China Kingdom (Beijing) Import v. United States

United States Court of Appeals
for the Federal Circuit
______________________
WEISHAN HONGDA AQUATIC FOOD CO., LTD.,
Plaintiff
CHINA KINGDOM (BEIJING) IMPORT & EXPORT
CO., LTD., SHANGHAI OCEAN FLAVOR
INTERNATIONAL TRADING CO., LTD., DEYAN
AQUATIC PRODUCTS AND FOOD CO., LTD.,
Plaintiffs-Appellants
v.
UNITED STATES, CRAWFISH PROCESSORS
ALLIANCE,
Defendants-Appellees
______________________
2018-1375
______________________
Appeal from the United States Court of International
Trade in No. 1:16-cv-00073-MAB, Judge Mark A. Barnett.
______________________
Decided: March 5, 2019
______________________
YINGCHAO XIAO, Lee & Xiao, San Marino, CA, argued
for plaintiffs-appellants. Also represented by DOUGLAS
CAMPAU.
MOLLIE LENORE FINNAN, Commercial Litigation
Branch, Civil Division, United States Department of
2 CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED
STATES
Justice, Washington, DC, argued for defendant-appellee
United States. Also represented by JOSEPH H. HUNT,
JEANNE E. DAVIDSON, PATRICIA M. MCCARTHY; BRENDAN
SASLOW, SAAD YOUNUS CHALCHAL, Office of Chief Counsel
for Trade Enforcement & Compliance, United States De-
partment of Commerce, Washington, DC.
WILL E. LEONARD, Adduci, Mastriani & Schaumberg,
LLP, Washington, DC, for defendant-appellee Crawfish
Processors Alliance. Also represented by JOHN
STEINBERGER.
______________________
Before DYK, WALLACH, and CHEN, Circuit Judges.
WALLACH, Circuit Judge.
This appeal concerns the U.S. Department of Com-
merce’s (“Commerce”) final results of an administrative re-
view and a new shipper review of the antidumping duty
order on freshwater crawfish tail meat (“subject merchan-
dise”) from the People’s Republic of China (“China”). See
Freshwater Crawfish Tail Meat from the People’s Republic
of China, 81 Fed. Reg. 21,840, 21,840 (Dep’t of Commerce
Apr. 13, 2016) (final admin. review and new shipper re-
view) (“Final Results”); see also Freshwater Crawfish Tail
Meat from the People’s Republic of China, 81 Fed. Reg.
23,457, 23,457 (Dep’t of Commerce Apr. 21, 2016) (notice of
correction to final admin. review and new shipper review)
(“Amended Final Results”). 1 Appellants China Kingdom
(Beijing) Import & Export Co., Ltd. (“China Kingdom”),
Ocean Flavor, and Deyan Aquatic Products and Food Co.,
1 The Amended Final Results corrected the Final Re-
sults, which “incorrectly identified” Shanghai Ocean Flavor
International Trading Co., Ltd. (“Ocean Flavor”) by a dif-
ferent name. Amended Final Results, 81 Fed. Reg. at
23,457.
CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED 3
STATES
Ltd. (“Deyan”) (collectively, “Chinese Respondents”) argue
the U.S. Court of International Trade (“CIT”) erred in sus-
taining Commerce’s calculations of weighted average
dumping margins for each respondent. Weishan Hongda
Aquatic Food Co. v. United States, 273 F. Supp. 3d 1279,
1293 (Ct. Int’l Trade 2017) (sustaining the margins calcu-
lated in the “Final Results, as corrected by the Am[ended]
Final Results and as amended by the [Final Results of Re-
mand Redetermination (‘Remand Results’)]”); see J.A. 733–
43 (Remand Results); 2 see also J.A. 1–2 (Judgment).
The Chinese Respondents appeal. We have jurisdiction
pursuant to 28 U.S.C. § 1295(a)(5) (2012). We affirm.
BACKGROUND
I. Legal Framework
By statute, antidumping duties may be imposed on for-
eign merchandise sold, or likely to be sold, “in the United
States at less than its fair value.” 19 U.S.C. § 1673 (2012). 3
At the conclusion of an investigation, if Commerce and the
U.S. International Trade Commission have made the req-
uisite findings, Commerce “shall publish an antidumping
duty order” directing U.S. Customs and Border Protection
officers to assess duties on imports of goods covered by the
2 In the Remand Results, Commerce did not change
the margins calculated in the Final Results. See J.A. 733.
3 In June 2015, Congress amended the statutes con-
taining the antidumping provisions. See Trade Preferences
Extension Act of 2015 (“TPEA”), Pub. L. No. 114-27,
§§ 501–507, 129 Stat. 362, 383–87. We review the Final
Results in accordance with the TPEA because they issued
after the TPEA became effective. See Ad Hoc Shrimp
Trade Action Comm. v. United States, 802 F.3d 1339, 1348–
52 (Fed. Cir. 2015). Unless stated otherwise, we cite to the
U.S. Code version of the statute when there are no material
changes in the TPEA for purposes of this appeal.
4 CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED
STATES
investigation. Id. § 1673e(a). Each year after the order is
published, if Commerce receives a request for an adminis-
trative review of the order, it “shall” conduct such a review.
Id. § 1675(a)(1). Similarly, if Commerce receives a request
for a review by a new shipper of subject merchandise, it
shall conduct such a review. See id. § 1675(a)(2)(B)(i) (re-
quiring a review where “an exporter or producer” estab-
lishes that they “did not export” subject merchandise and
are not affiliated with an exporter or producer that did ex-
port subject merchandise “during the period of investiga-
tion”); see also 19 C.F.R. § 351.214(a) (2016) (referring to
these reviews as “new shipper reviews”).
