Federal Circuit Sees Defense of PMS Adjustment for Sales-Below-Cost Test
Three defendant-appellants of an antidumping case -- Atlas Tube, Searing Industries and Nucor Tubular Products -- filed a reply brief at the U.S. Court of Appeals for the Federal Circuit on Nov. 22 to defend the Commerce Department's particular market situation adjustment in the sales-below-cost test when calculating normal value (Dong-A Steel Company, et al. v. United States, Fed. Cir. #21-2153).
The case stems from the 2016-17 antidumping duty administrative review of heavy-walled rectangular welded carbon steel pipes and tubes from South Korea. In the initial review, Commerce found four factors that contributed to a PMS for the cost of production, then used this as the basis to make a PMS adjustment for the sales-below-cost test. As it has done many times before, the court then said that Commerce used an "impermissible interpretation" of Section 504 of the Trade Preferences Extension Act of 2015 (TPEA) -- the part of the bill that defines "ordinary course of trade" and "normal value" when calculating dumping margins in AD proceedings.
After issuing their opening brief at the Federal Circuit, Atlas Tube, Searing and Nucor were criticized by the AD respondents and plaintiff-appellees, Dong-A Steel Company and Kukje Steel Co., for providing "virtually no statement of the case." Seeking to justify their stance in light of this criticism, the trio said that "the issues in this case ... are not case-specific but are rather legal snowballs picking up additional (passive) support as they roll downhill." That a single CIT judge rejected the ability for Commerce to make a PMS adjustment for the sales-below-cost test is wrong, and every case since has failed to correct these legal errors, the defendant-appellants said.
The brief holds that the plaintiff-appellee's notion that a PMS adjustment cannot be made is wrong for four reasons: the TPEA impacts the sales-below-cost provision of the statute, silence in the statute is neither "plain language nor an unambiguous prohibition against agency action for Chevron purposes," Commerce has broader authority to adjust a respondent's costs when the costs don't reasonably reflect the costs associated with the production and sale of the merchandise, and the appellees' interpretation of the TPEA is "unworkable and absurd."
The trio also defended the evidence backing the PMS adjustment itself, including that Chinese steel overcapacity distorts the price of the subject merchandise. "Record evidence showed that the extent of Chinese overcapacity in [hot-rolled coil (HRC)] production was such that it need not be solely, or even intentionally, directed at the Korean market in order to have a significant impact," the brief said. HRC is an input in heavy-walled rectangular pipe. "The record includes numerous sources demonstrating that Chinese HRC contributed to the PMS in Korea, and that subsidized Chinese HRC drove down Korean prices for HRC in Korea and negatively affected Korean steel producers."