US Defends Methodology to Apply Suppliers' Subsidies to Lumber Exporters
The U.S. defended the methodology it used to calculate the amount of supplier subsides attributable to exporters Les Produits Forestiers D&G and its cross-owned affiliates, led by Les Produits Forestiers Portbec, on remand in a case on the expedited countervailing duty review of Canadian softwood lumber. Filing remand comments on Nov. 15, the government said two alternative methodologies floated by the petitioner, the Committee Overseeing Action for Lumber International Trade Investigations or Negotiations, both fall short (Committee Overseeing Action for Lumber International Trade Investigations or Negotiations v. U.S., CIT Consol. # 19-00122).
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Most recently in the proceeding, the Court of International Trade remanded the review for Commerce to review its decision not to attribute subsidies received by D&G and Portbec (see 2404230031). As a result, the agency applied subsidies received by D&G and Portbec from its unaffiliated suppliers, finding it necessary to examine each company's purchases of lumber from the unaffiliated suppliers in relation to their share of their combined total sales.
In response, the petitioner offered two alternatives, the first of which would have Commerce calculate separate rates for D&G and Portbec as if the two were independent and separate companies, using each exporter's total sales as the denominator and each company's supplier lumber purchases as the numerator. The agency would then add up the two subsidy rates after weighting them by each company's sales level in relation to the total sales amount of the two firms combined.
Commerce said this approach is "flawed" and also wasn't raised administratively. The agency argued that this approach "disregards the uncontested finding that D&G and Portbec are cross-owned producers of softwood lumber."
The petitioner's second approach would see Commerce calculate one CVD rate for D&G and Portbec using the two companies' combined total sales as the denominator and their combined supplier lumber purchases as the numerator.
The agency said this approach also was flawed since it "treats D&G and Portbec the same and assumes that both companies had similar purchase values of lumber from unaffiliated suppliers, and that both companies had similar sales during the [period of review]." The record instead establishes that D&G and Portbec bought "meaningfully different volumes of lumber from unaffiliated producers and had notably different sales levels for 2015," the brief said.
The agency said its methodology "accounts for the fact that, while D&G is a much larger company than Portbec in terms of sales, it purchases a relatively small amount of lumber from unaffiliated suppliers, while Portbec purchased a significant amount of lumber from unaffiliated suppliers and has a relatively small amount of sales."