Slip Op. 12-4 UNITED STATES COURT OF INTERNATIONAL TRADE

HOME PRODUCTS INTERNATIONAL, INC., Plaintiff,

v. UNITED STATES, Defendant. Before: Leo M. Gordon, Judge Consol. Court No. 11-00104

OPINION and ORDER [Administrative review results remanded.] Dated: January 6, 2012

Frederick L. Ikenson, Peggy A. Clarke, Larry Hampel, Blank Rome LLP, of Washington, DC for Plaintiff Home Products International, Inc. Carrie A. Dunsmore, Trial Attorney, Co mmercial Litigation Branch, Civil Division, U.S. Department of Ju stice, of Washington, D.C. fo r defendant. With her on the brief were Tony West, Assistant Attorney General , Jeanne E. Davidson, Director and Patricia M. McCarthy, Assistant Director. Of Counsel on brief was Thomas M. Beline, Office of the Chief Counsel for Import Administration, Internationa l Department of Commerce of Washington, D.C. for Defendant United States. William E. Perry, Emily Lawson, Dors ey & Whitney LLP, of Seattle WA, for Defendant-Intervenor Since Ha rdware (Guangzhou) Co., Ltd. Gordon, Judge: This consolidated acti on involves an administrative review conducted by the U.S. Departm ent of Commerce (“Commerce”) of the antidumping duty order covering Floor-Standing, Metal-Top Ir oning Tables from China. See FloorStanding, Metal-Top Ironing Tables and Cert ain Parts Thereof fr om the People’s Republic of China, 76 Fed. Reg. 15,295 (Dep’t of Comme rce Mar. 21, 2011) (finalConsol. Court No. 11-00104 Page 2 results admin. review) (“Final Results”); see also Issues and Decision Memorandum for Ironing Tables from China, A-570- 888 (Mar. 20, 2011), available at http://ia.ita.doc.gov/frn/summary/PRC/2011- 6560-1.pdf (last visited Jan. 6, 2012) (“Decision Memorandum”). Before the court are motions for judgment on the agency record filed by Home Products Internat ional, Inc. (“HPI”) and Since Hardware (Guangzhou) Co., Ltd. (“Since Hardware”). The court has jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of the Tari ff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006), 1 and 28 U.S.C. § 1581(c) (2006). HPI challenges Commerce’s determination to use the market economy purchase price for Since Hardware’s cartons. Si nce Hardware challenges Commerce’s (1) selection of a financial statement for use in the surrogate financial ratio, and (2) surrogate value determination for labor. 2 For the reasons set forth below, the court remands the Final Results to Commerce to address certain aspects of its surrogate value determination for labor. I. Standard of Review For administrative reviews of antidum ping duty orders, the court sustains Commerce’s determinations, findings, or conc lusions unless they are “unsupported by substantial evidence on the record, or other wise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically, w hen reviewing agency determinations, findings, or conclusions for substantial evidence, the court assesses whether the agency action

1 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of Title 19 of the U. S. Code, 2006 edition. 2 Since Hardware also challenged Comme rce’s surrogate value determination for brokerage and handling, which t he court decided on procedural grounds in a prior order.Consol. Court No. 11-00104 Page 3 is reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458 F.3d 1345, 1350-51 (Fed. Cir. 2006). Subst antial evidence has been described as “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Dupont Teijin Films USA v. United States, 407 F. 3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938 )). Substantial evidence has also been described as “somethi ng less than the weight of the evidence, and the possibility of drawing tw o inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence.” Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620 (1966). Fundamentally, though, “substantial evidence” is best u nderstood as a word formula connoting reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and Practice § 9.24[1] (3d. ed. 2011). Ther efore, when addressing a subst antial evidence issue raised by a party, the court analyzes whether t he challenged agency acti on “was reasonable given the circumstances presented by the wh ole record.” Edward D. Re, Bernard J. Babb, and Susan M. Koplin, 8 West's F ed. Forms, National Courts § 13342 (2d ed. 2011). Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842- 45 (1984), governs judicial review of Commerce's interpretation of the antidum ping statute. Dupont, 407 F.3d 1211, 1215; Agro Dutch Indus. Ltd. v. United St ates, 508 F.3d 1024, 1030 (Fed. Cir. 2007). “[S]tatutory interpre tations articulated by Commerce during its antidum ping proceedings are entitled to judicial def erence under Chevron.” Pesquer a Mares Australes Ltda. v.Consol. Court No. 11-00104 Page 4 United States, 266 F.3d 1372, 1382 (Fed. Cir. 2001); see also Wheatland Tube Co. v. United States, 495 F.3d 1355 , 1359 (Fed. Cir. 2007) (“[W]e determine whether Commerce's statutory interpretation is entit led to deference purs uant to Chevron.”). II. Discussion

