Commerce Must Explain Departure From Expected Method in AD Review, CIT Says

The case stems from a challenge to the first administrative review of the antidumping duty order on certain steel nails from Taiwan in which Pro-Team Coil Nail Enterprise and Bonuts Hardware Logistics were selected as mandatory respondents. After Bonuts said it wouldn't participate, Unicatch was tapped as the replacement. In the final results of the review, Commerce picked the mandatory respondents' rates using total adverse facts available and selected the highest dumping margin alleged in the petition.

Following litigation over challenges from the plaintiffs, led by Pro-Team, Commerce calculated a company-specific dumping margin of zero percent for Pro-Team, but continued to saddle Unicatch with a total AFA rate of 78.17%. The agency then took a simple average of all three respondents' rates, including Bonuts', to derive the non-individually examined respondent rate, amounting to 39.09%. In the case's second opinion, Barnett instructed Commerce to corroborate the petition rate, which the agency did using Pro-Team's transaction-specific margins. When Commerce simply averaged the three mandatory respondents' rates again, the non-individually examined respondents were stuck with a 52.11% rate.

Barnett, in his July 30 opinion, sustained Commerce's corroboration of the petition rate, holding that the agency rightly found that "the petition margin was within the range of certain transaction-specific margins calculated for Pro-Team in this review. In fact, the petition rate fell well below the transaction-specific margins relied upon by Commerce." Unicatch challenged this holding on two grounds: that the individual sales don't account for a sufficient portion of ProTeam's sales to be considered reliable and that the margins are "aberrationally high." Citing prior CIT rulings, Barnett said that a single sale can be used for corroboration and that "the mere fact that a margin is unusually high does not mean that it lacks probative value and hence cannot be used for corroboration.”

However, the chief judge did remand for further consideration Commerce's decision to depart from the expected method when calculating the non-individually examined respondents' rate. The expected method involves weight-averaging the mandatory respondents' margins, while in this case Commerce took a simple average. The agency acknowledged it dropped the expected method since it "lacked volume data for Bonuts," indicating that it lacked Bonuts' sales values. The statute permits Commerce to drop the expected method if volume data is missing, Barnett explained.

"Commerce, however, had placed on the record U.S. import volume data from U.S. Customs and Border Protection ('Customs'), which was broken down by producer/exporter, and which Commerce relied on to select the mandatory respondents," Barnett said. "When Commerce asserted that the volume data were incomplete, it did not explain why the Customs data, which were reliable for purposes of respondent selection, were not also reliable for purposes of using the 'expected method' for determining the rate for non-individually investigated companies. Because Commerce failed to address record evidence regarding the volume of Bonuts’ U.S. shipments and otherwise failed to justify its departure from the expected methodology, that departure is unsupported by substantial evidence."

(Pro-Team Coil Nail Enterprise, Inc. et al. v. United States, Slip Op. 21-93, CIT Consol. # 18-00027, dated 07/30/21, Judge Barnett. Attorneys: Ned Marshak of Grunfeld Desiderio for plaintiffs Pro-Team, PT Enterprise Inc., Unicatch, TC International, Inc., Hor Liang Industrial Corp. and Romp Coil Nails Industries Inc., and Sosun Bae for defendant U.S. government)