THAI PLASTIC BAGS INDUSTRIES 

CO., LTD, ET. AL., 

Plaintiffs,

v. 

UNITED STATES, 

Defendant,

and

POLYETHYLENE RETAIL CARRIER BAG 

COMMITTEE, HILEX POLY CO., LLC, 

and SUPERBAG CORPORATION, 

Defendant-Intervenors.

Slip Op. -

UNITED STATES COURT OF INTERNATIONAL TRADE 

OPINION

[affirming the Department of Commerce’s remand redeterminations]

Dated: 2013

Irene H. Chen, Chen Law Group LLC, of Rockville, MD, 

and Mark B. Lehnardt, Lehnardt & Lehnardt, LLC, of Liberty, MO, 

for Thai Plastic Bags Industries, Co., Ltd. 

Joseph W. Dorn and Daniel L. Schneiderman, King & 

Spalding LLP, of Washington, DC, for Polyethylene Retail Carrier 

Bag Committee, Hilex Poly Co., LLC, and Superbag Corporation. 

Ryan M. Majerus, Trial Attorney, Commercial Litigation 

Branch, Civil Division, U.S. Department of Justice, of 

Washington, DC, for Defendant. Also on the brief were Stuart F. 

Delery, Acting Assistant Attorney General, Jeanne E. Davidson, 

Director, and Patricia M. McCarthy, Assistant Director. Of 

1

 This action was consolidated with Court No. 11-00409 and 

Court No. 11-00416. 

Before: Donald C. Pogue, 

Chief Judge 

Consol. Court No. 11-004081

13 139

November 13,
Consol. Court No. 11-00408 Page 2 

counsel on the brief was Scott D. McBride, Senior Attorney, 

Office of the Chief Counsel for Import Administration, U.S. 

Department of Commerce, of Washington, DC. 

Pogue, Chief Judge: This case returns to court 

following remand to the Department of Commerce (“Commerce” or 

“the Department”) by Thai Plastic Bags Industries Co., Ltd. v. 

United States, 37 CIT ____, 904 F. Supp. 2d 1326 (2013) (“TPBI 

Remand Order”).2 The Department responded to the TPBI Remand 

Order by issuing its Results of Remand Redetermination Pursuant 

to Court Remand, A-549-821, ARP 09-10 (Jul. 10, 2013), ECF Nos. 

87, 89 (“Remand Results”). 

The parties here raise two challenges to the Remand 

Results. First, respondent Plaintiffs claim that Commerce 

improperly increased Thai Plastic Bags Industries Co., Ltd.’s 

(“TPBI”) home market general and administrative (“G&A”) expenses 

by failing to exclude from, or “offset,” those expenses by the 

amount of revenue from the sale of certain assets. Second, 

Defendant-Intervenors Polyethylene Retail Carrier Bag Committee, 

Hilex Poly Company, LLC, and Superbag Corporation (collectively 

the “Domestic Producers”) claim that the Department has 

improperly reduced the surrogate selling expenses for respondent 

Landblue (Thailand) Co., Ltd. (“Landblue”). In the alternative, 

2

 All citations to the TPBI Remand Order are to the Federal 

Supplement.
Consol. Court No. 11-00408 Page 3 

the Domestic Producers argue that the Department should, if 

allowed to reduce Landblue’s selling expenses, calculate a 

profit amount derived from the same source (TPBI) rather than 

the surrogate producer selected by the Department, Thantawan 

Industry Public Company Limited (“Thantawan”).

For the reasons stated below, the Department’s remand 

determinations are affirmed. Commerce’s denial of an offset to 

G&A expenses for revenue from the sale of land and buildings 

properly applies a Department policy intended to increase the 

accuracy of dumping margin calculations in a manner supported by 

the record evidence presented. The reduction of surrogate 

selling expenses, which reflects the distinction between direct 

and indirect costs, is neither beyond the discretion of the 

Department nor unsupported by substantial evidence on the 

record. Finally, the Department was not obliged to seek 

additional information from TPBI to calculate a profit amount 

after it reasonably determined to use Thantawan as a surrogate 

for Landblue.

BACKGROUND

A. Department of Commerce Determinations and the TPBI Remand 

Order
Consol. Court No. 11-00408 Page 4 

The TPBI Remand Order followed a review of the 

Department’s determinations in Polyethylene Retail Carrier Bags 

From Thailand, 76 Fed. Reg. 59,999 (Dep’t Commerce Sept. 28, 

2011) (final results) (“Final Results”) and accompanying Issues 

& Decision Mem., A-549-821, ARP 09-10 (Sept. 21, 2011) (“I&D 

Memo”). The Final Results calculated dumping margins for the 

two exporter/respondent companies under review, TPBI and 

Landblue. In making these calculations, the Department 

exercised its authority under section 773(e)(2)(B) of the Tariff 

Act of 1930, 19 U.S.C. § 1677b(e)(2)(B)3

 to “construct” or 

estimate actual costs of a respondent’s sales where valid 

comparison sales in the exporting country were not available.

