Wind Tower Petitioner Says Conversion Costs Must Only Be Based on Physical Characteristics
In a reply brief Feb. 18, domestic petitioner Wind Tower Trade Coalition again argued that a review respondent’s conversion costs calculation should have been based only on its towers’ physical characteristics, not its monthly production quantity (Wind Tower Trade Coalition v. United States, CIT # 24-00070).
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The respondent itself, South Korean exporter Dongkuk S&C, “reported that its indirect conversion costs ‘are not impacted by differences in product characteristics,’” the trade group said. But Commerce “chose to ignore” that fact, it said, and DOJ justified Commerce’s finding by saying the department used costs that “reasonably reflect the cost associated with the production and sale of the merchandise,” it said.
Commerce’s own past practice positions cost allocation “based on physical characteristics” as the main factor it considers in cost analyses, the coalition said. This is because, as the U.S. Court of Appeals for the Federal Circuit has found, products’ physical characteristics “‘generally account’ for major differences in costs,’” it said.
The department didn’t even state itself that it had found Dongkuk’s conversion costs to “reasonably reflect” the usual production and sales costs of wind towers, the trade coalition said -- that was a post hoc justification by the government. Commerce instead simply said that the respondent “reported its conversion costs based on its normal books and records,” it claimed.
But that isn’t the test, it argued. Rather, it said, “the relevant issue is whether Dongkuk’s books and records ‘reasonably reflect the cost associated with the production and sale of the merchandise,’ not whether a respondent has reported its costs consistent with its books and records.”
The statute exists “precisely” for the circumstance that a respondent’s books and records are factually accurate, but not reflective of selling the good in question, the coalition said.
It also argued that Commerce should have accepted its own analysis of Dongkuk’s conversion costs, which showed that product control numbers (CONNUMs) with specific characteristics “had per-section conversion costs that differed significantly.”
It said the department rejected this analysis as “deficient” because it didn’t include consideration of “minor CONNUM characteristics (i.e. bus bars, conduits, elevators, platforms, and other internal components) that allegedly ‘impact the costs associated with producing differing CONNUMs.’” But those minor characteristics didn’t actually have any impact, and Commerce failed to show how they “drove the cost variances in the [coalition's] analysis,” it said.