Slip Op. 12-

UNITED STATES COURT OF INTERNATIONAL TRADE

YANGZHOU BESTPAK GIFTS & CRAFTS CO., LTD., Plaintiff,

v. UNITED STATES, Defendant, BERWICK OFFRAY LLC,

Defendant-Intervenor. Before: Judith M. Barzilay, Senior Judge

Court No. 10-00295

[Commerce’s separate rate calculation is sustained.] Dated: March 22, 2012 Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP ( Bruce M. Mitchell, Mark E. Pardo, Ned H. Marshak and Andrew T. Schutz ), for Plaintiff Yangzhou Best pak Gifts & Crafts Co., Ltd. Stuart F. Delery , Acting Assistant Attorney General; Jeanne E. Davidson , Director; Patricia M. McCarthy , Assistant Director, Commerci al Litigation Branch, Civil Division, U.S. Department of Justice ( Renee Gerber ); and Scott D. McBride , U.S. Department of Commerce, Of Counsel, for Defendant United States. Pepper Hamilton LLP ( Gregory C. Dorris ) for Defendant-Interveno r, Berwick-Offray LLC.

OPINION BARZILAY, Senior Judge: This case return s to the court following a partial remand of the final results of an antidumping duty inves tigation conducted by the U.S. Department of Commerce (“Commerce”) covering narrow woven ribbons from the People’s Republic of ChinaCourt No. 10-00295 Page 2

and Taiwan. See Narrow Woven Ribbons With Woven Selv edge From the People's Republic of

China , 75 Fed. Reg. 41,808 (Dep’t of Commerce July 19, 2010) (“ Final Results ”), as amended Narrow Woven Ribbons with Woven Selvedge from the People’s Republic of China , 75 Fed. Reg. 51,979 (Dep’t of Commerce Aug. 24, 2010) (amended final determination); see also Issues and Decision Memorandum for the Final Determinati on in the Antidumping Duty Investigation of Narrow Woven Ribbons with Woven Selvedge from the People’s Republic of China , A-570-952 (July 12, 2010) (“ Decision Memorandum ”), available at http://ia.ita.doc.gov/frn/summ ary/PRC/2010-17568-1.pdf (last visite d Mar. 22, 2012). Before the court are the Final Results of the redetermination (Sep. 26, 2011) (“ Remand Results ”) filed by Commerce pursuant to Yangzhou Bestpak Gifts & Crafts Co. v. United States , 35 CIT __, 783 F. Supp. 2d 1343 (2011) (“ Bestpak ”). The court has jurisdiction under Section 516A(a )(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2006), and 28 U.S.C. § 1581(c). For the reasons set forth belo w, the court sustains Commerce’s Remand Results

. I. BACKGROUND The investigation involved nine teen respondents, which Comm erce identified as a large number of companies pursuant to 19 U.S.C. § 1677f-1(c)(2). Commerce selected only two mandatory respondents to determine the weighted average dumping margins for the pool of twelve uninvestigated respondents w ho qualified for a separate rate. See § 1677f-1(c)(2)(B)

. The first mandatory respondent, Ningbo Jintian Import & Export Co., Ltd. (“Ningbo Jintian”), failed to cooperate in the investigati on and was assigned an adverse f acts available (“AFA”) rate of 247.65%. The second, Yama Ribbons & Bows Co., Ltd. (“Yama”), fully cooperated in the investigation and was assigned a de minimis rate of 0%. Plainti ff Yangzhou Bestpak Gifts &Court No. 10-00295 Page 3

Crafts Co., Ltd.’s (“Bestpak”) was not selected as a mandatory respondent but applied for separate rate status, successfu lly establishing an absence of de jure or de facto government control. To calculate the separa te rate, Commerce took the simple average of the rates assigned to Ningbo Jintian (247.65%) and Yama (0%), yielding a rate of 123.83%, which Commerce assigned to Bestpak and the other el even separate rate respondents. See Final Results , 75 Fed. Reg. at 41,811. Bestpak then commenced this action challengi ng Commerce’s separate rate calculation.