See Final Results at 60000, 60001. Both the Domestic Producers 

and the Plaintiff exporter/respondents challenged aspects of the 

Department’s constructed value (“CV”) calculations in a 

consolidated action here. TPBI Remand Order. Of these 

challenges, the TPBI Remand Order identified two issues 

requiring additional consideration.

First, the Department had calculated a reduction in 

its estimates of TPBI’s G&A expenses by “offsetting” or reducing 

those expenses by the amount of revenues from certain asset 

3

 Further references to the Tariff Act of 1930, as amended, 

are to the relevant portions of Title 19 of the U.S. Code, 2006 

edition.
Consol. Court No. 11-00408 Page 5 

sales taking place during the period of review (“POR”). I&D Memo 

at cmt. 1. In doing this, the Department applied a general 

policy allowing reductions for any gains made in the “routine 

disposition of assets” in order to more accurately calculate the 

dumping margin. Id.4

 The TPBI Remand Order concluded that the 

Department’s grant to TPBI of an offset for revenue from the 

sale of certain land and fixed assets, despite indicia that the 

4

 In calculating the cost of production for purposes of 

establishing a dumping margin, the Department is required by 

19 U.S.C. § 1677b(b)(3)(B) to include “an amount for selling, 

general, and administrative expense based on actual data 

pertaining to production and sales [. . . ].” In making this 

calculation, the Department’s regular practice is to offset 

expenses by revenues from the sale of equipment or capital goods 

so long as such sales are routine parts of the production 

process. Remand Results at 3. This practice recognizes that 

“The gains or losses on the routine disposal or sale of assets 

of this type relate to the general operations of the company as 

a whole because they result from activities that occurred to 

support on-going production operations.” Certain Softwood Lumber 

Products from Canada, 70 Fed. Reg. 73,437 (Dep’t Commerce Dec. 

12, 2005) (final results) and accompanying Issues & Decision 

Mem., A-122-838 (“Softwood I&D Memo”) at cmt. 8. 

In contrast, the Department interprets “pertaining to 

production and sales” in 19 U.S.C. § 1677b(b)(3)(B) as properly 

excluding costs that are not routine and recurring in the normal 

course of production and sales. See id. Reflecting this, the 

Department has consistently made a distinction between routine 

transactions relating to production and singular or “one off” 

transactions. These two types of transactions are distinguished 

for the purpose of calculating revenue offsets to G&A expenses 

based on an analysis of their “nature, significance, and the 

relationship of that activity to the general operations of the 

company.” Remand Results, at 15 (quoting Certain Frozen Canned 

Warmwater Shrimp from Brazil, 69 Fed. Reg. 76,910 (Dep’t 

Commerce Dec. 23, 2004) (final determination) and accompanying 

Issues & Decision Memo, A-351-838 at cmt. 8.) 
Consol. Court No. 11-00408 Page 6 

sale was not conducted in the routine course of business, was 

not adequately supported by evidence on the record. TPBI Remand 

Order at 1331. The decision to provide an offset for these 

revenues was therefore remanded to the Department for further 

consideration.

Second, the Department calculated a normal or home 

market value for Landblue by approximating Landblue’s selling 

expenses using Landblue’s own ratio of direct to indirect 

selling expenses and applying that ratio to the selling expenses 

reported by Thantawan, a Thai surrogate company selected 

because, during the POR, it produced “similar merchandise, [had] 

a similar customer base, and operated with a profit.” I&D Memo 

at cmt. 5.5 The decision to apply the Landblue ratio to 

Thantawan’s selling expenses represented an acknowledgement by 

the Department that Thantawan’s reported selling expenses did 

not disaggregate direct expenses associated with export sales 

from indirect expenses that would apply to both domestic and 

export sales. Id. Because Thatawan’s expenses were not 

allocated or identified as direct and indirect, the Department 

determined that the accuracy of the CV calculated for Landblue 

would be greater if some correction were made for the overinclusion of selling expenses in the surrogate’s financial 

5

 Landblue did not have any home market or third country 

sales. I&D Memo at 13. 
Consol. Court No. 11-00408 Page 7 

statement. Id.; Remand Results at 7. To make this correction, 

the Department applied Landblue’s direct/indirect expense ratio 

to Thantawan’s reported selling expenses to generate the amount.

But the decision to use Landblue’s own direct/indirect expense 

ratio was based on assumptions about the similarity of the 

expenses incurred by the two companies. 

