Slip Op. 17-95 UNITED STATES COURT OF INTERNATIONAL TRADE

PUBLIC VERSION Before: Leo M. Gordon, Judge

Court No: 15-00141

OPINION [Commerce’s final results sustained.] Dated: August 1, 2017 Jonathan M. Zelinski, Cassidy Levy Kent (USA) LLP of Washington, DC argued for Plaintiffs Morex Ribbon Corp., Papill on Ribbon and Bow Inc ., and Ad-Teck Ribbon, LLC (dba Wrap Ribbon). With him on the briefs were James R. Cannon, Jr. and Ulrika K. Swanson. Kara M. Westercamp, Trial Attorney, Co mmercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for Defendant United States. With her on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, and Renée Gerber, Trial Attorney. Of counsel was Am anda T. Lee, Attorney, U.S. Department of Commerce, Office of the Chief Counsel for Trade Enfo rcement and Compliance of Washington, DC. Gregory C. Dorris, Pepper Hamilton LLP ofWashington, DC argued for DefendantIntervenor Berwick Offray LLC. Gordon, Judge: This action involves the third administrative review conducted by the U.S. Department of Comme rce (“Commerce”) of the anti dumping duty order covering narrow woven ribbons with woven selvedge (“N WR”) from Taiwan. See Narrow Woven Ribbons with Woven Selved ge from Taiwan, 80 Fed. R eg. 19,635 (Dep’t of Commerce Apr. 13, 2015) (final results of admin. re view), ECF No. 19-4 (“Final Results”), and MOREX RIBBON CORP., PAPILLON RIBBON AND BOW INC., AND AD-TECK RIBBON, LLC, Plaintiffs,

v. UNITED STATES, Defendant.Court No. 15-00141 Page 2

accompanying Issues and Decision Mem. for t he Final Results of the Antidumping Duty Admin. Rev. on Narrow Woven Ribbons with Woven Selvedge from Taiwan, A-583-844 (Dep’t of Commerce Apr. 6, 2015) (“Decision Mem.”), ECF No. 19-5.

Before the court is the USCIT Rule 56. 2 motion for judgment on the agency record of Plaintiffs Morex Ribbon Corp., Papillon Ribbon and Bow Inc., an d Ad-Teck Ribbon, LLC (collectively, “Plaintiffs” or “Morex”). See Pls.’ R. 56.2 Me m. Supp. Mot. J. Agency R., ECF No. 23 (“Morex Br.”); see also Def.’s O pp’n Pls.’ Mot. J. Ad min. R., ECF No. 29 (“Def.’s Resp.”) ; Def.-Intervenor Berwick Offray LLC’s Opp’n Pls.’ Mot. J. Admin. R., ECF No. 33; Pls.’ Reply Br. Supp. Mot. J. Agency R., ECF No. 37 (“Morex Reply”). The court has jurisdiction pursuant to Secti on 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012), 1 and 28 U.S.C. § 1581(c) (2012). I. Background Plaintiffs imported NWR fr om Hen Hao Trading Co. Lt d. a.k.a. Taiwan Tulip Ribbons and Braids Co. Ltd. (“Hen Hao”), a producer of NWR from Taiwan, during the period of review (“POR”). Each plaintiff paid cash deposits at the rate of 4.37%

─ the rate required by Commerce at the time of entry. Compl. ¶ 7. Commerce identified Hen Hao and another Taiwanese producer of NWR, King Young Enterprises Co., Ltd., along with King Young’s affiliates, Ethel Enterprise Co., Ltd. and Glory Young Enterprise Co., Ltd. (collectively “King Young”), as mandatory respondents in the administrative review and

