Xi'an Metals & Minerals Import & Export Co. v. United States , 256 F. Supp. 3d 1346 ( 2017 )

Slip Op. 17 - 120
UNITED STATES COURT OF INTERNATIONAL TRADE
- - - - - - - - - - - - - - - - - - - - x Senior Judge Aquilino
XI’AN METALS & MINERALS IMPORT & EXPORT :
CO., LTD.,
Plaintiff, :
-and- :
THE STANLEY WORKS (LANGFANG) FASTENING :
SYSTEMS CO., LTD. and STANLEY BLACK AND
DECKER, INC., :
Consolidated-Plaintiffs, : Consolidated
Court No. 15-00109
v. :
UNITED STATES, :
Defendant,
-and- :
MID CONTINENT STEEL & WIRE, INC., :
Intervenor-Defendant. :
- - - - - - - - - - - - - - - - - - - - x
Opinion & Order
[Plaintiff motions for judgment on the agency record,
contesting surrogate-value determinations based thereon,
granted in part; remanded to the International Trade
Administration.]
Dated: September 6, 2017
Gregory S. Menegaz, J. Kevin Horgan, Alexandra H. Salzman, and
John J. Kenkel, deKieffer & Horgan, PLLC, Washington, D.C., for the
plaintiff.
Lawrence J. Bogard and Peter J. Bogard, Neville Peterson LLP,
Washington, D.C., for the consolidated-plaintiffs.
Sosun Bae, Trial Attorney, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice, Washington, D.C., for the
defendant. Also on the papers Benjamin C. Mizer, Principal Deputy
Assistant Attorney General, Jeanne E. Davidson, Director, and
Consol. Court No. 15-00109 Page 2
Patricia M. McCarthy, Assistant Director; Zachary Simmons,
Attorney, Office of the Chief Counsel for Trade Enforcement &
Compliance, U.S. Department of Commerce, of counsel.
Adam H. Gordon and Ping Gong, The Bristol Group PLLC,
Washington, D.C., for the intervenor-defendant.
AQUILINO, Senior Judge: At bar are consolidated
complaints invoking 19 U.S.C. §§ 1516a(a)(2)(A)(i)(I) and (B)(iii)
and 28 U.S.C. §1581¥c¦ jurisdiction over the final results of the
fifth administrative review (“AR5”) of its antidumping-duty order
covering certain steel nails from the People’s Republic of China
(“PRC”) published by the U.S. Department of Commerce, International
Trade Administration (“ITA”) sub nom. Certain Steel Nails from the
PRC, 80 Fed.Reg. 18816 (April 8, 2015), PDoc 294. See accompanying
final issues and decision memorandum (“IDM”), PDoc 276, covering
the period of August 1, 2012 through July 31, 2013.
Moving for judgment on the resultant administrative
record of AR5, plaintiff Xi’an Metals & Minerals Import & Export
Co., Ltd. raises four issues: (1) the suitability of Thailand as
the primary surrogate country, (2) valuation of its
brokerage/handling (“B&H”) and freight costs, (3) adjustment of the
weight denominator used in calculating its inland freight and B&H
costs, and (4) double counting of SG&A (selling, general, and
administrative) labor expenses in the labor rate used.
Consol. Court No. 15-00109 Page 3
Also moving for judgment pursuant to USCIT Rule 56.2,
consolidated-plaintiffs The Stanley Works (Langfang) Fastening
Systems Co., Ltd. and Stanley Black & Decker, Inc. press one minor
issue and a much broader matter for relief: (5) correction of a
“transcription error” in their factors-of-production (“FOP”)
database and (6) various challenges to ITA’s “differential pricing”
analysis.
Judicial review of AR5 is governed by the applicable law
and by the substantial evidence of record, which has long been
defined as “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” Consol. Edison Co. v.
NLRB, 305 U.S. 197, 229 (1938). See 19 U.S.C. §1516a(b)(l)(B)(i).
I
The antidumping-duty statute requires the ITA to seek
surrogate values (“SVs”) for the factors of production for subject
merchandise produced in or exported from a non-market economy
(“NME”) country. 19 U.S.C. §1677b(c)(1). The agency selected
Xi’an Metals and the Stanley firms as AR5’s mandatory respondents.
It sent antidumping questionnaires to them, to which they responded
in a timely manner. ITA circulated a letter to interested parties
inviting comments on surrogate country selection and SV data, to
which it received comments and rebuttal comments. It thereafter
Consol. Court No. 15-00109 Page 4
issued supplemental questionnaires to which Xi’an Metals and
Stanley also timely responded.
ITA published notice of the preliminary results of AR5
sub nom. Certain Steel Nails from the People’s Republic of China,
79 Fed.Reg. 58744 (Sept. 30, 2014), PDoc 304. See accompanying
preliminary decision memorandum (“PDM”), PDoc 224. Employing its
differential pricing analysis, the agency preliminarily calculated
a weighted-average dumping margin of 6.69 percent for Stanley and
72.40 percent for Xi’an Metals. As part of its analysis, ITA
concluded that there was a pattern of export prices for comparable
merchandise that differed significantly among purchasers, regions,
or time periods. See id. at 17-18. For Stanley, it found that the
average-to-average (“A-A”) methodology did not appropriately
account for such differences and applied the average-to-transaction
(“A-T”) methodology to some Stanley U.S. sales and applied A-A to
its other United States sales (reflecting a “mixed” alternative
methodology). See id. For Xi’an Metals, ITA concluded that the A-A
methodology appropriately accounted for such differences and
applied it to calculate that firm’s weighted-average dumping
margin. See id. at 18. The agency also selected Thailand as the
primary surrogate country for FOP valuation and surrogate financial
ratios in constructing normal value. See PDoc 226.
Consol. Court No. 15-00109 Page 5
During the course of its verification of the Stanley
United States sales database and FOP, ITA accepted minor
corrections that were brought to its attention. In February 2015,
the agency requested that Stanley submit new sales and FOP
databases to reflect the corrections that were revealed during
verification. PDoc 257. Stanley did so timely. Whereafter ITA
disclosed to the parties its calculations for AR5. On April 7,
2015, ITA received a ministerial error allegation from Stanley that
urged the agency to correct a transcription error that Stanley had
made in its revised FOP database. ITA declined to do so.
The AR5 final results were published the next day. Based
on the differential pricing analysis and the use of Thai SV data,
ITA calculated a weighted-average dumping margin of 13.19 percent
for Stanley and 72.52 percent for Xi’an Metals. In those results,
the agency used the consolidated customer code (field CCUSCODU) in
the Stanley margin program after determining that the use of
individual customer codes (field CUSCODU) for the Preliminary
Results had been erroneous. See IDM at 45-46. This correction
altered the results of the differential pricing analysis, leading
ITA to apply the A-T methodology to all of the Stanley U.S. sales.
Consol. Court No. 15-00109 Page 6
II
For its AR5 final results, ITA continued to select
Thailand as the primary surrogate country. Plaintiff Xi’an argues
the substantial evidence of record shows that that country is
unsuitable as a surrogate in this case, that the Thai steel wire
rod values are aberrant, and that either the Philippines or Ukraine
is a superior primary surrogate country for valuing FOP.
A
Plaintiff Xi’an argues reports compiled by the U.S. Trade
Representative in 2011, 2012 and 2013, the U.S. Department of
Commerce, and FedEx International Resource Center all constitute
substantial evidence of record showing that Thai customs officials
routinely manipulate the entered values of imported merchandise,
that such manipulation is pervasive across all sectors, and that
therefore the Thai import data are tainted. Plaintiff Xi’an
further argues that the average Thai import price for steel wire
rod (“SWR”) during the POR of $916 per metric ton is not only the
highest SWR price of record but exceeds “by far” the benchmarks it
provided therefor. Xi’an’s benchmarks included SWR data from the
World Bank Global Economic Monitor (“GEM”), world steel prices
published by MEPS (International) Ltd., MEPS Asian Market SWR
prices, official Thai domestic steel prices, SWR prices for Thai
Consol. Court No. 15-00109 Page 7
domestic and export sales from TATA Steel, “UN Comtrade” (i.e.,
United Nations International Trade Statistics Database) import
prices for other countries at a comparable level of economic
development as the PRC (including the Philippines and Ukraine), and
world market prices published by Asian Metal and Metal Expert.
The AR5 final results explain that, in order to value an
input accurately, ITA examines all relevant price information on
the record, including any appropriate benchmark data; that in any
given case the agency’s current practice is to examine available
import data for potential surrogate countries and/or data from the
same HTS category for the surrogate country over multiple years to
determine if the current data appear aberrational compared to
historical values; and that the existence of higher prices alone is
not a sufficient basis for concluding that the price data for a
particular SV are distorted or misrepresentative. On the record
for AR5, ITA concluded that none of the datasets suggested by Xi’an
Metals serve as reliable benchmark data to determine whether Thai
wire rod import data are aberrational1, and that Xi-an Metals’ HTS
1
Specifically, ITA concluded: that the World Bank GEM data
on the record are unclear as to which countries (which could
include NME countries) were used to calculate the steel rod prices,
but more critically do not make any distinction for carbon content,
(continued...)
Consol. Court No. 15-00109 Page 8
data analysis, submitted to support concluding that the Thai import
data for SWR are distorted and should be disregarded because they
are higher than export prices, does not permit “an appropriate
comparison in order to determine if the data [are] aberrational”
because Xi’an’s analysis is at the six-digit HTS level and “does
not include any of the 11-digit HTS categories used to value wire
rod at the Preliminary Results”. IDM at 16.
Plaintiff Xi’an contends defendant’s reasoning conflates
the use of such benchmarks to evaluate the suitability of the
average Thai import price with using such benchmarks as SVs in
their own right; that the defensive responses2 of it and the
intervenor-defendant do nothing to dispel such “serious
1
(...continued)
which is one of the most important physical characteristics of that
input; that the “MEPS data suffer[ ] from similar deficiencies” in
that none of the countries covered thereby are at the same level of
economic development as the PRC nor do the data distinguish carbon
content; and that none of the countries covered by the Asia Metal
Market prices are potential surrogate countries meeting ITA’s
surrogate country criteria. See IDM at 15-16.