The TPBI Remand Order found these assumptions to be 

contradicted by facts on the record. Specifically, the 

Department did not address the fact that Landblue, with no 

domestic sales at all, was likely to incur a different ratio of 

direct and indirect selling expenses than a company selling 

largely within its home market. TPBI Remand Order at 1334. As a 

result, it was not clear from the record evidence that applying 

the Landblue ratio would serve the statutory purpose of making 

as accurate a determination as possible. This determination was 

also therefore remanded to the Department for reconsideration.

B. Challenged Remand Results 

To address the two issues on remand, the Department 

gathered additional information and revised its determinations 

based on the resulting, more complete factual record. 

First, the Department’s reconsideration of the revenue 

offsets allowed for TPBI’s sale of assets was based on answers 

submitted by TPBI to a Department questionnaire intended to 
Consol. Court No. 11-00408 Page 8 

better identify the type of sales that generated the contested 

revenues. Remand Results at 4. Based on its analysis of this 

additional information, the Department determined that the 

portion of revenues attributable to the sale of an office 

building and associated land should not be classified as part of 

the company’s routine operations. Instead, the Department found 

that this was a singular sale of fixed assets generating nonrecurring gains. This determination was based on both the 

relative size of the transaction and the business circumstances 

that surrounded the sale. Id. at 5-6. Therefore the Department, 

on remand, eliminated the deduction of that portion of TPBI's 

gain from its calculation of its G&A expenses. Id. at 6. 

Second, Commerce addressed the remaining issue on 

remand by opening the record to collect additional data from 

both Landblue and TPBI regarding the breakdown of their direct 

and indirect selling expenses. Commerce then re-examined the 

use of Thantawan as a surrogate for calculating Landblue’s 

selling expenses and reconsidered the application of a 

direct/indirect ratio to Thantawan’s reported selling expenses. 

Remand Results, app. B at 2; id. app. A (“Analysis Memo”) at 3; 

id. at 13, 17. Based on the additional data collected from 

Landblue and TPBI, the Department a) affirmed its determination 

that using Thantawan as a surrogate for Landblue’s selling 

expenses is justified, b) affirmed the determination that 
Consol. Court No. 11-00408 Page 9 

applying some reduction to Thantawan’s selling expenses is 

justified, and c) determined that the types of selling expenses 

incurred by Thantawan and TPBI were sufficiently similar to 

justify applying TPBI’s direct/indirect selling expense ratio — 

rather than Landblue’s - to the reported selling expenses in 

calculating a CV for Landblue. Finally, the Department declined 

to re-open its determination of an appropriate profit figure for 

Landblue to use surrogate data rather than TPBI’s proprietory 

information.

STANDARD OF REVIEW 

“The court will sustain the Department’s determination 

upon remand if it complies with the court’s remand order, is 

supported by substantial evidence on the record, and is 

otherwise in accordance with law.” Jinan Yipin Corp. v. United 

States, __ CIT __, 637 F. Supp. 2d 1183, 1185 (2009) (citing 

19 U.S.C. § 1516a(b)(1)(B)(i)). 

This standard precludes arbitrariness in the 

application of antidumping laws. An agency decision is 

arbitrary, inter alia, if it applies different standards of 

judgment to similar cases without adequate explanation and 

factual support on the record. See Transactive Corp. v. United 

States, 91 F.3d 232, 237 (D.C. Cir. 1996) (“an agency action is 
Consol. Court No. 11-00408 Page 10 

arbitrary when the agency offered insufficient reasons for 

treating similar situations differently.”) 

DISCUSSION

A. The Exclusion of Revenues From the Sale of Land in 

Calculating TPBI’s G&A Expenses

Based on the additional information gathered by the 

Department, revenue from TPBI’s sale of a parcel of land and 

associated buildings have been appropriately excluded from gains 

incurred in the routine operation of business and therefore not 

used as the basis for an offset or deduction from TPBI’s G&A 

expenses.6

TPBI argues that this analysis has not been properly 

conducted in classifying their reported sale of an office 

building and parcel of land. Plaintiffs’ Comments Concerning 

Commerce’s Final Results of Redetermination, ECF No. 92 at 5.

Noting that in some prior determinations the Department has 

found that land sales are classified as routine expenses which 

are appropriately the basis for a G&A revenue offset, TPBI 

claims that the Department has determined that the land and 

building sales were significant and non-routine “without 

material analysis or discussion.” Id. at 4-5. 

