CIT OKs Use of One Mandatory Respondent's Data to Construct Value for Another in OCTG Review

The Court of International Trade ruled Dec. 18 that Commerce could use one antidumping duty review mandatory respondent’s third-country sales to calculate another’s AD when no better information was available. The opinion comes at the end of a long CIT case challenging the Commerce Department’s 2020 administrative review of the AD order on certain oil county tubular goods (OCTG) from Korea, filed by plaintiff Hyundai Steel in May 2022 (see 2205100033).

Because Commerce determined Hyundai didn't have an appropriate third-country market or home market for it to look to in calculating the exporter’s export price profit, overall profit and selling expenses, it had instead turned to the third-country market of the other respondent, SeAH Steel Corporation. After doing so, it set an AD rate of 19.54% for Hyundai, while SeAH received a 3.85% rate. All the other companies affected by the review received a 11.70% AD rate, averaged from the two mandatory respondents’ rates.

Hyundai argued that it had no ability to review SeAH’s underlying data for accuracy. It also said that Commerce hadn't applied a mandatory constructed value “profit cap,” and that Commerce had had better places to look than SeAH to find data in constructing value for Hyundai.

Hyundai’s case was consolidated to include plaintiffs AJU Besteel Corporation, Nexteel Corporation and Husteel Co., all non-selected respondents; SeAH Steel likewise joined as a plaintiff-intervenor, intending to litigate Commerce’s alleged failure to apply a constructed value profit cap (see 2208010045).

The case reached Judge Jennifer Choe-Groves first in June of 2023, as Commerce sought, and received, a remand to reconsider its calculation of Hyundai’s constructed export price profit (see 2306090053). She granted the remand and also directed Commerce to reconsider the rates of non-examined companies. However, she sustained Commerce’s determination that one type of export from Hyundai was still to be considred in its AD calculation, despite Hyundai arguing they were “non-subject” goods. She also sustained Commerce’s use of neutral facts otherwise available in its calculation of Hyundai’s further manufacturing costs in the U.S., another factor in the AD decision.

On remand, Commerce recalculated its constructed export price profit for Hyundai’s OCTG, relying on the company’s own financial statements rather than SeAH’s sales (see 2309270047). This dropped Hyundai’s AD rate to 9.63% and the non-examined companies’ to 6.74%. No parties commented against the latter decision.

However, Commerce continued its use of SeAH’s third-country markets to construct values for Hyundai’s profit, selling expenses and profit cap, which Hyundai opposed in another set of remand comments (see 2309130030). It said statutory law preferred Commerce look to “the actual data of the specific exporter or producer being examined,” rather than to other companies. It also said that, if Commerce were to look beyond Hyundai, it should not choose SeAH Steel because that exporter was not representative of Hyundai’s costs of manufacture, sales records or customers.

The court upheld Commerce’s results upon remand in its opinion published Dec. 18.

Commerce could have looked to multiple other companies, but it decided to use SeAH because the company was a Korean OCTG producer; its third-country market was a viable comparison; and the sales were made in the ordinary course of trade, Choe-Groves said in her opinion.

That was legal under the relevant statutes, which provide several alternatives, none more heavily weighted than any other, whenever a respondent lacks data to assist Commerce in constructing value for it, the opinion said. It said one of those alternatives is to look to the data of other respondents to the investigation.

“Commerce’s interpretation of the statute is not unreasonable,” the opinion said.

SeAH’s profit reflected Korean production of OCTG, and its data “provided the greatest specificity to the merchandise under consideration,” the court said. The other sources of data offered would have included profits from non-OCTG products, it said. It upheld Commerce’s determination that SeAH’s third-country profit and selling expenses was the best information available.

As for the argument that Commerce applied an inappropriate profit cap by relying on neutral facts available, the opinion disagreed, saying Commerce acted reasonably when faced with a lack of relevant information from the respondent and provided an adequate explanation after the fact.

Hyundai had argued that Commerce’s use of SeAH’s information to construct Hyundai’s profit cap was equivalent to “no cap at all” due to the differences in sales between the two companies. A profit cap is intended to prevent outlying data from influencing Commerce in its decisions, the opinion said.

However, CIT said neutral facts available were all Commerce had to use in its calculations, and it was unpersuaded that Commerce could not apply them to calculate a profit cap. It also said it didn't believe SeAH’s profits were abnormally high.

“Taken as a whole, the Court concludes that the SeAH data were a reasonable proxy to use as facts available based on Commerce’s explanations and citations to substantial record evidence,” the opinion said.

(Hyundai Steel Co. v. United States, Slip Op. 23-183, CIT # 22-00138, dated 12/18/23; Judge: Jennifer Choe-Groves; Attorneys: Jarrod M. Goldfeder of Trade Pacific for plaintiff Hyundai Steel Co. and consolidated plaintiff AJU Besteel Co.; J. David Park of Arnold & Porter for consolidated plaintiff and plaintiff-intervenor Nexteel Co.; Claudia Burke for defendant U.S. government)