See Bestpak , 783 F. Supp. 2d at 1345. Bestpak claime d that Commerce had violated the antidumping statute by factoring an AFA ra te into the separate rate calculation. Id. Plaintiff also claimed that Commerce’s separate rate calculation yielde d a rate that did not reasonably reflect Bestpak’s potential dumping margin. Id . The court, in turn, concluded that Commerce had not violated the statute by fact oring an AFA rate into th e separate rate calculation. Id . at 1349-50. The court, though, had reservations on the substa ntial evidence issue of the reasonableness of Commerce’s decision-making given the administrative record. Id. at 1350-53. The court was concerned that Commerce’s simple average of the two rates may have been too facile and perhaps did not “reasonably reflect” Bestpak’s potential dumping margin. Id. The court remanded the case to Commerce for further explana tion as to “how the se parate rate of 123.83% relates to Bestpak’s commercial activity.” Id . at 1353.

In the Remand Results Commerce attempted to comply with the court’s remand order by utilizing the limited information provided in the quantity and value (“Q&V”) questionnaires to calculate estimated average unit values (“ AUV”) for the two mandatory respondents and Bestpak. Id. at 6-7. The AUV analysis conducted by Commerce relied on individually reportedCourt No. 10-00295 Page 4

Q&V data submitted by respondents dur ing the antidumping investigation. Id. After comparing the AUV information to the dumping margins es tablished during the investigation, Commerce again determined that “the separate rate assi gned to [Bestpak] in the Final Determination reasonably reflects its potential dumping margin.” Id. at 7. II. STANDARD OF REVIEW When reviewing Commerce’ s antidumping determinations under 19 U.S.C. § 1516a(a)(2)(B)(i) and 28 U.S.C. § 1581(c), the U.S. C ourt of Internationa l Trade sustains Commerce‘s “determinations, findings, or c onclusions” unless they are “unsupported by

substantial evidence on the reco rd, or otherwise not in acco rdance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More specifica lly, when reviewing agency determinations, findings, or conclusions for substantial evidence, the court assesses whether the agency action is reasonable given the record as a whole. Nippon Steel Corp. v. United States , 458 F.3d 1345, 1350-51 (Fed. Cir. 2006). Substantial evidence has been describe d 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 b een described as “something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrativ e agency's finding from being supported by

substantial evidence.” Consolo v. Fed. Mar. Comm'n , 383 U.S. 607, 620 (1966). III. DISCUSSION In non-market economy investigations Comm erce assumes that respondent companies operate under foreign government control. See Sigma Corp. v. United States , 117 F.3d 1401,Court No. 10-00295 Page 5

1405 (Fed. Cir. 1997). During the course of an antidumping investigation, Commerce affords non-investigated respondents the opportunity to establish an ab sence of government control and thereby secure a separate rate. See Policy Bulletin 05.1: Separ ate–Rates Practice and Application of Combination Rates in Anti dumping Investigations Involving Non–Market Economy Countries , at 2, 3–4, 6 (Apr. 5, 2005) (explaining separate rate practice and stating Commerce will calculate a separate rate for the “pool of non-inve stigated firms” in an NME proceeding) available at http://ia.ita.doc.gov/policy/bull05- 1.pdf (last visited Mar. 22, 2012); Sigma Corp. , 117 F.3d at 1405. In calculating a separate rate for non-individually investig ated respondents in non-market economy investigations, Commerce normally reli es 19 U.S.C. § 1673d(c)(5)(A), which defines

the all-others rate used in market economy investigations. See Bristol Metals L.P. v. United

States , 34 CIT __, __, 703 F. Supp. 2d 1370, 1378 (2010) (citation omitted). The statute instructs Commerce to weight-average the rates calculate d for the investigated parties, excluding de

minimis or zero rates and excluding rates based on fact s available, to determine the separate rate. 19 U.S.C. § 1673d(c)(5)(A). However, “[i]f the estimated weighted average dumping margins established for all exporters and producer s individually investigated are zero or de minimis margins, or are determined entirely [on the basi s of facts available], th e administering authority may use any reasonable method to establish the estimated all-others ra te for exporters and producers not individually investigated, includin g averaging the estimated weighted average dumping margins determined for the exporters and producers individua lly investigated.” § 1673d(c)(5)(B). The Statement of Administrative Action provides that the “expected method in such cases will be to weight-average the zero and de minimis margins and margins determinedCourt No. 10-00295 Page 6

pursuant to the facts available, provided th at volume data is available.” Uruguay Round Agreements Act, Statement of Administrati ve Action, H.R. Doc. No. 103–316, vol. 1, at 873 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4201 (“ SAA”). It goes on to state that “if this method is not feasible, or if it results in an av erage that would not be reasonably reflective of potential dumping margins for non-investigated exporters or producer s, Commerce may use