When conducting these reviews, Commerce typically
must “determine the individual weighted average dumping
margin for each known exporter and producer of the sub-
ject merchandise.” 19 U.S.C. § 1677f–1(c)(1). A dumping
margin reflects the amount by which the “‘normal value’
(the price a producer charges in its home market) exceeds
the ‘export price’ (the price of the product in the United
States) or ‘constructed export price.’” 4 U.S. Steel Corp. v.
United States, 621 F.3d 1351, 1353 (Fed. Cir. 2010) (foot-
note omitted) (citing 19 U.S.C. § 1677(35)(A)).
4 “When the foreign producer or exporter sells di-
rectly to an unaffiliated purchaser in the United States,
Commerce uses [export price] as the U.S. price for purposes
of the comparison.” Micron Tech., Inc. v. United States, 243
F.3d 1301, 1303 (Fed. Cir. 2001) (citation omitted). “How-
ever, where a sale is made by a foreign producer or exporter
to an affiliated purchaser in the United States, the statute
provides for use of [constructed export price] as the [U.S.]
price for purposes of the comparison.” Id. (citation omit-
ted). The calculation of constructed export price, as com-
pared to export price, is subject to certain “[a]dditional
adjustments.” 19 U.S.C. § 1677a(d).
CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED 5
STATES
The statute explains how “normal value shall be deter-
mined” “[i]n order to achieve a fair comparison with the ex-
port price or constructed export price.” 19 U.S.C.
§ 1677b(a). However, if Commerce determines the export-
ing country is a “nonmarket economy country” 5 and “finds
that available information does not permit the normal
value of the subject merchandise to be determined under [§
1677b(a)],” then Commerce calculates normal value by val-
uing the “factors of production” used in producing the mer-
chandise in a comparable “market economy country or
countries.” Id. § 1677b(c)(1). Specifically, Commerce must
value the factors of production “to the extent possible . . . in
one or more market economy countries that are—(A) at a
level of economic development comparable to that of the
nonmarket economy country, and (B) significant producers
of comparable merchandise.” Id. § 1677b(c)(4). Accord-
ingly, in selecting these so-called surrogate values to rep-
resent the factors of production, Commerce “attempts to
construct a hypothetical market value of that product in
the nonmarket economy.” Downhole Pipe, 776 F.3d at 1375
(internal quotation marks, brackets, and citation omitted).
5 A “nonmarket economy country” is “any foreign
country that [Commerce] determines does not operate on
market principles of cost or pricing structures, so that sales
of merchandise in such country do not reflect the fair value
of the merchandise.” 19 U.S.C. § 1677(18)(A). “Because it
deems China to be a nonmarket economy country, Com-
merce generally considers information on sales in China
and financial information obtained from Chinese producers
to be unreliable for determining, under . . . § 1677b(a), the
normal value of the subject merchandise.” Downhole Pipe
& Equip., L.P. v. United States, 776 F.3d 1369, 1375 n.1
(Fed. Cir. 2015) (internal quotation marks and citation
omitted).
6 CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED
STATES
II. Procedural History
In 1997, Commerce, after conducting an investigation,
issued an antidumping duty order that covers freshwater
crawfish tail meat from China. See Freshwater Crawfish
Tail Meat from the People’s Republic of China, 62 Fed. Reg.
48,218, 48,219 (Dep’t of Commerce Sept. 15, 1997) (anti-
dumping duty order). Following timely requests, Com-
merce initiated an administrative review in October 2014,
covering a period of review from September 1, 2013, to Au-
gust 31, 2014. See Initiation of Antidumping and Counter-
vailing Duty Administrative Reviews, 79 Fed. Reg. 64,565,
64,565, 64,567 (Dep’t of Commerce Oct. 30, 2014) (initia-
tion admin. review). Commerce limited its review to the
two largest exporters of the subject merchandise by vol-
ume, thereby selecting China Kingdom and Deyan as man-
datory respondents, while Ocean Flavor participated in the
administrative review by seeking voluntary respondent
status. J.A. 416; see J.A. 317–18 (deciding, by Commerce,
to limit the review); see also 19 U.S.C. §§ 1677f–1(c)(2) (ex-
plaining when Commerce may limit its review to a “reason-
able number of exporters or producers”), 1677m(a)
(discussing the process for voluntary respondents). In ad-
dition, following timely requests, Commerce also initiated
a new shipper review for three companies, including
Weishan Hongda Aquatic Food Co., Ltd. (“Hongda”), cover-
ing the same period of review as the administrative review.
See Initiation of Antidumping Duty New Shipper Reviews,
79 Fed. Reg. 64,749, 64,749 (Dep’t of Commerce Oct. 31,
2014) (initiation of new shipper review). In November
2014, Commerce aligned the statutory time limits for issu-
ance of the new shipper review with the deadlines of the
concurrent administrative review. J.A. 314.
In October 2015, Commerce published the preliminary
results of its administrative review and new shipper re-
view. See Freshwater Crawfish Tail Meat from the People’s
Republic of China, 80 Fed. Reg. 60,624, 60,624 (Dep’t of
Commerce Oct. 7, 2015) (prelim. admin. review and new
CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED 7
STATES
shipper review) (“Preliminary Results”); see also J.A. 415–
30 (providing Commerce’s decision memorandum accompa-
nying the Preliminary Results). For the Preliminary Re-
sults, Commerce explained in its accompanying decision
memorandum that, before selecting surrogate values, it
“determined that South Africa, Colombia, Bulgaria, Thai-
land, Ecuador, and Indonesia are countries that are at the
same level of economic development to that of [China]” and
further found that “Indonesia and Thailand are significant
producers of comparable merchandise [to freshwater craw-
fish tail meat], processed seafood.” J.A. 418–19 (footnotes
omitted). Because of Commerce’s regulatory preference “to
value [factors of production] in a single country,” Com-
merce selected “Thailand as the primary surrogate coun-
try,” given “the availability of factor values in Thailand
relative to Indonesia,” “including, importantly, financial
statements.” J.A. 419 (footnote omitted); see 19 C.F.R.
