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US Defends Use of Malaysian Surrogates in Activated Carbon Exporters’ Appeal

The U.S. defended the Commerce Department before the U.S. Court of Appeals for the Federal Circuit on March 18 regarding a number of decisions it made during its 13th administrative review of the antidumping duty order on activated carbon from China, including its selection of two Malaysian exporters as surrogates over a respondent’s opposition (Carbon Activated Tianjin Co., Ltd. v. U.S., Fed. Cir. # 23-2413).

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Chinese exporters led by Carbon Activated Tianjin and Carbon Activated Corporation filed their opening briefs at CAFC in February (see 2402060057). They are appealing several Court of International Trade rulings on their case, including one that Malaysian producers Century Chemical Works Sendirian Berhad and Bravo Green were reasonable surrogates and others that Commerce looked under the most accurate various Malaysian tariff schedule subheadings for surrogate sales and costs information (see 2307240049).

The U.S. said March 18 that Commerce was right to rely on the two Malaysian producers’ information in its review because Malaysia was the only significant producer of activated carbon it had among its surrogate options.

The exporters argued that the Malaysian records were not the statutorily required “best available information” because they were not disaggregated. They said that Commerce “unlawfully relied exclusively on the net-producer criterion” when finding that Malaysia was the only significant producer of the relevant goods.

However, Commerce’s significant-producer ruling also took into account financial statements provided by one Romanian company and two Malaysian companies, the U.S. said. It said that only the Malaysian companies’ statements provided evidence of significant activated carbon production.

“In sustaining Commerce’s significant-producer determination, the trial court relied on both of Commerce’s findings related to this issue,” it said.

It also said that looking to net exporter evidence is a common and lawful way for Commerce to find the significant producers among potential surrogates. In contrast, the exporters’ own proposed surrogate country, Romania, was neither a net exporter nor a significant producer, it said.

And Commerce had not “disregarded” Romania’s aggregated information when making its determination that Malaysia was the only available significant producer, it said. It said the department would only have needed to compare the two countries’ data if both survived the initial significant producer determination.

The government also opposed the exporters’ claim that Commerce used data from the wrong Malaysian tariff schedule subheadings for four activated carbon inputs -- coal-based carbonized material, coal tar, hydrochloric acid and steam -- in its calculations.

It said “substantial evidence” supports the department’s choice to use Malaysian coconut shell charcoal data, not Turkish wood charcoal data, as surrogate for carbonized material information. Coal-based carbonized material and coconut shell charcoal are both steam activated, while wood carbonized material is usually chemically activated, making Commerce’s choice reasonable, it said.

It noted that this is the same issue being litigated in the exporters’ appeal of Commerce’s 12th review of activated carbon from China (see 2403070043).

The exporters also challenge the department's use of Malaysian data under a “mineral tars, including reconstituted tars” subheading to value coal tar, but “these arguments do no more than ask this court to reweigh evidence, engage in speculation, or disregard Commerce’s practice for determining when surrogate values are aberrational,” it said.

Finally, they called both Malaysian hydrochloric acid information and steam information too general; the former because the relevant subheading covers “hydrogen chloride (hydrochloric acid)” and the latter because they claimed that subheading “is not specific to steam,” as it includes data for liquefied natural gas while the exporters only use gaseous steam.

Neither of these claims directly counter Commerce’s reasons for using the contested data, the government said. It did so because the Malaysian data, especially on steam, was the most accurate to the inputs and came from a much larger volume of imports. The agency also prefers to pull all surrogate value information from the same country when it can, it said.