Commerce Properly Made PMS Adjustment in AD Case, Line Pipe Producer Argues in Federal Circuit

The Court of International Trade erred in finding that the Commerce Department improperly applied a particular market situation when addressing purported distortions to costs of production in the 2015-16 antidumping administrative review on welded line pipe from South Korea, U.S. domestic pipe manufacturer Welspun Tubular LLC argued in its May 17 opening brief in the U.S. Court of Appeals for the Federal Circuit. Arguing that Commerce's interpretation of the PMS statute is entitled to deference and that the agency's finding of a PMS in South Korea is supported by substantial evidence, Welspun argued that CIT's reading of 2015's Trade Preferences Extension Act in a decision issued by the lower court on Jan. 4 would lead to "absurd results."

According to Welspun, by reading the TPEA to limit Commerce from making PMS adjustments to costs of production only if they are explicitly authorized by the statute, the results in the PMS framework would be absurd. "If the CIT’s reasoning stands, Commerce would be able to address PMS distortions in the [cost of production] database for purposes of calculating constructed value but would be unable to address the same distortions when identifying home market sales that can be used in the determination of normal value," Welspun said. "Moreover, the Court’s reading of the statute would effectively require Commerce to construct normal value in every instance where a PMS is found to exist."

CIT erred in concluding that the absence of any language directing a PMS adjustment to costs for a sales-below-cost test regarding the calculation of costs of products means a prohibition on its use, the manufacturer argued. "Nothing in the TPEA nor in the antidumping statute as a whole prohibits Commerce from adjusting a respondent’s COP for purposes of the sales-below-cost test where Commerce determines that such adjustments are necessary to account for costs not reasonably reflected in a respondent’s books and records or costs that are outside the ordinary course of trade because of the existence of a PMS," Welspun said.

Wellspun also challenges CIT's holding that Commerce did not adequately prove a PMS existed at all. "The CIT committed error by deciding that Commerce’s finding that a PMS existed was unsupported by substantial evidence," Wellspun said. "In reaching this decision, the CIT erroneously applied a requirement not found in the statute that Commerce must quantify the effect of each of the factors contributing to the PMS distortions in Korea. The CIT also examined each factor individually rather than cumulatively and failed meaningfully to address Commerce’s 'totality of the circumstances' analysis of the extensive record evidence supporting the conclusion that a PMS distorted the costs of producing WLP in Korea during the [period of review]."