§ 351.408(c)(2) (“Except for labor . . . [Commerce] normally
will value all factors in a single surrogate country.”). Com-
merce selected surrogate values for factors of production
and, relevant here, calculated three surrogate financial ra-
tios to represent (1) manufacturing overhead, (2) selling,
general, and administrative (“SG&A”) expenses, and
(3) profit, “by averaging the non-proprietary information
taken from the 2012 financial statements of two Thai pro-
ducers of processed seafood,” Surapon Food Public Com-
pany Ltd. (“Surapon”) and Kiang Huat Sea Gull Trading
Frozen Food Public Company Ltd. (“Kiang Huat”).
J.A. 429; see J.A. 686 (identifying the names of the two
Thai producers of processed seafood).
Although the period of review covered September 1,
2013, to August 31, 2014, Commerce explained that it
“[found] it appropriate to consider using the financial state-
ment of . . . two [Thai] seafood processors . . . for calendar
year 2012.” J.A. 449. Commerce detailed that “the condi-
tion known as [Early Mortality Syndrome
(‘EMS’)] . . . decimated shrimp populations in Thailand
8 CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED
STATES
covering calendar years 2013 and 2014, [thereby] sharply
restricting the profitability of seafood processors in that
country,” but that calendar year 2012 was unaffected by
EMS. J.A. 449 (emphasis added). Commerce noted that
the Thai Financial Statements “do not identify energy ex-
penses” and therefore Commerce was “unable to segregate
and . . . exclude energy costs from the calculation of the
surrogate financial ratio for overhead,” per its normal prac-
tice in calculating these ratios. J.A. 449. Nevertheless,
Commerce relied on the Thai Financial Statements, calcu-
lating surrogate financial ratios of 7.73% for manufactur-
ing overhead, 2.45% for SG&A expenses, and 6.77% for
profit. J.A. 449. Consequently, Commerce calculated a
0.00% weighted average dumping margin for each of the
Chinese Respondents. Preliminary Results, 80 Fed. Reg.
at 60,625.
Commerce issued the Final Results in April 2016. 81
Fed. Reg. at 21,840; see J.A. 684–96 (providing Commerce’s
decision memorandum accompanying the Final Results).
In the Final Results, Commerce determined that the Thai
Financial Statements from 2012 were no longer the best
available information on the record by which to value the
surrogate financial ratios. See J.A. 690–92. Commerce ex-
plained Surapon’s and Kiang Huat’s financial statements
demonstrate that they “benefit from countervailing export
subsidies and therefore are an unreliable source to value
financial ratios.” J.A. 692. Instead, Commerce relied on
South African company Oceana Group’s annual report
(“Oceana Report”), stating that “South Africa is a signifi-
cant producer of comparable merchandise.” J.A. 692; see
J.A. 692 (recognizing that, although Commerce’s “prefer-
ence is to value all surrogate values from a single country,”
Commerce has “the discretion to resort to a secondary sur-
rogate country if the data from the primary surrogate
[country] do not provide a viable option because they do not
provide sufficient reliable sources of publicly available sur-
rogate value data”). Commerce noted that the Oceana
CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED 9
STATES
Report is “contemporaneous with the [period of review]”
and “contains the necessary information for [Commerce] to
calculate appropriate financial ratios.” J.A. 692 (footnote
omitted).
Based on the Oceana Report, Commerce calculated the
following surrogate financial ratios: 6.69% for manufactur-
ing overhead, 37.05% for SG&A expenses, and 20.05% for
profit. J.A. 699. Although the surrogate financial ratio for
manufacturing overhead slightly decreased from the Pre-
liminary Results, the other two surrogate financial ratios
markedly increased. See J.A. 449 (calculating, for the Pre-
liminary Results, surrogate financial ratios of 7.73% for
manufacturing overhead, 2.45% for SG&A expenses, and
6.77% for profit). As a result of, inter alia, the change to
the surrogate financial ratios made in the Final Results,
Commerce recalculated the weighted average dumping
margins from 0.00% to: 22.16% for China Kingdom, 12.04%
for Deyan, and 17.23% for Ocean Flavor. 81 Fed. Reg. at
21,841.
The Chinese Respondents and Hongda sued Appellee
United States (“the Government”) in the CIT, challenging
the antidumping duty rates assigned to them. See Weishan
Hongda, 273 F. Supp. 3d at 1280; see also J.A. 45–46 (ex-
cerpts from the Complaint). The United States “requested
remand to address” the issue of “the factual basis for Com-
merce’s determination that South Africa is a significant
producer of comparable merchandise.” Weishan Hongda,
273 F. Supp. 3d at 1284. In the Remand Results, Com-
merce calculated the same margins as it did in the Final
Results, “continu[ing] to find it appropriate to rely on” the
Oceana Report because it determined that South Africa is
at “the same level of economic development as China” and
“is a significant producer of comparable merchandise.”