1 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of Title 19 of the U.S. Code, 2012 edition.Court No. 15-00141 Page 3

forwarded questionnaires to them. See Na rrow Woven Ribbons with Woven Selvedge from Taiwan, 79 Fed. Reg. 60, 449 (Dep’t of Commerce Oct. 7, 2014) (prelim. results), PD 86 2 ; see also Decision Mem. for the Prelim . Results of the Admin. Rev. of the Antidumping Duty Order on Narrow Woven Rib bons with Woven Se lvedge from Taiwan, A-583-844 (Dep’t of Commerce Sept. 25, 2014), PD 87. King Young cooperated with Commerce during the administrative review and received a calculated rate of 30.64%. Final Re sults, 80 Fed. Reg. at 19,636. Hen Hao, on the other hand, withdrew fr om the review without s ubmitting any information. See Hen Hao’s Notice of Withdrawal, PD 25 at bar code 3186563-01 (Mar. 7, 2014). Consequently, Commerce applied facts available wi th an adverse inference 3 and assigned Hen Hao a total adverse fa cts available (“AFA ”) rate of 137.20%

─ the highest rate alleged in the petition (“Petit ion Rate”). Decision Mem. at 34. In this action Plaintiffs challenge the assi gnment of the Petition Rate to Hen Hao. For the reasons set forth below, the c ourt sustains Commerce’s determination.

2 “PD” refers to a document contained in the public administr ative record, which is found in ECF No. 19-1, unless other wise noted. “CD” refers to a document contained in the confidential administrative record, which is found in ECF No. 19-2, unless otherwise noted. 3 Under 19 U.S.C. § 1677e(a)(2), if Commerce finds that a respondent's information is unreliable because the res pondent has withheld informati on that Commerce requests, failed to provide requested information in a ti mely manner or in the form or manner requested, or significantly impeded the progress of the proc eeding, Commerce is required to calculate that respondent's margin using the facts otherwise available. Having decided to apply facts available, Commerce then ma y draw an adverse inference against a respondent in selecting from among the facts otherwise available w hen it finds that a respondent “has failed to cooperate by not acti ng to the best of its ability.” 19 U.S.C. § 1677e(b).Court No. 15-00141 Page 4

II. Standard of Review The court sustains Commerce’s “determinat ions, findings, or conclusions” unless they are “unsupported by subs tantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More spec ifically, when reviewing agency determinations, findings, or conclusions for substantial evidence, the court assesses whether the agency action is reasonabl e given the record as a whole. Nippon Steel Corp. v. United St ates, 458 F.3d 1345, 1350-51 (Fed. Cir. 2006). Substantial evidence has been described as “such relev ant evidence as a reasonable mind might accept as adequate to support a conclusion.” Du Pont 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 “something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an adm inistrative agency’s finding from being supported by substantial evid ence.” Consolo v. Fed. Ma r. Comm’n, 383 U.S. 607, 620 (1966). Fundamentally, though, “substantial ev idence” is best understood as a word formula connoting reasonableness review. 3 Charle s H. Koch, Jr., Administrative Law and Practice § 9.24[1] ( 3d ed. 2017). Therefore, when addressing a substantial evidence issue raised by a party, the court analyzes whether the challenged agency action “was reasonable given the circumstances pres ented by the whole record.” 8A, West’s Fed. Forms, National Courts § 3.6 (5th ed. 2017).Court No. 15-00141 Page 5

