Petitioner Says Commerce Failed to Correct for Conversion Costs in AD Review on Wind Towers
The Commerce Department failed to correct for respondent Dongkuk S&C's conversion costs and improperly relied on Dongkuk's information from a past antidumping duty review as the basis for constructed value ratios, petitioner Wind Tower Trade Coalition argued in a July 9 complaint at the Court of International Trade. The petitioner brought the suit to contest the 2022-23 review of the AD order on utility scale wind towers from South Korea (Wind Tower Trade Coalition v. United States, CIT # 25-00104).
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During the review, Dongkuk reported the product characteristics for its wind towers along with project-specific costs. These costs included "indirect costs, or conversion costs, that Dongkuk incurred for converting steel plates and other minor inputs into a wind tower," the petitioner said. These costs were "allocated to each production process based on the allocation basis set by the nature of accounts and then subsequently allocated to each project based on the production quantity.”
The coalition gave Commerce an analysis showing the "per-section conversion costs deviated significantly between" control numbers (CONNUMs). The petitioner said this analysis matched Commerce's own analysis conducted in the AD investigation on utility scale wind towers from Indonesia, in which the agency "acknowledged that conversion costs specific to each type of tower were unrelated to the physical characteristics of the products."
The coalition suggested that Commerce adjust Dongkuk's conversion costs to "correct for the significant variations unrelated to the physical characteristics of the merchandise," which is the same fix Commerce made in the Indonesian AD investigation. The agency didn't address the coalition's proposed fix in its preliminary results, though in the final results, the agency rejected the proposal based on its finding "regarding conversion costs" for CONNUMs with the same number of sections.
Commerce said "towers with the same number of sections would have a similar production quantities [sic]" and thus "similar conversion costs," since Dongkuk allocated conversion costs based on monthly production quantities despite the company's claim that indirect costs "are not impacted by differences in product characteristics." The agency then analyzed conversion costs among CONNUMs with the "same number of sections," finding that this analysis showed that Dongkuk's conversion costs "primarily reflected physical wind tower characteristics" instead of monthly production quantities.
Early in the review, the coalition submitted financial information from Korean manufacturer Husteel that Commerce could use should it find it couldn't use Dongkuk's own home market or third country sales to determine normal value. The respondent contested the submission for being untimely.
Later in the review, after Commerce determined it couldn't use Dongkuk's information to determine normal value, the coalition submitted 2023 financial information of Korean steel pipe maker SeAH Steel Holdings in addition to the Husteel data. Instead of going with these options, Commerce based constructed value profit and selling expenses on Dongkuk's constructed value profit and selling expense ratios from the previous AD review.
The coalition challenged this selection in the review, arguing that Commerce "misinterpreted the alternative methods for determining [constructed value (CV)] ratios set out in 19 U.S.C. § 1677b(e)(2)(B) by analyzing Dongkuk’s information under subsection (i) rather than subsection (iii)."
The petitioner added that Dongkuk's ratios from the past review were "unrepresentative, distortive, unprofitable, and non-contemporaneous and that selecting this source as the basis for CV ratios was inconsistent with the statute and previous Commerce and court decisions." Commerce said it was aware of Dongkuk's unprofitability, yet it picked the respondent's information due to the "presence of individual profitable sales."