6

 See supra note 4.
Consol. Court No. 11-00408 Page 11 

Despite Plaintiffs’ claim, the analysis and evidence 

submitted with the Remand Results are sufficient to support the 

Department’s classification of this transaction. See Analysis 

Memo at 2. The Department distinguishes between the sale of 

capital equipment and the sale of an office building and 

associated land, reviews the criteria for considering such a 

sale to be outside the scope of routine business operations, and 

notes that the large scale of the revenues from the building 

transaction relative to the other transactions conducted during 

the same period make it “significant” as the term is used in 

this type of analysis. Id. at 2,3.7

 The analysis conducted by 

the Department in the Analysis Memo is comparable to the 

analysis that determined the result cited by the Plaintiff in 

Polyethylene Terephthalate Film, Sheet, and Strip from the 

Republic of Korea, 75 Fed. Reg. 70,901 (Dep’t of Commerce Nov. 

19, 2010) (final results) and accompanying Issues & Decision 

Mem., A-580-807 at cmt. 3. In both cases, the character of the 

transaction and its significance were evaluated – the former by 

its relationship to the company’s line of business and the 

latter based on the revenue generated relative to other 

transactions. The Department’s classification is therefore 

7

 See especially Table 1, emphasizing the scale of this 

transaction relative to other asset sales. 
Consol. Court No. 11-00408 Page 12 

consistent with its established practice and supported by a 

reasonable reading of the facts on the record. 

B. Application of TPBI’s Ratio of Direct to Indirect Selling 

Expenses to Thantawan’s Reported Selling Expenses

As noted above, in response to this aspect of the TPBI 

Remand Order, Commerce gathered additional information and made 

three significant conclusions based on an evaluation of the 

expanded record. First, it affirmed its determination that 

Thantawan represents an adequate surrogate for Landblue’s 

selling expenses. Remand Results at 11. Second, it affirmed the 

previous determination that the goal of calculating the most 

accurate CV requires that Thantawan’s financial statement of its 

selling expense be modified to reflect the distinction between 

direct and indirect expenses. Remand Results at 10, 19. Third, 

the Department determined that the similarity in market 

positions between Thantawan and TPBI makes the use of TPBI’s 

ratio of direct to indirect selling expenses - rather than 

Landblue’s - the most accurate way of calculating a CV for 

Landblue. Remand Results at 10. 

Of these determinations, the Domestic Producers object 

to the second on the same grounds articulated in their initial 

brief prior to the TPBI Remand Order. See Reply Brief of the 

Polyethylene Retail Carrier Bag Committee, et. al. in Support of 
Consol. Court No. 11-00408 Page 13 

Their Motion for Judgment on the Agency Record, ECF Nos. 50, 51 

(“Domestic Producer’s Brief”) at 10-12. Specifically, the 

Domestic Producers argue that Commerce has had a consistent 

practice since 2007 of never disaggregating line items on 

financial statements because of the Department’s concern that 

doing so might introduce distortions rather than increase 

accuracy. See Defendant-Intervenors’ Comments Concerning 

Commerce’s Final Results of Redetermination Pursuant to Court 

Remand, ECF No. 91 (“Domestic Producers’ Comments”) at 3. If 

such a practice exists, the court is obliged to ascertain 

whether the determination in this case has been supported by 

sufficient reasons for deviating from the practice and treating 

similar situations differently. See Transactive Corp. v. United 

States, 91 F.3d 232, 237 (D.C. Cir. 1996).

In support of their argument, the Domestic Producers 

cite four prior antidumping determinations claimed to articulate 

this general policy of never disaggregating line-items. See 

Coated Free Sheet Paper from the People's Republic of China, 72 

Fed. Reg. 60,632 (Dep’t Commerce Oct. 25, 2007) (final 

determination) and accompanying Issues & Decision Memorandum, A570-906 (“Free Sheet Paper”) at cmts. 4, 5; Wooden Bedroom 

Furniture from the People’s Republic of China, 76 Fed. Reg. 

49,729 (Dep’t Commerce Aug. 11, 2011) (final results) and 

accompanying Issues & Decision Mem., A-570-890 (“WBF 2011 I&D 
Consol. Court No. 11-00408 Page 14 

Memo”) at cmt. 19(A)(iv); Polyethylene Terephthalate Film, 

Sheet, and Strip from the People’s Republic of China, 77 Fed. 

Reg. 14,493 (Dep’t Commerce Mar. 12, 2012) (final results) and 

accompanying Issues & Decision Mem., A-570-924 (“PET Film 2012”) 

at Issue 18 ; Certain Coated Paper Suitable for High Quality 

Print Graphics Using Sheet-Fed Presses from the People’s 

Republic of China, 75 Fed. Reg. 59,217 (Dep’t Commerce Sep. 27, 

2010) (final determination) and accompanying Issues & Decision 

Mem., A-570-958 (“Coated Paper”) at cmt. 32. In addition, the 

Domestic Producers allege that this Court has acknowledged the 

existence of Commerce’s practice in Dongguan Sunrise Furniture 

Co., Ltd. v. United States, 36 CIT ___, 865 F. Supp. 2d 1216, 

1244 (2012).