III. Discussion In a total AFA scenario Commerce typically cannot calculate an antidumping rate for an uncooperative respondent because the info rmation required for that calculation was not provided. As a substitute, Comme rce relies on other sources of information (“secondary information”), e.g., the petition, the final determination from the investigation, prior administrative reviews, or any other information pl aced on the record, 19 U.S.C. § 1677e(b), to select a proxy that should be a “reasonably accurate estimate of the respondent’s actual rate, albeit with some bu ilt-in increase intended as a deterrent to noncompliance.” F.lli de Cecco di Filippo Fara S. Martino S.p. A. v United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000). When selecting an appropriate AFA proxy, Commerce’s general practice is to choose the higher of (1) the highest rate alleged in the petition or (2 ) the highest margin rate calculated in any segment of the proceeding, “unless these rates cannot be corroborated or there ar e case-specific reasons that these rates are not acceptable.” Decision Mem. at 39 (citations omitted). The proxy’ s purpose “is to provide respondents with an incentive to cooperate, not to impose punitive, abe rrational, or uncorroborated margins.” de Cecco, 216 F.3d at 1032. Although a higher AFA rate creates a stronger incentive to cooperate, “Commerce may not se lect unreasonably high rates having no relationship to the respondent’s actual dumpi ng margin.” Gallant Ocean (Thailand) Co. v. United States, 602 F.3d 1319, 1323 (Fed. Cir. 2010) (citing de Cecco, 216 F.3d at 1032); see also Timken Co. v. United States, 354 F.3d 1334, 1345 (Fed. Cir. 2004) (“Commerce must balance the statutory obj ectives of finding an accurate dumping margin and inducingCourt No. 15-00141 Page 6

compliance.”). Commerce must se lect a rate that is a “‘reasonably accurate estimate of the respondent’s actual rate,’” Gallant Ocean, 602 F.3d at 1323 (quoting de Cecco, 216 F.3d at 1032), and has “some grounding in commercial realit y.” Id. at 1324; see also Nan Ya Plastics Corp. v. United States, 810 F.3d 1333, 1344 (Fed. Cir. 2016). 4 Commerce, to the extent practicable, must corroborate secondary information with independent sources reasonably at its disposal. 19 U.S.C. § 1677e(c). In practice, “corroboration” involves confirming that secondary information has “probative value,” 19 C.F.R. § 351.308(d) ( 2014), by examining its “reliability and relevance.” Mittal Steel Galati S.A. v. United States, 31 CIT 730, 734, 491 F. Supp. 2d 1273, 1278 (2007) (citing Ball Bearings and Parts Thereof from France, Germany, Ita ly, Japan, Singapore, and the United Kingdom, 70 Fed. R eg. 54,711, 54,712–13 (Dep’t of Commerce Sept. 16, 2005) (final results admin. revs.)). A. AFA Rate Selection In the Final Results Commerce considered the following choices for an AFA rate for Hen Hao: (1) the Petition Rate of 137.20% (the highest rate alleged in the petition); (2) 4.37% (the only affirmative dumping margin calculated in the less than fair value investigation); (3) 30.64% (t he weighted-average margin calculated for King Young in the

4 The court notes that Congr ess amended the antidumping duty statute to eliminate the requirement that a total AFA proxy refl ect a respondent’s “c ommercial reality.” See Trade Preferences Extension Act of 2015. Pub.L. No. 114–27, 129 Stat. 362 (2015). “Commerce is . . . no longer required to tie an AD duty ma rgin to the ‘commercial reality’ of the interested party.” Fresh Garlic Producers Asso ciation v. United Stat es, 39 CIT ___, 121 F. Supp. 3d 1313, 1329 (2015). That amended provis ion does not apply to this action.Court No. 15-00141 Page 7

current segment of the proceedi ng); and (4) various margins calculated using a subset of King Young’s data. Decision Mem. at 39. In selecting an AFA rate for Hen Hao, Commerce determined that the Petition Rate was the only rate that wa s sufficient to deter non-compliance. Id. Commerce reasonably dete rmined that the 4.37% rate would not sufficiently deter non-compliance because it is Hen Hao’s current cash deposit rate and “at this rate Hen Hao’s NWR has continued to be imported into the United States.” Id. (citing Mem. Regarding Release of Customs Entry Data from U.S. Customs and Border Protection, PD 6 at bar c ode 3164169-01, CD 1 at bar co de 3164167-01 (Nov. 19. 2013)). Commerce also reasonably determined that the 30.64% rate would not deter noncompliance because it was the actual calcul ated dumping rate assigned to King Young, the sole cooperative respondent for the POR. Id. Additionally, Commerce declined to choose a rate calculated using a subset of King Young’s data, finding that use of a contemporaneous rate calculated for a co operative respondent “w ould be at odds with the statutory purpose of AFA to induce cooperative behavior.” Id. at 40. That left the Petition Rate of 137.20%. Plaintiffs contend that the AFA rate is unreasonably high because as independent importers they will be responsible to pay the increased duties, even though they had no control over Hen Hao’s decision to withdraw from the administrative review. Morex Br. 9. This very scenario was alluded to by the U.S. Court of Appeals for t he Federal Circuit in KYD, Inc. v. United States, 607 F.3d 760 (Fed. Cir. 2010). There, plaintiff KYD, an independent U.S. importer of polyethylene retail carrier bags, challenged Commerce’s assignment of the petition rate, as AF A, to an uncooperative foreign producer andCourt No. 15-00141 Page 8