A. Cartons Although Commerce generally uses data from a su rrogate market economy country to value inputs for a respondent o perating in a non-mark et economy, if the respondent purchases an input in suffici ent quantity from a market economy, Commerce values those inputs based on the purchase price paid. 19 C.F.R. § 351.408(c)(1). Commerce has adopted a rebu ttable presumption that market economy purchase prices are the best available in formation if the total purchased volume exceeds 33 percent of the total volume of that input’s purchases. See Antidumping Methodologies: Market Economy Inputs, Ex pected Non-Market Economy Wages, Duty Drawback; and Request for Comments, 71 Fed. Reg. 61,716, 61,717-719 (Dep’t of Commerce Oct. 19, 2006) (“market economy input methodology”). Applying the market economy input me thodology, Commerce determined that Since Hardware purchased more than 33 percent of its cart ons from a market economy source, and that the market ec onomy price was the best available information to value cartons. In its administrative case brief HPI contended that Since Hardware’s carton input consisted of two inputs, cartons and corrugated paper, and that if separated, the 33 percent threshold would not be met. HPI Case Brief at 11-13, PR 82. 3 In the Final

3 “PR __” refers to a document contai ned in the public administrative record.Consol. Court No. 11-00104 Page 5
Results Commerce did not share HPI’s “infer ences and assumptions,” Clearon Corp. v. United States, 35 CIT ___, ___, 800 F. Supp. 2d 1355, 1361 (2011) , and continued to treat cartons as one input. In its brief before the c ourt, HPI again contends that Since Hardware’s carton input should be divided into two separate factors of produc tion—a cartons factor and a corrugated paper factor. Home Products Br. at 3-4, ECF No. 29. The available record evidence, however, demonstrates that Since Hardware reported the carton input as one factor, Since Hardware treats the input as one factor, and Commerce verified Since Hardware’s input as one factor. See Sinc e Hardware Section D Response PR 17; Verification Memorandum, PR 51. The court cannot identify any record evidence that demonstrates that Since Hardware purchas ed cartons as two inputs (cartons and corrugated paper). For example, Home Products might have included on the administrative record affidavits or invoices from its own experie nce with cartons, or obtained information from Since Hardware’s supplier (as it did for brokerage and handling) demonstrating that t he supplier sells cartons as tw o items, not one. See QVD Food Co. v. United States , 658 F.3d 1318, 1324 (Fed. Cir . 2011) (“[T]he burden of creating an adequate record lies with [interes ted parties] and not with Commerce.”) (internal quotation marks and ci tation omitted). In short, Commerce’s finding that Since Hardware’s cartons are one factor and not two is reasonable. Comme rce’s treatment of Since Hardware’s cartons input must therefore be sustained.Consol. Court No. 11-00104 Page 6 B. Surrogate Financial Statements Since Hardware only filed a rebuttal br ief during the administrative proceeding and did not challenge Commerce’s selection of surrogate financia l statements. See November 17, 2010 Letter from Since Hardware to Commerc e, PR 83. In its brief before the court, Since Hardware raises for the first time issues rela ting to the selection of surrogate financial stat ements, issues that it could hav e raised before the agency in its case briefs. Since Hardware has ther efore failed to exhaus t its administrative remedies. See 28 U.S.C. § 2637(d); Carpent er Tech. Corp. v. United States, 30 CIT 1373, 1374-75, 452 F. Supp. 2d 1344, 1346 (2006) (citing Wo odford v. Ngo, 548 U.S. 81, 88-90 (2006)); see also 19 C.F.R. § 351.309(c)(2). Accordingly, Commerce’s selection of financial statements is sustained. C. Labor Wage Rage When determining surrogate labor rates, Comme rce is required “to utilize, to the extent possible,” data from one or more market economy countries that are both economically comparable to the non-market economy at issue, and “significant producers of comparable merchandi se.” 19 U.S.C. § 1677b(c)(4); Dorbest Ltd. v. United States, 604 F.3d 1363, 1372–73 (Fed. Cir. 2010) (invalidating por tion of Commerce’s labor regulation, 19 C.F.R. § 351.408(c)(3)). In the Fi nal Results Commerce valued labor using an average, industry-specific wage rate calculated from earning or wage data under Chapter 5B of t he International Labor Organiza tion (“ILO”) Yearbook on Labor Statistics. See Industr y Specific Wage Rate Selection Memorandum, PR 71. Commerce relied on industry-specific labor dat a from multiple countries that CommerceConsol. Court No. 11-00104 Page 7 determined were economically comparabl e to China and significant producers of comparable merchandise. Id. Commerce, howev er, did not utilize wage data from the primary surrogate count ry, India. Id. Since Hardware challenges Commerce’ s valuation of the labor wage rate, arguing that wage data from Indi a is the best available info rmation to value labor. Since Hardware contends that this result is ma ndated by 19 U.S.C. § 1677b(c)(4), Dorbest, and Shandong Rongxin Impor t & Export Co. v. United Stat es, 35 CIT ___, 774 F. Supp. 2d 1307 (2011), as well as Commerce’s subsequently announced policy changes for the calculation of labor wage rates in NME proceedings, Antidumpi