CHINA PROCESSED FOOD IMPORT &

EXPORT COMPANY,

Plaintiff,

v.

UNITED STATES,

Defendant,

and

COALITION FOR FAIR PRESERVED

MUSHROOM TRADE,

Defendant-Intervenor.

Slip Op. 08-16

UNITED STATES COURT OF INTERNATIONAL TRADE

Before: Timothy C. Stanceu, Judge

Court No. 04-00503

OPINION

[Denying plaintiff’s motion for judgment upon the agency record and dismissing action]

Dated: January 31, 2008

Trade Pacific PLLC (Robert G. Gosselink) for plaintiff China Processed Food Import &

Export Company.

Jeffrey S. Bucholtz, Acting Assistant Attorney General, Jeanne E. Davidson, Director,

Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United

States Department of Justice (Richard P. Schroeder); Quentin M. Baird, Philip J. Curtin, and

Jonathan M. Zielinski, Office of Chief Counsel for Import Administration, United States

Department of Commerce, of counsel, for defendant.

Kelley Drye Collier Shannon (Michael J. Coursey and Adam H. Gordon) for defendantintervenor Coalition for Fair Preserved Mushroom Trade.

Stanceu, Judge: China Processed Food Import & Export Company (“plaintiff” or

“COFCO”) challenges the final administrative determination (“Final Results”) that the

International Trade Administration, United States Department of Commerce (“Commerce” or the
Court No. 04-00503 Page 2

“Department”) issued in the fourth administrative review of an antidumping duty order entered

on certain preserved mushrooms (“subject merchandise”) from the People’s Republic of China

(“China” or the “PRC”). See Certain Preserved Mushrooms From the People’s Republic of

China: Final Results of Sixth Antidumping Duty New Shipper Review and Final Results and

Partial Rescission of the Fourth Antidumping Duty Admin. Review, 69 Fed. Reg. 54,635 (Sept. 9,

2004) (“Final Results”). Plaintiff moves pursuant to USCIT Rule 56.2 for judgment upon the

agency record, arguing that the Final Results were unlawful because Commerce abused its

discretion and acted unfairly in applying to COFCO retroactively a change in the methodology

for determining the normal value of COFCO’s subject merchandise. Plaintiff, however, does not

challenge the new methodology on the merits.

Under the new methodology, which Commerce applied in the fourth administrative

review but not in the antidumping duty investigation or in a previous administrative review of the

antidumping duty order, Commerce treated COFCO and its affiliated producers and exporters as

a single entity. When determining the normal value of COFCO’s exports of subject

merchandise, Commerce used not only data on the factors of production associated with the

actual producer of the merchandise that COFCO exported to the United States, but also factorsof-production data of an affiliated producer that did not produce that merchandise. Coalition for

Fair Preserved Mushroom Trade, the petitioner in the antidumping duty investigation resulting in

the antidumping duty order (“petitioner”) and the party that advocated use of the new

methodology in the fourth administrative review, sought and was granted defendant-intervenor

status but did not further participate in this litigation. See id. at 54,635 n.3. Because plaintiff, in

moving for judgment upon the agency record, did not challenge on the merits the method by
Court No. 04-00503 Page 3

which Commerce calculated the normal value of COFCO’s merchandise in the fourth

administrative review, and because Commerce did not exceed its discretion in deciding not to

continue following the method by which it determined such normal value prior to the fourth

administrative review, the court denies plaintiff’s motion for judgment upon the agency record

and, pursuant to USCIT Rule 56.2(b), dismisses this action.

I. BACKGROUND

A. The Investigation and the First, Second, and Third Administrative Reviews

Commerce issued an antidumping duty order on the subject merchandise in 1999. Notice

of Amendment of Final Determination of Sales at Less Than Fair Value and Antidumping Duty

Order: Certain Preserved Mushrooms From the People’s Republic of China, 64 Fed. Reg. 8308

(Feb. 19, 1999) (“Order”). COFCO, an exporter of the subject merchandise in China, purchased

the subject merchandise that it exported to the United States during the period of investigation

from two mushroom producers with which it was affiliated, Zishan Cannery Canned Food

Factory (now known as Fujian Zishan Group Co., Ltd. (“Fujian Zishan”)) and COFCO (Longhai)

Food, Inc. (“Longhai”). Mem. of P. & A. in Supp. of COFCO’s Mot. for J. upon the Agency

R. 2 (“COFCO’s Mem. of P. & A.”). Commerce determined in the investigation that the subject

merchandise COFCO exported to the United States was sold at less than fair value and applied to

that merchandise an antidumping duty margin of 121.47 percent. Order, 64 Fed. Reg. at 8310. 

In the final less-than-fair-value determination that concluded the antidumping duty investigation,

Commerce identified various affiliates of COFCO but did not, in discussing its calculation of the

normal value of COFCO’s merchandise or its determination of an antidumping duty margin for

COFCO, discuss whether COFCO and any of its affiliates should be treated as a single entity. 
Court No. 04-00503 Page 4

 Commerce identified China National Cereals, Oils, & Foodstuffs Import & Export Corp. 1

as COFCO’s owner. It also identified Xiamen Jiahua Import & Export Trading Co., Ltd.

(“Xiamen Jiahua”) as COFCO’s affiliated exporter and Xiamen Special Economic Trade Group

Cereals, Oils, & Foodstuffs Import & Export Company as Xiamen Jiahua’s owner. Notice of

Final Determination of Sales at Less Than Fair Value: Certain Preserved Mushrooms from the

People’s Republic of China, 63 Fed. Reg. 72,255, 72,255-56 (Dec. 31, 1998).

See Notice of Final Determination of Sales at Less Than Fair Value: Certain Preserved

Mushrooms from the People’s Republic of China, 63 Fed. Reg. 72,255, 72,255-56, 72,258

(Dec. 31, 1998) ; Notice of Prelim. Determination of Sales at Less Than Fair Value and 1

Postponement of Final Determination: Certain Preserved Mushrooms From the People’s

Republic of China, 63 Fed. Reg. 41,794, 41,796, 41,799-800 (Aug. 5, 1998).