exporter of the subject merchandise. KYD argued that “Commerce should apply AFA rates only against uncooperative parties” and that “a cooperative, i ndependent importer should not be required to pay an assessment based on an AFA dumping margin imposed on an uncooperative producer/e xporter.” Id. at 768. The Federal Circuit rejected KYD’s argument because it “would allow an uncooperative foreign exporter to avoid the adverse inferences permitted by statute simply by selecting an unrelated importer, resulting in easy evasion of the means Congress intended for Commerce to use to induce cooperation with its antidumping investigations.” Id. The court also recognized that in some cases “domestic importers will have to pay enhanced antidumping margins because of the uncooper ativeness of the exporters from whom they pur chase goods,” and that the possi bility that U.S. importers would have to pay increased duties was consis tent with the intent behind the statute permitting the use of AFA. Id. (“In the aggregate, . . . the importers’ exposure to enhanced antidumping duties seems likely to have the effect of either directly inducing cooperation from the exporters with whom the importers deal or doing so indirectly, by leaving uncooperative exporters without importing partners who are willing to deal in their products.”). Therefore, the po ssibility that Plaintiffs as domestic (U.S.-based) importers may bear contingent liability resulting from the uncooperative behavior of its unaffiliated exporter cannot invali date Commerce’s AFA rate selection. Next, Plaintiffs argue that Commerce un reasonably failed to consider as a mitigating factor Hen Hao’s reasons for fa iling to comply with Commerce’s requests for information. Morex Br. 12. Specifically, Morex contends that Hen Hao’s failure to complyCourt No. 15-00141 Page 9

was not the result of a business decision t hat Hen Hao would gain a better or equivalent rate by not cooperating. Ra ther the burden of responding to those requests was “simply beyond the capabilities of [Hen Hao’s] employees.” Id. (quoting Hen Hao’s Notice of Withdrawal at 1-2, PD 25 at bar code 3186563-01 (Mar. 7, 2014)). Unfortunately for Plaintiffs, “section 1677e(b) does not by it s terms set a ‘willfulness’ or ‘reasonable respondent’ standard, nor does it require findings of motivation or intent. Simply put, there is no mens rea com ponent to the section 1677e(b) inquiry.” Nippon Steel Corp.v. United States, 337 F.3d 1373, 1383 (Fed. Cir. 2003). Finally, Plaintiffs contend t hat to calculate a non-punitive rate that represents the uncooperative respondent’s commercial reality Commerce must use a cooperative respondent’s rate from the same POR, or a nearby period, as a baseline and add a premium for deterrent effect. Mo rex Br. 10-11 (citing Lifestyle En ter., Inc. v. United States, 36 CIT ___, ___, 844 F. Supp. 2d 1283 (2012) (“Lifestyle Enterprise I”); Lifestyle Enter. Inc. v. United States, 36 CIT ___, 865 F. Supp. 2d 1284 (2012) (“Lifestyle Enterprise II”); Gallant Ocean, 602 F.3d 1319; D ongguan Sunrise Furniture Co. v. United States, 39 CIT ___, 2015 WL 179003 (Jan. 14, 2015) (“Dongguan Sunrise Furniture IV”)). The court disagrees. Plaintiffs maintain that the appropriate baseline for Hen Hao’s AFA rate is one derived from the rates calculated for c ooperative respondents—0% and 4.37% in prior segments and 30.64% in this segment. Bas ed on those rates, Morex contends that Commerce’s selection of the Petition Rate is unsupported by the record. In particular, Plaintiffs argue that the Petition Rate is ov er 4.5 times higher than the highest calculatedCourt No. 15-00141 Page 10

