AD Petitioner, Respondents Debate Remand Results on South Korean PMS Reversal, CIT Rulings

Antidumping petitioner U.S. Steel Corporation and the two mandatory respondents in the contested antidumping duty review, SeAH Steel Co. and NEXTEEL Co., submitted their comments on the Commerce Department's remand results at the Court of International Trade. U.S. Steel spoke out against Commerce's flip on its finding of a particular market situation for South Korean steel while the respondents argued against the agency's reallocation of suspended product line and inventory valuation losses to general and administrative expenses and Commerce's decision to deduct a portion of SeAH's G&A expenses of a U.S. affiliate for further manufacturing costs (SeAH Steel Co. v. United States, CIT #19-00086).

SeAH and NEXTEEL's case, along with other plaintiffs, contests the 2016-17 antidumping administrative review of oil country tubular goods from South Korea. In April, Judge Jennifer Choe-Groves took a careful look at Commerce's findings and sent multiple aspects of them back to the agency for further review. For starters, the judge said that Commerce did not have enough evidence to back its contention that a PMS distorted the cost of production of OCTG goods in South Korea. On remand, Commerce flipped its finding under respectful protest (see 2107010048).

In their comments, while continuing to disagree with Commerce's analysis, SeAH and NEXTEEL urged the court to sustain this new holding from Commerce. U.S. Steel, on the other hand, was not so accepting of the new circumstances. The steel company said that Commerce's new PMS determination misconstrued the court's remand order. The agency found the court's order to mean it could only continue to find a PMS in South Korea if other previously unconsidered record evidence, reweighed and rejected by the court, established a PMS.

"As U.S. Steel explained, Commerce should not construe the Court’s Remand Order as directing a particular verdict because that would be unlawful," the comments said. "Therefore, there was no lawful basis for Commerce to construe the Remand Order in the severely limiting way that it did, particularly given that the Court expressly remanded for 'further explanation or reconsideration,' a necessarily open-ended mandate." U.S. Steel also said that there's no legal basis for the court to assume a fact-finding role in the case, castigating Commerce for forking over its fact-finding role to the court.

Aside from the legal arguments, U.S. Steel continued to argue the merits of a PMS finding for South Korean steel. In the review's original final determination, Commerce held that Chinese overcapacity of steel inputs uniquely affected the Korean steel market, leading to a PMS finding. The agency's new determination that this overcapacity does not create a special situation is unsupported, U.S. Steel said.

"The worsening domestic Korean market conditions -- recently increasing proportion and absolute volume of HRC imported from China; that Chinese [hot-rolled coil] was trading $118/ton below domestic prices during the POR; that such Chinese HRC was being used by a mandatory respondent to create pipe during the POR; and that import average unit values were continuing to decline -- evidence a situation in which HRC costs no longer reflect what it costs to produce OCTG in the ordinary course of trade," the comments said. "Yet, Commerce did not make any finding by reference to the record evidence, and thus failed to support the conclusions of its Remand Redetermination with substantial evidence."

Also discontented with certain elements of the remand, SeAH and NEXTEEL chimed in, although their comments were better spent lambasting Commerce's G&A expense allocation decisions for constructed export price calculations. For instance, Choe-Groves said that the statute does not permit Commerce to deduct the portion of the G&A expenses of SeAH's U.S. affiliate that were allocated to imported pipe as part of the further manufacturing costs adjustment, SeAH said. "In its Remand Determination, Commerce has attempted to evade this holding by claiming that the portion of G&A expenses allocated to imported pipe should be considered selling expenses," the comments said. "... That assertion is, however, contrary to Commerce’s established practice of distinguishing between G&A expenses and selling expenses."

NEXTEEL went after Commerce's decision to continue reallocating losses tied to suspended product lines to the respondent's G&A expenses. "Simply put, Commerce has failed to explain how its reallocation of the costs as G&A is consistent with the statute when NEXTEEL did not treat these costs as G&A expenses in its normal books and records and NEXTEEL’s records are consistent with Korean [generally accepted accounting principles]," the company's comments said.