Camau Frozen Seafood Processing Import Export Corp v. United States

Slip Op. 12 - 137
UNITED STATES COURT OF INTERNATIONAL TRADE
CAMAU FROZEN SEAFOOD
PROCESSING IMPORT EXPORT
CORPORATION, et al.,
Plaintiffs,
v.
Before: Donald C. Pogue,
UNITED STATES, Chief Judge
Defendant, Consol. Court No. 11-003991
and
AD HOC SHRIMP TRADE ACTION
COMMITTEE and AMERICAN SHRIMP
PROCESSORS ASSOCIATION,
Defendant-Intervenors.
OPINION
[affirming, in part, and remanding, in part, final results of
administrative review of antidumping duty order]
Dated: November 15, 2012
Matthew R. Nicely, David S. Christy, and David J.
Townsend, Thompson Hine LLP, of Washington, DC, on behalf of
Plaintiffs Camau Frozen Seafood Processing Import Export Corp.;
Minh Phu Seafood Corp.; Minh Phat Seafood Co., Ltd.; Minh Qui
Seafood Co., Ltd.; and Viet I-Mei Frozen Foods Co., Ltd.
Joshua E. Kurland, Trial Attorney, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice, of
Washington, DC, on behalf of Defendant. With him on the briefs
were Stuart F. Delery, Acting Assistant Attorney General; Jeanne
E. Davidson, Director; and Patricia M. McCarthy, Assistant
Director. Of counsel on the briefs was Jonathan Zielinski,
Senior Attorney, Office of the Chief Counsel for Import
Administration, U.S. Department of Commerce, of Washington, DC.
1
This action is consolidated with Court No. 11-00383.
Order, Dec. 20, 2011, ECF No. 30.
Consol. Court No. 11-00399 Page 2
Andrew W. Kentz, Jordan C. Kahn, and Nathaniel M.
Rickard, Picard Kentz & Rowe LLP, of Washington, DC, for the
Defendant-Intervenor Ad Hoc Shrimp Trade Action Committee.
Terence P. Steward, Geert M. De Prest, Elizabeth J.
Drake, Jumana M. Misleh, and Stephanie R. Manaker, Stewart and
Stewart, of Washington, DC, and Edward T. Hayes, Leake &
Andersson, LLP, of New Orleans, LA, for the Defendant-Intervenor
American Shrimp Processors Association.
Pogue, Chief Judge: This is a consolidated action
seeking review of determinations made by the United States
Department of Commerce (“Commerce”) in the fifth administrative
review of the antidumping duty order covering certain frozen
warmwater shrimp from the Socialist Republic of Vietnam
(“Vietnam”).2 Currently before the court are motions for
judgment on the agency record submitted by Respondents Camau
Frozen Seafood Processing Import Export Corp., et al.,
(collectively “Respondents”) and Petitioner Ad Hoc Shrimp Trade
Action Committee (“AHSTAC”). Respondents challenge Commerce’s
decision to zero in this administrative review after it ceased
zeroing in investigations; AHSTAC challenges Commerce’s choice of
Bangladesh as the primary surrogate country and Commerce’s
decision to value labor using only data from the Bangladesh
2
Certain Frozen Warmwater Shrimp from the Socialist
Republic of Vietnam, 76 Fed. Reg. 56,158 (Dep’t Commerce Sept.
12, 2011) (final results and final partial rescission of
antidumping duty administrative review) (“Final Results”), and
accompanying Issues & Decision Memorandum, A-552-802, ARP 09–10
(Aug. 31, 2011), Admin. R. Pt. 2 Pub. Doc. 9, available at
http://ia.ita.doc.gov/frn/summary/VIETNAM/2011-23278-1.pdf (last
visited Nov. 13, 2012) (“I & D Mem.”) (adopted in Final Results,
76 Fed. Reg. at 56,159).
Consol. Court No. 11-00399 Page 3
Bureau of Statistics.
As explained below, the court (1) affirms Commerce’s
explanation for continuing to zero in reviews but not in
investigations; (2) does not reach Commerce’s choice of
Bangladesh as the primary surrogate country; and (3) remands
Commerce’s decision to value labor using only data from the
Bangladesh Bureau of Statistics.
The court has jurisdiction pursuant to
§ 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19
U.S.C. § 1516a(a)(2)(B)(iii) (2006)3 and 28 U.S.C. § 1581(c)
(2006).
BACKGROUND
Commerce has designated Vietnam as a non-market economy
country (“NME”). When investigating potentially dumped
merchandise from an NME, Commerce considers the NME data for
measuring normal value4 to be unreliable. Therefore, Commerce
calculates normal value for merchandise from an NME using
surrogate values for factors of production drawn from a market
economy country. 19 U.S.C. § 1677b(c)(1). In general, Commerce
3
All further citations to the Tariff Act of 1930, as
amended, are to Title 19 of the U.S. Code, 2006 edition.