rate, and therefore is unnecessarily puniti ve, i.e., more than a mere deterrent. Citing Dongguan Sunrise Furniture I, 37 CI T ___, ___, 931 F. Supp. 2d. 1346, 1355 (2013), Plaintiffs also argue that Commerce faile d to explain its rati onale for selecting the Petition Rate and why a lower rate—some where above 30.64% and below 137.20%— would not provide a sufficient deterrent. The court disagrees. In Lifestyle Enterpri se I, the court re jected the AFA rate because the rate was “an extreme outlier” when vi ewed in light of the prior reviews and because the record suggested that the unc ooperative respondent’s commercial reality “differ[ed] significantly” from the respondent in the review from which the AFA rate was taken. Lifestyle Enterprise I, 36 CIT at ___, 844 F. Supp. 2d at 1291. In contrast, in this action, the Petition Rate was not an “extreme outlier” as Commerce used that rate in the first and second administrative reviews. The fi rst administrative review was challenged, and this Court sustained Commece’s use of t he Petition Rate. Hubscher Ribbon Corp. v. United States, 37 CIT ___, 942 F. Supp. 2d 1375 (2013). Additionally here, unlike in Lifestyle Enterprise I, Commerce tied the Petition Rate to Hen Hao’s commercial reality. Specifically, Commerce found that Hen Hao supplied NWR to a Canadian reseller who was assigned the Petition Rate as AFA in the first administrative review. Decision Mem. at 42. Plaintiffs’ reliance on Lifestyle Enterprise II is also misplaced. There the court held that the AFA rate used in that case wa s based on “an impermissibly small percentage” of sales and that the transactions sele cted by Commerce were “outside of the mainstream.” Lifestyle Enterprise II, 865 F. Supp. 2d at 1290. In reaching its holding,Court No. 15-00141 Page 11

the court stated that the case was “[u]nlike cases in wh ich the rate and amount of deterrent were facially within the bounds of commercial rea lity.” Id. at 1292. Here, Commerce corroborated the Petition Rate using King Young’s margins. These margins represented a significant number of King Young’s U.S. sales of products within the range of the main stream products sold by King Young during the POR. 5
Decision Mem. at 44. Similarly, the circumstances in the Donggua n Sunrise Furniture cases are distinct from those in this action. The question befor e the court in Dongguan was whether a partial AFA rate assigned to a mostly-cooperati ng respondent reflected that company’s commercial reality. See Dongguan Sunrise Furniture IV, 39 CIT at ___, 2015 WL 179003, at * 4. Although the court rem anded the underlying decision to Commerce, it did so out of a concern that Commerce failed to account fo r “the large variety of individual products and dumping margins reflected in [the respondent’s] reported sales . . . .” Id. In contrast, here, Hen Hao did not report any sales data for the POR. Lastly, Gallant Ocean is also distinguishabl e. In Gallant Ocean, the Federal Circuit rejected Commerce’s use of the highest dumpi ng margin stated in the petition as AFA because the rate could not be corroborated when vi ewed in the context of the facts of that record. See Gallant Ocean, 602 F.3d at 1 324-25. Here, on the other hand, Commerce