After issuance of the antidumping duty order, COFCO stopped purchasing subject

merchandise from Fujian Zishan and Longhai, producers that processed, but did not grow,

mushrooms, and began to purchase solely from another mushroom producer with which it was

affiliated, Fujian Yu Xing Fruit & Vegetable Foodstuff Development Co. (“Yu Xing”), a

producer that did grow mushrooms. COFCO’s Mem. of P. & A. 3; Certain Preserved

Mushrooms From the People’s Republic of China: Prelim. Results of Sixth New Shipper Review

and Prelim. Results and Partial Rescission of Fourth Antidumping Duty Admin. Review, 69 Fed.

Reg. 10,410, 10,413 (Mar. 5, 2004) (“Prelim. Results”). “COFCO believed that the primary

reason for its 127.47 [sic] percent antidumping margin was that Fujian Zishan’s and [Longhai’s]

production processes did not take advantage of vertical integration, and that the production costs

and normal values calculated by Commerce were higher than they otherwise might have been had

Fujian Zishan and [Longhai] grown mushrooms instead of purchasing them.” COFCO’s Mem.

of P. & A. 3.
Court No. 04-00503 Page 5

In the first administrative review, Commerce calculated the normal value of COFCO’s

merchandise based on the factors-of-production data reported by COFCO’s sole producer,

Yu Xing, for the period August 5, 1998 through January 31, 2000. See Prelim. Results of First

New Shipper Review and First Antidumping Duty Admin. Review: Certain Preserved Mushrooms

From the People’s Republic of China, 65 Fed. Reg. 66,703, 66,706-07 (Nov. 7, 2000)

(identifying Yu Xing as COFCO’s supplier). Commerce considered and rejected petitioner’s

objection that Yu Xing’s factors-of-production data were unreliable. See Issues and Decision

Mem. for the Antidumping Duty Admin. and New Shipper Reviews on Certain Preserved

Mushrooms from the People’s Republic of China – Aug. 5, 1998, through Jan. 31, 2000 at 1-2,

18-19 (May 31, 2001). Commerce determined an antidumping duty margin of 0.00 percent for

entries of subject merchandise exported by COFCO during the period of August 5, 1998 through

January 31, 2000. See Final Results of First New Shipper Review and First Antidumping Duty

Admin. Review: Certain Preserved Mushrooms From the People’s Republic of China, 66 Fed.

Reg. 31,204, 31,205 (June 11, 2001). From the published decision concluding the first

administrative review, it does not appear that either petitioner or Commerce considered the

possibility of the Department’s collecting and using data from COFCO’s other affiliates in

determining the normal value of COFCO’s merchandise. See id. at 31,204-06.

Commerce conducted two additional administrative reviews of the antidumping duty

order before the administrative review at issue in this case. However, upon petitioner’s request,

the second and third administrative reviews were rescinded with respect to COFCO. Certain

Preserved Mushrooms From the People’s Republic of China: Prelim. Results of New Shipper

Review and Prelim. Results and Partial Rescission of Second Antidumping Duty Admin. Review,
Court No. 04-00503 Page 6

67 Fed. Reg. 10,128, 10,129 (Mar. 6, 2002) (covering the period February 1, 2000 through

January 31, 2001); Certain Preserved Mushrooms from the People’s Republic of China: Notice

of Partial Rescission of Antidumping Duty Admin. Review, 67 Fed. Reg. 53,914, 53,914

(Aug. 20, 2002) (covering the period February 1, 2001 through January 31, 2002). Accordingly,

the assessment rate for entries of COFCO’s merchandise made during those time periods

remained at 0.00 percent, the rate determined in the first administrative review.

B. The Fourth Administrative Review

Commerce conducted the administrative review at issue here, i.e., the fourth

administrative review, for entries of subject merchandise made by COFCO, among others, during

the period February 1, 2002 through January 31, 2003 (“period of review” or “POR”). Prelim.

Results, 69 Fed. Reg. at 10,412. During the fourth administrative review, in response to the

Department’s requests for information, COFCO reported that Yu Xing, its affiliated producer,

supplied all subject merchandise that COFCO exported to the United States during the period of

review, and COFCO provided Yu Xing’s factors-of-production data. See, e.g., Letter from White

& Case to Sec’y of Commerce A16-A17, D1-D15, Exs. D1-D6 (May 30, 2003) (responding to

the Department’s questionnaire) (Admin. R. Doc. No. 41). Petitioner commented that

Commerce should require COFCO to submit a full response to Section A of the Department’s

questionnaire for each of its affiliates, including companies other than Yu Xing, to determine

which companies affiliated with COFCO should submit factors-of-production data. Letter from

Collier Shannon Scott to Sec’y of Commerce 7-10 (July 17, 2003) (commenting on COFCO’s

questionnaire response) (Admin. R. Doc. No. 56). Commerce sent COFCO supplemental

questionnaires.
Court No. 04-00503 Page 7

In response to three supplemental questionnaires, COFCO provided Commerce with

information on companies that Commerce potentially could find to be affiliated with COFCO

and also provided factors-of-production data for certain of those companies. Letter from White &

Case to Sec’y of Commerce (Sept. 10, 2003) (responding to the first supplemental questionnaire)

(Admin. R. Doc. No. 96); Letter from White & Case to Sec’y of Commerce (Nov. 10, 2003)

(responding to the second supplemental questionnaire) (Admin. R. Doc. No. 127) (“Second

Supplemental Resp.”); Letter from White & Case to Sec’y of Commerce (Dec. 8, 2003)

(responding to the third supplemental questionnaire) (Admin. R. Doc. No. 132). Petitioner urged

Commerce to treat as a single entity COFCO’s affiliated producers and exporters and to calculate

normal value based on a weighted average of the factors-of-production data pertaining to

producers of subject merchandise with which COFCO was affiliated. Letter from Collier

Shannon Scott to Sec’y of Commerce (Sept. 30, 2003) (commenting on COFCO’s first

supplemental response) (Admin. R. Doc. No. 109); see also Letter from Collier Shannon Scott to

Sec’y of Commerce (Feb. 2, 2004) (commenting on COFCO’s fourth supplemental response)

(Admin. R. Doc. No. 157).

Commerce met with counsel for petitioner and COFCO during December 2003 and

January 2004 to determine whether to require additional producers affiliated with COFCO to

report factors-of-production data. See Mem. to the File (Dec. 22, 2003) (Admin. R. Doc.