2
To wit: that the reports cited by Xi’an Metals refer only
to general concerns about certain practices by Thailand’s Customs
Department and fail to address the specific raw material inputs
consumed by respondents in this case; that the Thai SWR import
values on which ITA relied cannot be concluded aberrant, as the
existence of higher prices alone does not necessarily indicate that
price data are distorted or misrepresentative; and that Xi’an
Metals fails to identify record evidence that materially undermines
the integrity of the SWR values upon which ITA relied.
Consol. Court No. 15-00109 Page 9
deficiencies” in ITA’s choice of Thailand as the primary surrogate
country; that because the defendant and ITA acknowledge that Thai
customs officials arbitrarily increase some import values the
record evidence provides reason to believe or suspect that the
import values of the inputs used as SVs for Xi-an Metals’ inputs
were manipulated; and that defendant’s claim that the agency
“believe or suspect” analysis “hinges on specific and objective
evidence on which [ITA] would rely in determining that a country’s
surrogate value data were unreliable” is not supported in practice.
Assuming the correctness of its foregoing position,
plaintiff Xi’an argues that either the Philippines or Ukraine is
superior to Thailand as a primary surrogate country in this case
since the data for neither are tainted by manipulation of entered
values for imported merchandise. The plaintiff contends the
Ukrainian SWR prices from Metal Expert in particular are more
specific than the Thai values as to the diameters of the SWR, and
ITA has used that source for SWR in past reviews. And plaintiff
Xi’an complains that the defendant does not back up its “fall back”
argument that ITA “is not required to consider or give weight to
any particular criteria in determining what constitutes the best
available information on the record” for SVs with reference to
substantial evidence when the agency emphasizes certain criteria
Consol. Court No. 15-00109 Page 10
and “completely ignores” other data quality criteria. XM Reply at
9, referencing Gerald Metals, Inc. v. United States, 132 F.3d 716,
720 (Fed.Cir. 1997) (substantial evidence standard “requires more
than mere assertion of ‘evidence which in and of itself justified
[the . . . determination], without taking into account
contradictory evidence or evidence from which conflicting
inferences would be drawn’”, quoting Universal Camera Corp. v.
NLRB, 340 U.S. 474, 487 (1951)).
The question, as always, is whether substantial evidence
of record supports ITA determination(s). This court is unpersuaded
herein that it does not, or that the agency has not considered all
available evidence. Defendant’s logic is weak at points3, but
ITA’s determination has substantial support on the record, and in
toto, plaintiff Xi-an essentially asks for substitution of judgment
for that of the agency, a request in conflict with the teaching of
Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 619-20 (1966). See,
3
Plaintiff Xi’an argues, for example, that defendant’s
contention that Ukraine’s Metal Expert prices are unusable because
they do not satisfy ITA’s criteria of being exclusive of taxes and
duties is disingenuous when the defendant states in a previous
sentence that the Metal Expert prices are actual transactions that
include 20% VAT and a 4% mark-up charged to intermediate traders
who buy the material from domestic producers and sell to
warehouses, and the calculation of the price free of such taxes and
duties is a simple mathematical computation which ITA has performed
in the past.
Consol. Court No. 15-00109 Page 11
e.g., Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927,
933 (Fed.Cir. 1984) (“the possibility of drawing two inconsistent
conclusions from the same evidence does not prevent an
administrative agency’s finding from being supported by substantial
evidence”) (quoting same). Cf. Elkay Manufacturing Co. v. United
States, 40 CIT ___, ___, 180 F. Supp. 3d 1245, 1255 (2016) (“record
evidence of manipulation of [Thai] customs values does not rise to
such a level that [ITA] was left with no choice but to foreclose
any use of Thai import data to determine [an SV] for a production
input”), appeal filed, No. 16-2637 (Fed.Cir. Sept. 14, 2016).
B
Plaintiff Xi’an also argues that a military coup in
Thailand should have triggered a “reason to believe or suspect”
standard of pricing distortion in that country’s economy. It
placed 43 pages of articles on the record detailing the massive
political unrest and protests that rocked Thailand between 2011 and
2014, culminating in military-controlled government. The review
period (“POR”) at issue in this appeal is August 1, 2012 through
July 31, 2013. The plaintiff claims the materials covering
Thailand’s political and economic turbulence attest that the 2011
elections were never accepted as legitimate, that the military coup
was an undemocratic and complete takeover of the country, and that
Consol. Court No. 15-00109 Page 12
it was reasonable to conclude that a free-market economy could not
properly function in the absence of the free flow of information or
impartial rule of law. Plaintiff Xi’an argues the issue should be
remanded for ITA to explain how the military coup does not meet the
lenient “reason to believe or suspect” standard, because it is
counter-intuitive, if not hypocritical, that the agency would
reject the PRC economy based on state control but then select the
an alternative country under military dominance as the
“free-market” surrogate for the PRC where “better” alternative
countries were presented on the record for which no such
distortions were alleged.
The burden is on the plaintiff, however, to provide for
the record evidence to support its argument. The AR5 final results
explain ITA’s
disagree[ment] with Xi’[a]n Metals’ argument that the
Thai military coup renders Thai import data to be
unrepresentative and unreliable. . . . [I]t is the
Department’s practice to focus on several criteria,
including whether the SV data are contemporaneous,
publicly available, tax and duty exclusive,
representative of a broad market average, and specific.
Xi’[a]n Metals has neither provided any evidence on the
record as to why the military coup affects the criteria
considered by the Department nor how specific inputs are
affected.
IDM at 13.
Consol. Court No. 15-00109 Page 13
Plaintiff Xi’an’s arguments here do not persuade as to
the incorrectness of ITA’s position on the subject. See, e.g., NMB
Singapore Ltd. v. United States, 557 F.3d 1316, 1319 (Fed.Cir.
2009) (ITA’s explanations need not be perfect, only “reasonably
discernible”).
C
Plaintiff Xi’an also complains that an NME respondent has
no “ability” to select the primary surrogate country. The
defendant counters this is contrary to the statute because the
surrogate country must be deemed “appropriate by the administering
authority.” Xi’an replies that it could select the home market by
applying all of the statutory criteria, including economic
comparability and significance of production, see 19 U.S.C. §
1677b(c)(1)(B), and that the defendant has no answer to the problem
of how an NME respondent can comply with the remedial nature of the
antidumping laws if it has no way to estimate its costs when it
sets the price for export to the United States. Plaintiff Xi’an
states that it is simply pointing out that the NME respondent is
severely disadvantaged vis-á-vis market economy respondents if it
is not permitted to assert a surrogate country meeting all the
criteria and host to reasonably reliable data for the valuation of
its factors.
Consol. Court No. 15-00109 Page 14
The court appreciates this concern and can concur that a
rational producer would not chose the highest available steel costs
when lower domestic, regional, and economically comparable sources
are available4, but the argument is one that conflicts with what
has long been the case: “It is [ITA], not the respondent, that
determines what information is to be provided” for a particular
proceeding. Ansaldo Componenti, S.p.A. v. United States, 10 CIT
28, 37, 628 F. Supp. 198, 205 (1986). Accord Essar Steel Ltd. v.
United States, 34 CIT 1057, 1072-73, 721 F. Supp. 2d 1285, 1298-99
(2010), aff’d in relevant part, 678 F.3d 1268 (Fed.Cir. 2012); NSK,
Ltd. v. United States, 20 CIT 361, 367, 919 F. Supp. 442, 447
(1996); Nachi-Fujikoshi Corp. v. United States, 19 CIT 914, 920,
890 F. Supp. 1106, 1111 (1995); Tianjin Mach. Import and Export Co.
v. United States, 16 CIT 931, 936, 806 F. Supp. 1008, 1015 (1992);
Chinsung Indus. Co. v. United States, 13 CIT 103, 705 F. Supp. 598
(1989); Timken Co. v. United States, 11 CIT 786, 804, 673 F. Supp.
495, 513 (1987); Smith-Corona Group Consumer Prods. Div., SCM Corp.
v. United States, 713 F.2d 1568, 1577 n. 26 (Fed.Cir. 1983), cert.
denied, 465 U.S. 1022 (1984). As the final selection of an
4
Cf. Sigma Corporation v. United States, 117 F.3d 1401,
1408 (Fed.Cir. 1997) (finding problematic the rationale that a
casting producer in the surrogate country would choose to pay the
highest combination of prices for pig iron plus freight).
Consol. Court No. 15-00109 Page 15
appropriate surrogate country occurs post-closing of the review
period, it may be that such selection is not susceptible to the
kind of predictability plaintiff Xi’an desires, but it is,
nonetheless, susceptible to the burden of persuasion borne by
interested parties.
D
Plaintiff Xi’an also asserts that ITA’s surrogate
brokerage and handling (“B&H”) is unreliable and unreasonably high.
It prays for remand consistent with Since Hardware (Guangzhou) Co.
v. United States, 38 CIT ___, 977 F. Supp. 2d 1347 (2014), which
barred the agency from relying on the hypothetical weight postured
in Doing Business reports. The plaintiff argues that, for the
denominator calculating B&H and inland freight costs, ITA should
use either the maximum cargo load for a 20-foot container or Xi’an
Metals’ own average cargo load instead of the weight of 10,000
kilograms from the relevant Doing Business report.
The defendant responds that Xi’an Metals failed to
exhaust this specific argument before ITA during the administrative
process. It also responds that it would be inappropriate to use
Xi’an Metals’ own average cargo load because the value must come
from a selected surrogate country, and that substantial evidence
supports the use of the 10,000 kilogram denominator in any event
Consol. Court No. 15-00109 Page 16
because the relationship between costs and quantity is maintained
in reliance upon the Doing Business report and results in an
accurate per-unit cost. See also Def-Int’s Resp. at 18-20.