4
An antidumping duty equal to “the amount by which the
normal value exceeds the export price” may be assessed on
merchandise sold at less than fair value in the United States. 19
U.S.C. § 1673.
Consol. Court No. 11-00399 Page 4
prefers to draw all surrogate values from a single surrogate
country (the “primary surrogate country”). Import Administration
Policy Bulletin No. 04.1, Non-Market Economy Surrogate Country
Selection Process (Mar. 1, 2004), available at
http://ia.ita.doc.gov/policy/bull04-1.html (last visited Nov. 15,
2012) (“Policy Bulletin 04.1”). In this review, Commerce chose
Bangladesh as the primary surrogate country and rejected AHSTAC’s
preferred choice, the Philippines. I & D Mem. cmt. 1 at 3–5.
In the past, Commerce has deviated from its general
surrogate value policy when choosing surrogate values for labor.
Rather than drawing surrogate labor values from the primary
surrogate country, Commerce historically valued labor by
averaging labor values from multiple countries. While this
review was pending, Commerce changed its policy to value labor
solely on the basis of data from the primary surrogate country.
Antidumping Methodologies in Proceedings Involving Non-Market
Economies: Valuing the Factor of Production: Labor, 76 Fed. Reg.
36,092 (Dep’t Commerce June 21, 2011) (“New Labor Methodology”).
In light of its new policy, Commerce sought additional comments
from interested parties on how to value labor in the instant
review. I & D Mem. at 2. After reviewing the comments, Commerce
chose to value labor consistent with the New Labor Methodology by
using data solely from the primary surrogate country, Bangladesh.
Id. at cmt. 2.I at 21–24.
Consol. Court No. 11-00399 Page 5
Furthermore, when calculating the weighted average
dumping margin in this review, Commerce chose to zero dumping
margins with negative values. Id. at cmt. 3 at 32.5 At the time
of this review, Commerce’s practice of zeroing in administrative
reviews differed from its practice of offsetting in antidumping
investigations, where it allowed dumping margins with negative
and positive values to offset each other when calculating the
weighted average dumping margin. Id. at 30–32.6 However, in
February of this year, Commerce published a new policy regarding
the use of zeroing in administrative reviews. 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) (“Final
Modification”). In the Final Modification, Commerce stated that
5
This issue has been the subject of much recent litigation,
and further background on the issue and its development can be
found in Grobest & I-Mei Indus. (Vietnam) Co. v. United States,
36 CIT __, 853 F. Supp. 2d 1352 (2012) (“Grobest II”) and Union
Steel v. United States, 36 CIT __, 823 F. Supp. 2d 1346 (2012).
6
See also Grobest II, 36 CIT at __, 853 F. Supp. 2d at
1360–61 (“Pursuant to both methodologies, Commerce calculates the
§ 1677(35)(A) dumping margin by subtracting the export price from
normal value for each averaging group [of subject merchandise].
Once a dumping margin has been established, Commerce aggregates
these dumping margins to determine a weighted average dumping
margin. In an investigation, Commerce aggregates all of the
dumping margins to determine ‘overall pricing behavior.’ In a
review, Commerce zeros negative margins prior to aggregation to
arrive at a more accurate margin and to uncover masked dumping.”
(citation omitted)).
Consol. Court No. 11-00399 Page 6
the Department is adopting the proposed changes to its
methodology for calculating weighted-average margins of
dumping and antidumping duty assessment rates to
provide offsets for non-dumped comparisons when using
monthly [average-to-average] comparisons in reviews, in
a manner that parallels the WTO-consistent methodology
the Department currently applies in original
antidumping duty investigations.
Id. at 8102. Therefore, as of April 16, 2012, Commerce ceased
zeroing, in general, consistent with the policy announced in the
Final Modification.
STANDARD OF REVIEW
When reviewing Commerce’s decisions in administrative
reviews of antidumping duty orders, the Court “shall hold
unlawful any determination, finding, or conclusion found . . . to
be unsupported by substantial evidence on the record, or
otherwise not in accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i).
DISCUSSION
I. Zeroing
Turning first to the issue of zeroing, Respondents
challenge Commerce’s decision to employ zeroing in administrative
reviews but not in investigations. But the explanation Commerce
provided in this review is the same as that previously held to be
both reasonable and consistent with the Court of Appeals for the
Consol. Court No. 11-00399 Page 7
Federal Circuit’s decisions in Dongbu Steel Co. v. United States,
635 F.3d 1363 (Fed. Cir. 2011) and JTEKT Corp. v. United States,
642 F.3d 1378 (Fed. Cir. 2011). See Grobest II, 36 CIT at __, 853
F. Supp. 2d at 1356–62; see also Far E. New Century Corp. v.
United States, 36 CIT __, Slip Op. 12-110, *6–7 (Aug. 29, 2012).
