Citric Acid Exporter Says Commerce Ignored Increase in Stable Conversion Costs During POR
Supporting its July motion for judgment (see 2407160051), Belgium citrate exporter Citribel again asked the Court of International Trade Dec. 6 to find that the Commerce Department’s refusal to conduct quarterly conversion cost analyses is unreasonable (Citribel v. U.S., CIT # 24-00010).
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It also said it hadn’t waived any arguments nor failed to exhaust its administrative remedies.
Citribel brought its case to CIT arguing, under Loper Bright, that Commerce should have been willing to conduct a quarterly conversion costs analyses in calculating its normal value in an antidumping review of Belgium-origin citric acid. The department already does so for raw materials costs when an exporter has faced “significant” cost fluctuations during its review period, it pointed out.
The government responded that conversion costs are generally much more erratic, as they can include bonuses, insurance costs, energy costs, and so forth (see 2409300055). The department’s practice of annualizing conversion costs is not only more accurate for that reason; it has also been upheld repeatedly by courts, the U.S. said.
But Commerce “failed to address several fundamental questions” in its review results, Citribel said. For example, it claimed, the department never actually analyzed the effect significantly fluctuating conversion costs during Citribel’s review period had on the exporter -- even though it claimed it had.
“Citribel raised this issue in its administrative case brief, and Commerce did not address it,” it said. “Citribel raised this issue again in its case brief for this court proceeding, and the Defendant did not address it. … So, did Commerce conduct this analysis or not?”
The exporter also argued that Commerce, while acknowledging the substantial changes in conversions costs Citribel faced during the review period, had “suggest[ed]” that the change was “not ‘real.’” It pointed to Commerce’s statement in its final results that “conversion costs are ‘normally incurred erratically,’” saying that statement suggested that Citribel’s conversion costs fluctuations simply reflected “distortions requiring normalization” instead of “actual cost increases.”
But Citribel did experience “actual cost increases” during the review period, the exporter said. It said that two of its conversion costs, at least, are not “incurred erratically” -- natural gas and electricity, which “are directly tied to the production quantity of citric acid and therefore do not fluctuate unpredictably.” These costs both rose during the review period, it said.
Commerce also claimed that “it is normal” for conversion costs to fluctuate sporadically, but Citribel’s energy costs increases were “far from normal,” the exporter said. Those increases, it said, were caused by the Russian invasion of Ukraine, and they forced Citribel to adjust its prices each quarter.
“If the assumption underlying Commerce’s methodology does not hold true, shouldn’t Commerce adjust its methodology?” it said.
The exporter also noted that this change was not the result of high inflation, something that Commerce does generally conduct a separate analysis for.
And it disagreed that it had waived any of its arguments for lack of exhausting them administratively. For example, it said, it has “consistently argued” that the department has been misinterpreting the statutory definition of “period” under 19 U.S.C. 1677b(b)(3).
And the U.S. claimed Citribel waived any arguments regarding Commerce’s failure to explain whether it had actually analyzed the impact of conversion cost fluctuations on the exporter’s value, citing the fact that “administrative case brief refers to prior cases in which Commerce used annual conversion cost,” it said. But the government can’t rely on past precedent alone, Citribel said -- it has to, and failed to, conduct a case-specific analysis.