5 Commerce found that [[ ]] tr ansaction-specific margins, or [[ ]] of King Young’s transactions, were higher than the Petition Rate. See Corroboration of Adverse Facts Available Rate for the Final Results at 1, CD 122 at bar code 3269 505-01 (Apr. 6, 2015).Court No. 15-00141 Page 12

corroborated the Petition Rate, establishing a link between the rate and Hen Hao’s commercial reality. See infra. B. Corroboration To corroborate the 137.20% rate, Comme rce reviewed transaction-specific margins submitted by King Yo ung regarding hundreds of U.S. sales of NWR during the POR. Decision Mem. at 41. Plaintiffs do not question Comme rce’s use of King Young’s sales data to corroborate the Petition Rate. Ra ther, Plaintiffs argue that Commerce used an insufficient number of trans action-specific margins calc ulated for King Young. Morex Br. 15-16. The court does not agree. The administrative record supports Commerce’s finding that a substantial num ber of King Young’s actual U. S. transactions were dumped at rates “at an even higher level than [the Petition Rate].” 6 Commerce found that King Young’s sales represented “numerous models and thousands of spools, at rates equaling or exceeding the [P]etition [R]a te.” Decision Mem. at 41. T hese sales “were not isolated sales of unusual models, but rather they [fe ll] well within the r ange of the mainstream products sold by King Young during the PO R.” Id.; see KYD, 607 F.3d at 767 (Commerce may use cooperative companies’ transaction-s pecific margins to support an AFA rate when that rate is within the range of ac tual selling prices). Consequently, Commerce determined that King Young’s sales data provided a reasonab le basis to corroborate the Petition Rate and determined that the Petition Rate was “neither aberrational nor divorced from commercial reality. ” Decision Mem. at 41.

6 See footnote 5 supra.Court No. 15-00141 Page 13

Commerce also corroborated the Petition Ra te based on other record evidence, concluding that the Petition Rate was rele vant and reliable. Commerce determined that the Petition Rate was relevant to Hen Hao in that King Young, who, like Hen Hao, is a Taiwanese producer/exporter selling NWR to the United States, was found to be dumping NWR at rates similar to, or higher than, the Petition Rate during the POR. Decision Mem. at 42. Commerce noted that Plaintiffs them selves recognized that “Hen Hao’s commercial reality is linked to King Young’s, given that [the importers] suggest various alternative AFA rates which are derived fr om King Young’s data,” and that “in every segment of this proceeding, [Commerce has] found that NW R produced in Taiwan and exported to the United States [was] being dumped in rates exceeding 100 percent.” Id.; see Narrow Woven Ribbons with Woven Selvedge from Taiw an, 77 Fed. Reg. 72,825 (Dep’t of Commerce Dec. 6, 2012) (final results firs t admin. rev.) (dumping margin of 137.20%); Narrow Woven Ribbons with Woven Selvedge from Taiwan, 78 Fed. Reg. 50,377 (Dep’t of Commerce Aug. 19, 2013) (final results second admin. rev.) (same). Additionally, Commerce determined that the Petition Rate was relevant to Hen Hao because Hen Hao previously supplied NWR to a Canadian reseller who Commerce found to be dumping at the 137.20% rate in the first administrative review, Decision Mem. at 42, and the application of this rate to the C anadian reseller was ulti mately sustained, see Hubscher Ribbon, 37 CIT ___, 942 F. Supp. 2d 1375. Lastly, Commerce determined that the Peti tion Rate of 137.20% rate continued to be reliable. Decision Mem. at 42. Given the absence of any information on the record to the contrary, no basis exists to conc lude that Commerce’s determination wasCourt No. 15-00141 Page 14

unreasonable. See id. (noting there was “no evidence on the record that Hen Hao [did] not continue to sell dumped NWR to the United States . . . .”). Therefore, Commerce’s corroboration of the Petition Ra te as relevant and reliable is supported by substantial evidence.

IV. CONCLUSION For the foregoing reasons, the court sust ains Commerce’s assignment of an AFA rate based on the Petition Rate to Hen Hao. Judgment will be ent ered accordingly.

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

Dated: August 1, 2017 New York, New York