No. 137); Mem. to the File (Dec. 22, 2003) (Admin. R. Doc. No. 138); Mem. to the File (Jan. 7,

2004) (Admin. R. Doc. No. 145). Commerce subsequently issued a fourth supplemental

questionnaire to COFCO in which Commerce “addressed [COFCO’s] affiliations with other

companies that sold and/or produced preserved mushrooms during the POR and requested
Court No. 04-00503 Page 8

COFCO to provide factors of production data for those companies.” Prelim. Results, 69 Fed.

Reg. at 10,411; see Letter from Sec’y of Commerce to White & Case 1-12 (Jan. 7, 2004) 

(Admin. R. Doc. No. 146) (“Fourth Supplemental Questionnaire”). Specifically, Commerce

asked that COFCO provide factors-of-production data for two additional producers, Fujian

Zishan and COFCO (Zhangzhou) Food Industrial Co., Ltd. (“Zhangzhou”). Fourth

Supplemental Questionnaire at 1, 11-12. COFCO responded in January and February 2004,

providing requested information for both Fujian Zishan and Zhangzhou. Prelim. Results, 69 Fed.

Reg. at 10,411; Letter from White & Case to Sec’y of Commerce (Jan. 26, 2004) (Admin. R. Doc.

No. 156) (“Fourth Supplemental Resp. Part I”); Letter from White & Case to Sec’y of Commerce

(Feb. 9, 2004) (Admin. R. Doc. No. 167) (“Fourth Supplemental Resp. Part II”).

Commerce issued a preliminary determination in the fourth administrative review

(“Preliminary Results”) in which Commerce concluded that COFCO was affiliated with three

producers – Yu Xing, Fujian Zishan, and Zhangzhou – and two other exporters – China National

Cereals, Oils, & Foodstuffs Import & Export Corp. (“China National”) and Xiamen Jiahua

Import & Export Trading Co., Ltd. (“Xiamen Jiahua”) – through common ownership and

common control. Prelim. Results, 69 Fed. Reg. at 10,413. Commerce cited COFCO’s

“significant ownership share in Yu Xing” and identified China National as COFCO’s parent

company and the entity through which COFCO is affiliated with producers Fujian Zishan and

Zhangzhou and exporter Xiamen Jiahua. Id. Commerce further concluded that the three

affiliated producers should be treated as a single entity. Id. at 10,413-14. Because Zhangzhou

did not produce processed mushrooms in the same container sizes as those sold by COFCO in the

United States, Commerce did not use Zhangzhou’s factors-of-production data in determining the
Court No. 04-00503 Page 9

normal value of COFCO’s merchandise. However, for identical sizes of canned mushrooms

produced by Yu Xing and Fujian Zishan, Commerce weight-averaged the factors of production

reported by Fujian Zishan with those of Yu Xing. See 4th Admin. Review of the Antidumping

Duty Order on Certain Preserved Mushrooms from the People’s Republic of China: Calculation

Mem. for the Prelim. Results for China Processed Food Import & Export Co. (“COFCO”) at 2-3

(Mar. 1, 2004) (Admin. R. Doc. No. 192) (“COFCO Calculation Mem.”); see also Prelim.

Results, 69 Fed. Reg. at 10,420. Commerce used this approach even though all of the

merchandise exported by COFCO during the period of review was produced by Yu Xing, not

Fujian Zishan. Commerce preliminarily determined a margin of 87.47 percent for COFCO. 

Prelim. Results, 69 Fed. Reg. at 10,422.

Upon issuing the Preliminary Results, Commerce sent COFCO another supplemental

questionnaire. See Letter from Sec’y of Commerce to White & Case (Mar. 5, 2004) (setting forth

the fifth supplemental questionnaire) (Admin. R. Doc. No. 193). COFCO responded, providing

additional data concerning its affiliates. Letter from White & Case to Sec’y of Commerce

(Mar. 31, 2004) (responding to the fifth supplemental questionnaire) (Admin. R. Doc. No. 209). 

In the Final Results, Commerce affirmed its determination to treat COFCO and the three

producers – Yu Xing, Fujian Zishan, and Zhangzhou – as a single entity and also added two

exporters to that entity – China National and Xiamen Jiahua. Final Results, 69 Fed. Reg.

at 54,639. Commerce determined a margin of 3.92 percent for COFCO. Id. at 54,641. As it had

in the Preliminary Results, Commerce used factors-of-production data of both Yu Xing and

Fujian Zishan in determining the normal value of COFCO’s merchandise. However, Commerce

changed its method for calculating COFCO’s normal value from that used in the Preliminary
Court No. 04-00503 Page 10

Results. Agreeing with a comment of COFCO, Commerce first calculated the normal value for

each product based on the factors of production at each separate facility and then averaged the

normal values by applying a weighting factor based on the total production quantity of each

product. Issues and Decision Mem. for the Final Results of the Antidumping Duty New Shipper

and Admin. Reviews on Certain Preserved Mushrooms from the People’s Republic of China –

Feb. 1, 2002, through Jan. 31, 2003, Comment 2 (“Decision Mem.”).

On October 8, 2004, COFCO filed a summons and complaint contesting the Final

Results. See Compl. ¶¶ 12-15. Plaintiff moves pursuant to USCIT Rule 56.2 for judgment upon

the agency record. See Pl.’s Rule 56.2 Mot. for J. upon the Agency R. 1-2; COFCO’s Mem. of

P. & A. 1. 

II. DISCUSSION

The court has jurisdiction over COFCO’s cause of action pursuant to 28 U.S.C.

§ 1581(c). 28 U.S.C. § 1581(c) (2000); see also Compl. 1. COFCO timely brought suit pursuant

to 19 U.S.C § 1516a(a)(2)(A)(i) to contest the Final Results. 19 U.S.C § 1516a(a)(2)(A) (2000). 

COFCO has standing to do so because it is an exporter of the subject merchandise that

participated in the administrative review proceeding before Commerce. Id.; see Compl. 1-2. The

court reviews the Final Results according to 19 U.S.C. § 1516a(b)(1)(B)(i), which requires the

court to “hold unlawful any determination, finding, or conclusion found . . . in an action brought

under [19 U.S.C. § 1516a(a)(2)], to be unsupported by substantial evidence on the record, or

otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B).

