Opinion ID: 767689
Heading Depth: 3
Heading Rank: 1

Heading: Amendment to the Constructed Export Price Definition

Text: 32 After the 1994 amendments the language of the statute became clear. Any ambiguity that might have necessitated a test to define what type of activity by an affiliated importer might give rise to a sale in the United States was eliminated by the addition of the phrase by a seller affiliated with the producer. 19 U.S.C. § 1677a(b). Like the language in PQ Corporation, the plain meaning of the language enacted by Congress focuses on whether the foreign producer and the U.S. importer are related. The language added by the 1994 amendments makes clear that if a sale or agreement to sell occurred in the United States and was made by a seller affiliated with the producer/exporter, then that sale must be classified as a CEP sale and the CEP deductions applied to the sale price. In contrast, an EP sale may only be made by the producer or exporter, as the EP definition in the statute makes no provision for an EP sale by a U.S. affiliate of the foreign producer. Thus, the additional language highlights the difference between the two definitions: an EP sale can only be made by the producer/exporter while a CEP sale can be made by an affiliate. 33 Here the sales contracts in evidence clearly indicate that the sales to the unaffiliated U.S. purchasers were made by affiliates of the foreign producers that are located in the United States. If the importer and the producer are affiliated, then the first sale to an unaffiliated party is necessarily the sale between the affiliated importer and the unaffiliated purchaser (unless there is another intermediate U.S. affiliate involved). With the addition of the language in the 1994 amendment, the relationship that necessitated use of a sale between U.S. entities (CEP) rather than between a foreign and U.S. entity (EP) to establish the U.S. Price became even clearer: a U.S. seller to the ultimate buyer that is affiliated with the producer requires CEP classification, regardless of the specific activities or role of the U.S. affiliate, or whether the foreign producer was the party that initially negotiated the terms of the sale. Thus, the 1994 amendment rendered the PQ Test inappropriate because any arguable ambiguity was removed from the statute, and the test conflicts with the plain meaning of the statute. 34 Despite the plain meaning of the language of the statute, the government and the Korean manufacturers cite to the Statement of Administrative Action (SAA) that accompanied the URAA as evidence of congressional intent to endorse the PQ Test as a proper interpretation of the new statutory language. The SAA declares that the [n]ew section 772 retains the distinction in existing law between 'purchase price' (now called the 'export price') and 'exporters sales price' (now called the 'constructed export price'). That statement goes on to declare that [n]otwithstanding the change in terminology, no change is intended in the circumstances under which export price . . . versus constructed export price . . . are used. H. Doc. No. 103-316, Vol. 1 at 822 (1994), reprinted in 1994 U.S.C.C.A.N. 3773, 4163. The appellants argue that this indicates congressional approval of the distinctions made by the PQ Test. We disagree. 35 The addition of the word affiliated to the CEP sales definition is consistent with a definition of CEP sales based on whether the foreign exporter/producer and the U.S. importer are related, as the Court of International Trade said in PQ Corporation. There is nothing in the SAA to indicate that Congress was aware of Commerce's PQ Test or intended the use of EP or CEP to be determined based on the activities of the importer rather than the relationship between the importer and the producer/exporter. Defining a sale by a U.S. affiliate as one that requires a CEP classification did not change the circumstances under which CEP and EP had historically been used. The addition of this term merely reinforced the language in the statute prior to the 1994 amendment and the holdings in the case law by emphasizing that the critical question was not the role of the affiliate in the sale but the relationship between the seller and the producer/exporter, i.e., whether the U.S. importer is an affiliate of the foreign producer. 36 In addition, the Korean producers argue that because the terms seller and sold are undefined in the statute, they are therefore ambiguous. Thus, they argue, Commerce developed the PQ Test to determine, based on the affiliate's activities, if it is indeed a seller. When a word is undefined in a statute the agency and the reviewing court should give the undefined term its ordinary meaning. See Perrin v. United States, 444 U.S. 37, 42 (1979) (A fundamental canon of statutory construction is that, unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning.). Black's Law Dictionary (6th ed. 1990) defines seller as one who has contracted to sell property . . . the party who transfers property in the contract of sale. As to sold, this court previously addressed the meaning of that term in the definition of the Exporter's Sales Price (now CEP). See NSK Ltd. v. United States, 115 F.3d 965, 973 (Fed. Cir. 1997). In that case we defined sold to require both a transfer of ownership to an unrelated party and consideration. Id. at 975 (emphasis added). We see no reason to question these definitions, and therefore hold that the seller referred to in the CEP definition is simply one who contracts to sell and sold refers to the transfer of ownership or title. Since there can be no real ambiguity about these terms, contrary to the assertions of the appellees, we are not required to do any analysis under the second part of the Chevron test. 37 The record in this appeal is not disputed; it was the U.S. affiliates of the Korean producers that contracted for sale with the unaffiliated U.S. purchasers. The title or ownership passed from the U.S. affiliate to the unaffiliated U.S. purchaser. There were no contracts between the Korean producers and the unaffiliated U.S. purchasers. Thus, U.S. affiliates were the sellers, as indicated by the plain language of the statute. Commerce does not require a cumbersome test, examining the activities of the affiliate, to determine whether or not the affiliate is a seller, when the answer to that question is plain from the face of the contracts governing the sales in question. If Congress had intended the EP versus CEP distinction to be made based on which party negotiated the terms of the deal or on the relative importance of each party's role, it would not have written the statute to distinguish between the two categories based on where the sale was made and which party made the sale.