Commerce Picks New Surrogate Labor Rate, Slightly Lowers Rates in AD Review
The Commerce Department stuck by its selection of comparable merchandise for chlorinated isocyanurates (chlorinated isos) in its Aug. 4 remand results at the Court of International Trade. However, the agency swapped the surrogate labor data it used in the 2021-22 administrative review of the AD order on Chinese chlorinated isos, which led to small downward adjustments in the AD rates for the two mandatory respondents (Bio-Lab, Inc. v. United States, CIT Consol. # 24-00024).
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Respondent Heze Huayi Chemical's rate dropped from 50.27% to 48.87%, and respondent Juancheng Kangtai Chemical's rate dipped from 73.84% to 72.6%.
In its decision on the review, the trade court sustained Commerce's selection of Romania as the primary surrogate country, though it remanded several other aspects of the review, including the agency's finding that cyanuric acid isn't a "major input" of chlorinated isos and thus doesn't require Commerce to determine a surrogate value for the input (see 2504150055). In the review, Commerce said cyanuric acid doesn't meet the agency's definition of a major input, which generally involves "processed agricultural, aquatic, and mineral products."
On remand, the agency continued to find that cyanuric acid isn't a major input. Commerce said the input doesn't comprise a "predominant portion of the product" nor is it “specialized or dedicated or used intensively” in making the subject merchandise. Cyanuric acid isn't unique among the inputs used to make chlorinated isos, the agency said, basing this conclusion on information from Heze Huayi's product brochure. Commerce added that the record shows that neither respondent bought any of the cyanuric acid it used to make chlorinated isos.
The trade court also remanded Commerce's finding that sodium hypochlorite and calcium hypochlorite were "comparable" products to chlorinated isos. On remand, the agency continued to find that the two products share "similar physical characteristics" with chlorinated isos.
Commerce said record information shows that "chlorinated isos and calcium hypo share similar characteristics because they can be both found in a powdery or tablet form, are chlorinated where both products can be used as disinfectants or for water treatment applications, can be purchased in similar packaging, and react in a similar fashion when they come into contact with water." While the record has some information indicating the products have some differences, Commerce's Policy Bulletin 4.1 “instructs that for purposes of finding products to be comparable, 'comparable merchandise’ is not defined in the statute or the regulations, since it is best determined on a case-by-case basis.”
CIT also said Commerce failed to respond to information submitted by the petitioners regarding differences in the physical characteristics between chlorinated isos and the comparable products. The agency admitted that it didn't respond to certain declarations from various engineers, though it said after review, that the declarations "focus more on the production processes for cyanuric acid, chlorinated isos, and sodium hypo, than on their physical characteristics."
The court also said Commerce needed to further explain or reconsider its determination that the production processes of calcium hypo and sodium hypo are similar to the production process for chlorinated isos. The court said Commerce must support its finding of similarity with "more than the mere assertion that the processes are both multi-stage and share some inputs.”
On remand, Commerce stuck by its determination and said the three products "require similar key inputs" and require "multistage production processes." The agency analyzed information from Heze Huayi regarding its process for making chlorinated isos, the International Trade Commission's finding in ITC Calcium Hypochlorite from China Final on the production process for calcium hypo, and information from the petitioners on the production processes for sodium hypo.
Lastly, CIT sent back Commerce's surrogate labor data selection. In the review, the agency selected Romanian Eurostat labor rates from 2020-21 in the construction and services sectors. The trade court said Commerce didn't address comments related to the Romanian labor rate regarding the fact that the data isn't as contemporaneous as alternative rates and isn't a manufacturing labor rate.
On remand, Commerce reopened the record and put on the record Romanian labor data from the International Labour Organization covering 2021-22 for "manufacturing." No parties commented on the rate.