other reasonable methods.” Id. Here, Commerce selected two mandatory re spondents, Yama and Ningbo Jintian. Only Yama cooperated, receiving a de minimis 0% dumping margin. See Final Results , 75 Fed. Reg. 41,811. Ningbo Jintian stopped cooperating earl y, receiving an AFA rate of 247.65%. See id. ; see also Memorandum from Zhulieta Willbrand, RE: Ningbo Jintian , Pub. Admin. R. Doc. No. 109 (Oct. 6, 2009). Bestpak, as an un-investigat ed respondent, did not submit responses to Commerce’s antidumping duty questionnaires. This re sulted in an admini strative record with limited data points that unfo rtunately yielded only a de minimis and an AFA rate. As a result, Commerce could not calculate a sepa rate rate using individually investigated margins (excluding

the de minimis and AFA rates) because they did not exist. See 19 U.S.C. § 1673d(c)(5)(A). Instead, Commerce used “other reasonable methods”, SAA at 873, and took the simple average of what seem like extreme data points (0 % and 247.65%) to calculate a separate rate for all twelve of the respondents that qualified for separate rate status, which included Bestpak. See Preliminary Results , 75 Fed. Reg. 7244, 7248-49 (Dep’t of Commerce Feb. 18, 2010). This is an approach Commerce has used in the past. See 1-Hydroxyethylidene-1, 1-Diphosphonic Acid from the People's Republic of China: Final Determination of Sales at Less Than Fair Value , 74 Fed. Reg. 10,545, 10,546 (Dep’t of Commerce Mar. 11, 2009) and accompanying Issues and DecisionCourt No. 10-00295 Page 7

Memorandum at Cmt. 6 (Mar. 5, 2009) (“[F]or purpos es of determining the separate rate margins, because there are no rates other than de minimis or those based on AFA, we have determined to take a simple average of the AFA rate and the de minimis rate . . . .”) available at http://ia.ita.doc.gov/frn/su mmary/PRC/E9-5237-1.pdf (last visited Mar. 22, 2012); see also Changzou Wujin Fine Chem. Factory Co. v. United States , Slip Op. 10–85, 2010 WL 3239213, at *4 (Aug. 5, 2010) (“Likewise, Commerce followed its customary practice when it calculated the separate rate by averaging the revised AFA rate with th e zero rate of the mandatory respondent.”). The court originally remanded this case out of concern that Commer ce’s separate rate calculation – taking the simple average of Yama’s de minimis 0% rate and Ningbo Jintian’s 247.65% AFA rate – was potentially too simplistic an approach given the administrative record. The court anticipated that the administrative record might cont ain enough available information to expand the menu of potential separate rates beyond the 123.83% as calculated and assigned by Commerce. After reviewing the Remand Results , however, the court must acknowledge that the

administrative record does not contain sufficien t sales data to support a more sophisticated separate rate calculation. Bestpak, for its part, requests an order fr om the court directing Commerce to assign Bestpak a 0% rate. Pl.’s Commen ts 20. This request gives the c ourt pause, especially when measured against the substantial evidence standa rd of review, which pl aces certain limits on the court’s ability to replace, by affirmative in junction, a separate rate chosen by Commerce (123.83%) with another of the court’s choosing. To do so, the administrative record must support the alternative 0% rate urged by Bestpak as the one and only correct separa te rate, not just forCourt No. 10-00295 Page 8

Bestpak, but for all other separate rate respondent s. To achieve that result, Bestpak would need to explain to the court how the administrative record supports using Ya ma alone as a proxy for all separate rate respondents, as opposed to a simple average of Yama and Ningbo Jintian. The administrative record, however, does not contain much sales data, meaning the court cannot have much confidence that one particul ar choice over another is in fact the one, true, correct answer for the separate rate margin. Additionally, Bestpak, in effect, wants the court to reject the AFA rate while fully embracing Yama’s de minimis rate, a position that lose s its appeal when read against the statutory guidance to exclude both facts available and de minimis margins (if possible) when calculating separate rates. See 19 U.S.C. § 1673d(c)(5)(A).