Plaintiff’s challenge to the Final Results arose from the Department’s application in the

fourth administrative review, but not in the investigation or in a prior administrative review, of a
Court No. 04-00503 Page 11

procedure to which Commerce has referred as “collapsing.” Although plaintiff’s complaint set

forth two claims related to the application of the “collapsing” methodology, plaintiff, in its

motion for judgment upon the agency record, limited its arguments to the second claim. See

Compl. ¶¶ 12-15; COFCO’s Mem. of P. & A. 1 & n.1. Below, the court first describes the

Department’s “collapsing” regulation, 19 C.F.R. § 351.401(f), to provide the necessary

background for the discussion of plaintiff’s claims. See 19 C.F.R. § 351.401(f) (2004). The

court then addresses the consequences of plaintiff’s abandonment of its first claim, which claim

had challenged certain factual findings and determinations supporting the application of the

Department’s “collapsing” methodology. Finally, the court addresses plaintiff’s second claim,

which claim is the basis for plaintiff’s motion for judgment upon the agency record.

Under the procedure set forth in the Department’s regulations, Commerce in some

circumstances will “collapse” a producer of subject merchandise and producers affiliated with

that producer, i.e., treat the producer and its affiliated producers as a single entity, in an

antidumping duty investigation or review. See id. § 351.401(f)(1). Specifically, under 19 C.F.R.

§ 351.401(f)(1), “the Secretary will treat two or more affiliated producers as a single entity where

those producers have production facilities for similar or identical products that would not require

substantial retooling of either facility in order to restructure manufacturing priorities and the

Secretary concludes that there is a significant potential for the manipulation of price or

production.” Id. The Department’s regulation on collapsing further provides that:

[i]n identifying a significant potential for the manipulation of price or production,

the factors the Secretary may consider include:

(i) The level of common ownership;

(ii) The extent to which managerial employees or board members of one firm

sit on the board of directors of an affiliated firm; and 
Court No. 04-00503 Page 12

 In relevant part, 19 U.S.C. § 1677(33) defines “affiliated persons,” stating that

2

[t]he following persons shall be considered to be “affiliated” or “affiliated

persons”:

...

(E) Any person directly or indirectly owning, controlling, or holding with

power to vote, 5 percent or more of the outstanding voting stock or shares of any

organization and such organization.

(F) Two or more persons directly or indirectly controlling, controlled by, or

under common control with, any person.

(G) Any person who controls any other person and such other person.

19 U.S.C. § 1677(33)(E)-(G) (2000). The section further provides that “[f]or purposes of this

paragraph, a person shall be considered to control another person if the person is legally or

operationally in a position to exercise restraint or direction over the other person.” Id.

§ 1677(33).

(iii) Whether operations are intertwined, such as through the sharing of sales

information, involvement in production and pricing decisions, the sharing of

facilities or employees, or significant transactions between the affiliated

producers.

Id. § 351.401(f)(2). In the fourth administrative review, Commerce “collapsed” COFCO with

Chinese producers, and also with Chinese exporters, of the subject merchandise. Final Results,

69 Fed. Reg. at 54,639. Commerce determined COFCO to be affiliated with these other

producers and exporters, a determination that COFCO did not contest in the administrative

review and does not challenge before the court. See id. In making the determination that

COFCO and the various producers and other exporters were affiliated for purposes of the

antidumping laws, Commerce applied criteria set forth in 19 U.S.C. § 1677(33) (2000). See id.;

2

Prelim. Results, 69 Fed. Reg. at 10,413-14.

The regulation on collapsing does not expressly limit the use of the collapsing

methodology to antidumping cases involving merchandise from market economy countries. In

fact, Commerce has applied the collapsing regulation to merchandise from nonmarket economy
Court No. 04-00503 Page 13

 As specified by the statute, the non-exhaustive list of factors of production subject to 3

valuation includes the hours of labor required to produce the merchandise, the quantities of raw

materials used, the amount of energy and other utilities consumed in the production process, and

any representative capital cost, including depreciation. 19 U.S.C. § 1677b(c)(3) (2000). 

 In the fourth administrative review, Commerce chose India as the “surrogate” market

4

economy country for purposes of valuing the factors of production. Prelim. Results, 69 Fed. Reg.

at 10,420.

countries even though the method for determining normal value in a nonmarket economy country

is substantially different from the method applied to merchandise from a market economy

country. See, e.g., Hontex Enters., Inc. v. United States, 27 CIT 272, 288-97, 248 F. Supp. 2d

1323, 1337-44 (2003) (comparing the application of the collapsing methodology in market and

nonmarket economy cases). If the subject merchandise is produced in and exported from a

country that Commerce considers to be a nonmarket economy country, such as China, Commerce

usually calculates the normal value of the subject merchandise according to a factors-ofproduction method specified by statute. See 19 U.S.C. § 1677b(c)(1) (2000). Under this method,

the Department identifies and quantifies the factors of production utilized in producing the 3

subject merchandise. Id. § 1677b(c)(1), (3)-(4). The Department then determines values for

these factors based on the best available information pertaining to a market economy country that

is at a level of economic development comparable to that of the nonmarket economy country and

that is a significant producer of either the subject merchandise or comparable merchandise. See 4

id. § 1677b(c)(4). Specifically, the statute provides that where the subject merchandise is

exported from a nonmarket economy country and Commerce finds (as it did in this case) that

available information does not permit normal value to be determined according to the usual

method as provided in 19 U.S.C. § 1677b(a), “the administering authority shall determine the
Court No. 04-00503 Page 14

normal value of the subject merchandise on the basis of the value of the factors of production

utilized in producing the merchandise and to which shall be added an amount for general

expenses and profit plus the cost of containers, coverings, and other expenses.” Id.

§ 1677b(c)(1). Unless Commerce finds that available information is inadequate for doing so (a

finding Commerce did not make in this case), Commerce is to value the factors of production

based on the best available information regarding the values of such factors in the surrogate

country or countries that Commerce chooses (i.e., in this case, India). See id. § 1677b(c)(1)-(2);

Prelim. Results, 69 Fed. Reg. at 10,420.