J.A. 733–34 (footnote omitted). Commerce explained that
“[Global Trade Atlas] export data and the ‘export revenue’
figure reported in [the] Oceana [Report], sufficiently
demonstrate that South Africa is a significant producer of
10 CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED
STATES
comparable merchandise.” J.A. 741. Following the Re-
mand Results, the Chinese Respondents and Hongda rep-
resented to the CIT that “they no longer challenge
Commerce’s finding that South Africa is a significant pro-
ducer of comparable merchandise.” Weishan Hongda, 273
F. Supp. 3d at 1285 (footnote omitted). Instead, the Chi-
nese Respondents argued Commerce erred by relying on
the Oceana Report “to value financial ratios.” Id.
The CIT ultimately “sustain[ed] Commerce’s Final Re-
sults, as corrected by the Am[ended] Final Results and as
amended by the Remand Results.” Id. at 1293 (third italics
added). As a preliminary matter, the CIT found that the
Chinese Respondents and Hongda “chose to [administra-
tively] exhaust some, but not all, of their arguments
against using the data in the Oceana Report.” Id. at 1288.
The CIT upheld Commerce’s reliance on the Oceana Report
as the best available information, recognizing that “Com-
merce compared the Thai and South African statements
and determined that the taint of countervailable subsidies
in conjunction with the [energy input] disaggregation is-
sues in the Thai statements outweighed any perceived
flaws in the Oceana Report.” Id. at 1292; see 19 U.S.C.
§ 1677(5)–(5B) (defining countervailable and noncounter-
vailable subsidies). According to the CIT, although Hongda
raised concerns regarding the use of the Oceana Report due
“to the basket category for cost of sales and the aggregation
of labor and raw materials therein,” Commerce sufficiently
addressed those concerns by recognizing “its ability to use
its preferred methodology.” Weishan Hongda, 273 F. Supp.
3d at 1292.
DISCUSSION
The Chinese Respondents argue Commerce “improp-
erly rejected the two Thai financial statements . . . in favor
of [the Oceana Report] in the calculation of surrogate finan-
cial ratios.” Appellants’ Br. 9. Appellee Crawfish Proces-
sors Alliance (“CPA”), a domestic interested party during
CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED 11
STATES
Commerce’s proceedings, contends the Chinese Respond-
ents’ surrogate financial ratio arguments “are barred by
[their] failure to exhaust administrative remedies” and
therefore the CIT lacked jurisdiction over this claim. CPA’s
Br. 19 (capitalization modified); see id. at 19–22. After ar-
ticulating the appropriate legal standards, we address
CPA’s threshold argument and then the Chinese Respond-
ents’ argument. 6
6 CPA also argues “this court lacks jurisdiction with
respect to the final results of the [new shipper review]” for
Hongda because only the Chinese Respondents, which
were parties to the administrative review, filed a notice of
appeal of the Judgment. CPA’s Br. 17 (capitalization mod-
ified). We agree. An administrative review and new ship-
per review are separate and independent segments of a
proceeding. See 19 C.F.R. § 351.102(b)(47) (explaining that
each “segment of a proceeding” “is reviewable”); see also id.
§ 351.102(b)(2) (defining administrative review as a review
under § 1675(a)(1)), (b)(33) (defining new shipper review as
a review under § 1675(a)(2)). In this case, Commerce
aligned the administrative review and new shipper review.
J.A. 314. The CIT’s Opinion sustained, on the merits, Com-
merce’s surrogate financial ratio determination in both the
administrative review and new shipper review, see
Weishan Hongda, 273 F. Supp. 3d at 1293, and it entered
its Judgment accordingly, J.A. 1. Hongda, which requested
a new shipper review, did not file a notice of appeal of the
Judgment, and therefore we may not provide redress to
Hongda in this appeal brought by the Chinese Respond-
ents. See Lexmark Int’l, Inc. v. Static Control Components,
Inc., 572 U.S. 118, 126 (2014) (acknowledging “the general
prohibition on a litigant’s raising another person’s legal
rights” (internal quotation marks and citation omitted)).
The issue of our jurisdiction is separate from the issue of
whether the CIT had jurisdiction to consider the merits of
12 CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED
STATES
I. Standard of Review
We apply the same standard of review as the CIT, see
Downhole Pipe, 776 F.3d at 1373, which upholds Com-
merce’s determinations that are supported “by substantial
evidence on the record” and otherwise “in accordance with
law,” 19 U.S.C. § 1516a(b)(1)(B)(i). “Although we review
the decisions of the CIT de novo, we give great weight to
the informed opinion of the CIT and it is nearly always the
starting point of our analysis.” Nan Ya Plastics Corp. v.
United States, 810 F.3d 1333, 1341 (Fed. Cir. 2016) (inter-
nal quotation marks, brackets, ellipsis, and citation omit-
ted). “Substantial evidence is defined as more than a mere
scintilla, as well as evidence that a reasonable mind might
accept as adequate to support a conclusion,” and Com-
merce’s “finding may still be supported by substantial evi-
dence even if two inconsistent conclusions can be drawn
from the evidence.” Downhole Pipe, 776 F.3d at 1374 (in-
ternal quotation marks and citations omitted). “We look to
the record as a whole, including evidence that supports as
well as evidence that fairly detracts from the substantiality
of the evidence.” SolarWorld Ams., Inc. v. United States,
910 F.3d 1216, 1222 (Fed. Cir. 2018) (internal quotation
marks and citation omitted).
II. CIT’s Jurisdiction
A. Legal Standards
“Article III generally requires a federal court to satisfy
itself of its jurisdiction over the subject matter before it
considers the merits of a case.” Ruhrgas AG v. Marathon
Oil Co., 526 U.S. 574, 583 (1999). A court “may not assume
jurisdiction for the purpose of deciding the merits of the
case.” Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp.,
Hongda’s surrogate financial ratio arguments raised dur-
ing the new shipper review. We address the CIT’s jurisdic-
tion below.
CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED 13
STATES
549 U.S. 422, 431 (2007). “The requirement that jurisdic-
tion be established as a threshold matter springs from the
nature and limits of the judicial power of the United States
and is inflexible and without exception.” Steel Co. v. Citi-
zens for a Better Env’t, 523 U.S. 83, 94–95 (1998) (internal
quotation marks, brackets, and citation omitted). Where
jurisdiction is lacking, “the proper course would be to dis-
miss on that ground.” Sinochem, 549 U.S. at 436.
“We review a decision of the [CIT] on whether to re-
quire exhaustion in a particular case for abuse of discre-
tion.” Boomerang Tube LLC v. United States, 856 F.3d 908,
912 (Fed. Cir. 2017). The CIT “shall, where appropriate,
require the exhaustion of administrative remedies.” 28
U.S.C. § 2637(d). “[T]his statutory mandate indicates a
congressional intent that, absent a strong contrary reason,
the [CIT] should insist that parties exhaust their remedies
before the pertinent administrative agencies.” Boomerang,
856 F.3d at 912 (internal quotation marks and citation
omitted).
B. The CIT Had Jurisdiction to Reach the Merits of the
Chinese Respondents’ Claims
In assessing CPA’s argument whether the Chinese Re-
spondents exhausted their administrative remedies where
they did not raise the issue of surrogate financial ratios in
their case briefs in the administrative review, but where
Hongda raised the issue in the “separate, but aligned” new
shipper review, the CIT said “[i]n light of the decision on
the merits of this case, the court need not resolve CPA’s ar-
gument.” Weishan Hongda, 273 F. Supp. 3d at 1289, 1290
(emphasis added). Instead, the CIT acknowledged the Gov-
ernment’s representation “that it was not asserting the
doctrine of administrative exhaustion against the [Chinese
Respondents] because Commerce had examined surrogate
values jointly for both reviews, relying on the same evi-
dence and arriving at the same determination.” Id. at
1289. Therefore, the CIT “turn[ed] to the merits of
14 CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED
STATES
[Chinese Respondents’ and Hongda’s] exhausted argu-
ments.” Id. at 1290 (footnote omitted).
CPA now argues the CIT lacked jurisdiction over the
Chinese Respondents’ claims due to the Chinese Respond-
ents’ failure to exhaust the surrogate financial ratios argu-
ments during the administrative review. See CPA’s
Br. 17–22. According to CPA, although the administrative
review and new shipper review were aligned, they are sep-
arate and independent proceedings, such that the Chinese
Respondents cannot bootstrap their surrogate financial ra-
tios arguments to Hongda’s surrogate financial ratios ar-
guments made during the new shipper review. See id. at
17. CPA contends that, because the Chinese Respondents
did not file any case briefs during the administrative re-
view, see id. at 8–11, they failed to exhaust their adminis-
trative remedies in the administrative review, thereby
depriving the CIT of jurisdiction over the Chinese Respond-
ents’ claims regarding the surrogate financial ratios, id. at
19–22. We disagree.
“[E]xhaustion of administrative remedies is required
where Congress imposes an exhaustion requirement by
statute.” Coit Indep. Joint Venture v. Fed. Sav. & Loan Ins.
Corp., 489 U.S. 561, 579 (1989) (citations omitted). “But
where Congress has not clearly required exhaustion, sound
judicial discretion governs.” McCarthy v. Madigan, 503
U.S. 140, 144 (1992) (citation omitted). “[T]he initial ques-
tion whether exhaustion is required should be answered by
reference to congressional intent; and a court should not
defer the exercise of jurisdiction under a federal statute un-
less it is consistent with that intent.” Patsy v. Bd. of Re-
gents, 457 U.S. 496, 501–02 (1982) (footnote omitted).
CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED 15
STATES
We clarify that the requirement to exhaust administra-
tive remedies under § 2637(d) is not jurisdictional. 7 We
acknowledge that we have occasionally referred to the re-
quirement to exhaust administrative remedies under
§ 2637(d) as having jurisdictional effect. See, e.g., Essar
Steel, Ltd. v. United States, 753 F.3d 1368, 1374 (Fed. Cir.
2014) (“The doctrine of exhaustion provides that no one is
entitled to judicial relief for a supposed or threatened in-
jury until the prescribed administrative remedy has been
exhausted.” (emphasis added) (internal quotation marks
and citation omitted)); Belgium v. United States, 551 F.3d
1339, 1349 (Fed. Cir. 2009) (“Under the circumstances[,]
there was no failure to exhaust available administrative
remedies. Thus the trial court properly exercised jurisdic-
tion, and [appellee]’s claim on the merits is also not barred
by the exhaustion doctrine.” (emphasis added) (citation
omitted)); Consol. Bearings Co. v. United States, 348 F.3d
997, 1003 (Fed. Cir. 2003) (considering exhaustion under
§ 2637(d) as part of “the jurisdictional inquiry” and stating
“[w]hile enforcing exhaustion requirements as jurisdic-
tional prerequisites, the [CIT] also enjoys discretion to iden-
tify circumstances where exhaustion of administrative
remedies does not apply” (emphases added)). However,
“[c]ourts . . . have been less than meticulous” when classi-
fying requirements as jurisdictional, and we find that to be
the case here. See Kontrick v. Ryan, 540 U.S. 443, 454
(2004). None of the cases discussed above actually decided
the issue of whether § 2637(d) is jurisdictional; rather, they
simply reference jurisdiction in passing. See Essar Steel,
7 We do not suggest that exhaustion is not jurisdic-
tional under other agency statutes. “Exhaustion require-
ments are sometimes regarded as jurisdictional and
sometimes not.” St. Bernard Par. Gov’t v. United States,
No. 2018-1204, 2019 WL 638118, at *4 (Fed. Cir. Feb. 15,
2019).