To determine whether such a policy exists and whether 

the Department is engaged in arbitrary behavior by violating 

that policy in this instance, it is necessary to examine the 

Domestic Producers’ claims in detail. Conceding that Department 

policy allowed it to disaggregate balance sheet line items in 

2005, the Domestic Producers claim that the Department 

8

 This determination, in which the Department rejects a 

complex proposal to modify cost estimates for a company in one 

country, based on the balance sheets of an affiliated producer 

in another country, offers only indirect support for the 

Domestic Producers’ claim. Id. at Issue 1. 
Consol. Court No. 11-00408 Page 15 

introduced a new policy in “late 2007” that precluded 

disaggregating line items in a financial statement.9

The first authority cited by the Domestic Producers to 

support this claim is Free Sheet Paper at comments 4 and 5.

While the Department in this determination did refuse to 

disaggregate a balance sheet line item, it neither established a 

new policy on this question nor dismissed its prior practice of 

balancing the chance of improving accuracy against the danger of 

introducing distortion. Instead, the Department expressed a 

“preference” for using unmodified surrogate data,10 justified its 

9

 The Domestic producers concede that the Department’s 

policy as of 2005, when it decided Certain Hot-Rolled Carbon 

Steel Flat Products from Romania, 70 Fed. Reg. 34,448 (Dep’t 

Commerce June 14, 2005) (final results) and accompanying Issues 

& Decision Mem., A-485-806 (“HRS from Romania”) at cmt. 7, 

allowed it to do precisely what it has done in the Remand 

Results – disaggregate a financial statement line items when 

doing so is likely to result in greater accuracy. Domestic 

Producers’ Comments at 4. The Domestic producers claim that 

this policy was changed in late 2007 (presumably in the Free 

Sheet Paper determination) to eliminate the practice or test of 

balancing the likelihood of increasing accuracy against the 

danger of introducing distortion. Since 2007, according to the 

Domestic Producers, the Department “does not evaluate the 

‘unique facts’ of each case regarding whether an adjustment 

might add accuracy without causing distortion. It refrains from 

such an analysis and applies a generalized policy not to go 

behind the financial statement line items.” Domestic Producers’ 

Comments at 5. 

10 At issue in this determination was the failure of the 

surrogate to disaggregate manufacturing and non-manufacturing 

labor costs. The surrogate was an Indian company deemed 

comparable to a Chinese exporter. Petitioner argued that 

failing to disaggregate costs from different types of labor 

overstated the CV of costs faced by the Chinese producer and 

(footnote continued . . . ) 
Consol. Court No. 11-00408 Page 16 

decision specifically with reference to the balancing test that 

the Domestic Producers claim it discarded,11 and explained how 

the then instant case differed from the HRS from Romania 

determination of 2005 in ways that justified a different 

outcome.12 Thus, based on a close examination of Free Sheet 

resulted in a distorted estimate of SG&A costs. The petitioner 

suggested that Commerce could apply a ratio to the aggregate 

labor cost figure based on data provided by the India Labor 

Bureau’s Annual Survey of Industries, a public source. 

Commerce determined that it would not disaggregate labor 

costs, relying primarily on Wooden Bedroom Furniture from the 

People’s Republic of China, 72 Fed. Reg. 46,957 (Dep’t Commerce 

Aug. 22, 2007) (amended final results) and accompanying Issues & 

Decision Mem., A-570-890 (“WBF 2007 I&D Memo”) at cmt. 26 as an 

authority for the Department’s practice: “The Department has 

noted its preference for using financial statements of surrogate 

companies that produce merchandise that is comparable or 

identical to subject merchandise without making adjustments to 

individual line items in the financial statement.” Free Sheet 

Paper at cmt. 4 (emphasis added). 

11 Commerce explained that a lack of information about the 

surrogate and the difference between a non-market economy 

(“NME”) producer and a market economy (“ME”) surrogate made it 

impossible to be certain that an adjustment to this balance 

sheet item would improve accuracy: “[b]ecause [the Department] 

does not know all of the components that contribute to the costs 

of a surrogate producer, it cannot be certain of the individual 

components which comprise the various line items in surrogate 

financial statements. 

“Therefore, adjusting those statements may not make them 

any more accurate and indeed may only provide the illusion of 

precision.” Free Sheet Paper at cmt. 4. 