In Grobest II, the court found the relevant statute ambiguous and
Commerce’s rationale for employing differing methodologies in
investigations and reviews to be a reasonable interpretation of
the statute. Grobest II, 36 CIT at __, 853 F. Supp. 2d at
1358–62.
Respondents also raise an issue in this case that was
not decided in Grobest II. Specifically, Respondents challenge
Commerce’s reliance on the goal of identifying masked dumping as
a basis for Commerce’s continued use of zeroing in administrative
reviews. Respondents argue that it is inappropriate for Commerce
to rely on this rationale in light of Commerce’s new policy of
not zeroing in administrative reviews.7 Mem. of Law Supp. Pls.’
7
In Grobest II, the defendant-intervenors raised this issue
in their comments to the court on Commerce’s remand results.
Because the issue had not been raised in comments to Commerce on
the Department’s draft remand results, the court found that
defendant-intervenors had failed to exhaust their administrative
remedies and declined to consider the argument. Grobest II, 36
CIT at __, 853 F. Supp. 2d at 1361 n.10. Here, while Respondents
have not previously raised this argument before Commerce, they
had no opportunity because the new policy was published on
February 12, 2012, following the publication, on September 12,
2011, of the Final Results. Therefore, the exhaustion doctrine
does not apply in this case.
Consol. Court No. 11-00399 Page 8
Rule 56.2 Mot. J. Agency R. at 15, ECF No. 40 (“Resp’ts’ Br.”).
Respondents focus on language in the Final Modification
where Commerce states that “the Department disagrees with those
comments that suggest it is not capturing 100 percent of the
dumping” and that “the Department does not agree that the
potential for masked dumping means that [average-to-average]
comparisons are unsuitable as the default basis for determining
the weighted-average dumping margins . . . in reviews.” Final
Modification, 77 Fed. Reg. at 8106, 8104; Resp’ts’ Br. at 15–16.8
Taken together, Respondents argue, these statements show that
Commerce concedes it can capture 100 percent of dumping without
zeroing; therefore, masked dumping is not a reasonable concern
that can support alternative methodologies in investigations and
reviews.
Respondents, however, do not recognize the full extent
of Commerce’s reasoning in the Final Modification. First,
Commerce does not argue that it can capture 100 percent of
dumping with its new average-to-average offsetting methodology
for reviews; rather, Commerce argues that it “will capture 100
percent of the dumping that is determined to exist pursuant to
8
Respondents also argue that the methodology announced in
the Final Modification is arbitrary and unreasonable because
Commerce reserves the right to apply an alternative methodology
when it believes such is appropriate. Resp’ts’ Br. at 15–16. But
Commerce’s application in future cases is not at issue in this
case.
Consol. Court No. 11-00399 Page 9
this methodology.” Final Modification, 77 Fed. Reg. at 8106
(emphasis added). Furthermore, Commerce has not abandoned its
concern about masked dumping. On the contrary, Commerce has
changed its approach to masked dumping by deciding to pursue
masked dumping on a case-by-case basis. Id. at 8104 (“Similar to
the conduct of original investigations, when conducting reviews
under the modified methodology, the Department will determine, on
a case-by-case basis, whether it is appropriate to use an
alternative comparison methodology . . . .”).
When examined in full, Commerce’s reasoning in the
Final Modification does not indict the rationale behind its prior
policy of zeroing in reviews but not in investigations. Commerce
has made a change in policy and priority. The new policy
announced in the Final Modification responds to a series of
adverse World Trade Organization (“WTO”) decisions finding that
Commerce’s zeroing methodology in reviews was inconsistent with
the General Agreement on Tariffs and Trade (“GATT”) and the
Agreement on Implementation of Article VI of the GATT 1994. Id.
at 8101–02. To adhere to these adverse findings, Commerce,
pursuant to 19 U.S.C. § 3533(g), changed its policy. When
Commerce stated that the new policy would “capture 100 percent of
the dumping that is determined to exist pursuant to this
methodology,” Final Modification, 77 Fed. Reg. at 8106, it was
acknowledging that some dumping could go uncaptured. While
Consol. Court No. 11-00399 Page 10
Commerce remains concerned about masked dumping, and will pursue
it on a case-by-case basis, Commerce adopted a new methodology
that may capture less masked dumping in order to conform with
adverse WTO rulings.