Pursuant to 28 U.S.C. §2637(d), the court “shall, where
appropriate, require the exhaustion of administrative remedies” in
civil actions arising from ITA’s antidumping- and countervailing-
duty determinations. The doctrine of exhaustion is that “no one is
entitled to judicial relief for a supposed or threatened injury
until the prescribed administrative remedy has been exhausted.”
Sandvik Steel Co. v. United States, 164 F.3d 596, 599 (Fed.Cir.
1998), quoting McKart v. United States, 395 U.S. 185, 193 (1969).
It is well-settled that “[a] reviewing court usurps the agency’s
function when it sets aside an agency determination upon a ground
not theretofore presented and deprives the [agency] of an
opportunity to consider the matter, make its ruling, and state the
reason for its action.” Unemployment Compensation Comm’n of Alaska
v. Aragan, 329 U.S. 143, 155 (1946) (“UCCA”); accord Yantai
Oriental Juice Co. v. United States, 27 CIT 1709, 1719 (2003).
“Simple fairness to those who are engaged in the tasks of
administration, and to litigants, requires as a general rule that
courts should not topple over administrative decisions unless the
administrative body not only has erred but has erred against
Consol. Court No. 15-00109 Page 17
objection made at the time appropriate under its practice.” United
States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952).
See also Metz v. United States, 466 F.3d 991, 999 (Fed.Cir. 2006).
Thus, a party must present all arguments to ITA at the
time it is addressing an issue. E.g., Mittal Steel Point Lisas
Ltd. v. United States, 548 F.3d 1375, 1383-84 (Fed.Cir. 2008). A
party’s obligation to exhaust its administrative remedies applies
equally to overall issues as well as to individual arguments. Rhone
Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed.Cir.
1990). By failing to raise this argument until now, Xi’an Metals
deprived ITA of the “opportunity to consider the matter, make its
ruling, and state the reason for its action.” UCCA, 329 U.S. at
155.
None of the limited exceptions to the exhaustion
requirement apply here. See Corus Staal BV v. United States, 30 CIT
1040, 1050 n. 11 (2006) (identifying exceptions for pure legal
questions, futility in raising argument at agency level, denial of
access to confidential record, intervening judicial
interpretation), aff’d, 502 F.3d 1370 (Fed.Cir. 2007). First, the
pure question of law exception does not apply to arguments
concerning the new factual analysis that plaintiff Xi’an now posits
Consol. Court No. 15-00109 Page 18
for the first time. See Mittal Steel, 548 F.3d at 1384 (pure
question of law exception does not apply when the argument relies
on unique facts of the case). ITA did not have the opportunity to
analyze, in the first instance, Xi’an Metals’ contentions
pertaining to the Doing Business report and its preference for
instead using those B&H costs incurred by Thai exporters of frozen
freshwater shrimp. Second, it would not have been futile for Xi’an
Metals to present the analysis of the factual information to the
agency during the underlying administrative proceeding. The
futility exception to the exhaustion doctrine is narrow: parties
must demonstrate that they “would be required to go through
obviously useless motions in order to preserve their rights”, Corus
Staal, 502 F.3d at 1379 (internal quotations and citations
omitted), and plaintiff Xi’an’s argument does not satisfy that
standard. Third, there has been no intervening judicial decision
that might excuse the absence of Xi’an Metals’ argument at the
administrative level. Fourth, plaintiff Xi’an does not allege any
untimely access to the confidential record. Thus did it fail to
exhaust.
E
Plaintiff Xi’an’s last claim is that ITA made two labor
classification errors: (1) it included staff labor costs in the
Consol. Court No. 15-00109 Page 19
the selling, general, and administrative (“SG&A”) expenses,
reasoning that the respondents did not report labor hours
associated with the selling and administrative staff; and (2) from
the financial statements of the Thai company L.S. Industries Co.
(“LSI”) used for calculation of surrogate financial ratios5 ITA
accounted for various line items such as “welfare” and “social
security and compensation” as SG&A-type labor costs despite the
fact that the Thailand National Statistics Office (“NSO”)
statistics used to calculate labor SV includes such benefits in the
reported labor rate. See IDM at 19-20. ITA decided that it would
adhere to how the surrogate financial statements themselves
classified these items. See id. at 20.
And yet, in the calculation of surrogate financial
ratios, it is the agency’s practice to avoid double-counting labor
costs that are included among SG&A by “adjust[ing] the surrogate
financial ratios when the available record information -- in the
form of itemized indirect labor costs -- demonstrates that labor
costs are overstated.” Antidumping Methodologies in Proceedings
Involving Non–Market Economies: Valuing the Factor of Production:
Labor, 76 Fed.Reg. 36092, 36093-94 (June 21, 2011) (“Labor
5
See Final Surrogate Value Submission and Pre-Preliminary
Comments (Aug. 19, 2014) at Exhibit SV-1, PDoc 208.
Consol. Court No. 15-00109 Page 20
Methodologies”). Stated differently, ITA looks to the surrogate
financial statements on the record, and if they “include
disaggregated overhead and [SG&A] expense items that are already
included in the [record data used to value labor], [it] will remove
these identifiable costs items.” Id. at 36094. See, e.g., Certain
Frozen Warmwater Shrimp From the Socialist Rep. of Vietnam, 67
Fed.Reg. 56158 (Sept. 12, 2011), and accompanying issues and
decision memorandum (“I&D memo”) at cmt. 5.B.
The defendant maintains that ITA followed practice during
the administrative proceeding by treating labor-related costs in
its financial ratio calculations in the same manner that the
surrogate company disaggregates labor costs, explaining that under
ITA’s FOP methodology for calculating normal value, labor expenses
capture the labor cost only for manufacturing, which is obtained by
multiplying a respondent’s reported direct and indirect labor hours
to manufacture subject merchandise by the surrogate labor rate
(e.g., the Thai NSO labor rate). The defendant contends that the
Thai NSO 2007 labor data, used to calculate the labor SV, were
derived from an average remuneration paid for persons engaged in
various “manufacturing and non-manufacturing activities”6 and that,
6
Def’s Resp. at 82.
Consol. Court No. 15-00109 Page 21
contrary to plaintiff Xi’an’s argument, it does not follow that the
labor expenses calculated using the NSO labor rate capture all
labor expenses. Further, the defendant contends, the respondents
did not report labor hours associated with selling and
administrative staff, as staff labor costs would normally be
expected to be included among the SG&A expenses. Concluding, the
defendant argues the SG&A labor expenses in each surrogate
company’s financial statement should therefore be included in the
numerator of the SG&A ratio associated with that company, and
therefore the SG&A labor expenses listed in LSI’s financial
statements should be classified under the SG&A expenses and
included in the respective numerator of the SG&A ratio calculation,
an outcome ITA ensured by including the “Salary and Bonus” line
item from LSI’s “Total Cost of Management” in the SG&A buildup in
the financial ratio calculations. See Def’s Resp. at 82-83,
referencing IDM at 19-20. See also Def-Int’s Resp. at 20-22.
Plaintiff Xi’an counters that defendant’s (and intervenor
-defendant’s similar) explanation merely restates ITA’s position
from the IDM rather than confronting the facts and logic of their
argument, which it contends amounts to a waiver of any surrogate
Consol. Court No. 15-00109 Page 22
labor cost defense7; and that the Thai NSO 2007 labor data do
indeed cover “all” labor expenses, including overtime, benefits,
vacation pay, and the range of executive, administrative, and
production labor, regardless of the exactitude of “various
manufacturing and non-manufacturing activities”. XM Reply at 19,
referencing Pet’s SV Submission at Ex. 9, PDocs 158-160. Plaintiff
Xi’an further argues, it does not follow from the fact that
respondents are not required to report hours of administrative or
non-production labor (see NME questionnaire) that those costs have
not been counted, and also that it is indisputable that the labor
rate ITA now relies upon pursuant to Labor Methodologies is an
inflated rate intended to account for those very expenses.
It is apparent from the IDM at page 19 that ITA’s
reasoning was informed by Elkay Manufacturing Co. v. United States,
7
À la Calgon Carbon Corp. v. United States, 40 CIT ___,
Slip Op. 16-4 (Jan. 20, 2016) at 11 (“[t]he government and
petitioners, in their response briefs, chose not to address the
merits of CAC’s arguments, which were raised by CAC in its opening
brief supporting its CIT Rule 56.2 motion[;] [a]ny argument,
therefore, defending ITA’s selection of a $2.42 per kilogram rate
to Shanxi DMD, is waived, as CAC claimed in its reply brief”),
citing United States v. Great American Ins. Co. of New York, 738
F.3d 1320, 1328 (Fed.Cir. 2013) (“[i]t is well established that
arguments that are not appropriately developed in a party’s
briefing may be deemed waived”) (add’l citations omitted). See
also Nan Ya Plastics Corp. v. United States, 810 F.3d 1333, 1346-47
(Fed.Cir. 2016), quoting id.
Consol. Court No. 15-00109 Page 23
38 CIT ___, ___, 34 F. Supp. 3d 1369, 1375-84 (2014) (rejecting
argument that the NSO labor rate “failed to capture any SG&A labor
costs”, but also rejecting conclusion that “double-counting” of
SG&A labor expenses required the specific downward adjustments made
in that case, i.e., the record “lack[ed] substantial evidence to
support [ITA]’s conclusion that the rate [it] applied to the hours
of production labor reported by the investigated respondents
overstated the value of those labor hours to such an extent as to
justify the specific, compensatory adjustments . . . made to the
SG&A/interest expense ratios”). See also Elkay Manufacturing Co.,
supra, 40 CIT at ___, 180 F.Supp.3d at 1257-59 (sustaining ITA’s
revised decision not to remove identifiable SG&A labor items from
its calculated SG&A expense ratios). The problem here, however,
appears similar to that which was recently considered in Yingqing
v. United States8. But, the source and labor rate ITA has
deliberately chosen pursuant to Labor Methodologies apparently
8
40 CIT ___, ___, 195 F. Supp. 3d 1299, 1309-11 (2016)
(discussing reliance upon Thai 2007 NSO data and LSI’s financial
statements and remanding for explanation of why items such as
“Employee welfare cost” and “Subsidy of Social Security Fund and
Workmen Compensation Fund”, which ITA had previously recognized in
Certain Steel Nails from the PRC, 79 Fed.Reg. 19316 (April 8,
2014), and accompanying I&D memo at cmt. 2, as indirect labor
expenses of the type covered by the 2007 NSO data which therefore
necessitated adjustment of the surrogate financial ratios to avoid
double counting, had not been treated similarly in the review under
consideration in Yingqing).
