending to
demonstrate that prices calculated using as a point of comparison a growing season of low prices
would prevent price suppression or undercutting during the course of the 2013 Suspension
Agreement in order to explain how setting a reference price that is marginally higher than an
average U.S. suppressed price achieves the statutory goal of preventing price suppression or
undercutting; it is further
ORDERED that, on remand, Commerce must examine whether prices were not
suppressed during the other winter seasons. That is, Commerce must cite substantial evidence
demonstrating why the 2011 – 2012 winter season was superior to the winter seasons of other
years or a combination of years; it is further
Court No. 13-00148 Page 31
ORDERED that, on remand, Commerce must support with substantial evidence its
conclusion that the reference price will prevent suppression or undercutting and, thereby,
“eliminate completely the injurious effect of exports to the United States” of Mexican tomatoes,
pursuant to 19 U.S.C. § 1673c(c)(1). In doing so, Commerce may wish to take into consideration
the ITC’s preliminary injury determination, in which the ITC considered U.S. and Mexican
monthly average prices and margins of overselling and underselling spanning a three-year period
when determining the price effects of subject imports; it is further
ORDERED that, on remand, Commerce is directed to reconsider, in light of its
determinations with respect to price suppression and injurious effect, its determination that
“suspension of [the] investigation will be more beneficial to the domestic industry than
continuation of the investigation,” pursuant to 19 U.S.C. § 1673c(c)(2)(A)(i); it is further
ORDERED that Commerce may reopen the record to solicit additional information
required to make these determinations or otherwise complete its analysis; and it is further
ORDERED that the remand results shall be due ninety (90) days from the date of this
Opinion and Order; comments to the remand results shall be due thirty (30) days following filing
of the remand results; and replies to such comments shall be due thirty (30) days following filing
of the comments.
/s/ Richard K. Eaton
Richard K. Eaton, Judge
Dated: August 25, 2017
New York, New York