ng Methodologies in Proceedings Involving Non-Mark et Economies: Valuing the Fa ctor of Production: Labor, 76 Fed. Reg. 36,092 (June 21, 2011) (“New Labor Wage Rate Policy”). These authorities, however, do not mandat e the result that Since Hardware desires. As the court in Shandong explai ned: “The Court finds groundless [the] argument that Commerce was obligated to ut ilize data from a single country to value labor. This argument is untenable in the face of a statute, agency regulation, and CAFC case law, which all ex plicitly permit the agency to utilize data from multiple countries.” Shandong, 35 CIT at ___, 774 F. Supp. 2d at 1314. Commerce may, as a matter of gap-filling discretion, decide to use only one country w hen valuing labor (an approach it has since adopted in its New Labor Wage Rate Policy), but nothing in the authorities relied upon by Since Hardware mandates that result. For Since Hardware to obtain the relief it desires, (an order from the court directing Commerce to use only Indian wa ge data to value labor), the administrativeConsol. Court No. 11-00104 Page 8 record must support the conclusion that India, and India alone, is both economically comparable to China and a significant produc er of comparable merchandise. Since Hardware, though, never makes that specif ic argument. Instead, Since Hardware argues that Commerce’s use of HTS categories at the six-digit, instead of the 10-digit, level was “overly broad,” inflating the measur e of exports from countries that Commerce identified as “significant pr oducers.” Since Hardware Br. at 7, ECF No. 30. Missing from this argument, however, is any explanat ion why the measure is “overly broad.” One might surmise that Sinc e Hardware is arguing that the six-digit level includes merchandise that is not “com parable” to the subject merchandise, as required by 19 U.S.C. § 1677b(c)(4). That argument, in turn, would implicate an analysis of the meaning of the word “comparabl e”, together with an analysis of the information on the administrative record on the scope of the six and ten-digit HTS categories. For whatever reason though, Since Hardware chos e not to fully develop its argument that Commerce’s approach was “overly broad,” leavin g the court to deem the issue waived, and sustain Commerce’s use of multiple countri es to calculate the surrogate value for the labor wage rate. See MTZ Polyfilms, Ltd v. United States, 33 CI T ___, ___, 659 F. Supp. 2d 1303, 1308-09 (2009); Fujian Lianfu Fore stry Co. v. United States, 33 CIT ___, ___, 638 F. Supp. 2d 1325, 1350 (2009); United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990) (“[I]ssues adverted to in a perfunctory manner, unaccompanied by some effort at developed argument ation, are deemed waived. It is not enough merely to mention a possible argument in the most skeletal way, leaving the court to do counsel'sConsol. Court No. 11-00104 Page 9 work, create the ossature for the argumen t, and put flesh on it s bones.”) (internal citations omitted). Moving on, Since Hardware does raise one issue from Commerce’s labor wage rate determination that merits a remand: Co mmerce’s selection of the industry-specific data from the International Stan dard Classification of all Eco nomic Activities (“ISIC”). Commerce selected ISIC Revision 3 instead of Revision 2 because it was more contemporaneous, but it does not include data fr om India (the primary surrogate), which did not report data in Revision 3. See Decision Memorandum at 5. The court in Shandong reviewed an identical issue, providing a detailed ex planation of the potential unreasonableness of excluding Indian data from the labor calculus: The Court is less sanguine, however, about the reasons Commerce cites for excluding Indian labor data, which was reported under ISIC– Rev.2, from the group of countries ultima tely providing the labor rate, all of which reported data under ISIC–Rev.3 . While the agency has made clear that it prefers “to use data from a single ISIC revision to ensure consistency of the industry categor y,” the Court finds Commerce's justification for this preference la cking and inconsistent. The Indian wages and earnings data reported to the ILO appears to meet all other criteria identified by the agency, includi ng quality, specificity, and contemporaneity. Indian ILO labor data was reported for a year close to the period of review—2006—and was r eported at a more specific 3–digit level of the ISIC than the 2–digit–lev el data relied on by Commerce. Also, India reported a combined earnings figure for men and women, in accordance with Commerce's pref erence, and the agency does not dispute that the ISIC–Rev.2 Indian l abor data includes the pencil industry. To dismiss such apparently valuabl e data without further explanation is unjustified. Moreover, refusing to us e ISIC–Rev.2 data contradicts what the agency has repeatedly identified as a paramount interest: generating the broadest basket of countries possible to value labor. Commerce has cited the need for a broad basket of c ountries to justify using less contemporaneous data, Remand Results at 28, and to attempt to justify the inclusion of labor data from countries with minuscule amounts of exports, (Def.'s Resp. at 14.). T he inconsistency with which Commerce has asserted the need for a broad basket of countries warrants a remand.Consol. Court No. 11-00104 Page 10