This new policy does not undermine Commerce’s rationale
for the prior policy. Commerce remains concerned about masked
dumping but has determined it cannot pursue its prior approach to
masked dumping and conform to the adverse WTO rulings. Going
forward, Commerce has chosen to pursue the latter objective over
the former. This change in objective does not make the prior
policy unreasonable, just as Commerce previously “adjust[ed] its
methodology to seek overall pricing behavior in investigations
and more accurate duties in reviews, by zeroing in reviews but
not in investigations,” without being unreasonable, Grobest II,
36 CIT at __, 853 F. Supp. 2d at 1361–62.
For the foregoing reasons, the court will follow its
recent opinions in Grobest II and Far E. New Century on the issue
of zeroing and affirm Commerce’s explanation as reasonable.
II. Surrogate Country Choice
In its first of two challenges, AHSTAC contends that
Commerce improperly selected Bangladesh as the primary surrogate
country. Specifically, AHSTAC challenges Commerce’s policy of
considering all countries designated economically comparable to
the NME under investigation to be equally economically
Consol. Court No. 11-00399 Page 11
comparable. AHSTAC, however, did not raise this issue before
Commerce, even though the issue was clearly in play and AHSTAC
had an opportunity to raise its challenge during the
administrative review. Therefore, the court will not reach this
issue because AHSTAC failed to exhaust its administrative
remedies.
In actions challenging antidumping determinations, “the
Court of International Trade shall, where appropriate, require
the exhaustion of administrative remedies.” 28 U.S.C. § 2637(d).
Exhaustion is “generally appropriate in the antidumping context
because it allows the agency to apply its expertise, rectify
administrative mistakes, and compile a record adequate for
judicial review — advancing the twin purposes of protecting
administrative agency authority and promoting judicial
efficiency.” Carpenter Tech. Corp. v. United States, 30 CIT 1595,
1597, 464 F. Supp. 2d 1347, 1349 (2006) (quoting Carpenter Tech.
Corp. v. United States, 30 CIT 1373, 1374–75, 452 F. Supp. 2d
1344, 1346 (2006)). For these reasons, parties are “procedurally
required to raise the[ir] issue before Commerce at the time
Commerce [is] addressing the issue.” Dorbest Ltd. v. United
States, 604 F.3d 1363, 1375 (Fed. Cir. 2010) (alteration in
original) (citing Mittal Steel Point Lisas Ltd. v. United States,
548 F.3d 1375, 1383 (Fed. Cir. 2008)).
In its case brief to Commerce, AHSTAC argued that the
Consol. Court No. 11-00399 Page 12
Philippines should be the surrogate country solely because its
surrogate value data was superior to the Bangladeshi data. AHSTAC
Case Br., A-522-802, ARP 09–10 (Apr. 18, 2011), Admin. R. Pt. 1
Pub. Doc. 166 at 1–11. Commerce was not persuaded and selected
Bangladesh as the primary surrogate. At no point did AHSTAC
contend that the difference in GNI between Bangladesh and the
Philippines (or the difference between either potential surrogate
country and Vietnam) was relevant to the surrogate country
selection. In other words, AHSTAC never argued that one country
was more economically comparable to Vietnam than the other.
The issue of economic comparability became important
for AHSTAC when Commerce decided to apply its New Labor
Methodology in this administrative review because this meant
Commerce would value labor using data from the primary surrogate
country, Bangladesh, rather than using multi-country averaging or
data from AHSTAC’s preferred source, the Philippines.
Nevertheless, when Commerce invited comments on the application
of the New Labor Methodology in this review, Letter from Commerce
to Interested Parties, A-552-802, ARP 09-10 (June 23, 2011),
Admin. R. Pt. 1 Pub. Doc. 173 (“Labor Letter”), AHSTAC did not
challenge Commerce’s finding of equal economic comparability
between Bangladesh and the Philippines in light of the New Labor
Methodology, see Producers Comments on Labor Rates, A-552-802,
ARP 09-10 (July 7, 2011), Admin. R. Pt. 1 Pub. Doc. 175
Consol. Court No. 11-00399 Page 13
(“AHSTAC’s Labor Methodology Comments”). AHSTAC chose to argue
instead that Commerce should either 1) maintain its multi-country
averaging approach because it was consistent with prior Court of
International Trade case law, 2) choose the Philippines as the
surrogate country because the ILO Chapter 6A data Commerce said
it preferred in the New Labor Methodology was available from the
Philippines but not Bangladesh, or 3) value labor alone based on
data from the Philippines because ILO Chapter 6A data was
available and the Bangladeshi Bureau of Statistics data on wage
rates was unreliable. AHSTAC’s Labor Methodology Comments at 2–9.