16 CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED
STATES
753 F.3d at 1374; Belgium, 551 F.3d at 1349; Consol. Bear-
ings, 348 F.3d at 1003.
In analyzing § 2637(d), we have explicitly “held that ex-
haustion is not strictly a jurisdictional requirement and
therefore the [CIT] may waive the requirement at the
court’s discretion.” United States v. Nitek Elecs., Inc., 806
F.3d 1376, 1381 (Fed. Cir. 2015). This conclusion is correct
because § 2637(d) speaks in general terms and Congress
did not identify under which particular circumstances ad-
ministrative remedies should be exhausted. See 28 U.S.C.
§ 2637(d); see also Maggitt v. West, 202 F.3d 1370, 1377
(Fed. Cir. 2000) (“It is well settled that when Congress has
not clearly mandated the exhaustion of particular admin-
istrative remedies, the exhaustion doctrine is not jurisdic-
tional, but is a matter for the exercise of ‘sound judicial
discretion.’” (quoting McCarthy, 503 U.S. at 144)). Instead,
§ 2637(d) affords the CIT discretion through its inclusion
of its “where appropriate” clause, see 28 U.S.C. § 2637(d)
(“[T]he [CIT] shall, where appropriate, require the exhaus-
tion of administrative remedies.” (emphasis added)), which
is at odds with traditional notions of jurisdiction, see
United States v. Priority Prods., Inc., 793 F.2d 296, 300
(Fed. Cir. 1986) (explaining that “Congress appears to have
recognized” § 2637(d)’s non-jurisdictional nature “by grant-
ing the [CIT] some discretion to excuse the failure to ex-
haust administrative remedies”); see also Itochu Bldg.
Prods. v. United States, 733 F.3d 1140, 1145–46 (Fed. Cir.
2013) (recognizing the CIT, in its discretion, should assess
whether exhaustion is required by considering “the pur-
poses served by requiring exhaustion in the particular
case” and outlining specific, court-recognized exceptions to
the exhaustion requirement). Congress has not evinced a
contrary intent. See H.R. Rep. No. 96-1235, at 57 (1980),
as reprinted in 1980 U.S.C.C.A.N. 3729, 3769 (recognizing
that “[s]ubsection (d) states a general rule” of exhaustion).
Congress did not render § 2637(d) jurisdictional, so the CIT
was not prevented from considering the merits of the
CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED 17
STATES
Chinese Respondents’ claims, see Sinochem, 549 U.S. at
431 (explaining a federal court may not assume jurisdic-
tion), as doing so does not violate separation of powers prin-
ciples, absent a legislatively erected jurisdictional bar, see
Ruhrgas, 526 U.S. at 585 (explaining that “separation of
powers” concerns require a court to ascertain jurisdiction
before reaching the merits). 8
III. Surrogate Financial Ratios
A. Legal Standard
When valuing factors of production in the nonmarket
economy context, the statute directs that Commerce’s deci-
sion “shall be based on the best available information re-
garding the values of such factors in a market economy
country or countries.” 19 U.S.C. § 1677b(c)(1) (emphasis
added). Commerce has “broad discretion” to determine
what constitutes the best available information, as this
term “is not defined by statute.” QVD Food Co. v. United
States, 658 F.3d 1318, 1323 (Fed. Cir. 2011). Pursuant to
Commerce’s stated practice, it “generally selects, to the ex-
tent practicable, surrogate values that are publicly availa-
ble, are product-specific, reflect a broad market average,
and are contemporaneous with the period of review.” Qing-
dao Sea–Line Trading Co. v. United States, 766 F.3d 1378,
1386 (Fed. Cir. 2014) (footnote omitted). To value
8 Our holding today should not be understood as al-
lowing the CIT to routinely bypass the issue of exhaustion
and proceed to the merits. For instance, § 2637(d) indi-
cates “a congressional intent that, absent a strong contrary
reason, the [CIT] should insist that parties exhaust their
remedies.” Boomerang, 856 F.3d at 912 (internal quotation
marks and citation omitted); see JBF RAK LLC v. United
States, 790 F.3d 1358, 1366 (Fed. Cir. 2015) (indicating the
CIT typically “takes a strict view” of exhaustion (internal
quotation marks and citation omitted)).
18 CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED
STATES
surrogate financial ratios of manufacturing overhead,
SG&A expenses, and profit, Commerce “normally will use
non-proprietary information gathered from producers of
identical or comparable merchandise in the surrogate
country.” 19 C.F.R. § 351.408(c)(4). “Generally, if more
than one producer’s financial statements are available,
Commerce averages the financial ratios derived from all
the available financial statements.” Ad Hoc Shrimp Trade
Action Comm. v. United States, 618 F.3d 1316, 1320 (Fed.
Cir. 2010) (citation omitted).