Consol. Court No. 15-00109 Page 24
includes all types and forms of labor as well as labor benefits,
and, in that announcement of new methodology, the agency recognized
that it would be over-counting the labor rate for production labor
and specifically indicated therein that the financial ratios would
have to be adjusted so labor was not double-counted; the implicit
remedy would be to move all labor costs explicitly incorporated in
the SG&A source and rate chosen to the ratio denominators.
In this case, by not removing the various line items such
as “welfare” and “social security and compensation” that are
presumptively included already in the Thai NSO rate, the SV for
labor is inflated, which requires correction initially via the
court’s grant of the pertinent part of plaintiff Xi’an’s motion for
agency reconsideration. On remand therefor, if ITA continues to
select a source and rate that includes all labor positions and
benefits, it needs to ensure that all forms of labor costs on the
financial statements are in the “materials-labor-energy” (or “MLE”)
denominator of the ratios in accordance with its Labor
Methodologies, but whatever course it chooses will need to obviate
the double counting9 that is manifest in the AR5 final results.
9
Prior to Labor Methodologies, ITA’s approach had been to
select a source for the production labor rate that included only
production labor, but the “mixed method” adopted by ITA here double
(continued...)
Consol. Court No. 15-00109 Page 25
III
A
The first claim of the Stanley plaintiffs’ Rule 56.2
motion is that ITA arbitrarily refused to correct a transcription
error in their February 17, 2015 post-verification FOP database
(specifically the omission of a zero in the tenth or one-hundredth
decimal place in field “V_DLCROD”), which they claim resulted in
the FOP for low-carbon SWR being overstated by almost nine percent,
and directly resulted in an erroneous increase in their dumping
margin of 3.09 percentage points -- about 30 percent higher than it
would have been absent the error. ITA had directed them to submit
the post-verification database to implement minor FOP corrections
that it had accepted at verification, including corrections to the
variance rate for SWR. PDoc 257. The purpose of the revised
database was thus to ensure that the AR5 final results would be
based on verified data, and the minor corrections should have
reduced the Stanley dumping margin from the Preliminary Results.
The Stanley plaintiffs contend ITA did not issue its
request for the revised FOP database until eight weeks after
9
(...continued)
counts the respondent’s labor cost by saddling production labor
with a rate embedded with administrative and executive labor and
then charging for that administrative and executive labor a second
time by leaving those costs in the factory overhead and SG&A ratio
numerators. Cf. Yingqing, supra.
Consol. Court No. 15-00109 Page 26
verification, and the agency initially afforded only two days in
which to prepare and submit the revised database, a deadline
subsequently extended over a President’s Day weekend, which
relatively short deadline “certainly contributed to Stanley’s
computer programmer inadvertently omitting a zero to the right of
the decimal point in the field for concerning low-carbon SWR.”
Stanley Reply at 3. The consolidated-plaintiffs further explain
that it was not possible to have identified the error in their
administrative case brief because the revised database was
submitted on the same day as that brief. Id. at 4.
Whatever the excuse, the error occurred, and it is
manifest. ITA’s ministerial error memorandum, PDoc 297, and the
defendant imply Stanley had an opportunity to bring the error to
ITA’s attention in the time period between the case brief and the
AR5 final results, to which the Stanley reply is that the timely
submission of a ministerial error allegation is the only available
procedure for correcting a clerical error in a submission made
concurrently with a case brief. See 19 U.S.C. §1675(h) and 19
C.F.R. §351.224(e) (contemplating that final results are only
“final” subject to correction of ministerial errors). Stanley did
so. CDoc 327. But ITA rejected the ministerial error allegation
by stating that, generally, “ministerial errors include only those
Consol. Court No. 15-00109 Page 27
errors that are produced by the Department. The Department will
only correct a respondent’s error when that error is ‘so egregious
and so obvious’ that failing to correct the error would be
arbitrary and capricious.” PDoc 297 at 4. ITA then concluded the
error was “neither so egregious nor so obvious as to be
characterized as a ministerial error.” Id.
However, in light of the Stanley presentment, it is
difficult to fathom how their ministerial error could have been
concluded otherwise, especially given its impact on their overall
dumping margin (a 43.5 percent change from the Preliminary
Results). In short, ITA must be ordered on remand to make the
correction. See, e.g., NTN Bearing Corp. v. United States, 74 F.3d
1204, 1208 (Fed.Cir. 1995) (it is incumbent on ITA to correct such
errors, as it has a “duty to determine dumping margins ‘as
accurately as possible’”), quoting Rhone Poulenc, Inc. v United
States, 899 F.2d 1185, 1191 (Fed.Cir. 1990). See also Brother
Indus., Ltd. v. United States, 15 CIT 332, 341, 771 F. Supp. 374,
384 (1991) (“court-ordered amendments of ministerial errors are not
destructive of the ITA’s ability to manage its proceedings”).
B
The remainder of the Stanley motion focuses on ITA’s
targeted dumping analysis of its sales, i.e, by “purchasers,
Consol. Court No. 15-00109 Page 28
regions, or periods of time.” 19 U.S.C. §1677f-1(d)(1)(B). See,
e.g., Mid Continent Nail Corp. V. United States, 38 CIT ___, ___
n. 3, 999 F. Supp. 2d 1307, 1311 n. 3 (2014).
Section 1677f-l(d) of Title 19, U.S.C. directs “in
general” that ITA “shall” calculate dumping margins using the A-A
or transaction-to-transaction (“T-T”) price comparison methods, see
id., subsection (1)(A), but where the record establishes the
existence of a pattern of export prices that differ significantly
among customers, regions, or time periods and why such differences
cannot be accounted for using the A-A method is explained, ITA
“may” calculate dumping margins using a different methodology such
as the A-T method. See 19 U.S.C. §1677f-l(d)(l)(B). When ITA uses
that method, it reverts to “zeroing”10 but does not ignore non-
10
This refers to the practice of not using transactions
with U.S. selling prices above normal value to offset transactions
with U.S. selling prices below normal value. See, e.g., Timken Co.
v. United States, 38 CIT ___, ___, 968 F. Supp. 2d 1279, 1281-82
(2014). ITA abandoned “zeroing” in administrative reviews in 2012,
Antidumping Proceedings: Calculation of the Weighted-Average
Dumping Margin and Assessment Rate in Certain Antidumping Duty
Proceedings; Final Modification, 77 Fed.Reg. 8101 (Feb. 14, 2012),
and Stanley complains that the continued act of “zeroing” generates
higher calculated dumping margins (Stanley claims the use of A-T
with zeroing raised its margin from zero to 13.19 percent). The
court observed in dicta nearly twenty years ago that comparisons
based on the A-A method appear to “allow higher prices to cancel
out some amount of dumping” and also that “transaction-specific
price comparisons are statistically biased toward a dumping
(continued...)
Consol. Court No. 15-00109 Page 29
dumped sales when it uses the A-A method. The Statement of
Administrative Action (“SAA”) accompanying the Uruguay Round
Agreements Act explains that Congress intended “targeted dumping”
to comprise “situations [in which] an exporter may sell at a dumped
price to particular customers or regions, while selling at higher
prices to other customers or regions.” The SAA explicitly links
ITA’s use of the A-T method to “targeted dumping”:
New Section 777A(d)(l)(B) provides for a comparison of
average normal values to individuals export prices ... in
situations where an average-to-average or transaction-to-
transaction methodology cannot account for a pattern of
prices that differ significantly among purchasers,
regions, or time periods, i.e., where targeted dumping
may be occurring.
SAA at 843.
Consistent with the SAA, ITA promulgated a targeted
dumping regulation, 19 C.F.R. §351.414(f). See Antidumping Duties;
Countervailing Duties, 62 Fed.Reg. 27296, 27373-76 (May 19, 1997).
Its salient elements are:
10
(...continued)
finding”, Borden, Inc. v. United States, 22 CIT 233, 235-40, 4
F. Supp. 2d 1221, 1224-28 (1998), citing How the GATT Affects U.S.
Antidumping and Countervailing Duty Policy, 33-35, 66
(Congressional Budget Office 1994), but to that point “zeroing” had
long been understood to be a not-improper philosophic, not
mathematic, interpretation of how dumping is best determined under
U.S. law -- at least until certain members of appellate panels of
the World Trade Organization began to surprise these United States
in opining what had originally been negotiated and “agreed to” when
the Antidumping “Agreement” was signed.
Consol. Court No. 15-00109 Page 30
1. Targeted dumping must be determined through the use of
“standard and appropriate statistical techniques.”
2. The A-T comparison is used only for those specific
sales that comprise targeted dumping.
3. “Normally,” targeted dumping will be pursued only in
response to an allegation by a petitioner that includes
supporting factual information and an explanation as to
why the A-T comparison could not take into account any
alleged price differences.
The current11 test of targeted dumping, differential
pricing, purports to examine differences in a respondent’s prices
among individual purchasers, geographic regions, and quarterly time
periods. It is performed at the level of individual product
control numbers (CONNUMs) and net of adjustments to gross U.S.
selling price. ITA does not require any allegation or factual
11
ITA’s approach has evolved over at least five distinct
tests to determining the presence of targeted dumping: (1) the
“pasta test”, announced in 1998 in response to the Borden decision,
supra; (2) the “P/2” test (Notice of Final Determination of Sales
at Less Than Fair Value: Coated Free Sheet Paper from the Republic
of Korea, 72 Fed.Reg. 60630 (Oct. 25, 2007)); (3) the “Nails I”
test (Certain Steel Nails from the People’s Republic of China:
Final Determination of Sales at Less Than Fair Value and Partial
Affirmative Determination of Critical Circumstances, 73 Fed.Reg.