In the fourth administrative review, Commerce invoked its collapsing authority under

19 C.F.R. § 351.401(f) in determining the normal value of COFCO’s exports of subject

merchandise according to factor-of-production data pertaining to two Chinese mushroom

producers, Yu Xing and Fujian Zishan. See Prelim. Results, 69 Fed. Reg. at 10,413-14, 10,420;

COFCO Calculation Mem. 2-3. Commerce did so even though COFCO reported (and

Commerce found) that all subject merchandise that COFCO exported to the United States market

during the period of review was produced by Yu Xing. See Prelim. Results, 69 Fed. Reg.

at 10,413; Decision Mem. at 11-12. More broadly, Commerce applied its collapsing method in

the Final Results in deciding to treat COFCO and its two affiliated exporters, China National and

Xiamen Jiahua, and producers Yu Xing, Fujian Zishan, and Zhangzhou, as a single entity,

subjecting COFCO and the companies affiliated with COFCO to COFCO’s antidumping duty

rate. Final Results, 69 Fed. Reg. at 54,639, 54,641.

Upon applying the criteria of 19 C.F.R. § 351.401(f), Commerce concluded that “the first

and second collapsing criteria are met here because [Yu Xing, Fujian Zishan, and Zhangzhou] are
Court No. 04-00503 Page 15

affiliated . . . and all have production facilities for producing similar or identical products that

would not require substantial retooling in order to restructure manufacturing priorities . . . .” 

Prelim. Results, 69 Fed. Reg. at 10,414 (citing Fourth Supplemental Resp. Part II). Commerce

concluded that “the third collapsing criterion is met in this case because a significant potential for

manipulation of price or production exists among [Yu Xing, Fujian Zishan, and Zhangzhou]” due

to common ownership, common control through a common member of the board of directors and

a general manager shared by two of the companies, and operations found to be “sufficiently

intertwined.” Id. at 10,413-14. On the issue of “sufficiently intertwined” operations, Commerce

found that “COFCO has shifted its source of supply among these affiliates.” Id. at 10,414. 

Commerce explained that it used Fujian Zishan’s factors-of-production data during the

investigation to determine COFCO’s dumping margin and “that during the POR Fujian Zishan

supplied preserved mushrooms to Xiamen Jiahua, and Yu Xing supplied preserved mushrooms

to COFCO . . . .” Id. (citing Fourth Supplemental Resp. Part II, Ex. 1 and Second Supplemental

Resp. at 4). In the Final Results, Commerce affirmed its conclusions regarding collapsing of the

affiliated producers and included the two affiliated exporters in the collapsed entity. “We note

that our rationale for collapsing, i.e., to prevent manipulation of price and/or production, applies

to both producers and exporters, if the facts indicate that producers of like merchandise are

affiliated as a result of their mutual relationship with an exporter.” Final Results, 69 Fed. Reg.

at 54,639.

In its complaint, plaintiff alleges as its first claim that “[t]he Department’s findings,

determinations, and conclusion that Yu Xing, Fujian Zishan, and [Zhangzhou] had production

facilities for producing similar or identical products that would not require substantial retooling
Court No. 04-00503 Page 16

in order to restructure manufacturing priorities, were not supported by substantial evidence

and/or otherwise not in accordance with law.” Compl. ¶ 13. As stated previously, COFCO

expressly declined to pursue this claim in moving for judgment upon the agency record, stating in

its memorandum in support of its motion that it “has dropped one of the issues previously

identified” and that “[t]he Rule 56.2(c) statement therefore supersedes the Statement of Claims

filed earlier.” COFCO’s Mem. of P. & A. 1 n.1. Because plaintiff did not include its first claim

in its motion for judgment upon the agency record, that claim is not before the court.

The Court of International Trade previously has addressed the general issue of whether

Commerce may determine normal value according to 19 U.S.C. § 1677b(c)(1) on the basis of the

value of factors of production that pertained to an affiliated producer that did not actually

produce the subject merchandise exported to the United States but that Commerce collapsed with

the actual producer. See Anshan Iron & Steel Co. v. United States, 27 CIT 1234, 1254 (2003)

(concluding that no language in the statute supports the proposition that Commerce must exclude

from the calculation of normal value the factors of production of non-exporting subsidiaries that

manufactured the subject merchandise during the period of investigation). The Department’s

method of determining the normal value of COFCO’s merchandise in the fourth administrative

review appears to be similar to the method that was at issue in Anshan Iron & Steel Co. See

id. at 1254-55. However, the court will not address the issue of whether the Department’s

method of determining normal value on the record of this case was consistent with 19 U.S.C.

§ 1677b(c) and related provisions because COFCO has not raised this issue in moving for

judgment upon the agency record. COFCO’s memorandum in support of its motion makes plain
Court No. 04-00503 Page 17

that COFCO is not challenging on the merits the method by which Commerce calculated the

normal value of its merchandise. See COFCO’s Mem. of P. & A. 1 & n.1.

Under USCIT Rule 56.2(c), a party moving for judgment upon the agency record must

state in its brief the issues of law presented together with the reasons for contesting or supporting

the administrative determination. USCIT R. 56.2(c). Nowhere in plaintiff’s memorandum in

support of its motion for judgment upon the agency record does the court find any argument by

plaintiff that the Department’s method of determining normal value in the fourth administrative

review was impermissible according to 19 U.S.C. § 1677b(c) and related provisions of the

antidumping laws. In abandoning the first claim set forth in its complaint, COFCO signifies that

it is no longer challenging the Department’s finding, pursuant to 19 C.F.R. § 351.401(f), that

Yu Xing and Fujian Zishan had production facilities for producing similar or identical products

that would not require substantial retooling in order to restructure manufacturing priorities, a

finding that was a basis for the Department’s decision to determine normal value based on

factors-of-production data of both Yu Xing and Fujian Zishan.

COFCO confined its Rule 56.2 motion to the second claim in its complaint, which is that

“[t]he Department’s decision to implement a new normal value calculation methodology that

created dumping margins for merchandise that already had entered the United States when

Plaintiff China Processed had relied on the Department’s previous methodology in order to avoid

just such an outcome is unreasonable, inequitable, an abuse of discretion, and not in accordance

with law.” Compl. ¶ 15. COFCO pursues this claim in seeking relief under Rule 56.2, arguing

that Commerce, in applying retroactively a new methodology for calculating normal value,

unfairly penalized COFCO, which had detrimentally relied on the old methodology to avoid
Court No. 04-00503 Page 18

selling subject merchandise in the United States at less than fair value. COFCO’s Mem. of P. &

A. 10. Relying on Shikoku Chemicals Corp. v. United States, 16 CIT 382, 795 F. Supp. 417

(1992), and IPSCO, Inc. v. United States, 12 CIT 359, 687 F. Supp. 614 (1988), COFCO argues

that it was unfair of Commerce to change its methodology for calculating normal value when the

facts had not changed and when COFCO had relied on the old methodology, i.e., a methodology

that did not employ collapsing, in exporting subject merchandise to the United States. COFCO’s

Mem. of P. & A. 10-11, 15.

