Opinion ID: 549858
Heading Depth: 2
Heading Rank: 1

Heading: Netherlands Sales as Basis for FMV

Text: 47 The government argues, and the court agreed, that the ITA's selection of sales in the home market was proper because the ITA reasonably concluded from the evidence that the range of glue strengths sold in the Netherlands, were such or similar merchandise under definition (C) of section 1677(16) and that the total amount of these sales was sufficient to serve as the basis for FMV per statute and regulation. Appellant counters that the conclusion that all Netherlands sales are such or similar merchandise when compared with the glue strengths sold in the United States is unsupported, and that, in any event, only those sales of glue grades actually used by the ITA in calculating the dumping margin are sufficiently similar to be used to determine whether the amount of home market sales is sufficient to serve as the basis for FMV. We are unpersuaded, however, that the ITA's selection of home market sales is unsupported or that the ITA's interpretation of the statute governing the selection of the basis for FMV is unreasonable. 48 The antidumping statute sets up a mandatory hierarchy for determining which geographic market is to be used as the basis for establishing FMV. See 19 U.S.C. Sec. 1677b(a) (1988). The statute dictates that the FMV be established using the first market that qualifies, and expresses a preference for home market sales (country of manufacture). Id.; see also Washington Red Raspberry Comm'n v. U.S., 859 F.2d 898, 902 (Fed.Cir.1988); Ansaldo Componenti, S.p.A. v. United States, 628 F.Supp. 198, 204 (Ct.Int'l Trade 1986). One condition the antidumping statute places on the use of the preferred geographic market, the home market, is that sales of such or similar merchandise in this market not be so small in relation to the quantity sold for exportation to countries other than the United States as to form an inadequate basis for comparison. 19 U.S.C. Sec. 1677b(a)(1)(B) (1988); see also Motorcycle Batteries From Taiwan; Final Determination of Sales at Less Than Fair Value, 47 Fed.Reg. 9264, 9264, 9266 (1982). The implementing regulation for this statutory limitation, found at 19 C.F.R. Sec. 353.4(a) (1988), among other things, sets forth a figure of 5 percent as the lower threshold below which sales in the home market, when compared to sales to all other countries excluding the United States, will normally be considered inadequate to permit home market sales to serve as the basis for FMV. See, e.g., Elemental Sulphur from Canada; Results of Administrative Review of Antidumping Finding, 47 Fed.Reg. 14507, 14508 (1982). 49 Applying these statutory sections and regulations to the 1981 review period, the ITA concluded that home market sales were sufficient to serve as the basis for FMV. The ITA had found that sales of all home market glues regardless of grade were such or similar merchandise with respect to the glue grades sold in the United States under section 1677(16)(C). In accordance with the statute and regulation, the ITA then totalled the home market sales of all glue grades and compared that amount with the total glue sales to other countries, excluding the United States, and found home market sales to represent 6.07 percent of sales to third countries. Thus, the sales to the home market exceeded the 5 percent regulatory threshold and glue sales in the Netherlands were sufficient to serve as the basis for FMV. 50 U.H.F.C. first asserts that ITA's determination that home market sales are sufficient as a basis for FMV must fail because it rests on an erroneous subsidiary finding that all glues sold by Trommelen in the Netherlands, regardless of glue grade, are such or similar merchandise with respect to all sales to the United States, regardless of glue grade. Specifically, U.H.F.C. contests, as unsupported by substantial evidence, the ITA's finding that all glues, regardless of grade, may reasonably be compared with glues sold to the United States under section 1677(16)(C). The ITA found that the glues may reasonably be compared regardless of grade based on the evidence showing many common uses to which the glues may be put. The government points to a Trommelen brochure that states: 51 Our product is exported to more than 35 countries all over the world. It is essential in the production of the following articles. Abrasives--Matches--Composed Cork Products--Currency and Security Papers--Musical Instruments--Textiles, etc. 52 The brochure goes on to provide instructions on how to process glues of different grades to obtain glue of any desired strength. The brochure can reasonably be understood to demonstrate that any glue grade, either with or without processing, might be used in any of the mentioned applications depending on the glue strength needed for the particular application, i.e., that the glue grades have many common uses. 53 Thus, we conclude that the record contains substantial evidence that the glue grades have many common uses. We further agree with the government that substantial evidence supports the conclusion that home market glues regardless of grade may reasonably be compared based on their many common uses. And since the other criteria of section 1677(16)(C) are not in dispute, the conclusion necessarily follows that the ITA's finding that all home market glues are such or similar merchandise under section 1677(16)(C) is supported by substantial evidence. 