33977 (June 16, 2008)); (4) the “Nails II” test (Polyethylene
Retail Carrier Bags from Taiwan: Final Determination of Sales At
Less Than Fair Value, 75 Fed.Reg. 14569 (March 26, 2010)); and (5)
differential pricing (Xanthan Gum from the People’s Republic of
China: Final Determination of Sales At Less Than Fair Value, 78
Fed.Reg. 33351 (June 4, 2013), and accompanying I&D memo).
Consol. Court No. 15-00109 Page 31
support in differential pricing; rather, ITA now performs
differential pricing by rote in every proceeding.
ITA analyzes prices for each CONNUM by dividing them into
a series of “test groups” (each comprising prices to a specific
purchaser, region, or calendar quarter) and “base groups”
(comprising the remaining purchasers, regions, or calendar
quarters). Prices to every purchaser, region, and calendar quarter
are serially analyzed as a test group and then recycled into the
base group of prices for that CONNUM. Differential pricing then
entails three elements.
In the first element, ITA employs “Cohen’s d statistic”
to measure the “effect size” between each test group and its
relevant base group. The agency describes effect size as a
descriptive measure of the “magnitude” of the difference between
two groups, which the Stanley plaintiffs contend infra is gross
oversimplification.
ITA calculates the Cohen d statistic as the difference
between the weighted average net prices of the test and base groups
divided by the “pooled” standard deviation of the net prices of the
two groups. The pooled standard deviation is calculated as the
square root of the sum of the square of the base group’s standard
Consol. Court No. 15-00109 Page 32
deviation plus the square of the test group’s standard deviation,
divided by two. The resulting coefficients are labeled as “small”,
“medium”, or “large”.
Notably, ITA ignores whether a test group’s
weighted-average price is higher or lower than the base group’s
weighted-average price. A “large” Cohen’s d coefficient is 0.8 or
greater, which means that the weighted-averages of the base group
and the test group differ by 0.8 standard deviations. The agency
deems all sales that meet or exceed the 0.8 Cohen d coefficient to
have “passed” that threshold, thereby satisfying the statute’s
requirement that “significant” price differences exist as a
precondition to using the A-T method.
In the second element, called the “ratio” test, ITA
stratifies the percentage of a respondent’s sales that “pass” the
Cohen d test. If the value of a respondent’s passing sales account
for 66 percent or more of the value of its total sales, then the
agency uses the A-T method with zeroing for all sales. If the
Cohen d test “pass” rate is 33 percent or less, then ITA uses the
A-A method for all sales. If the Cohen d test “pass” rate falls
between 33 percent and 66 percent, then the agency uses the A-T
method with zeroing for sales that “pass” the Cohen d test and the
Consol. Court No. 15-00109 Page 33
A-A method for the remaining sales. ITA deems this stratification
of CDT “pass” rates to establish whether a “pattern” of significant
price differences exists.
In the third element, called the “meaningful difference”
test, ITA calculates the respondent’s dumping margin in three ways.
First, it uses the A-A method for all sales. Second, it uses a
“mixed” method in which the A-T method with zeroing is applied only
to sales that have “passed” the Cohen d test while the A-A method
is applied to the remaining sales. Third, ITA applies the A-T
method with zeroing to all sales. Depending on the results of the
“ratio” test, the margin resulting from either the second or third
method is compared to the margin resulting from the A-A method for
all sales. The agency deems a “meaningful difference” to exist
between the two calculations if the margin using the A-T (or
“mixed”) method (1) generates a 25 percent relative change in the
dumping margin compared to the A-A method, or (2) generates a
dumping margin that crosses the de minimis threshold when compared
to the A-A method. ITA deems the existence of a “meaningful
difference” sufficient to explain why it cannot account for a
pattern of significant price differences using the A-A method.
Consol. Court No. 15-00109 Page 34
C
As an initial matter, the Stanley plaintiffs raise again
the issue of ITA’s “abrupt” withdrawal of its 1997 targeted dumping
regulation pursuant to Withdrawal of the Regulatory Provisions
Governing Targeted Dumping in Antidumping Duty Investigations, 73
Fed.Reg. 74930 (Dec. 10, 2008). See 19 C.F.R. §351.414(f) (2007).
Mid Continent Nail Corp. v. United States, 846 F.3d 1364
(Fed.Cir. 2017), indeed held that withdrawal to have been unlawful
and not harmless in accordance with the Administrative Procedures
Act. Defendant’s explanation is that, whereas the statute places
certain restrictions on ITA selection of a comparison methodology
for purposes of investigations, it does not do so for purposes of
administrative reviews such as the one at bar. Def’s Resp. at 23-
24, referencing 19 U.S.C. §1677f-1(d)(1)(B), SAA at 842-43. JBF
RAK LLC v. United States, 790 F.3d 1358, 1364 (Fed.Cir. 2015), held
that to be true, and cases since have consistently deferred to that
interpretation. E.g., Fine Furniture (Shanghai) Ltd. v. United
States, 40 CIT ___, ___, 182 F. Supp. 3d 1350, 1364 (2016); Nan Ya
Plastics Corp., Ltd. v. United States, 39 CIT ___, ___ n. 3, 128
F. Supp. 3d 1345, 1349 n. 3 (2015); Apex Frozen Foods Private Ltd. v.
United States, 38 CIT ___, ___, 37 F. Supp. 3d 1286, 1293 (2014),
aff’d, 862 F.3d 1322 (Fed.Cir. 2017); CP Kelco Oy v. United States,
Consol. Court No. 15-00109 Page 35
38 CIT ___, ___, 978 F. Supp. 2d 1315, 1320 (2014); Timken Co. v.
United States, 38 CIT ___, ___ & n. 7, 968 F. Supp. 2d 1279, 1286 &
n. 7 (2014). Further, although ITA typically cites to 19 U.S.C. §
1677f-1(d)(1)(B) for “guidance”, it does not consider that
provision “binding” legal authority since its statutory authority
to select a comparison methodology in reviews is derived from a
different provision, 19 U.S.C. §1677f-1(d)(2), which does not place
restrictions on ITA’s choice of comparison methodology. As such,
the agency has discretion12 to apply A-T methodology in reviews
notwithstanding the circumstances surrounding the withdrawal of the
pre-2008 targeted dumping regulation.
The defendant contends ITA properly applied A-T
methodology during AR5. It found that the value of Stanley sales
passing the Cohen d test accounted for more than 66 percent of the
value of total Stanley United States sales and also found a
meaningful difference between the weighted-average dumping margins
12
But as a further threshold matter, the Stanley plaintiffs
complain ITA initiated differential pricing without an allegation
that they had engaged in targeted dumping. And cf. Diamond
Sawblades Manufacturers’ Coalition v. United States, 39 CIT ___,
Slip Op 15–116 (Oct. 21, 2015), at 5-6 & n.4 (ITA rejecting a
targeted dumping allegation as untimely and declining to
self-initiate on the ground that the targeted dumping provision
applies by its express terms to agency investigations not
administrative reviews). The consolidated-plaintiffs do not press
the point to one of unlawfulness herein, however.
Consol. Court No. 15-00109 Page 36
calculated using the A-A methodology and an alternative comparison
methodology based on the A-T method. See Stanley Final Results
Analysis Memo at 3. See also IDM at 36. Specifically, when
comparing the Stanley weighted-average dumping margin calculated
pursuant to the A-A method and an alternative comparison method
based on the A-T method, that margin rose above the de minimis
threshold. Such a difference in the weighted-average dumping
margins has been held to satisfy the statutory requirement that ITA
explain why the A-A method cannot account for such differences. See
Apex Frozen Foods, supra, 38 CIT at ___, 37 F.Supp.3d at 1295-96.
Cf. Golden Dragon Precise Copper Tube Grp., Inc. v. United States,
39 CIT ___, Slip Op. 15-89 (2015) at 15-16 (“the significance of
the ‘effect size’ . . . in and of itself ‘explains why such
differences cannot be taken into account’ using A-A methodology”).
Be that as it may, it misses the Stanley point that the
regulation expressly limits the A-T methodology “to those sales
that constitute targeted dumping”, and it is this “limiting rule”
that Gold East Paper (Jiangsu) Co. v. United States, 37 CIT ___,
___, 918 F. Supp. 2d 1317, 1327 (2013), and Mid Continent both held
still in effect at the times in question. The AR5 final results
Consol. Court No. 15-00109 Page 37
violate this rule by applying the A-T methodology to all Stanley
sales. Remand, for the purpose of properly applying it, is
therefore necessary.
D
The Stanley plaintiffs argue that ITA’s use of the Cohen
d test is unlawful because it (i) was allegedly designed for a
context dissimilar to that being analyzed by the agency in a
differential pricing analysis; (ii) is arbitrary in terms of its
classification of effect sizes; (iii) is unreasonable when the
entire data population is available; and (iv) fails to measure
statistical significance.
(i)
Their claim is that Dr. Cohen’s d test was created for
psychological research and used as a tool in the behavioral
sciences and should not apply in a matter like this. The defendant
responds that ITA uses the test to analyze a respondent’s pricing
behavior, see IDM at 31, and that the economics of pricing behavior
is, in fact, a subset within the ambit of behavioral science. It
is an accepted statistical test, employed by ITA to discern a
pricing pattern, and the Stanley position neither persuades that
the agency’s use of it was unreasonable nor demonstrates
unlawfulness thereof.
Consol. Court No. 15-00109 Page 38
(ii)
The Stanley plaintiffs contend ITA’s classification
method for the Cohen d test effect size is arbitrary. By way of
background, after ITA determines Cohen’s d coefficient, it
establishes a threshold to determine whether that is significant.