As relief, COFCO seeks a court order remanding the Final Results to Commerce “with

instructions (1) to calculate the normal value of COFCO’s sales of subject merchandise during

the fourth administrative review period using only the factor data of Yu Xing, and (2) to

implement only prospectively its new methodology.” Id. at 15. By seeking relief under which

the court would direct Commerce to implement the collapsing methodology “only

prospectively,” COFCO suggests that it views as lawful the method by which Commerce

determined normal value, i.e., by using factors-of-production data of both Yu Xing and Fujian

Zishan even though only Yu Xing produced the subject merchandise that COFCO exported to the

United States market during the period of review. See id.; see also Reply Br. in Further Supp. of

COFCO’s Mot. for J. upon the Agency R. 1 (“reiterating at the outset that COFCO is not

challenging Commerce’s affiliation determination in the underlying proceeding. Nor is COFCO

challenging Commerce’s authority to collapse COFCO and its affiliated producers in future

administrative reviews for purposes of calculating the appropriate antidumping duty margin.”)

(“COFCO’s Reply”). COFCO objects only to what it characterizes as a retroactive application of

a new methodology that, if applied prospectively, would have been acceptable. COFCO’s Mem.
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of P. & A. 15. According to plaintiff, “in the face of years of acceptance of [the Department’s]

prior approach, Commerce may not implement a new methodological change retroactively.” Id.

at 14. When applied in the fourth administrative review, the collapsing procedure was, according

to COFCO, unfair because COFCO, desiring to avoid selling merchandise in the United States at

less than fair value, had relied on the Department’s previous methodology, which did not use the

collapsing procedure. Id. at 11-15. Rather than raise a substantive objection to the new

methodology, COFCO’s remaining claim takes issue only with the Department’s decision to

discontinue using the old, non-collapsing methodology.

COFCO’s characterization of the change in the Department’s method as “retroactive”

does not, by itself, convince the court that Commerce abused its discretion or otherwise acted

contrary to law in deciding to discontinue using its previous method. Antidumping duties are

administered according to a retrospective, remedial duty assessment system. The Court of

International Trade has observed previously that “[t]he absence of certainty regarding the

dumping margins and final assessment of antidumping duties is a characteristic of the

retrospective system of administrative reviews designed by Congress.” Abitibi-Consol. Inc. v.

United States, 30 CIT __, __, 437 F. Supp. 2d 1352, 1361 (2006). Retroactivity is inherent in

this system in that the Department’s determinations made during the administrative review

necessarily apply to merchandise previously exported from the producing country and entered

into the United States. Even if COFCO relied to its detriment on the continuation of the method

applied in the investigation and the first administrative review (as it claims), that reliance is not,

by itself, sufficient to entitle COFCO to relief that would reverse the Department’s decision in

the fourth administrative review to depart from that method, under the retrospective statutory
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 In administrative reviews conducted under 19 U.S.C. § 1675(a), “the Secretary will treat 5

as de minimis any weighted-average dumping margin or countervailable subsidy rate that is less

than 0.5 percent ad valorem, or the equivalent specific rate.” 19 C.F.R. § 351.106(c)(1) (2004).

scheme. Commerce invoked its collapsing procedure in the fourth administrative review after

making certain findings of fact that it did not make on the record of the investigation or the

record of the first administrative review and did not have occasion to make in the second and

third administrative reviews, which did not include a review of COFCO’s sales. Commerce

proceeded with its collapsing analysis, invoking a procedure that it had established previously by

regulation, on the basis of those findings of fact and on the basis of conclusions of law, which

findings and conclusions COFCO has declined to challenge in moving for judgment upon the

agency record.

The court disagrees with plaintiff’s argument that the court, based on guidance drawn

from the holding of the Court of International Trade in Shikoku, should conclude that Commerce

abused its discretion and acted unreasonably by deciding to depart from a methodology that it

had employed previously and on which COFCO had relied. See COFCO’s Mem. of

P. & A. 13-15; Shikoku, 16 CIT 382, 795 F. Supp. 417. The court concludes that the facts and

circumstances of Shikoku differ in material respects from those giving rise to this case.

In Shikoku, Commerce established a dumping margin of 9.66 percent for the plaintiffs’

sales of dichloro isocyanurates (“DCA”) in the first administrative review of an antidumping

duty order on cyanuric acid and its chlorinated derivatives, DCA and trichloro isocyanuric acid,

from Japan. 16 CIT at 383, 795 F. Supp. at 418. For plaintiffs’ sales of DCA, Commerce

determined a de minimis margin in the second administrative review and assigned margins of 5

zero for the third and fourth administrative reviews. Id. As discussed in Shikoku, the
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Department’s regulations, 19 C.F.R. § 353.25(b)(1) (1991), allowed Commerce to revoke the

“antidumping duty order if the subject merchandise ha[d] not been sold at less than foreign

market value for three years subsequent to the publication of the order.” Id. at 384 n.4, 795 F.

Supp. at 418 n.4. In the fifth and sixth administrative reviews, however, Commerce changed the

methodology that it had used in the investigation and in the first four administrative reviews in

calculating a deduction from home market value for certain expenses that plaintiff Shikoku

incurred when repackaging DCA from a granular form suitable for export to a form suitable for

home market sale. Id. at 383-84, 795 F. Supp. at 418. Commerce determined antidumping duty

margins of 0.81 and 0.91 percent for plaintiffs’ sales of DCA in the fifth and sixth administrative

reviews, respectively, and refused plaintiffs’ request to revoke the antidumping duty order as to

DCA. Id. By changing its methodology, Commerce attempted to eliminate from the calculation

of the repackaging deduction certain labor expenses that were directly attributable to making

tablets and to tablet repackaging, recognizing that plaintiffs exported chlorinated derivative

products to the United States only in granular, not tablet, form. Id. at 384-86, 795 F. Supp.

at 418-20. The plaintiffs in Shikoku argued that the new methodology was rife with

inconsistencies and errors and did not result in a more accurate calculation of the repackaging

deduction than the previous method. Id. They argued, further, that they had been unfairly

penalized because Commerce applied the new methodology retroactively in spite of their reliance

on the old methodology. Id. at 386-88, 795 F. Supp. at 420-22.

