Opinion ID: 767689
Heading Depth: 2
Heading Rank: 3

Heading: Application of the Fair-Value and Major-Input Provisions

Text: 48 Commerce deemed three affiliated Korean producers, POSCO, POCOS and PSI, a single entity for its dumping analysis and levied a single anti-dumping duty on the entire group of related companies (a process referred to as collapsing). See Final Results, 62 Fed. Reg. at 18,430. Because it considered the separate companies as one entity, rather than separate though affiliated companies, Commerce did not disregard the transaction prices among the group members and apply fair-value prices instead when determining the constructed value. 9 The so called fair-value provision is described in 19 U.S.C. § 1677b(f)(2): 49 A transaction directly or indirectly between affiliated persons may be disregarded if, in the case of any element of value required to be considered, the amount representing that element does not fairly reflect the amount usually reflected in sales of merchandise under consideration in the market under consideration. If a transaction is disregarded under the preceding sentence and no other transactions are available for consideration, the determination of the amount shall be based on the information available as to what the amount would have been if the transaction had occurred between persons who are not affiliated. 50 19 U.S.C. § 1677b(f)(2) (emphasis added). 51 Similarly, because the POSCO companies were collapsed into a single entity, Commerce did not apply the major-input provision of 19 U.S.C. § 1677b(f)(3): 52 If, in the case of a transaction between affiliated persons involving the production by one of such persons of a major input to the merchandise, the administering authority has reasonable grounds to believe or suspect that an amount represented as the value of such input is less than the cost of production of such input, then the administering authority may determine the value of the major input on the basis of information available regarding such cost of production, if such cost is greater than the amount that would be determined for such input under paragraph (2). 53 19 U.S.C. § 1677b(f)(3) (emphasis added). 54 While the domestic producers contested the collapsing of POSCO and POCOS below, they do not do so here. Thus, the only question before this court is whether, once collapsed, it was permissible for Commerce, in the exercise of its discretion, not to apply the provisions of 19 U.S.C. §§ 1677b(f)(2) & (3) to underlying transactions between those companies. In the earlier administrative review of this anti-dumping action and in other similar actions, Commerce applied the fair-value and major-input provisions despite collapsing several entities into one. 10 In this second review, however, Commerce concluded that application of those provisions was unwarranted, if not unlawful, because a decision to treat affiliated parties as a single entity necessitates that transactions among the parties also be valued based on the group as a whole. Final Results, 62 Fed. Reg. at 18,430. 55 Affiliated persons are defined in the statute as those directly or indirectly owning five percent or more of the voting shares of an organization or two or more persons controlled by or controlling a common person. See 19 U.S.C. §§ 1677(33)(E) & (F) (1994). The domestic producers argue that collapsing for purposes of levying a single anti-dumping duty does not erase corporate form; thus POSCO and POCOS are affiliated persons under the statute and Commerce should still have applied the fair-value and major-input provisions. The Appellees argue, and the Court of International Trade upheld Commerce's determination, that once they have been collapsed, POSCO, POCOS and PSI need no longer be treated as affiliated companies, but rather should be treated as one entity for all anti-dumping determination purposes. We may or may not agree that to do so is necessary or wise, but it cannot be fairly said to be an abuse of discretion. 56 When analyzing transfers between divisions of the same company Commerce need not and does not apply the fair-value or major-input provisions. See Certain Forged Steel Crankshafts from the United Kingdom, 61 Fed. Reg. 54,613, 54,614 (Oct. 21, 1996). Thus, it is not unreasonable for Commerce to decide not to apply those provisions to affiliates that are properly treated as one company for the balance of the anti-dumping analysis. Both provisions only apply to transactions between . . . persons; once Commerce has decided to treat the companies as one person for purposes of the anti-dumping analysis, it is not statutorily required to apply the provisions. 57 Indeed, the Domestic Producers' argument that the statute requires the application of the provisions even to affiliates that were not treated as one entity is contrary to the plain language of the statute, which merely provides that Commerce may determine the values in a manner other than the use of the transfer price. Thus, the statute leaves possible application of the fair-value and major-input provisions to the discretion the agency, such that Commerce could decline to apply those provisions even if the POSCO producers were considered separate affiliates rather than one entity. We therefore affirm the decision of the Court of International Trade insofar as it upholds Commerce's decision not to apply the fair-value and major-input provisions.