Exporters Say Commerce Must Jointly Consider Economic and Merchandise Comparability in Making Surrogate Picks
Exporters led by Bio-Lab argued that the statute concerning surrogate value selection requires the Commerce Department to balance the importance of both economic and merchandise comparability rather than elevating one factor over the other. Filing a reply brief earlier this month at the Court of International Trade, Bio-Lab said that the court should find this to be the "best" reading of the statute, 19 U.S.C. 1677b(c), under the standard of review for ambiguous statutes established by the Supreme Court in Loper Bright Enterprises v. Raimondo (Bio-Lab v. U.S., CIT Consol. # 24-00024).
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In the 2021-22 administrative review of the AD order on chlorinated isocyanurates from China, Commerce picked Romania as the main surrogate. Bio-Lab challenged this choice at the trade court, arguing that the agency picked Romania "on the sole basis that Mexico -- a producer of identical merchandise -- is slightly less economically comparable to China than Romania" without also evaluating the degree to which sodium hypochlorite made in Romania was comparable to the subject merchandise made in Mexico and China.
Responding to the government's defense of the Romania pick, Bio-Lab argued that the statute itself requires Commerce to balance both the "economic and merchandise comparability" of the surrogate nations to the home market. The exporter said Commerce misapplied Section 1677b(c) "when the sequence in which it considers the statutory factors controls the selection of the best available values or the evaluation of record evidence." The sequence for considering the two factors "should not be an obstacle to considering all of the record evidence regarding both factors," the brief said.
The exporter claimed that "the legislative history, text, and structure of 19 U.S.C. § 1677b(c)(4) unambiguously demonstrate that both economic comparability and merchandise comparability are equal factors that Commerce must consider in the selection of a surrogate country."
In addition, Bio-Lab argued that Commerce's finding that calcium and sodium hypochlorite are comparable to chlorinated isocyanurates isn't supported by substantial evidence. These two items don't have "significant overlap in end uses," and the existence of common inputs between the products, such as chlorine, doesn't establish that they have "comparable physical characteristics." In fact, the chemicals have "significantly different production processes," Bio-Lab said, citing the "complexity of the multi-stage Chlor isos production process" as "a compelling distinction between Chlor isos and calcium or sodium hypochlorites."