AHSTAC contends that exhaustion is not appropriate
because Commerce notified the parties that it intended to apply
the New Labor Methodology after the period for submission of
administrative case briefs had ended and requested narrowly
tailored comments within a short (two week) time frame. Pl. Ad
Hoc Shrimp Trade Action Comm.’s Reply Mem. at 12–13, ECF No. 72
(“AHSTAC’s Reply Br.”). In AHSTAC’s view these procedures were
so exceptional and onerous that the court should exercise its
discretion to consider AHSTAC’s argument. Cf. Hormel v.
Helvering, 312 U.S. 552, 557 (1941) (“There may always be
exceptional cases or particular circumstances which will prompt a
reviewing or appellate court, where injustice might otherwise
result, to consider questions of law which were neither pressed
nor passed upon by the court or administrative agency below.”).
Consol. Court No. 11-00399 Page 14
The court recognizes that such cases may exist, but
this is not one. Though the period for additional comment may
have been short and the subject matter narrow, AHSTAC had ample
notice of the New Labor Methodology and a fair opportunity to
raise its concern about the presumption of equal economic
comparability. But AHSTAC never raised its economic
comparability argument before Commerce.9 By not raising the
argument, AHSTAC deprived Commerce of the opportunity to “apply
its expertise, rectify administrative mistakes, [or] compile a
record adequate for judicial review” on the issue. Carpenter
Tech., 30 CIT at 1597, 464 F. Supp. 2d at 1349.
By not raising the equal economic comparability
argument before Commerce, AHSTAC failed to exhaust its
administrative remedies with respect to this issue. See QVD Food
Co. v. United States, 34 CIT __, 721 F. Supp. 2d 1311, 1320–21
(2010) (finding a failure to exhaust administrative remedies
9
In its comments on valuing labor in this review, AHSTAC
did challenge the choice of Bangladesh as the primary surrogate
country and argued that Commerce should reconsider that decision
and choose the Philippines on the basis of the superior
Philippine data. AHSTAC’s Labor Methodology Comments at 4–5.
This challenge to primary surrogate country choice is no more
germane to the “narrow issue of the Department’s final labor rate
pursuant to [the New Labor Methodology],” AHSTAC’s Reply Br. at
12–13 (quoting Labor Letter at 2) (emphasis omitted), than an
argument challenging the economic comparability policy would have
been. Having argued surrogate country choice in its comments,
AHSTAC’s argument that it did not have an opportunity to comment
on economic comparability because the request for comment was so
narrowly tailored is not persuasive.
Consol. Court No. 11-00399 Page 15
where a party introduced, in its brief to the court, new
arguments not made before Commerce even though issues were
“squarely in play”), aff’d, 658 F.3d 1318 (Fed. Cir. 2011).
Accordingly, the court does not reach Commerce’s choice of
Bangladesh as the primary surrogate country.
III. Surrogate Labor Methodology
AHSTAC also challenges Commerce’s decision to rely
solely on data from Bangladesh to value labor. AHSTAC contends
both that the Bangladeshi labor rate is unsupported by
substantial evidence and that Commerce failed to adequately
explain its decision to change from a policy of valuing labor
using multi-country averaging to valuing labor based on data
solely from the primary surrogate country.10 As the latter is a
facial challenge to Commerce’s new policy, it will be addressed
first.
When valuing factors of production, Commerce “shall
utilize, to the extent possible, the prices or costs of factors
of production 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.” 19 U.S.C. § 1677b(c)(4). Prior to the
10
AHSTAC also challenges the Bangladeshi labor data as
aberrationally low. As discussed below, Commerce’s choice of the
Bangladeshi data will be remanded because it is not supported by
substantial evidence; therefore, the court need not reach the
question of whether the Bangladeshi data is aberrational.
Consol. Court No. 11-00399 Page 16
Court of Appeals’ decision in Dorbest Ltd. v. United States, 604
F.3d 1363 (Fed. Cir. 2010) (“Dorbest IV”), Commerce valued labor
using a regression based methodology described in 19 C.F.R.
§ 351.408(c)(3). Id. at 1367–68. In Dorbest IV, the Court of
Appeals invalidated the regression based methodology, holding
that § 351.408(c)(3) “improperly requires using data from both
economically comparable and economically dissimilar countries,
and it improperly uses data from both countries that produce
comparable merchandise and countries that do not.” Id. at 1372.
In response to Dorbest IV, Commerce established an
interim methodology that relied on a simple average of labor
rates from economically comparable countries that were also
significant producers of comparable merchandise. Dorbest Ltd. v.