B. Commerce’s Selection of the Oceana Report to Calcu-
late Surrogate Financial Ratios Is Supported by Substan-
tial Evidence and Otherwise in Accordance with Law
Commerce determined the Thai Financial Statements
were not the best available information because “infor-
mation on the record indicates that these Thai companies
benefitted from countervailable export subsidies.” J.A. 691
(footnote omitted). According to Commerce, the Thai Fi-
nancial Statements demonstrate that Surapon and Kiang
Huat “received export subsidies under the Investment Pro-
motion Act.” J.A. 691. Instead, Commerce relied on the
Oceana Report, explaining that it is “a viable alternative”
because it is “contemporaneous with the [period of review]”
and “contains the necessary information for [Commerce] to
calculate appropriate financial ratios.” J.A. 692 (footnote
omitted) (citing J.A. 698–99). Commerce explained that,
compared to the Thai Financial Statements that did not
separately identify energy costs, the Oceana Report “ena-
ble[d Commerce] to follow [its] normal methodology, i.e.,
the energy costs are included in the [materials, labor, and
energy costs] denominator and not the overhead numerator
to the calculation.” J.A. 699 (italics omitted). The Chinese
Respondents argue Commerce should have used the Thai
Financial Statements to calculate surrogate financial ra-
tios, and that it erred by summarily rejecting the Thai Fi-
nancial Statements “on subsidy grounds without weighing
them against the inferior data quality of [the] Oceana
CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED 19
STATES
[Report].” Appellants’ Br. 16 (capitalization modified). We
disagree with the Chinese Respondents.
The TPEA states that, “[i]n valuing the factors of pro-
duction,” Commerce “may disregard price or cost values
without further investigation if [Commerce] has deter-
mined that broadly available export subsidies existed or
particular instances of subsidization occurred.” Pub. L. No.
114-27, § 505(b), 129 Stat. at 386 (amending § 1677b(c)). 9
By regulation, “[Commerce] will consider a subsidy to be an
export subsidy if the Secretary determines that eligibility
for, approval of, or the amount of, a subsidy is contingent
upon export performance.” 19 C.F.R. § 351.514(a).
Substantial evidence supports Commerce’s determina-
tion that the Oceana Report is the best available infor-
mation on the record to value the surrogate financial
ratios. Surapon and Kiang Huat’s financial statements re-
veal that each received export subsidies under Thailand’s
Investment Promotion Act. See J.A. 501 (stating, in Kiang
Huat’s financial statement, “[b]y virtue of the provisions of
the . . . Investment Promotion Act . . . , [Kiang Huat] ha[s]
been granted privileges by the Board of Investment relat-
ing to manufacturing of frozen seafood products” and list-
ing certain exemptions), 603 (providing similar language in
Surapon’s financial statement). 10 Commerce has previ-
ously determined that subsidies provided under Thailand’s
Investment Promotion Act are countervailable export
9 The legislative history to the pre-TPEA version of
the statute similarly provided that, when valuing factors of
production, “Commerce shall avoid using any prices which
it has reason to believe or suspect may be . . . subsidized.”
H.R. Rep. No. 100-576, at 590–91 (1988) (Conf. Rep.), as
reprinted in 1988 U.S.C.C.A.N. 1547, 1623–24.
10 The Chinese Respondents state they “never argued
that the Thai [F]inancial[ Statements] were free of subsi-
dies.” See Appellants’ Br. 18.
20 CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED
STATES
subsidies pursuant to § 351.514(a) because the benefits
provided under that statute are export contingent. See
J.A. 691–92 & n.25 (first citing Certain Frozen Warmwater
Shrimp from Thailand, 78 Fed. Reg. 50,379 (Dep’t of Com-
merce Aug. 19, 2013) (final neg. determination); then citing
Issues and Decision Memorandum for the Final Determi-
nation in the Countervailing Duty Investigation of Certain
Frozen Warmwater Shrimp from Thailand, Case No. C-
549-828, at 9, 19–22 (Dep’t of Commerce Aug. 12, 2013),
https://enforcement.trade.gov/frn/summary/thailand/2013-
20166-1.pdf (finding that certain Investment Promotion
Act subsidies satisfied the definition of countervailable
subsidies under § 1677(5A)). The Chinese Respondents do
not challenge this finding. See generally Appellants’ Br.
Therefore, under the TPEA, Commerce properly ques-
tioned the reliability of the Thai Financial Statements as
tainted by countervailable export subsidies. See Pub. L.
No. 114-27, § 505(b), 129 Stat. at 386 (allowing Commerce
to “disregard price or cost values . . . if [Commerce] has de-
termined that broadly available export subsidies existed”);
CS Wind Viet. Co. v. United States, 832 F.3d 1367, 1374–
75 (Fed. Cir. 2016) (holding that, where Commerce deter-
mined “it had a reasonable basis to believe or suspect that
[a foreign producer]’s purchases of [certain inputs from Ko-
rea] benefited from [export] subsidies,” Commerce was jus-
tified in employing “essentially a presumption-based
approach” to not rely on those Korean prices to value those
inputs because this was a reasonable application of the
statute).
In addition, Commerce appropriately relied on the
Oceana Report as preferable to the Thai Financial State-
ments. Unlike the Thai Financial Statements, the Oceana
Report enabled Commerce to use its “normal methodology”
to calculate the manufacturing overhead ratio by including
energy costs in the denominator of the calculation. See J.A.
699 (explaining this in Commerce’s surrogate value memo-
randum for the Final Results); see also J.A. 704 (identifying
CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED 21
STATES
by Commerce in a spreadsheet that the Oceana Report re-
flects energy costs as zero because it considered energy
costs to be included under raw materials costs). Had Com-
merce not employed its normal methodology, it would not
have been able to calculate surrogate values for the Chi-
nese “[R]espondents’ energy inputs” due to concerns of
“double-counting energy costs” in the surrogate financial
ratios. J.A. 429, 429 n.66. “[T]he decision to select a par-
ticular methodology rests solely within Commerce’s sound
discretion.” SolarWorld, 910 F.3d at 1226 (internal quota-
tion marks and citation omitted). Because the Chinese Re-
spondents have not challenged Commerce’s normal
methodology as unsupported or unlawful, see generally Ap-
pellants’ Br., we conclude it was not error for Commerce to
consider the fact that the Oceana Report allowed it to em-
ploy its normal methodology, which would avoid double
counting, as a reason to prefer the Oceana Report, see So-
larWorld, 910 F.3d at 1226 (holding Commerce is not re-
quired to deviate from its normal methodology in selecting
surrogate values, absent a legitimate reason).