See PDM at 16-17. The defendant explains that the agency adheres
to the three different fixed thresholds Dr. Cohen deduced (small,
medium, and large) because they allow ITA to determine the
“significance” (or meaningfulness) of the differences between
prices to a particular purchaser, region, or time period as well as
the prices of comparable merchandise to all other purchasers,
regions, or time periods in an efficient and predictable way, and
are generally accepted thresholds for the d test. See id. at 34-35
(citing and quoting David Lane et al., “Effect Size,” Section 2,
“Difference Between Two Means” (stating that the guidelines
suggested by Dr. Cohen as to what constitutes small, medium, and
large effect size “have been widely adopted”)). ITA generally uses
the “large” threshold (i.e. Cohen’s d coefficient above 0.8) as the
threshold for passing the d test, because the “large” threshold
provides the strongest support for the differences being
meaningful. Id. at 36-37.
Consol. Court No. 15-00109 Page 39
Substantial evidence of record herein supports the use of
Dr. Cohen’s d test and the threshold demarcations he intuited,
along with the caveats he enunciated, since the record evinces that
his test gained awareness, acceptance, and use among scientists
within various disciplines of the self-professed community of
“experts”, see, e.g., id., and the Stanley arguments do little to
contradict or counteract this fact. Therefore, because ITA used
widely accepted thresholds, provided a rational explanation as to
which threshold to employ, and selected a threshold for the Cohen
d coefficient which has real world, practical meaning consistent
with the statute, its use of the threshold is not arbitrary. Cf.
Cosco Home & Office Prods. v. United States, 28 CIT 2043, 2049-50,
350 F. Supp. 2d 1294, 1299-1300 (2004) (holding ITA’s interpretation
of 19 U.S.C. §1675(a)(1) and amendment of its regulations
reasonable); Mitsubishi Heavy Indus., Ltd. v. United States, 21 CIT
1227, 1233-35, 986 F. Supp. 1428, 1434-35 (1997) (50 percent test).
(iii)
The Stanley plaintiffs challenge ITA’s application of the
ratio test, claiming that it does not explain how the three
Consol. Court No. 15-00109 Page 40
thresholds thereof13 satisfy the statutory requirements. ITA
explained that it uses the ratio test to complete its determination
as to whether there exists a pattern of prices that differ
significantly by purchaser, region, or period of time. See PDM at
17. This is necessary because, even though the sales for one or
more groups of comparable merchandise for specific purchasers,
regions, or time periods may pass the Cohen d test, it does not
necessarily follow that, in relation to the total volume of a
respondent’s export sales, there is sufficient evidence that there
exists a pattern of prices that differ significantly. See IDM at
37-38. Pursuant to 19 U.S.C. §1677f-1(d)(1)(B), ITA “may
determine” whether sales were made at less than fair value using
the alternative method when subsections (i) and (ii) of the
provision are satisfied, but the statute is silent as to how ITA
may determine whether those subsections are thus and such. See id.
The agency in this matter lawfully exercised its discretion in
filling the gaps of determining how the A-T method could be
considered as an alternative methodology. See id. See also JBF
RAK, supra, 790 F.3d at 1364.
13
Thirty-three percent or less; 33-66 percent; and 66
percent or more.
Consol. Court No. 15-00109 Page 41
(iv)
The Stanley plaintiffs assert that the statute requires
ITA to measure “statistical significance,” which the Cohen d test
does not measure. This assertion underlies many of the Stanley
arguments, but “statistical significance” is irrelevant where, as
here, the agency has a complete set of data to consider.
The statute provides that ITA may apply an alternative
comparison methodology if it finds “a pattern of export prices (or
constructed export prices) for comparable merchandise that differ
significantly among purchasers, regions, or periods of time[.]” 19
U.S.C. §1677f-1(d)(1)(B)(i) (emphasis added). Additionally, the
SAA states:
New Section 777A(d)(1)(B) provides for a comparison of
average normal values to individual export prices . . .
in situations where an [A-A] or [T-T] methodology cannot
account for a pattern of prices that differ significantly
among purchasers, regions, or time periods, i.e., where
targeted dumping may be occurring.
SAA at 843 (emphasis added). Neither the statute nor the SAA
defines the term “significantly”, but the consolidated-plaintiffs
contend its plain meaning is “statistically significant.” ITA
interprets otherwise.
Consol. Court No. 15-00109 Page 42
Statistical significance only takes on relevance when
“determin[ing] from a sample (i.e., the data at hand) of a larger
population an estimate of what the actual values (e.g., the mean or
variance) of the larger population may be”. IDM at 34. Here, ITA
has the entire population of the respondents’ sales in the U.S.
market; therefore, “‘statistical significance’ is not a relevant
consideration.” Id. The agency calculates the Cohen d
coefficients to determine whether differences in prices for
comparable merchandise among purchasers, regions, or time periods
are significant, and those calculations are based upon all of the
United States sales that Stanley reported for the POR, not merely
a sample, and thus form the entire population of U.S. sales of
subject merchandise. See id. Sampling error does not exist when
there are complete data for analysis.
The Stanley plaintiffs state that the purpose of the
Cohen d test is to “make reasonable queries as to how big an
intervention effect may be when only a sample is available.” It
would be more accurate to state, however, that the Cohen d
coefficient measure of effect size “quantifies the size of the
difference between two groups, and may therefore be said to be a
true measure of the significance of the difference” based on
Consol. Court No. 15-00109 Page 43
complete information, not samples. See id. at 33 (citations
omitted). Accordingly, once again, the “statistical significance”
of ITA’s calculations is not relevant to its analysis, and
requiring the agency to measure statistical significance here,
where it has incorporated all of the respondents’ data in the
analysis, would be inappropriate14.
As noted above, Congress did not use the word
“statistical” or any variation thereof when it drafted the statute.
And as ITA stated in the IDM, and as Stanley has argued elsewhere,
Congress acts intentionally when it drafts statutory language.
Simply put, if Congress had wanted ITA to measure “statistical
14
A number of Stanley arguments continue to press an
interpretation of the term “significant” that is at variance with
what the statute requires. For example, the consolidated-
plaintiffs raise concerns with regard to accounting for random
events and Type I error (i.e., a “false positive” leading to
incorrect rejection of a true null hypothesis), and they also
express concerns about whether Cohen’s d test tests a statistical
hypothesis, which is necessary when measuring for statistical
significance. But as indicated above, there are no random estimates
of actual statistical measures because ITA’s analysis relies on
complete information to perform such calculations. See IDM at 34.
Because the agency has the complete population of Stanley United
States sales, none of the resulting calculations evince random
errors because of sampling, and because there is no sampling or
randomness, all issues related to Type I errors, which are errors
that occur because of sampling, are moot.
Consol. Court No. 15-00109 Page 44
significance,” it would have included the word “statistical”15. In
applying the Cohen d test, ITA fulfills the statutory requirement
to measure whether there exists a pattern of prices that differ
“significantly”, and the d test enables the agency to quantify, in
a simple and transparent approach, whether prices differ
significantly among purchasers, regions, or time periods.
(v)
The Stanley plaintiffs claim that several other aspects
of ITA’s differential pricing analysis contravene congressional
intent. However, mere disagreement with its approach, where the
statute is silent, is not a sufficient basis for the court to
overturn the agency’s reasoning. See Mid Continent Nail Corp. v.
United States, 34 CIT 512, 519, 712 F. Supp. 2d 1370, 1376-77 (2010)
(“[g]enerally, courts lack an ‘independent authority to tell the
[agency] how to do its job’ when a statute does not specify ‘any
15
The Stanley definition of “significant” is “1. a) having
or expressing a meaning, b) full of meaning; 2. important;
momentous; 3. having or conveying a special or hidden meaning;
suggestive; 4. of or pertaining to an observed departure from a
hypothesis too large to be reasonably attributed to chance”,
Stanley Br., p. 32, citing Webster’s New World Dictionary of the
American Language at 1325 (1980) (emphasis omitted), and that
proffered definition supports ITA’s understanding of being tasked
by statute to find a meaningful difference between the average
price of a test group and the average price of a comparison group,
which the Cohen d test accomplishes. See IDM at 32, 36-37.
Consol. Court No. 15-00109 Page 45
Congressionally mandated procedure or methodology for assessment of
the statutory tests’”), quoting U.S. Steel Group v. United States,
96 F.3d 1352, 1362 (Fed.Cir. 1996). The statute does not specify
the particular analysis or approach that ITA must use, and in the
absence of showing challenged aspects of agency analysis
unreasonable, the court will defer to its discretion.
(vi)
The final step of ITA’s differential pricing analysis
examines whether the A-A methodology can account for a pattern of
prices that differ significantly by determining whether there
exists a meaningful difference in the weighted-average dumping
margins calculated using that methodology and an appropriate
alternative comparison methodology. See IDM at 36. The Stanley
plaintiffs argue that the AR5 final results do not explain why the
difference in the pattern of prices cannot be accounted for with
the A-A method. But their argument fails to persuade that ITA’s
explanation therein as to why that approach cannot account for
pricing differences was unreasonable. See id.
As explained in the AR5 final results (and again above),
if the difference in the weighted-average dumping margins
calculated using the A-A method and an appropriate alternative
Consol. Court No. 15-00109 Page 46
comparison method is meaningful, then that fact is indicative of
whether that method cannot account for such differences and
therefore an alternative method would be appropriate. See id.
More precisely, a meaningful difference between the results of the
A-A methodology and an appropriate alternative (A-T in this
instance) exists if: (1) there is a 25 percent relative change in
the weighted-average dumping margins between the A-A methodology
and the appropriate alternative where both are above the de minimis
threshold, or (2) the resulting weighted-average dumping margins
move across that threshold. See id.