The Court of International Trade in Shikoku explained that the government had not

clearly demonstrated that the new methodology was an improvement over the old but that “it

appears that expenses of making tablets were significant so it is likely that there was a marginal
Court No. 04-00503 Page 22

increase in accuracy.” Id. at 386, 795 F. Supp. at 420. The Court also found that plaintiffs had

demonstrated their reliance on the old methodology by adjusting their pricing accordingly. Id.

The Court reasoned that “[i]t [wa]s simply too late to mandate another three years of

administrative reviews because of a last minute ‘improvement’ in Commerce’s methodology”

and that “[p]laintiffs’ reliance, the unchanged fact pattern, and the lack of discovery of significant

error lead the court to conclude that Commerce did not have adequate reasons for its last minute

change in methodology.” Id. at 388, 795 F. Supp. at 422. The Court concluded that “Commerce

abused its discretion and acted unreasonably in changing its . . . methodology . . . in the latest

reviews, thereby preventing [Shikoku] from qualifying for consideration for revocation.” Id.

at 388-89, 795 F. Supp. at 422.

COFCO, unlike the plaintiffs in Shikoku, declined to challenge on the merits a new

methodology employed by the Department. This is significant because the reasoning in Shikoku

depended in part on the Court’s conclusions, reached based on plaintiffs’ having challenged the

new methodology on the merits, that the government had not clearly demonstrated that the new

methodology was an improvement and that the new methodology yielded what appeared to be

only a marginal increase in accuracy over the old methodology, concerning which no significant

error had been discovered. In this case, the court declines to reach a conclusion on the issue of

the relative merits of the old and new methodologies because plaintiff decided not to make this

issue the basis of its motion for judgment upon the agency record.

Moreover, COFCO did not have a basis for reliance equivalent to that found to exist in

Shikoku, in which the previous methodology had been used, without change, in the investigation

and in each of the first four administrative reviews. In Shikoku, after assigning plaintiffs zero
Court No. 04-00503 Page 23

margins in the third and fourth administrative reviews, Commerce assigned plaintiffs margins

above the de minimis level in the fifth and sixth administrative reviews after making the change

in methodology. In contrast, prior to the fourth administrative review at issue in this case,

Commerce calculated margins for COFCO only in the investigation and in the first

administrative review. As discussed previously, Commerce rescinded the second and third

administrative reviews as to COFCO upon the withdrawal of petitioner’s requests. COFCO

could have, but did not, request review of its sales in the second and third administrative reviews. 

In Shikoku, Commerce employed a last-minute change after an investigation and four

administrative reviews, which change likely (although not definitely) produced a marginal

increase in accuracy and had the result of precluding the opportunity for revocation of the

antidumping duty order. A similar basis for reliance does not exist in this case.

COFCO also cites IPSCO in support of its argument that retroactive application of the

Department’s new methodology was not fair in this case, where the facts had not changed and

where COFCO had relied on the old methodology. See 12 CIT at 378 n.27, 687 F. Supp.

at 631 n.27. The plaintiffs in IPSCO claimed that the Department’s use of certain new

methodologies in a countervailing duty investigation unfairly altered plaintiffs’ countervailing

duty liabilities retroactively. Id. The new methodologies at issue postdated the grants that

resulted in the countervailing duty investigation and were set forth in an appendix (“Subsidies

Appendix”) that was not the subject of notice-and-comment rule making. Id. at 378 & n.27, 687

F. Supp. at 630-31, 631 n.27. The IPSCO plaintiffs claimed prejudicial reliance on the old

methodologies, under which, they alleged, they would not have incurred countervailing duty

liability. Id. at 378 n.27, 687 F. Supp. at 631 n.27. They argued that retroactive application of
Court No. 04-00503 Page 24

the new methodologies, given their reliance, was impermissible unless such application produced

benefits outweighing the resulting prejudice. Id.

The holding in IPSCO does not convince the court that COFCO is entitled to relief on the

record of this case. The Court of International Trade held in IPSCO that one aspect of the new

methodologies established by the Subsidies Appendix, the use of a fifteen-year period for the

allocation of benefits from grants, was a legislative rule that was not adopted following the

notice-and-comment procedures that were required by the Administrative Procedure Act

(“APA”), but that other aspects of the Subsidies Appendix were exempt from the APA noticeand-comment requirements because they were interpretive rules. Id. at 373-78, 687 F. Supp.

at 626-31. The Court rejected the plaintiffs’ retroactivity argument in a footnote, concluding that

the plaintiffs failed to demonstrate actual prejudicial reliance on the old methodologies that were

in use prior to the Department’s issuance of the Subsidies Appendix. Id. at 378 n.27, 687 F.

Supp. at 631 n.27. The Court of International Trade in IPSCO did not further consider the

plaintiffs’ retroactivity claim and thus did not, in formulating its holdings in the case, decide the

question of whether the change in methodology would have been impermissible on retroactivity

grounds had prejudicial reliance been demonstrated.

In support of its motion for judgment upon the agency record, plaintiff also cites Fujian

Machinery and Equipment Import & Export Corp. v. United States, 25 CIT 1150, 1169-70, 178

F. Supp. 2d 1305, 1327 (2001), and Slater Steels Corporation v. United States, 28 CIT 340, 345,

316 F. Supp. 2d 1368, 1374 (2004), for the principle that an agency discarding one methodology

in favor of another must state clearly the grounds for its departure from prior norms. COFCO’s

Mem. of P. & A. 11. However, plaintiff, in its memorandum in support of its Rule 56.2 motion,
Court No. 04-00503 Page 25

does not set forth an argument that Commerce, in the Final Results, failed to state its reasons for

applying in the fourth administrative review a collapsing analysis that it did not apply previously

to COFCO and its affiliates. Only in its reply brief, when attempting to refute defendant’s

argument that Shikoku is inapposite to this case, did plaintiff argue that Commerce failed to

explain “its implied conclusion that the methodological change in the underlying proceeding was

either necessary or better” and that Commerce, in citing a potential for manipulation of price or

production, “has cited no specific facts or record evidence that actual manipulation of price or

production occurred.” COFCO’s Reply 3-4 (entitling the section in its reply brief containing the

above-quoted statement as “The Court’s Holding in Shikoku Chem. Corp. v. United States is