In Bestpak the court proceeded under a premise th at assumed the administrative record

contained more information about Bestpak’s and the other separa te rate respondents’ potential dumping margins. In actuality, the administrative record contains very little specific sales information about Bestpak or the other separate rate respondents. See, e.g., Quantity and Value Questionnaire Response for Yangzhou Bestpak Gifts & Crafts Co.. Ltd. , Pub. Admin. R. Doc. No. 57 (Aug. 19, 2009) (“ Q&V Response ”); Separate Rate Applica tion for Yangzhou Bestpak Gifts & Crafts Co., Ltd. , Pub. Admin. R. Doc. No. 102 (Oct. 5, 2009) (“ Separate Rate Appl. ”). As a non-investigated respondent, Bestpak was not required to submit extensive sales data to qualify for a separate rate. See Preliminary Determination , 75 Fed. Reg. 7244. During the investigation Bestpak submitted to Commerce Q&V questionnaire responses (to provide Commerce with information to select mandatory re spondents) and a separate rate application (to

establish de jure and de facto independence from government control). See Q&V Response , Pub. Admin. R. Doc. No. 57; Separate Rate Appl. , Pub. Admin. R. Doc. No. 102; PreliminaryCourt No. 10-00295 Page 9

Determination , 75 Fed. Reg. 7244. Bestpak did not submit any additional information regarding its pricing practices.

The Remand Results underscore this point. On remand, Commerce did its best to identify record evidence that would provi de some indication of Bestpa k’s potential dumping margins. Commerce used respondents’ Q&V data (typically used to identify highest volume producers of the subject merchandise) to establish es timated AUVs, which, according to Commerce, represented the “only basis the Department has for a comparison between the companies.” Id. at 16. In attempting to comply with the cour t’s order, Commerce explained that an estimated AUV is a ratio calculated by divi ding a respondent’s to tal value of sales by its total quantity of sales, which pr ovides a rough, estimated snapshot of a respondent’s pricing practices. A low es timated AUV in comparison to other exporters can indicate, all other things being equal, the existence of a larger dumping margin, while a high estimated AUV, again, presuming all other factors are equal, can indicate the reverse to be true.

Remand Results at 6. Commerce’s AUV analysis appears to be consistent with the dumping margins

established in the Final Results

. Id. at 6 and Attachment I (Estimated Average Unit Value Calculations). The AUV analys is itself, however, may be of limited utility. Commerce acknowledged the difficulties of relying on AUV data: [T]here is no substitute for dumping marg ins determined by the Department in the context of its investigati ons and reviews; and AUVs are no substitute for the Department’s determinations. Importantl y, in this instance, there are no price adjustments made to AUVs and the Depa rtment does not have any information that would even indicate whether such sales were export price or constructed export price transactions. AUVs also pr ovide no indication of the normal value side of the dumping equation. Therefore, we recognize the limited application of AUVs in this context.Court No. 10-00295 Page 10

Remand Results at 16. Having a better understa nding of the limits of the administrative record, the court acknowledges that Commerce was doing the be st that it could in response to the court’s order. The AUV data merely provi de a rough estimate of U.S. sa les price and therefore do not provide much information about Bestpak’s potenti al dumping margins. For example, it would be difficult for the court to draw meaningful infere nces and conclusions ab out Bestpak’s potential dumping margins from AUV data that does not acc ount for normal value, price adjustments, or constructed export price transacti ons. This is a natural consequenc e of a limited administrative record. The problem here is not the AUV data or Commerce’s attemp ted analysis of it, the real problem is the absence of enough sales data. Apart from Commerce’s AUV analysis, the record contains little information as to what Bestpak’s (or the other separa te rate respondents’ ) potential dumping margin might be, or whether it is closer to 0% or 247.65%. 1 Likewise, the court, Comm erce, and Bestpak simply

cannot know on this administrativ e record whether the separate rate “reasonably reflects” commercial reality. See SAA at 873. In an investigation Co mmerce begins the process of data collection and margin calculation, relying on the cooperation of mandatory (and voluntary) respondents. With the benefit of the additional data and calculated margins in subsequent administrative reviews, Commerce develops an ev er-evolving familiarity with industry pricing practices, which in turn permits Commerce to bette r evaluate (and the cour t to review) whether a