Commerce has broad discretion to determi ne which criteria it will use to sort and prioritize the data it uses in making its determination. The Court's role is to ensure that Commerce's sorting and prioritizing decisions are reasonable and consistently applied. In th is case, the Court finds that most of Commerce's sorting and prioritizing dec isions are well justified, such as the decision to use earnings data if available, and wages data if not, and the choice only to utilize data report ed for both sexes. The decision to insist that data be reported under a co mmon ISIC revision, however, is not supported by substantial evidence on the record. On remand, if Commerce still wishes to omit all labor data that a qualifying country reported under ISIC–Rev.2, it must ex plain why the need for consistency across ISIC revisions predominates over the need for a broad basket of countries to value labor. Alternativel y, if Commerce determines that the chief value is to have the broades t feasible basket of countries, Commerce is instructed to review which qualifying countries have reported data under a prior ISIC revision which satisfy the agency's other requirements. Shandong, 35 CIT at ___, 774 F. Supp. 2d at 1315. This is persuasive. Accordingly, the court will remand this issue to Commerce to address these specific issues, and if necessary, include Indian dat a in its calculation. Finally, Since Hardware challenges Commerc e’s choice of ISIC Classification 28 (metal fabricated products), as opposed to ISIC Classification 36 (manufacture of metal furniture) as one of the pr oper surrogate value data sources for ironing tables. Commerce carefully explained its choice of ISIC Classifica tion 28 on page 3 of its Industry Specific Wage Rate Selection Memorandum and again in the Decision Memorandum at 5-6. Commerce’s choice and its accompanying explanations appear more than reasonable on this administrative record. Since Hardware favors ISIC Classificati on 36 (manufacture of metal furniture) on the ground that ISIC Classification 28 (metal fabricated products) may cover items other than ironing tables, but Since Hardware fails to establish that ISIC Classification 36Consol. Court No. 11-00104 Page 11 (manufacture of metal furniture) only covers ironing tables. Since Hardware also fails to explain why or how this issue adversely affe cts the surrogate labor value for the subject merchandise. (For example, do labor rate s vary widely among the products covered by ISIC Classification 28? And conversely, are labor rates consistently uniform for the items covered by ISIC Classification 36?) . Also missing from Since Hardware’s argument is any consideration of how ISIC Classification 36, wh en compared to ISIC Classification 28, yields a much more accura te surrogate labor value for ironing tables. Whatever the merits of ISIC Classifi cation 36 may be (and Since Hardware has not adequately explained what t hey are), substantial evidence review contemplates that for a given data selection issue, two or mo re reasonable though inconsistent choices are possible on the same administrative record . See Catfish Farmers of Am. v. United States , 33 CIT ___, ___, 641 F. Supp. 2d 1362, 1366 (2009) (“T he administrative record for an antidumping duty administrative revi ew may support two or more reasonable, though inconsistent, determinations on a given issue.”). See also CITIC Trading Co. v. United States , 27 CIT 356, 366 (2003) (“while the standard of review precludes the court from determining whether [Commerce's] choice of surrogate values was the best available on an absolute scale, the cour t may determine the reasonableness of Commerce's selection of surrogate prices.”). With this framework in mind, and given an administrative record contai ning a thorough and reasonable explanation justifying the selection of ISIC Classification 28, the cour t must conclude that Since Hardware’s arguments for an alternative ISIC Classifica tion are without merit. Commerce’s choice of ISIC Classification 28 is therefore sustained.Consol. Court No. 11-00104 Page 12

III. Conclusion For the foregoing reasons the court wil l remand this action to Commerce to reconcile its exclusion of Indian wage data wi th Shandong. Accordingly, it is hereby ORDERED that this action is remanded to Commerce to reconcile its exclusion of Indian l abor data with the concerns raised by the court in Shandong; and it is further ORDERED that Commerce shall file its remand results on or before February 15, 2012; and it is further ORDERED that, if applicable, the par ties shall file a proposed scheduling order with page limits fo r comments on the remand results no later than seven days after Commerce files its remand results with the court.

/s/ Leo M. Gordon Judge Leo M. Gordon

Dated: January 6, 2012 New York, New York