Moreover, although Commerce recognized that “we do
not have an established hierarchy that automatically gives
certain characteristics (i.e., contemporaneity or specificity)
more weight than others,” J.A. 691 (italics omitted), Com-
merce stated that the Oceana Report contained infor-
mation that “is contemporaneous with the [period of
review]” for the present administrative review, J.A. 692.
Given that the statute acknowledges the import of contem-
poraneity when calculating antidumping margins, 19
U.S.C. § 1675(a)(1) (providing for annual, periodic re-
views); see Albemarle Corp. & Subsidiaries v. United
States, 821 F.3d 1345, 1356 (Fed. Cir. 2016) (“In assessing
the reasonableness of Commerce’s methodology, our anal-
ysis is guided by the statute’s manifest preference for con-
temporaneity in periodic administrative reviews.”),
Commerce appropriately relied on this fact in selecting the
Oceana Report as the best available information on the
22 CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED
STATES
record, see Qingdao, 766 F.3d at 1386 (identifying “contem-
poraneous with the period of review” as one criterion in se-
lecting surrogate values). Accordingly, Commerce’s
surrogate financial ratios determination is supported by
substantial evidence. 11
The Chinese Respondents’ counterarguments are una-
vailing. First, they argue that § 505(b) of the TPEA
“merely gives Commerce discretion, rather than a man-
date,” to disregard prices distorted by export subsidies. Ap-
pellants’ Br. 19. They maintain that “Commerce is
required to establish that the alternative financial is more
reliable and representative.” Id. at 18 (emphasis and cita-
tion omitted). While they are correct that Commerce’s
analysis when selecting the “best available information” on
the record inherently involves a comparison of the compet-
ing data sources to identify what available information is
“best” to value factors of production, 19 U.S.C.
§ 1677b(c)(1), the Chinese Respondents are incorrect in
contending that Commerce failed to conduct such a com-
parison here. Commerce stated its practice of rejecting “fi-
nancial statements where there is evidence that the
company received countervailable export subsidies and
11 The Chinese Respondents also argue that, if we
hold Commerce improperly calculated the surrogate finan-
cial ratios, thereby affecting the weighted average dump-
ing margins for mandatory respondents China Kingdom
and Deyan, then we should hold that “Ocean Flavor’s sep-
arate rate was . . . contrary to law and not supported by
substantial evidence.” Appellants’ Br. 9. Because we reject
the Chinese Respondents’ argument on the surrogate fi-
nancial ratios issue, we need not address this conditional
argument. Cf. Boss Control, Inc. v. Bombardier Inc., 410
F.3d 1372, 1381 (Fed. Cir. 2005) (refusing to address the
merits of a conditional argument where we affirmed the
primary issue on appeal).
CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED 23
STATES
where [it has] other more reliable and representative data
on the record.” J.A. 690 (emphasis added). Commerce then
found that the Thai Financial Statements suffered from
distortions due to export subsidies, and it explained that
the Oceana Report was “a viable alternative,” while ad-
dressing the challenges made to the Oceana Report.
J.A. 692. Because Commerce supported these findings
with substantial evidence, as discussed above, we hold it
properly conducted a best available information analysis.
See NMB Sing. Ltd. v. United States, 557 F.3d 1316, 1319
(Fed. Cir. 2009) (“Commerce must explain the basis for its
decisions; while its explanations do not have to be perfect,
the path of Commerce’s decision must be reasonably dis-
cernable to a reviewing court.” (citation omitted)).
Second, the Chinese Respondents argue the Oceana
Report is unreliable for calculating surrogate financial ra-
tios because it “yields a distorted overhead ratio” due to
“lack of a breakout for raw material costs and the inclusion
of an anomalous line item ‘overhead expenditure.’” Appel-
lants’ Br. 16. Regarding an alleged distorted overhead ra-
tio, the Chinese Respondents fail to explain how the
Oceana Report’s failure to break out raw materials causes
a distortion to the overhead ratio. See generally id. In-
stead, Commerce was able to use its normal methodology
to “calculate appropriate financial ratios,” despite the
Oceana Report’s failure to “provide disaggregated expenses
for raw materials or labor cost,” J.A. 692, because Com-
merce’s manufacturing overhead ratio groups “materials,
labor, and energy costs” in the denominator, J.A. 699. Re-
garding an alleged anomalous overhead expenditure, the
CIT found that no party exhausted this particular argu-
ment before Commerce. See Weishan Hongda, 273 F. Supp.
3d at 1288 (stating Hongda “did not present to Commerce
in the first instance its argument[] about possible misallo-
cation of overhead expenditure”). Because the Chinese Re-
spondents did not challenge this failure to exhaust
rationale in its opening brief, this argument is waived. See
24 CHINA KINGDOM (BEIJING) IMP. & EXP. CO. v. UNITED
STATES
SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312,
1320 (Fed. Cir. 2006). Accordingly, we conclude Commerce
did not err by relying on the Oceana Report to calculate
surrogate financial ratios.
CONCLUSION
We have considered the Chinese Respondents’ remain-
ing arguments and find them unpersuasive. For the fore-
going reasons, the Judgment of the U.S. Court of
International Trade is
AFFIRMED