Applicable to the Present Case”). The court does not construe the quoted language as an attempt,

impermissible or otherwise, to raise in a reply brief a new substantive argument. In the same

reply brief, plaintiff stated explicitly that it was declining to raise the substantive argument

discussed previously, “reiterating at the outset that COFCO is not challenging Commerce’s

affiliation determination in the underlying proceeding. Nor is COFCO challenging Commerce’s

authority to collapse COFCO and its affiliated producers in future administrative reviews for

purposes of calculating the appropriate antidumping duty margin.” Id. at 1. Moreover, as also

discussed previously, plaintiff abandoned its claim in the complaint challenging the

Department’s finding that Yu Xing, Fujian Zishan, and Zhangzhou had production facilities for

producing similar or identical products that would not require substantial retooling in order to

restructure manufacturing priorities. See COFCO’s Mem. of P. & A. 1 & n.1.

Later, in a supplemental brief responding to a question of the court concerning the issue

of notice for a change in methodology, plaintiff characterized as “hollow” the Department’s
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explanation that collapsing was applied in the fourth administrative review to prevent

manipulation of price or production, when “the collapsing regulation and the case-specific facts

relevant to a finding of affiliation among COFCO’s related producers had not changed since the

underlying investigation[.]” China Processed Food Import and Export Company’s Resp. to the

Ct.’s May 11, 2006 Questions 7 (“COFCO’s Resp. to the Ct.’s Questions”). Here again, plaintiff

confined its terse argument to the issues of its reliance on the old methodology and the timing of

the change rather than to the question of whether the new methodology, regardless of when

implemented, was in accordance with the statute. “Without any explicit recognition or warning

that the standard for collapsing had been changed, or any attempt to distinguish or reject

apparently inconsistent precedent, Commerce applied its collapsing regulation to COFCO’s

affiliated producers in the underlying proceeding when it had never done so before.” Id.

In its brief responding to the court’s questions, plaintiff also cited United States v.

Midwest Oil Company, 236 U.S. 459 (1915), for the principles that parties are justified in relying

on the law in conducting their business and that repeated actions of the government can define

the meaning and applicability of a particular statute or power. COFCO’s Resp. to the Ct.’s

Questions 4, 10. The Supreme Court in Midwest Oil Company affirmed the power of the

President, acting without express statutory authority, to withdraw public land that otherwise

would have been open to private acquisition, based on a long-standing practice under which

numerous executive orders had effected similar withdrawals. 236 U.S. at 469-74, 483. The

analysis of the practice addressed in Midwest Oil Company – one that “date[d] from an early

period in the history of the government,” occurred over “eighty years,” and involved hundreds of

orders – does not support, even remotely, a conclusion that COFCO, in the particular context of
Court No. 04-00503 Page 27

this case, may obtain relief on an expectation that Commerce would not make a change in the

methodology it employed in the investigation and the first administrative review. 236 U.S.

at 469 (internal quotation marks and citations omitted).

In the same brief, plaintiff argues that the Department’s departure from its earlier

methodology was unfair, contrary to the principle, addressed in Melamine Chemicals, Inc. v.

United States, 732 F.2d 924, 933 (Fed. Cir. 1984), and cited in Budd Company v. United States,

14 CIT 595, 602, 746 F. Supp. 1093, 1099 (1990), that Commerce has a duty to enforce the

antidumping laws fairly. COFCO’s Resp. to the Ct.’s Questions 13-14. In the portion of the

opinion in Melamine Chemicals to which plaintiff directs the court’s attention, the Court of

Appeals for the Federal Circuit held that Commerce acted within its statutory authority in

promulgating and applying a regulation under which Commerce disregarded antidumping

margins caused solely by volatile and temporary exchange rate fluctuations and allowed a 90-day

lag period for currency conversion that afforded an exporter a reasonable time period to adjust its

prices to such fluctuations. 732 F.2d at 930-34. The holding in Melamine Chemicals, which

turned on the breadth of Commerce’s discretion in implementing the antidumping duty laws

rather than limitations on Commerce’s authority to make changes in its methodologies, rested on

factual circumstances and issues of law dissimilar to those of this case. Melamine Chemicals

does not support a conclusion that principles of fairness required Commerce to continue to use its

earlier methodology during the fourth administrative review.

Nor is Budd Company instructive on the resolution of the question presented by

COFCO’s sole claim in this case. See 14 CIT 595, 746 F. Supp. 1093. In Budd Company, the

Court of International Trade considered a circumstance-of-sale adjustment that Commerce made
Court No. 04-00503 Page 28

in an amended less-than-fair-value determination to account for extreme exchange rate

fluctuations. See id. at 600-07, 746 F. Supp. at 1097-1103. Stating the principle that “fairness is

the touchstone of Commerce’s duty in enforcing the antidumping laws[,]” the Court explained

that “courts will not sanction Commerce’s use of circumstance of sale adjustments if to do so

would bring about results which appear to be entirely absurd and unfair.” See id. at 602, 746 F.

Supp. at 1099 (internal quotation marks and citations omitted). The Court nonetheless held that

the Department’s use of the circumstance-of-sale adjustment in the determination was reasonable

and not a violation of the APA’s required procedures for notice and public comment. See id.

at 600-07, 746 F. Supp. at 1097-1103. Although stating the general principle of fairness in the

administration of the antidumping laws that plaintiff has cited, Budd Company does not lend

support to plaintiff’s specific argument in this case.

III. CONCLUSION

For the reasons discussed above, the court rejects plaintiff’s claim that Commerce acted

unfairly and abused its discretion in deciding to depart from a method of determining normal

value on which plaintiff asserts that it relied. The court therefore will deny plaintiff’s motion for

judgment upon the agency record. Under the authority of USCIT R. 56.2(b), the court will enter

judgment dismissing this action. See USCIT R. 56.2(b) (allowing the court, in ruling on a

motion for judgment upon the agency record, to enter judgment in favor of an opposing party).

 /s/ Timothy C. Stanceu 

Timothy C. Stanceu

Judge

Dated: January 31, 2008

New York, New York