12 The Department addressed its prior decision to 

disaggregate in HRS from Romania and differentiated that 

decision from the fact pattern in Wooden Bedroom Furniture: 

“Given this extreme fact pattern [described in HRS From 

Romania], the Department concluded that significant overhead 

costs were missing and an adjustment needed to be made. This 

extreme situation is not present in the instant investigation as 

(footnote continued . . . ) 
Consol. Court No. 11-00408 Page 17 

Paper Determination in 2007, it is difficult to accept the 

Domestic Producers’ claim that this 2007 determination 

establishes a new policy or rejects in principle the 

disaggregation of balance sheet line items under all 

circumstances. The balancing of the need to improve accuracy 

and the danger of introducing distortion was still used in this 

determination, but the Department found that, given the facts 

and circumstances in that case, the test justified its 

preference not to go behind balance sheet line items when doing 

so was not supported by adequate data on the record. Id. at cmt. 

4.

The second citation presented by the Domestic 

Producers to support their claim that the Department has a 

policy of never going behind financial statement line items 

comes from the WBF 2011 I&D Memo. The extended quotation from 

this memo presented by the Domestic Producers, however, has a 

number of problems. First, roughly half of the quotation 

provided is quoted in turn from Pure Magnesium in Granular Form 

from the People's Republic of China, 66 Fed. Reg. 49,345 (Dep’t 

Commerce Sept. 27, 2001) (final determination) and accompanying 

Issues & Decision Mem., A-570-864 (“Pure Magnesium from China”) 

both the factory overhead and SG&A ratios used here are based on 

numerous expenses.” Free Sheet Paper at cmt. 4. 
Consol. Court No. 11-00408 Page 18 

at cmt. 4, a determination made in 2001.13 It therefore appears 

that the Domestic Producers are supporting a claim regarding a 

new policy, alleged to come into existence in 2007, by 

ultimately citing a determination written in 2001 - a time in 

which the Domestic Producers admit that the Department’s policy 

allowed “going behind” financial statement line items. As 

significantly, Pure Magnesium from China based its decision on a 

line of determinations running back to the mid-1990’s that were 

developed specifically to avoid distortions when the surrogate 

for an NME producer was unlikely to face costs similar to those 

of the ME surrogate or when differences in national accounting 

systems made disaggregating costs likely to produce 

distortions.14 In addition, Pure Magnesium from China justifies 

13 The omission of internal citations from the quote 

provided by the Domestic Producers makes this source both 

complex and misleading. Almost all of the quote provided (from 

“to not make” in the second line forward) is actually quoted 

directly from Certain Coated Paper Suitable for High Quality 

Print Graphics Using Sheet-Fed Presses from the People’s 

Republic of China, 75 Fed. Reg. 59,217 (Dep’t Commerce Sept. 

27, 2010) (final determination) and accompanying Issues & 

Decision Memorandum, A-570-958 at cmt. 32, which is in turn 

directly quoting Wooden Bedroom Furniture from the People's 

Republic of Chinaǡ 75 Fed. Reg. 50,992 (Dep’t Commerce Aug. 18, 

2010) (final results) and accompanying Issues & Decision 

Memorandum, A-570-890 at cmt. 30A. From this point, the 

citation combines direct quotes from two sources, but the 

ultimate origin of the statement is in Pure Magnesium from China 

at cmt. 4.

14 In Pure Magnesium from China, Commerce applied its policy 

to elements of factory overhead and subcontractors rather than 

direct and indirect selling expenses. The adjustments related 

(footnote continued . . . ) 
Consol. Court No. 11-00408 Page 19 

the Department’s decision by referring to Pure Magnesium from 

the Russian Federation, 66 Fed. Reg. 49,347 (Dep’t Commerce 

Sept. 27, 2001) (final determination) and accompanying Issues & 

Decision Mem., A-821-813 (“Pure Magnesium from Russia”) at cmt. 

2, a determination made concurrently and on the same grounds.

In Pure Magnesium from Russia, the Department justified its 

decision not to go behind financial statement line items as the 

best way to achieve accuracy in the absence of sufficient 

information; that is, when certain circumstances are present 

such as a comparison between an NME producer and an ME 

surrogate, the balance can be presumed to weigh against 

uninformed modification of balance sheet items.15

to the fractions of labor, depreciation, and energy costs faced 

by different producers. In addition, the surrogate firm in Pure 

Magnesium from China used a different processing technology than 

the Chinese firm, leading to the difficult problem of comparing 

any line item between the surrogate and target balance sheets 

and making any attempt to “correct” specific line items a 

necessarily subjective and arbitrary decision. See Pure 

Magnesium from China at cmt. 4 (discussion of subcontractor 

costs and comparison of energy costs). The reasons why Commerce 

would be reluctant to try to correct balance sheet items in Pure 

Magnesium from China are thus absent in the present case, which 

features a comparison of the direct and indirect selling costs 

faced by firms a) producing the same product, b) shipped using 

the same three methods, c) using the same national accounting 

standards, and d) located in the same country (which is a 

designated ME).

