Aluminum Exporter Says Commerce Regulation Wrongly Restricts Levels of Trade Analyses

A Spanish aluminum exporter argued June 11 that the Commerce Department is unlawfully restricting its statutory requirement to consider levels of trade when calculating normal value by requiring there be “substantial differences,” rather than plain “differences,” in those levels to trigger that analysis (Compania Valencia De Aluminio Baux, S.L.U. v. U.S., CIT # 23-00259).

That departmental regulation is at odds with the actual law, it said.

Exporter Compania Valencia De Aluminio Baux, challenging the first administrative review on common alloy aluminum sheet from Spain, said in a June 11 motion for judgment that it works in three different levels of trade to make sales in its home market and only one in the United States. In Spain, Baux said it makes, first, direct sales to unaffiliated customers; second, downstream sales to an affiliate, Bancolor; and third, sales made by “Bancolor’s Madrid DC” from warehouses to unaffiliated customers. In the U.S., it said, it itself only makes direct sales from warehouses to unaffiliated customers.

It argued that the only comparison Commerce should make between its home market prices and U.S. prices should therefore be between the prices set in identical trade channels -- between direct sales from Baux’s warehouse. However, the department wrongly refused to acknowledge the three different levels of trade Baux used in Spain, condensing them all into a single level, the exporter said.

Commerce is using the wrong standard to differentiate levels of trade, Baux said. It said that law simply calls for comparison between different levels of trade, while the department “unlawfully restricted” that by requiring those levels of trade be “substantially” different.

“Commerce’s interpretation that its regulation comports with the statute creates a circular problem where a difference in LOT may not exist under Commerce’s unlawful test (if there are not substantial difference in selling differences) but Commerce is nevertheless statutorily required to make a LOT adjustment because there are different selling activities occurring in the home and foreign markets,” it said.

The overall purpose of the statute is to ensure accurate price comparisons, and the department’s regulation defeats that, it argued.

It also said that the department’s determination that selling activities alone aren’t enough to establish level of trade was reached by cherry-picking language from the statute “while ignoring language that conflicts with Commerce’s preferred conclusion.”

However, Baux also said that substantial evidence proved it performed different selling functions, not just different selling activities, at one level of trade compared with the others.

The exporter took issue with the department's overall determination that all its home market sales were made at a single level of trade, saying that the finding was not supported by record evidence and otherwise not in accordance with law. It said that Commerce arbitrarily treated Baux different than other exporters. For example, it said, the department has previously differentiated direct-factory sales and warehouse sales by a reseller as separate levels of trade.

The exporter went through several differences in how sales were conducted by it itself compared with its affiliate. Baux said that it primarily sells “full coils of aluminum sheet to industrial consumers like Bancolor and other similar companies,” while Bancolor and Madrid DC sell to “a distinct customer base” further down the supply chain.

And Bancolor and Madrid DC performed services like warehousing, small customer support and commissions, in contrast to Baux, it said. It said this alone should have been enough to establish multiple levels of trade in Spain.