United States, 35 CIT __, 755 F. Supp. 2d 1291, 1294–96 (2011)
(“Dorbest VI”); see also Antidumping Methodologies in Proceedings
Involving Non-Market Economies: Valuing the Factor of Production:
Labor; Request for Comment, 76 Fed. Reg. 9544, 9546–47 (Dep’t
Commerce Feb. 18, 2011) (“Request for Comment”). Commerce’s
interim methodology was subsequently upheld by this Court on
several occasions. See Grobest & I-Mei Indus. (Vietnam) Co. v.
United States, 36 CIT __, 815 F. Supp. 2d 1342, 1356–60 (2012)
(“Grobest I”); Home Products Int’l, Inc. v. United States, 36 CIT
__, 810 F. Supp. 2d 1373, 1377–78 (2012); Shandong Rongxin Imp. &
Exp. Co. v. United States, 35 CIT __, 774 F. Supp. 2d 1307, 1314
Consol. Court No. 11-00399 Page 17
(2011). While affirming multi-country averaging, Shandong also
narrowed the universe of countries available for Commerce to
average by holding that “Commerce’s interpretation of
‘significant’ encompasses countries which almost certainly have
no domestic production — at least not any meaningful production,
capable of having influence or effect — and is therefore an
impermissible construction of [the ‘significant producer’ test
in] 19 U.S.C. § 1677b(c)(4).” Shandong, 35 CIT at __, 774 F.
Supp. 2d at 1316.
Following the Request for Comment, Commerce published
its New Labor Methodology, where it decided that in light of the
diminished sample size for averaging occasioned by Dorbest IV and
Shandong, it would value labor solely based on data from the
primary surrogate country. New Labor Methodology, 76 Fed. Reg. at
36,093. Commerce applied the New Labor Methodology in this
review based on the same analysis, I & D Mem. cmt. 2.I at 23–24,
which AHSTAC now challenges.
But changes in administrative policy are not subject to
heightened review. FCC v. Fox Television Stations, Inc., 556 U.S.
502, 514 (2009). In other words, the agency is not required to
explain why a new policy is better than the old policy; it is
enough that the policy would have been justified if adopted new.
Id. at 514–15. Thus, it is sufficient for the new policy to
reasonably fill a statutory gap left for agency decision making.
Consol. Court No. 11-00399 Page 18
Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467
U.S. 837, 843–44 (1984).
Commerce premises its change in policy, in both the
I & D Mem. and the New Labor Methodology, on the diminished
efficacy of multi-country averaging after Dorbest IV and
Shandong:
[T]he Department concluded that to be compliant with
the statute, and the two most recent court decisions,
the base for an average wage calculation would be so
limited (two countries in this case following the
interim labor methodology) that there would be little,
if any, benefit to relying on an average of wages from
multiple countries for purposes of minimizing the
variability that occurs in wages across countries.
I & D Mem. cmt. 2.I at 24; see also New Labor Methodology, 76
Fed. Reg. at 36,093. Acknowledging its past policy and
addressing the problem that led it to reject multi-country
averaging provides a reasonable basis for Commerce’s policy
change. Cf. Fox Television, 556 U.S. at 515. In light of Dorbest
IV and Shandong, Commerce cannot find enough countries that are
both economically comparable and significant producers of subject
merchandise to effectively average wages from multiple countries.
Thus, Commerce has provided a reasonable basis for abandoning its
prior policy, and the new policy is reasonable on its face.
That Commerce’s decision to change policy may be
facially reasonable does not fully resolve the issue presented
here. Commerce’s decision in this review, to value labor based
solely on Bangladeshi data, must also be supported by substantial
Consol. Court No. 11-00399 Page 19
evidence. Substantial evidence is “such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion.” Universal Camera Corp. v. NLRB, 340 U.S. 474, 477
(1951) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229
(1938)). And the “substantiality of evidence must take into
account whatever in the record fairly detracts from its weight.”
Id. at 488.
In considering whether to value labor solely on the
basis of data from Bangladesh, Commerce did not reconsider its
prior findings that wage rates strongly correlate to GNI and,
therefore, require special consideration. As Commerce stated
when it promulgated 19 C.F.R. § 351.408:
[W]hile per capita GDP and wages are positively
correlated, there is great variation in the wage rates
of the market economy countries that the Department
typically treats as being economically comparable. As
a practical matter, this means that the result of an
NME case can vary widely depending on which of the
economically comparable countries is selected as the
surrogate. . . . By avoiding the variability in results
depending on which economically comparable country
happens to be selected as the surrogate, the results
are much fairer to all parties.
