Commerce Didn't Address Surrogate Subsidies in Steel Nails Case, Respondent Argues at CAFC

The Commerce Department made subsidies an "afterthought" when it failed to properly evaluate their impact on potential surrogates in a case involving the administrative review of an antidumping duty order on steel nails from Oman, AD respondent Oman Fasteners told the U.S. Court of Appeals for the Federal Circuit in a June 16 response brief (Mid Continent Steel & Wire v. U.S., Fed. Cir. # 23-1039).

The agency relied on information distorted by subsidies on products that were not even similar, Oman Fasteners said. It also failed to adequately compare deficiencies in those potential surrogates and it failed to reopen the record when more information was required, Oman Fasteners said in the response.

Commerce relied on financial statements by Hitech and Sundram, but did not scrutinize those statements as DOJ maintained (see 2304280026), Oman Fasteners said. Instead, Commerce merely concluded that the two potential surrogates were subsidized. Because Commerce didn't evaluate the nature of those subsidies, the department's refusal to consider other potential surrogates was unreasonable, Oman Fasteners said. Commerce incorrectly concluded that other surrogates' data was unusable, but never compared the reliability of that data to Hitch's or Sundram's, the company said.

In addition, the department never explained why Sundram’s goods were similar enough to Oman Fasteners' nails to outweigh the subsidy problem, Oman Fasteners said. Any reference by Commerce as to those effects was "made in passing without explanation," it said.

Commerce needed to consider other alternatives beyond Hitech and Sundram in selecting the best surrogate, but it didn't weigh the alternative sources against the subsidized Hitech and Sundram data, Oman Fasteners said. Instead, Commerce "categorically rejected all other options until it was left with the subsidized ones," the company said, which left nothing to compare those subsidies to.

Petitioner Mid Continent's argument that the CAFC categorically approved Commerce’s approach is wrong, Oman Fasteners said. Evaluating "comparative deficiencies" between the potential surrogates was "the whole point of remand," Oman Fasteners said. Once Commerce was left with two subsidy-tainted sources, it should have done a "proper comparison," it said.

The only reasonable option was to reopen the record, Oman Fasteners said. Commerce lacked the required information to make an accurate determination after considering the subsidy issue. No party disputes that Commerce could have obtained that information, but chose not to, Oman Fasteners said.