CAFC Judges Question US, Turkish Exporter on Use of Turkish Lira to Value Home Market Sales
Judges at the U.S. Court of Appeals for the Federal Circuit questioned counsel for both antidumping respondent Habas Sinai ve Tibbi Gazlar Istihsal Endustrisi and the government on the Commerce Department's decision to use Turkish lira to value Habas' home-market sales in the 2018-19 administrative review of the antidumping duty order on cold-rolled steel flat products from Turkey. Judges Kimberly Moore, Todd Hughes and Tiffany Cunningham questioned Habas' claim that U.S. dollars should have been used because its home market price negotiations, invoices and records all used U.S. dollars (Habas Sinai ve Tibbi Gazlar Istihsal Endustrisi v. U.S., Fed. Cir. # 24-1158).
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The respondent argued on appeal that Commerce has a preference for using the "transaction currency," which the exporter argues in this case is U.S. dollars, and the valuation of the home-market sales in lira creates a "mischaracterization of the sale price that distorts the margin" (see 2403260054). Habas argued that it relies on U.S. dollar-denominated pricing to "avoid large fluctuations in the exchange rate."
The agency said that because it couldn't assign a dollar value to each payment received, it couldn't reconcile each payment with the dollar value on its corresponding invoice. The Court of International Trade upheld this move as backed by sufficient evidence, finding that the agency would have violated its past practice only if the dollar amount ultimately "controlled" the amount paid for the home-market sales (see 2309140049).
Moore opened the questions during oral argument by noting that Commerce seemingly made a fact finding that the "U.S. dollar price could not be reconciled because Habas didn't know the payment date of each invoice, and thus not the exchange rate that would be in effect on that date." The judge said this "doesn't feel like something I can really question," explaining that she has to "give a lot of deference in these scenarios."
In response, Nancy Noonan, counsel for Habas, said that this is something the court can question, since the respondent told Commerce that, in the "normal course of business," it has an "open account system." Under this system, the customer pays on a "rolling basis" that isn't tied to direct invoices. As a result, Habas submitted accounts receivable information in the record, the company said, adding that Commerce "never asked anything about" its submitted information. Noonan said if the agency finds a deficiency on the record, it has an "obligation" to ask the respondent about it.
Moore questioned whether there truly was a deficiency on the record, telling Noonan that she doesn't know "that this falls into that category." This is "just a question of" whether the agency can use U.S. dollars or lira, the judge said. Noonan replied that what Commerce had on the record was a home market sale that had the exact exchange rate used and "how that translates into the Turkish currency."
Hughes additionally questioned how Habas' "rolling basis" method of payment frustrates the problem, telling Noonan that there are cases where companies keep their records in a way that requires Commerce to "do alternative methodologies." He said "you can't blame Commerce for business choices your client makes." In response to Noonan's point that Commerce's primary methodology is to use U.S. dollars, Hughes said that "Commerce can change its mind if it has a reason to, and I think it gave a reason here."
DOJ attorney Emma Bond then sought to defend Commerce's position, arguing that only the Turkish lira values on the invoices could be reconciled with Habas' financial statements. She said there's no indication Commerce departed from its standard practice, given its standard approach of using verified data. Moore questioned this point, noting that "it seems that the common practice is to find a way to do a conversion and use U.S. dollars."
Bond replied that there's not a custom of using U.S. dollar values, but rather similar factual determinations in the past identifying U.S. dollars as the currency that controls the transaction.
Moore then asked if Commerce has an obligation to go back to the respondent and ask for more information to allow the agency to match up the dates. Bond said there's no obligation here to do so, especially since the agency didn't use facts available. She added that Commerce did ask a follow-up question indicating that the agency didn't have the "payment specific date or exchange rate." So not only did the agency ask for more information, it did so despite not having an obligation to do so, since it's relying on Habas' information, Bond said.
In rebuttal, Noonan emphasized that the "Turkish lira price that's in our books and records is the converted U.S. dollar price as of the date of sale in the home market on the invoice." She questioned why this price had to be converted to Turkish lira, arguing that it's "too much conversions" when a U.S. dollar price is on the record." Noonan said it's "not a fair comparison under the statute to have to convert to Turkish lira and then convert back to the U.S. dollar price on the exchange of the U.S. sale, not the Turkish sale."