Antidumping Duties; Countervailing Duties, 61 Fed. Reg. 7308,
7345 (Dep’t Commerce Feb. 27, 1996) (proposed rules).11 In light
11
See also Request for Comment, 76 Fed. Reg. at 9545
(“[W]age data from a single surrogate country does not normally
constitute the best available information for purposes of valuing
the labor input due to the variability that exists across wages
from countries with similar GNI.”); Certain Frozen Warmwater
Shrimp from the People’s Republic of Vietnam, 75 Fed. Reg. 47,771(footnote continued)
Consol. Court No. 11-00399 Page 20
of Commerce’s prior findings, the facts on the record of this
case seem to highlight the very concerns about valuing labor on
the basis of a single surrogate country that Commerce has
repeatedly raised. Specifically, taking into account the three
factors Commerce considers in choosing surrogate countries —
economic comparability, significant production of comparable
merchandise, and quality of data — Commerce had the following
points of comparison on the record of this case12:
11
(footnote continued)
(Dep’t Commerce Aug. 9, 2010) (final results and partial
rescission of antidumping duty administrative review) and
accompanying Issues and Decision Memorandum, A-552-802, ARP 08–09
(July 30, 2010) cmt. 9 at 27 (“[W]age data from a single
surrogate country does not constitute the best available
information for purposes of valuing the labor input due to the
variability that exists between wages and GNI. . . . As a result,
we find reliance on wage data from a single surrogate country to
be unreliable and arbitrary.”).
12
The following table includes the two countries that
Commerce determined satisfied all three criteria on the record of
this case. For the Preliminary Results of this review Commerce
employed its interim labor methodology. Certain Frozen Warmwater
Shrimp from the Socialist Republic of Vietnam, 76 Fed. Reg.
12,054, 12,062–63 (Dep’t Commerce Mar. 4, 2011) (preliminary
results, partial rescission, and request for revocation, in part,
of the fifth administrative review) (“Preliminary Results”).
Based on GNI, measured in per capita U.S. Dollars, Commerce found
thirty-five countries, falling between Bangladesh at the low end
and Indonesia at the high end, to be economically comparable to
Vietnam. Surrogate Values for the Preliminary Results, A-552-802,
ARP 09–10 (Feb. 28, 2011), Admin. R. Pt. 1 Pub. Doc. 144 at 6
(“Surrogate Value Mem.”). Of these thirty-five economically
comparable countries, Commerce determined that eighteen were also
significant producers of comparable merchandise, using its pre-
Shandong criteria for significant producers. Id. Of these
eighteen countries, three reported industry specific data under
Chapter 5B of the ILO dataset: Egypt, the Philippines, and
(footnote continued)
Consol. Court No. 11-00399 Page 21
GNI (per capita USD) Labor Rate (USD/hour)
Philippines 1890 1.91
Vietnam 890 --
Bangladesh 520 0.21
12
(footnote continued)
Indonesia. Id. at 7–8. If the Department’s preference for
industry specific data, as reported in ILO Chapter 6A or a
comparable form, see New Labor Methodology, 76 Fed. Reg. at
36,093–94, is taken into account, then Indonesia is removed from
the list. Finally, Egypt exported $39,251 of subject
merchandise in 2007 and had no reported exports in 2008 or 2009,
Ex. 6 to the Surrogate Value Mem.; therefore, it arguably fails
the Shandong significant producer test and should be removed.
AHSTAC also introduced ILO 6A data and argued that
Guyana (GNI 1450/0.82 USD/hour), Nicaragua (GNI 1080/1.02
USD/hour), and India (GNI 1070/0.70 USD/hour) met the
economically comparable and significant producer tests.
Producers’ Rebuttal Factual Info., A-552-802, ARP 09-10 (July 15,
2011), Admin. R. Pt. 1 Pub. Doc. 180, at 3. Because Commerce
valued labor based on data from the primary surrogate country,
Bangladesh, there is no record in the Final Results or I & D Mem.
of whether Commerce considered the alternate AHSTAC values to
have met all the necessary prongs for consideration; nor,
therefore, is there a record decision for the court to review.
The data in this table is drawn from the following
sources. GNI data is drawn from Request for Comments on
Surrogate Country Selection, A-552-802, ARP 09–10 (Aug. 20,
2010), Admin. R. Pt. 1 Pub. Doc. 82A, attach. 1. Labor rate data
for the Philippines is drawn from Ex. 6 to the Surrogate Value
Mem. Labor rate data for Bangladesh is drawn from the Final
Surrogate Value Mem., which states that the Bangladeshi labor
rate for the relevant period was 14.55 Bangladeshi Takas per
hour. Ex. 1 to the Final Surrogate Value Mem., A-552-802, ARP
09–10 (Aug. 31, 2011), Admin. R. Pt. 2 Pub. Doc. 3A. The average
exchange rate for Bangladeshi Takas to U.S. Dollars during the
first half of 2009, the period for which the Bangladeshi labor
rate was calculated, was 1.45%, as calculated by averaging the
daily buy rate of U.S. Dollars in Bangladeshi Takas provided by
Bangladesh Bank, the Central Bank of Bangladesh, from January 1,
2009, to June 30, 2009. See Bangladesh Bank, Exchange Rates,
http://www.bb.org.bd/econdata/exchangerate.php (use drop down
menus under “search previous data from archive” to retrieve daily
historical exchange rates with the U.S. Dollar) (last visited
Nov. 14, 2012). Converting 14.55 Bangladeshi Takas at a rate of
1.45% results in a labor rate of $0.210975 or $0.21 per hour.
