Oral Arguments in Plywood Case Discuss Product Similarity, Chinese Gov't Questionnaire Responses
In Feb. 27 oral arguments, Court of International Trade Judge Timothy Reif grappled with whether the Commerce Department reasonably selected a broader, less-specific plywood price dataset over a smaller, more specific one. He also dealt with the department’s application of adverse facts available to multilayered wood flooring review respondents after a finding of government control based on the Chinese government’s “deficient” questionnaire responses (Baroque Timber Industries (Zhongshan) Co. v. United States, CIT # 23-00136).
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Exporters led by Baroque Timber Industries brought their case in 2023 alleging a number of errors in a countervailing duty review (see 2308010050). They contested Commerce’s use of both International Tropical Timber Organization (ITTO) and UNComtrade price data, saying that the timber organization’s data alone should have been used to set the review’s price benchmark. Although ITTO’s data covered only a few countries, Baroque noted, it covered fewer plywood grades than did the global Comtrade data.
Government attorney Brendan Jordan said many CVD reviews must find acceptable comparability between datasets for products that differ by more than simply grade -- for example, apples and pears. Grade-A and Grade-B plywood are “essentially the same kind of thing” as Grade-C and Grade-D, he said; they “serve the same function” and are only distinguishable by finish.
The question was therefore how Commerce could fulfill its statutory mandate to provide a world market price, he said. The department, he said, reasonably concluded that the less-specific Comtrade data should be included in its benchmark analysis because it contained worldwide data prices, making it likely to be more representative overall.
Baroque’s attorney, Andrew Schutz, disagreed, saying he didn’t “know how that possibly fits within the regulation, or, more importantly, within the statute.” Grade-A plywood is much more expensive than the exporters' Grade-C plywood, and Commerce was choosing to use less accurate data and leaving better accuracy on the table, he claimed.
He said the department’s regulation doesn’t actually necessitate looking to as many countries as possible to establish a world benchmark price. Rather, it simply directs Commerce to look to a different market, he said.
“A price from Brazil is just as much a world market price as the UN Comtrade data,” he said.
The parties also discussed Commerce’s finding that the Chinese government’s response to the department’s questionnaires was deficient. The department reached that conclusion after China told it none of the exporters were under its control. That, however, was contradicted by the Chinese Communist Party’s own constitution, which requires establishment of a branch or committee in any enterprise with three or more party members, and a party opinion that advocated CCP committees implement ideological work at all levels of the private sector, Commerce claimed.
The Chinese government nevertheless informed Commerce that no party officials exerted any control over the suppliers, it said, warranting AFA.
But the department went about the process the wrong way, Schutz argued.
First, Commerce claimed to have provided notice of deficiency to the Chinese government in its first supplemental questionnaire by simply restating an earlier question, the attorney said. That wasn’t adequate notice, he said. Commerce then issued the Chinese government a second supplemental questionnaire that didn’t raise the issue.
“I mean, it’s only three questions,” he said. “I’m not quite sure why it would be burdensome at all to further explicate the nature of the deficiency.”
And Commerce reached that deficiency determination in part because the Chinese government didn’t provide supporting documentation that hadn’t been asked for in either the initial or supplemental questionnaires, he said.
In turn, the government argued that other questions in the supplemental questionnaire did ask “for granularity” from the Chinese government. China had said in its initial questionnaire response that no party officials exerted control over the plywood exporters’ input suppliers based on certifications from those companies, but then refused to provide any further documentation. Notably, in 2012, the Chinese government responded with an actual CCP letter, he said.
“So they could have satisfied it that way, but they simply didn’t,” he said.
Reif asked why Commerce couldn’t have been more specific in its supplemental questionnaire requests. It wouldn't have been burdensome on the agency to simply be more precise, he said, especially as it had demonstrated on other occasions that it could be so.
“Wouldn't it save everybody time if the questions were as precise as it could be so that some of these conversations would be addressed through the administrative process, and, if a respondent doesn't want to answer something, it's more clear?” he asked.