Incorrectly Chosen Surrogate Only Made 10% of Sales in Home Market, Exporter Argues
An automobile parts exporter’s financial statements aren’t representative of exporter Your Standing International’s home market steel nail sales, Your Standing said Nov. 29 in support of its August motion for judgment (see 2408270046) (Your Standing International v. United States, CIT # 24-00055).
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The exporter brought its case to the Court of International Trade in April, arguing the Commerce Department had unreasonably used automobile parts manufacturer San Shing’s financial data to construct a value for its steel nail exports in the final results of the 2021-22 antidumping duty review (see 2404020035). As a result of the review, Your Standing received a 26.28% dumping margin.
But “no reasonable mind” could accept the use of San Shing’s financial statements to construct Your Standing’s value and selling expenses, it said.
Under the framework established by reviews on pure magnesium from Israel and color television receivers from Malaysia, Commerce must weigh four different factors when selecting “the most appropriate profit rate for the respondent": product similarity, customer base similarity, extent of the surrogate’s U.S. sales and contemporaneity of the surrogate’s information, it said.
But Your Standing makes significant sales in Taiwan, unlike San Shing, the exporter said; the two companies have different customer bases.
In its review, Commerce said that San Shing made 70% of its sales “either in the Taiwanese home market or to third country markets,” Your Standing said. It claimed this “blatantly distorts” the actual record evidence, which shows that only about 10% of those sales are made in Taiwan and the remaining 60% went to other countries.
The court has previously rejected use of a surrogate who made only 32% of its sales in the relevant country, the exporter said. In this case, the surrogate made only 10% of its sales in Taiwan, but “Defendant would have the Court believe that 10 percent is a significant amount of San Shing’s total sales and San Shing’s financial statements were … appropriately used,” it said.
Plus, only “a fraction” of San Shing’s Taiwanese sales were of products comparable to Your Standing’s exports. Four out of five were sales of fasteners, not nails, it said.
Your Standing also claimed it hadn’t exhausted its administrative remedies related to its arguments about the different customer bases for automobile parts and steel nails, despite what the U.S. said (see 2411040060).
“Your Standing’s argument before the Court is the same as its argument before the Department of Commerce: that San Shing’s financial statements should be excluded from calculating Your Standing’s [constructed value] profit and selling expenses,” it said.
Particularly, it said, the customer bases argument “is directly derived” from the exporter’s arguments discussing San Shing’s automotive bolt products. And the U.S. was on notice regarding potential customer base arguments because “its own established analytical framework” requires customer base comparisons, it said.