Consol. Court No. 11-00399 Page 22
The data in this table places the Department’s prior
arguments regarding disparate wage rates across countries
presumed to be equally economically comparable into sharp relief.
Insofar as Commerce considers both countries in this table to be
economically comparable to Vietnam, the record suggests that
choosing one country to value labor may introduce either
overstated or understated labor rates. Commerce obliquely
acknowledges this fact when it fails to address AHSTAC’s
contention that wage rate variability is correlated to GNI
variability. Commerce notes in the I & D Mem. that
[t]he Department has long recognized, and the
Petitioners also agree, that the disparity in labor
rates correspond with disparities in the GNIs of
countries. The Petitioners’ labor data does not
demonstrate that the Bangladeshi labor data is
aberrationally low, but speak to the Petitioners’
argument that the Department’s wage rate policy
establishes a practice whereby labor wage rates will be
understated when the surrogate country has a low GNI
and overstated when the GNI is high.
I & D Mem. cmt. 2.I at 24.
Commerce has acknowledged both the correlation of wage
rates to GNI and AHSTAC’s concerns about the resulting
possibility for outlying labor values in this review, yet
Commerce did not address the disparity in the GNI of potential
surrogate countries on the record of this case. The Philippines
has a GNI roughly twice that of Vietnam, and Bangladesh has a GNI
roughly half that of Vietnam. Furthermore, this disparity in GNI
is reflected in a disparity between the wage rates of the two
Consol. Court No. 11-00399 Page 23
countries.
Commerce’s conclusion that Bangladesh’s wage rate is
the best available information for valuing the wage rate in
Vietnam must be based on a reasonable reading of the entire
record.13 By accounting for neither its prior finding of a
correlation between wage rates and GNI nor the disparity in both
wage rates and GNIs of the proposed surrogate countries on the
record of this case, Commerce has not considered evidence that
fairly detracts from the weight of its conclusion. Universal
Camera, 340 U.S. at 488.
Therefore, Commerce’s use of Bangladeshi data to value
labor is not supported by substantial evidence. Commerce may
change its averaging methodology, but it must make data choices
that a reasonable mind could find to be the best available on the
record. In light of its prior findings regarding the exceptional
nature of the labor factor of production, Commerce should
reconsider what factors are important when valuing labor in this
13
Commerce argues that the Bangladeshi data is the best
available information for valuing labor because Commerce has a
policy that favors valuing all factors of production using a
single surrogate country. Commerce has previously found,
however, that labor should be treated differently for the reasons
discussed above. Without addressing these prior findings and the
apparent discrepancy in labor values on the record of this case,
Commerce’s policy of preferring a single surrogate country does
not satisfy the substantial evidence test.
At oral argument, counsel for the Government offered
alternative bases for choosing Bangladesh, including its relative
proximity in GNI to Vietnam; however, counsel’s arguments were
not made by Commerce on the record of this case.
Consol. Court No. 11-00399 Page 24
review. For the foregoing reasons, Commerce’s decision to value
labor only on the basis of data from Bangladesh will be remanded
for reconsideration or further explanation.
CONCLUSION
Consistent with the foregoing opinion, the Final
Results are affirmed, in part, and remanded, in part. Commerce’s
explanation for its continued use of zeroing in administrative
reviews is affirmed. Commerce’s decision to value labor solely
on the basis of data from Bangladesh is remanded. On remand,
Commerce must either reconsider whether, on the facts presented
here, it is reasonable to value labor using only data from the
primary surrogate country or provide further explanation for its
decision. In either case, Commerce’s decision must be supported
by substantial evidence on the record.
Commerce shall have until January 14, 2013, to complete
and file its remand redetermination. Plaintiffs and Defendant-
Intervenors shall have until January 28, 2013, to file comments.
Plaintiffs, Defendant, and Defendant-Intervenors shall have until
February 11, 2013, to file any reply.
It is SO ORDERED.
/s/ Donald C. Pogue
Donald C. Pogue, Chief Judge
Dated: November 15, 2012
New York, New York