ITA found that a meaningful difference exists because the
Stanley weighted-average dumping margin did move across that
threshold upon a comparison of the two methods. See id. This
threshold is reasonable because comparing the weighted-average
dumping margins calculated using the two methods allows ITA to
quantify the extent to which the A-A method cannot take into
account different Stanley pricing. And ITA’s determination that
the A-A methodology cannot account for the difference in the
pattern of prices in similar circumstances has been upheld in
court. E.g., Samsung Elecs. Co. v. United States, 39 CIT ___, ___,
72 F. Supp. 3d 1359, 1368 (2015) (holding that ITA reasonably
Consol. Court No. 15-00109 Page 47
explained that “the A-to-A method does not take into account such
price differences because there is a meaningful difference in the
weighted average dumping margins when calculated using the A-to-A
method and the A-to-T method” and that Samsung’s margin had moved
across the de minimis threshold (citations omitted; emphasis in
original)); Apex, supra, 38 CIT at ___, 37 F.Supp.3d at 1299-1300
(holding that ITA reasonably concluded that the A-A methodology
could not account for targeting where plaintiff’s margin crossed
the de minimis threshold), aff’d, 862 F.3d at 1323-24. The Stanley
argument does not persuade that this is an unreasonable approach to
fulfilling the statute’s aim of combating masked dumping.
In AR5, ITA concluded that the A-A methodology could not
account for the difference in the pattern of prices once a
meaningful difference existed between that methodology and the A-T
approach when the Stanley weighted-average dumping margin moved
above the de minimis threshold. And, as in Apex and Samsung,
Stanley does not show that the meaningful difference was
immaterial.
(vii)
The Stanley plaintiffs allege that ITA use of the Cohen
d test is biased toward finding prices that differ significantly,
Consol. Court No. 15-00109 Page 48
leading it to overuse the A-T method. The argument appears to
conflate passing the d test with application of the A-T comparison
methodology, which requires that ITA find not only that a pattern
of prices that differ significantly exists but also that the A-A
methodology cannot account for such differences. Each of these
provisions requires a separate analysis, with distinct results, and
both must be satisfied to apply an alternative comparison
methodology. Moreover, Stanley citations to instances when
respondents’ sales passed Cohen’s d test without discussing whether
ITA applied an alternative comparison methodology, Stanley Brief at
39-40, illustrate only that the respondents’ pricing behavior
exhibited certain significant differences in prices. See IDM at 37
(stating that both requirements under the statute must be satisfied
before applying an alternative comparison methodology and that the
Stanley analysis is concerned with and limited to only the first of
the two requirements). These instances do not show whether ITA
applied an alternative comparison methodology or whether it found
that the respondents sold subject merchandise at less than normal
value.
The Stanley plaintiffs also fail to appreciate the
difference between sales found to be at significantly different
Consol. Court No. 15-00109 Page 49
prices as opposed to whether ITA has applied an alternative
comparison methodology to address masked dumping. They connect
high rates of sales passing Cohen’s d test to dumping. A high
passing rate, however, does not mean that the A-A methodology
cannot account for such differences (i.e., whether or not dumping
even exists or is being masked). As ITA explained, “[b]oth
requirements of section 1677f-1(d)(1)(B) of the Act must be
satisfied before [it] has the option of applying an alternative
comparison method in less-than-fair-value investigations.” IDM at
37-38. As such, even if a large proportion of U.S. sales pass the
d test, ITA does not automatically apply the A-T method. Id. It
must also consider whether the A-A method can account for such
differences and, if the standard comparison methodology can account
for such differences, ITA will not apply an alternative
methodology. See id.
In other words, a finding that there exists a pattern of
prices that differ significantly means only that ITA will consider
whether the standard comparison methodology can account for the
differences. Subject merchandise can be sold in the United States
market at significantly different prices yet none of the sales are
priced at less than normal value (i.e., there is no dumping); in
Consol. Court No. 15-00109 Page 50
such a situation, the A-A method will be able to account for the
differences, and that method will be used to calculate any
weighted-average margin. A firm can also make those same U.S.
sales at significantly different prices among purchasers, regions,
or time periods at prices which are all less than normal value
(i.e., all sales are dumped); in such a situation, the A-A method
also will be able to account for such differences, and thus, that
method can, again, be used. Thus, even if there is a high Cohen’s
d pass rate, it is meaningless without consideration of whether the
A-A method can account for the differences. See id. at 38; 19
U.S.C. §1677f-1(d)(1)(B)(ii).
(viii)
ITA reiterated the importance of both lower and higher
priced sales in masked dumping, noting that “higher priced sales
are equally capable as lower priced sales to create a pattern of
prices that differ significantly.” IDM at 38. The Stanley
plaintiffs disagree that “high” and “low” priced sales are
appropriate considerations when conducting Cohen’s d test.
They argue that ITA may not find that higher priced sales
pass that test and are part of a pattern of prices that differ
Consol. Court No. 15-00109 Page 51
significantly, but “high” and “low” are relative terms, and they
concede that the statute is silent as to this issue, providing only
that the agency must determine whether a pattern of prices that
differ significantly exists. The statute does not specify whether
ITA may or may not consider prices that differ because they are
higher or lower. See 19 U.S.C. §1677f-1(d)(1)(B) (alternative
methodology may be applied if (i) “there is a pattern of export
prices . . . for comparable merchandise that differ significantly
among purchases, regions, or periods of time, and (ii) [ITA]
explains why such differences cannot be taken into account” using
the A-A methodology).
Finding no explicit statutory support, the Stanley
plaintiffs look to the SAA, which they interpret to mean that
targeting and dumping are linked in the statute and, thus, ITA is
only authorized to consider dumped prices. But the SAA does
discuss both “dumped prices” and “higher prices”, as Stanley itself
notes: “[t]he SAA explains that ‘targeted dumping’ comprises
‘situations [in which] an exporter may sell at a dumped price to
particular customers or regions, while selling at higher prices to
other customers or regions.’” Stanley Brief at 42, quoting SAA at
842 (emphasis deleted). Thus, the SAA acknowledges that “targeted
Consol. Court No. 15-00109 Page 52
dumping” includes sales which have been made at both “dumped” (or
lower) prices as well as higher prices, and high priced sales will
offset lower priced sales, “either implicitly through the
calculation of a weighted-average sale price for a [United States]
averaging group, or explicitly through the granting of offsets when
aggregating the A-to-A comparison results, that can mask dumping”.
IDM at 38. In other words, higher and lower priced sales do not
operate independently: in theory at least all sales are relevant to
the analysis, and nothing in the statute or the SAA precludes ITA
from reviewing both higher and lower priced sales. See id. at
38-39.
(ix)
Additionally, the Stanley plaintiffs challenge the
calculation of the measure which ITA uses to gauge the effect size,
i.e., the Cohen d coefficient. To calculate the effect size, it
uses the “pooled standard deviation,” which is based on the
distribution of the prices between the test and comparison groups,
because it “reflects the dispersion, or variance, of prices within
each of the two groups.” IDM at 36. The consolidated-plaintiffs
contend that the use of a pooled standard deviation leads to a bias
for finding high Cohen d pass rates. See Stanley Brief at 39 (“ITA
incorrectly calculated the pooled standard deviation in the Cohen
Consol. Court No. 15-00109 Page 53
d statistic -- generating an upward bias in the ‘pass’ rate -- by
giving equal weight to the squared standard deviations of the
‘target’ and ‘comparison’ price groups despite clear evidence that
the target groups were much smaller in volume and the standard
deviations of the target and comparison groups were not equal”).
But once again, there is no statutory directive with
respect to how ITA determines whether a pattern of prices that
differ significantly exists, let alone how to calculate the pooled
standard deviation of the Cohen d coefficient. See Certain Frozen
Warmwater Shrimp From the Socialist Republic of Vietnam, 80
Fed.Reg. 55328 (Sept. 15, 2015), and accompanying I&D memo at 27.
ITA has generally relied on a reasonable and predictable approach
by using a simple average when determining the pooled standard
deviation. E.g., id. By giving equal weight to the test and
comparison groups, ITA balances the importance of the exporter’s
pricing behavior to a given purchaser, region, and time period, and
the exporter’s pricing behavior to other purchasers, regions, and
time periods. This implies that the magnitude of the sales to one
group does not skew the outcome. See id.
Furthermore, as discussed above, even when a majority of
a respondent’s sales pass the Cohen d test, this does not end ITA’s
Consol. Court No. 15-00109 Page 54
analysis in determining whether to apply an alternative methodology
when calculating its weighted-average dumping margin. See IDM at
38. The agency must also consider and explain why the A-A
comparison method cannot account for such differences, in order to
satisfy both requirements under section 1677f-1(d)(1)(B) of the
Act, and only then does ITA consider the application of the A-T
method. Id.
The Stanley plaintiffs attempt to validate their claim on
the supposed bias of the Cohen d test by pointing to the outcomes
of 150 preliminary determinations in which a differential pricing
analysis was employed. See Stanley Administrative Case Brief at
33-34 and Addendum A.16 However, the Stanley data and analysis fail
to establish (1) that a bias exists among those preliminary
determinations and (2) how any potential bias would be attributable
to ITA’s calculation of the pooled standard deviation based on a
simple average of the variances of the test and comparison groups.
See IDM at 37.
16
The Stanley brief at bar cites an expanded data set
covering 209 respondents through September 2015. See p. 40,
Addendum B. The defendant requests that this expanded data set be
ignored, as it was not submitted to ITA during the administrative
process and is therefore not part of the record for this
administrative review per 19 U.S.C. § 1516a(b)(1)(B)(i). It is so
ordered.
Consol. Court No. 15-00109 Page 55
The Stanley data fail to demonstrate a bias in ITA’s
application of the Cohen d test. They show that 113 of the 150
cases cited involved a sufficient percentage of sales value passing
the d test to consider the application of an alternative comparison
methodology. See Stanley Administrative Case Brief at Addendum A.
Of these, ITA applied the A-T method in only 50 of the
determinations. From Stanley’s own data, accordingly, there does
not appear to exist a bias in the agency’s application of the
differential pricing analysis including Cohen’s d test based on the
use of a simple average in determining the pooled standard
deviation. Only one-third of the cases to which Stanley cites
resulted in the application of an alternative comparison
methodology, representing less than one-half of the cases in which
there existed a pattern of prices that differ significantly
pursuant to the Cohen d and ratio tests.