15 Both the limiting conditions of this policy and the fact 

that it is intended to serve as a guideline in applying the 

balancing test are made clear by referring to a line of 

determinations going back to 1996: “[r]arely, if ever, will it 

be known that there is an exact correlation between overhead 

(footnote continued . . . ) 
Consol. Court No. 11-00408 Page 20 

Simply put, it appears that the Domestic Producers are 

correct that Commerce has articulated a practice of not going 

behind line items, but the Domestic Producers neglect to mention 

factors in the cited determinations that a) place limiting 

conditions on the application of that policy and b) explain the 

reasons why this general practice was adopted – reasons that are 

absent in the present case. The policy, applied since at least 

1996 and consistent with HRS from Romania in 2005, is repeatedly 

stated to serve the goal of balancing increasing accuracy 

against the danger of introducing distortions in cases where 

either the difference between NME and ME producers or 

differences between the nationality of producers would make 

line-by-line comparisons misleading. Each of the Determinations 

cited by the Domestic Producers explain the Department’s 

decision not to disaggregate surrogate balance sheet items in 

those cases with reference to this balancing test and support 

the decision not to disaggregate by citing either problems of 

expense components of the NME producer and the components of the 

surrogate overhead expenses. Therefore [. . .] the Department 

normally bases normal value completely on factor values from a 

surrogate country on the premise that the actual experience in 

the NME cannot meaningfully be considered. Accordingly, 

Department practice is to accept a valid surrogate overhead rate 

as wholly applicable to the NME producer in question.” Pure 

Magnesium from Russia at cmt. 2 (citing Tapered Roller Bearings 

and Parts Thereof, Finished or Unfinished, from the Republic of 

Romania, 61 Fed. Reg. 51,429 (Dep’t Commerce Oct. 2, 1996) 

(final results) and accompanying Issues & Decision Mem., A-485-

602 (“TRB from Romania”) at cmt. 7.) 
Consol. Court No. 11-00408 Page 21 

incommensurability or a lack of reliable data on the record.16

Neither of these circumstances are present in the instant case, 

making the Department’s application of the underlying balancing 

test an appropriate exercise of discretion similar to HRS from 

Romania.17

Finally, the Domestic Producers cite an 

acknowledgement by this court of the alleged policy in 2012. See 

Dongguan Sunrise Furniture Co., Ltd. v. United States, 36 CIT 

___, 865 F. Supp. 2d 1216, 1244 n.43 (2012). Both the decision 

in that case and the precedent relied upon by the court in 

16 See WBF 2011 I&D Memo at cmt. 19(A)(iv) (“In NME cases, 

it is generally not possible for the Department to dissect the 

financial statements of a surrogate company as if the surrogate 

company were the respondent under review, because the 

information necessary to do so is typically not available.” 

(emphasis added)); Coated Paper at cmt. 32 (“However, in NME 

cases, it is impossible for the Department to further dissect 

the financial statements of a surrogate company as if the 

surrogate company were an interested party to the proceeding, as 

the Department has no authority to either ask questions or 

verify the information from the surrogate company.” (emphasis 

added)). It is also worth noting that the Department has been 

reluctant to alter line items even in market economies based on 

comparison with parallel firms in other market economies, 

suggesting that differing accounting conventions and business 

practices across countries as well as the NME status of a 

producer can raise sufficient concerns about the danger of 

introducing distortions to trigger the presumption against 

disaggregation. See PET Film 2012 at Issue 1.

17 Note that the factors that marked HRS from Romania as an 

“extreme fact pattern” in Free Sheet Paper (see Note 12, supra) 

are less extraordinary when examining both producers and 

surrogates in the same market economy that use the same 

accounting standards, produce identical products, and export to 

the same markets. 
Consol. Court No. 11-00408 Page 22 

reaching it, however, are clearly permissive rather than 

mandatory.18 The court acknowledged in both cases that the 

Department has the discretion under 19 U.S.C. § 1677b(c)(4) to 

refrain from disaggregating balance sheet line items when there 

was significant uncertainty that disaggregation would produce 

more accuracy. 