54 U.H.F.C. next asserts that glue sales in the Netherlands did not meet the 5 percent threshold of 19 C.F.R. Sec. 353.4(a) because the ITA found only two grades, 300 and 400, to be sufficiently similar to serve as the basis for FMV, and that these grades amount to only 2.42 percent of the amount sold to third countries. We agree with the government that this argument confuses the difference between similar merchandise and most similar merchandise. The determination of the dumping margin requires calculation of an FMV and a USP, and subtracting the USP from the FMV. See 19 U.S.C. Sec. 1675(a)(2). The ITA found, and that finding is supported by substantial evidence, that all glues sold to the home market were similar merchandise for purposes of determining the market which serves as the basis for FMV. Once the home market is found to be a viable basis for FMV, the ITA has adopted a policy of matching the USP of merchandise with the FMV of the merchandise most similar to it in an effort to obtain the most accurate dumping margin using whatever market has been found to be the basis for FMV. 9 See, Smith-Corona Group, Consumer Prods. Div., SCM Corp. v. United States, 713 F.2d 1568, 1578, 1 Fed.Cir. (T) 130, 140-41 (Fed.Cir.1983) (antidumping law administered to achieve fair apples to apples comparison); see also, Certain Unfinished Mirrors from Portugal, 51 Fed.Reg. 43409 (1986) (two-part methodology of determining dumping margin followed); Shop Towels of Cotton From the People's Republic of China; Final Results of Administrative Review of Antidumping Duty Order, 50 Fed.Reg. 26020, 26021 (1985) (same). 55 It is well settled that an agency's interpretation of the statute it has been entrusted by Congress to administer is to be upheld unless it is unreasonable. Zenith Radio Corp. v. United States, 437 U.S. 443, 451, 98 S.Ct. 2441, 2445, 57 L.Ed.2d 337 (1978); Consumer Prods. Div., SCM Corp. v. Silver Reed America, Inc., 753 F.2d 1033, 1038-39, 3 Fed.Cir. (T) 83, 89-90 (Fed.Cir.1985); Smith-Corona, 713 F.2d at 1582, 1 Fed.Cir. (T) at 142-43. U.H.F.C. points to nothing in the statute or regulation that transforms the merchandise ITA considers most similar for purposes of computing the dumping margin under section 1675(a)(2) into the such or similar merchandise that must be considered to establish which market serves as the basis for FMV under section 1677b(a)(1). Indeed, the statute expressing a preference for home market as the basis for FMV requires that the sufficiency of sales in the home market be determined by reference to quantities of such or similar merchandise as defined in section 1677(16). As previously shown, the ITA's finding that all sales of glue in the Netherlands are such or similar merchandise is supported by substantial evidence. The statute and implementing regulations require no more. 56 We, therefore, uphold as a reasonable interpretation of the statute ITA's two-step policy of first determining which merchandise is such or similar in order to establish which market is to serve as the basis for FMV and then selecting which such or similar merchandise is the most similar in order to use the FMV for the latter in quantifying the dumping margin. 57 U.H.F.C. concludes that assuming the home market sales surpass the 5 percent threshold, that this 5 percent mark is not a hard and fast rule, but merely a rule of thumb that can be overcome and is overcome by the evidence it presented in this case. U.H.F.C. cites to prior determinations published by ITA as an indication that the ITA has itself noted many factors to be evaluated when judging whether the home market furnishes an adequate basis for FMV, and reasons that consideration of relevant factors mandates a finding that the home market was not a viable market. See, e.g., Certain Steel Wire Nails from the Republic of Korea, 45 Fed.Reg. 34941, 34942 (1980). U.H.F.C. points to evidence which shows that sales of identical glues in third countries are of grades identical to those sold to the United States; that the third country markets are larger, primary markets in contrast to the Netherlands which is a subsidiary market; and that sales to third countries were verified and made in quantities more comparable to those sales made to the United States. Coupled with the goal of the antidumping duty law to seek comparison of transactions in different markets on the most nearly comparable terms, U.H.F.C. argues that this evidence compel[s] the use of third-country sales as the basis for FMV. The short answer to this argument is that the goal of the antidumping duty laws is carried forth in the statutory and regulatory provisions, which express a preference for the home market as the basis for FMV and here have been properly interpreted and applied by the ITA to support the use of home market sales as the basis for FMV. Evidence of the structure of third-country markets, as compared with the home market (size of markets, quantities of goods sold, identity of goods sold with those sold to the United States) even if considered relevant by the ITA, are simply insufficient to overturn a supported finding by the ITA that the statutorily preferred market, the home market, establishes a viable basis for determining FMV. 58