The Stanley argument, to wit, “the conclusion that two
companies targeted all of their sales underscores” the
unreasonableness of differential pricing because “it makes no
economic sense for any one company to ‘target’ the majority of its
sales,” Stanley Brief at 40, and because “if all sales are
‘targeted,’ then none can be,” Stanley Administrative Case Brief at
Consol. Court No. 15-00109 Page 56
33, expresses a misappreciation of how ITA determines the existence
of a pattern of export prices that differs significantly among
purchasers, regions, or time periods. The focus is not on
“targeting” and economic decision-making, but on the difference
between export prices.17 While Stanley pointed to a single case
where all of the respondent’s sales prices differed significantly,
there are also 16 cases in the data where none of the sales prices
did so, indicating that ITA’s approach is not unreasonable and does
not exhibit a bias. In other words, the phenomenon to which
Stanley points as proof of bias is controverted by its opposite,
i.e., that no sales pass the Cohen d test. Accordingly, Stanley’s
own data indicate that, if anything, there is a tendency against
finding a pattern of prices that differ significantly across
purchasers, regions, or time periods.
17
For example, consider two purchasers, A and B. If the
prices to purchaser A are found to differ significantly from the
prices to purchaser B, then it follows that the prices to purchaser
B differ significantly from the prices to purchaser A. Here, it is
reasonable to conclude that all prices differ significantly.
Similarly, if the prices to purchaser A do not differ significantly
from the prices to purchaser B, then it follows that the prices to
purchaser B do not differ significantly from the prices to
purchaser A. Here, it is reasonable to conclude that none of the
prices differ significantly.
Consol. Court No. 15-00109 Page 57
(x)
The Stanley plaintiffs press a number of additional
arguments, none of which is persuasive.
First, their argument that the “meaningful difference”
element of the Cohen d test has the perverse effect of allowing a
respondent to avoid the A-T method with zeroing if all its sales
are dumped, gaining a lower margin than if only some of its sales
are dumped, lacks merit. If all of a respondent’s sales are
dumped, then there is no zeroing because there are no sales that
are not dumped, and the weighted-average dumping margin calculated
using the A-A and A-T method is identical. If only some of a
respondent’s sales are dumped, the calculated weighted-average
dumping margin will be reduced, reflecting the fact that there is
less dumping overall, regardless of whether or not zeroing is
applied to the non-dumped sales. Accordingly, it is unclear how
the respondent would gain a lower dumping margin if all of its
sales were dumped. Stanley erroneously associates the possible use
of zeroing with always reducing the weighted-average dumping
margin, and draws an unsupportable conclusion.
Second, the Stanley plaintiffs argue that ITA’s approach
is mechanical and rote, contrary to Congress’s intent that an
analysis to detect masked dumping be conducted on a case-by-case
Consol. Court No. 15-00109 Page 58
basis. But the agency does examine whether the statutory
requirements have been satisfied on a case-by-case basis. It
reviews the individual pricing behavior of each respondent when it
conducts a differential pricing analysis. Its analysis begins by
examining the extent to which a respondent’s sales pass the Cohen
d test, and whether a group of sales passes that test is measured
relative to the “pooled standard deviation” discussed above, which
specifically reflects the pricing behavior of each individual
respondent. Then, ITA determines whether the differences in
respondent’s prices, based on purchaser, time period, and region,
can be accounted for using the A-A methodology, which is directly
related to the respondent’s dumping in the U.S. market and whether
such dumping is masked. See IDM at 41 (“[o]n a case-by-case basis,
[ITA] also considers the factual information and arguments on the
record for each segment of a proceeding”).
Furthermore, ITA considers arguments from parties in each
segment of a proceeding concerning whether its approach should be
modified. See PDM at 17 (“[i]nterested parties may present
arguments and justification in relation to the above-described
differential pricing approach used in these preliminary results,
including arguments for modifying the group definitions used in
Consol. Court No. 15-00109 Page 59
this proceeding”). For example, in the 2011-2012 administrative
review of copper tubing from the PRC, the agency modified the time
periods used in the Cohen d test. See Seamless Refined Copper Pipe
and Tube From the PRC, 79 Fed.Reg. 23324 (April 28, 2014), and
accompanying I&D memo at 13-14.
The defendant contends that not only does ITA review the
specific circumstances of a respondent, it continues to expand its
experience and alter its method as it applies the methodology, see
IDM at 41, and that the agency reviewed Stanley sales to determine
which passed the Cohen d test, compared Stanley weighted-average
dumping margins calculated using the A-A methodology and the mixed
alternative methodology to determine whether the significant price
differences based on purchaser, period, and region, could be
accounted for by the A-A methodology, and found that the A-A
methodology did not account for such differences. See IDM at
30-31. To the extent ITA’s application of the differential pricing
analysis was tailored to Stanley, it was not mechanical; and even
if the Cohen d test itself may be inferred mechanistic, that does
not, ipse dixit, make it unlawful, or else all calculations would
be.
Consol. Court No. 15-00109 Page 60
Third, the Stanley plaintiffs challenge ITA’s continued
use of sales that have been found to pass the Cohen d test in the
base group of other comparisons. But as stated in the Preliminary
Results, the purpose of that test is “to evaluate the extent to
which the net prices to a particular purchaser, region, or time
period differ significantly from the net prices of all other sales
of comparable merchandise.” PDM at 16. Simply because certain
sale prices are part of a test group in one instance and part of a
comparison group in other instances does not constitute double
counting; agency dumping analysis includes all information and data
on the record, and selectively including or excluding certain sales
is not supported by the statute.
Furthermore, the inclusion of sales that “pass” the Cohen
d test in base groups for other test groups does not cause sales to
“pass” that otherwise would not. The Stanley assertion to the
contrary is refutable through the use of a hypothetical scenario:
[T]here are two purchasers, A and B, which purchase the
subject merchandise at average prices of 10 and 20,
respectively. Based on the Cohen’s d Test, when testing
purchaser A, the weighted-average price to purchaser B
will be the comparison group, and the difference in the
two prices between purchaser A and purchaser B, i.e., 10,
is found to pass the Cohen’s d Test. Then, when purchaser
B is the test group, purchaser A will be the comparison
group, and the sales to purchaser B will also be found to
pass the Cohen’s d Test.
Consol. Court No. 15-00109 Page 61
IDM at 41-42. If the weighted-average price to purchaser A differs
significantly from the weighted-average price to purchaser B, the
weighted-average price to purchaser B also differs significantly
from the weighted-average price to purchaser A. The Stanley
suggestion (that once ITA finds that the weighted-average price to
purchaser A differs significantly from the weighted-average price
to purchaser B, the sales prices to purchaser A should be excluded
henceforth from the analysis) appears illogical, as it would result
in no comparison being made for the weighted-average price to
purchaser B because sales to purchaser A would not be allowed to be
a basis for comparison. Further, if purchaser B’s sales were tested
first, purchaser A’s sales would not be tested for the same reason,
and such an approach would lead to arbitrary and unpredictable
results that would depend upon the order in which purchasers,
regions, or time periods were examined.
Fourth, the Stanley plaintiffs contend that the Cohen d
test prevents respondents from refraining from engaging in
“targeted dumping.” They claim that high pass rates for that test
make it difficult to “avoid being found ‘guilty’ of targeted
dumping.” But that test alone does not determine whether ITA will
apply an alternative comparison methodology. See IDM at 37-38.
Consol. Court No. 15-00109 Page 62
Lastly, the consolidated-plaintiffs challenge agency use
of net prices rather than gross prices when examining if a pattern
of prices differs significantly. Their specific contention is that
ITA fails to account for circumstances of sale that cause net
prices to vary, and that such circumstances are exogenous factors
that do not affect a respondent’s pricing behavior but are beyond
its control because of differences in selling circumstances. The
defendant contends ITA uses net prices to address all circumstances
of sale, deducting the associated expenses from the reported gross
unit prices which are used in the Cohen d test and that the
suggestion that circumstances of sale do not affect the pricing
behavior of a respondent is misleading. The defendant explains
that respondents will generally account for costs such as freight,
packing, and direct selling expenses in their pricing decisions,
and that, when a dumping margin is calculated, it is based on net
prices. For that reason, the defendant continues, ITA deems it
appropriate to examine whether there is a “differ significantly”
pattern based on net prices, because such examination later informs
agency margin calculation. See IDM at 37 (“[ITA] finds that it is
appropriate and reasonable that its examination of a pattern of
prices that differ significantly to be based on net prices rather
than gross prices, as net prices are the basis used to calculate
Consol. Court No. 15-00109 Page 63
dumping margins and determine a respondent’s amount of dumping”).
As this appears to implement the intent of the statute and the
regulations, where the purpose of a differential pricing analysis
is to determine whether the A-A comparison methodology is the
appropriate tool with which to measure a respondent’s dumping in
the U.S. market, see 19 C.F.R. §351.414(c)(1), this court cannot
fault defendant’s rationale.
In sum, with the exception of section III.C, supra, the
Stanley plaintiffs have not established that ITA’s utilization of
its differential pricing analysis was out of order. See Apex
Frozen Foods Private Ltd. v. United States, 862 F.3d 1322 and 862
F.3d 1337 (Fed.Cir. 2017), passim.
IV
In view of the foregoing, the motions of the plaintiff
and the consolidated-plaintiffs for judgment on the agency record18
can be granted only to the extent of remand to ITA for
reconsideration of the issues of (1) the two labor classification
18
The quality of the papers submitted in support, as well
as of those presented in opposition, obviated any need to burden
the parties with oral argument, and their motion therefor, for the
record, is thus hereby denied.
Consol. Court No. 15-00109 Page 64
matters, as discussed in section II.E, supra, (2) the apparent
omission, in the Stanley February 17, 2015 post-verification factor
of production database, of a zero in the tenth or one-hundredth
decimal place in field “V_DLCROD”, as discussed in section III.A
above, and (3) the application of the limiting rule, as discussed
in section III.C, supra.
The results of this remand shall be filed on or before
November 30, 2017, with any comments thereon due within 30 days of
the filing thereof.
So ordered.
Dated: New York, New York
September 6, 2017
__/s/ Thomas J. Aquilino, Jr.__________
Senior Judge