1 Bestpak argues, for the first time, that Bestpak should be assigned a 0% rate because of a sales invoice it submitted as part of its application fo r separate rate status . Pl.’s Comments 20. Bestpak, however, failed to raise this argumen t before Commerce, depriving Commerce of the opportunity to address it. As such, the court will not entertain it now. See 28 U.S.C. § 2637(d); Carpenter Tech. Corp. v. United States , 30 CIT 1373, 1374-75, 452 F. Supp. 2d 1344, 1346 (2006) (citing Woodford v. Ngo , 548 U.S. 81, 88-90 (2006)). Moreover, the court is not persuaded that one sales invoice is sufficient to demonstrat e that the separate ra te should be 0%.Court No. 10-00295 Page 11

separate rate “reasonably reflects” commercial re ality. At the investigatio n stage, however, that ability to identify and measure whether a separate rate “reasonably reflects” commercial reality can be severely limited. This is the case here . The court initially viewed Commerce’s separate rate calculation as potential ly too facile. What the Remand Results reveal is that Commerce had few, if any, reasonable options under the circum stances presented by a limited administrative

record. With that said, a separate rate respondent (like Bestpak) is not entirely without options. It may (1) challenge Commerce’s selection of a sm all a number of respondents from which a separate rate can be derived; as well as (2 ) request a voluntary inve stigation pursuant to 19 U.S.C. § 1677m(a). See 19 C.F.R. § 351.204(d). Although Be stpak challenged Commerce’s

selection of a small number of mandatory respondents in its admi nistrative case brief, Commerce rejected the argument because it was t oo late in the administrative proceeding. See Decision

Memorandum at Cmt. 10 (“Put simply, given the statutor y time constraints of an investigation, it

is not feasible at this time to identify an additional respondent, provide that respondent with time to respond to our questionnaires, analyze the da ta and develop a preliminary determination, provide parties with an o pportunity to comment upon the determination, solicit rebuttal comments, and then develop a final determinatio n. These labor-intensive efforts take several months to complete and, because Bestpak firs t suggested that we consider an additional respondent in its case brief, less than three months remained in st atutory time period to complete the investigation. . . . Bestpak did not present its suggestion that the Department investigate an additional respondent at a point in the proceeding where the Department could have acted upon its request. . . . Bestpak had ample opportunity to raise this issue as early as October 2009, whenCourt No. 10-00295 Page 12

Ningbo Jintian missed the deadline to respond to the Department’s Sections C and D questionnaire.”). Bestpak chose not to challenge this decision in its brief before the court. Alternatively, Bestpak did not request a volun tary investigation pursuant to 19 U.S.C. § 1677m(a). See Decision Memorandum at 21 (“[W]e also note that no interested parties submitted a voluntary response to the Department’s full antidumping questionnaire.”); see also Grobest & I-Mei Industrial (Vietnam) Co. v. United States , Slip Op. 12-9, at 37 (Jan. 18, 2012) (“ Grobest ”). Considering Bestpak’s stance that it is entitled to a 0% dumping margin, this option could have supplied the necessary pricing information for Commerce to ca lculate an individual dumping margin for Bestpak. Rather than pursue its ow n individual rate, Bestpak instead seeks the full benefit of Yama’s 0% individual ra te without incurring the same costs, effort, and risk that Yama assumed to obtain it. Even if Commerce rejected Bestpak’s request, Commerce would have been required to explain its decision under 19 U.S.C. § 1677m(a), which “plainly requires Commerce

to conduct individual reviews unless such revi ews would be unduly burdensome and inhibit the timely completion of the investigation.” Grobest , Slip. Op. 12-9, at 40; see also Zhejiang Native Produce & Animal By-Prods. Import & Export Corp. v. United States , 33 CIT __, __, 637 F. Supp. 2d 1260, 1264-65 (2009) (concluding that Commerce’s failure to review respondent that preserved its request for i ndividual review when mandato ry respondents withdrew was unreasonable). Commerce’s separate rate margin calculated using a simple average of a de minimis and facts available margin may be unfortunate and ev en frustrating, but it is not unreasonable on this limited administrative record. The court issued a remand in the belief there might be additional

choices from which Commerce could calculate the separate rate. In this case, however, thoseCourt No. 10-00295 Page 13

additional choices apparently do not exist. For the foregoing reasons, Comme rce’s separate rate

calculation is sustained. The court will enter judgment accordingly.

Dated: March 22, 2012 ____/s/ Judith M. Barzilay________ New York, NY Judith M. Barzilay, Senior Judge