 Based on this examination of the determinations cited 

by the Domestic Producers, a better understanding of the 

Department’s policy emerges. At least since the 1996 TRB from 

Romania Determination, the Department has developed a preference 

for accepting surrogate balance sheet items in toto for three 

reasons. First, the difficulty of comparing the costs facing ME 

and NME producers in detail made it unlikely that correcting 

individual surrogate balance sheet items would improve accuracy 

18 The governing precedent cited in Dongguan Sunrise is 

Magnesium Corp. of Am. v. United States, 166 F.3d 1364, 1372 

(Fed. Cir. 1999). This case finds that “[g]iven [several 

listed] uncertainties, the broad statutory mandate directing 

Commerce to use, ‘to the extent possible,’ the prices or costs 

of factors of production in a comparable market economy country 

does not require item-by-item accounting [. . .].” It is not 

reasonable to read this as requiring that the Department refrain 

from item-by-item accounting when better data is available on 

the record and doing so is unlikely to introduce distortions.

The court in Dongguan Sunrise affirms the permissive 

interpretation of this decision. 865 F. Supp. 2d 1216 at 1244 

n.43 (“Commerce is not required to do a line-by-line analysis

[. . .]”(emphasis added)).
Consol. Court No. 11-00408 Page 23 

and highly likely that they would introduce distortion.19

Second, different national accounting standards and production 

processes made it likely that introducing corrections based on 

surrogates in other countries would introduce distortions.20

Third, the inability to gather detailed information about nonparty surrogates in third countries meant that disaggregation of 

balance sheet line items would likely be based on incomplete 

information.21

Applying these criteria to the present case supports 

the Department’s position. First and most obvious, the 

Department’s policy against disaggregation is intended to apply 

in NME cases where a CV is being calculated based on a surrogate 

producer in a third country. Landblue does not present such a 

19 The inherent problems of creating a record that favored 

disaggregating balance sheets for NME producers using market 

economy surrogates were emphasized in Magnesium Corp. of Am. v. 

United States, 20 CIT 1092, 1104 (1996), aff’d 166 F.3d 1364 at 

1372. (“There is no evidence on the record that MagCorp's method 

of allocating inventory better reflects the subject NME country 

realities [. . .]”).

20 See, e.g., PET Film 2012 at Issue 1 (determining that 

incompatibilities between national accounting standards in the 

Philippines and Thailand were more important than possible 

distortions through subsidies in determining which country to 

use as a surrogate); Coated Paper at cmt. 32 (distinguishing 

that case from Woven Electric Blankets from the People’s 

Republic of China, 75 Fed. Reg. 38,459 (Dep’t Commerce Jul. 2, 

2010) (final determination) and accompanying Issues & Decision 

Mem., A-570-951 at cmt. 4, on the basis of whether surrogate 

financial statements were sufficiently detailed to allow exact 

classification of costs). 

21 See Coated Paper at cmt. 32. 
Consol. Court No. 11-00408 Page 24 

case, as both Thantawan and TPBI are, like Landblue, operating 

in the same market economy. Second, the policy is intended to 

guard against the uncertainties that arise when comparing 

producers operating in different national environments where 

accounting standards, industry norms, or other factors increase 

the danger of introducing distortions by attempting to “correct” 

balance sheet items. These dangers are absent here; the record 

shows that both the respondent and the surrogate are Thai 

producers operating in the same economic environment and 

producing similar products for similar markets. Only the third 

criterion – the problem of gathering record evidence directly 

from the surrogate – would weigh against disaggregation.22

Based on this, the Department here has adequately 

justified the application of its longstanding balancing test 

between improving accuracy and the danger of introducing 

distortion in this case. The policy articulated in HRS from 

Romania in 2005 was not discarded or superseded in Free Sheet 

Paper, but distinguished by the Department on the grounds noted 

above. The Determinations cited by the Domestic Producers do 

not demonstrate that a new policy was introduced in 2007. The 

Department’s “determination based upon the facts unique to each 

case, and pursuant to a consistent goal” of balancing the 

22 See Id. at Comment 32. 
Consol. Court No. 11-00408 Page 25 

possibility of increasing accuracy against the danger of 

introducing distortion is therefore neither arbitrary nor 

inconsistent. Remand Results at 18. Accordingly, the 

Department’s decision to disaggregate Thantawan’s reported 

selling expenses based on the ratio derived from TPBI’s direct 

to indirect expenses to calculate a CV for Landblue is affirmed. 

C. Profit

Finally, the Department’s remand determination declined to 

reopen its choice of an appropriate surrogate amount for 

Landblue’s profit. Nothing in the TPBI Remand Order required it 

to do so. Rather that remand order specifically affirmed 

Commerce’s determination on this issue.

CONCLUSION

For the foregoing reasons, the Department’s 

determinations in response to the remand are affirmed. Judgment 

shall be entered accordingly. 

___/s/ Donald C. Pogue_______ 

Donald C. Pogue, Chief Judge 

Dated: 2013

 New York, NY 

November 13,