Court Opinion

ID: 4443869
Source: CourtListenerOpinion
Date Created: 2019-10-03 15:01:43.598987+00
Date Added: 2024-06-11T14:27:56.796636
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

      MID CONTINENT STEEL & WIRE, INC.,
               Plaintiff-Appellant

                           v.

                  UNITED STATES,
                  Defendant-Appellee

 PT ENTERPRISE INC., PRO-TEAM COIL NAIL
ENTERPRISE INC., UNICATCH INDUSTRIAL CO.,
LTD., WTA INTERNTIONAL CO., LTD., ZON MON
      CO., LTD., HOR LIANG INDUSTRIAL
CORPORATION, PRESIDENT INDUSTRIAL INC.,
   LIANG CHYUAN INDUSTRIAL CO., LTD.,
            Defendants-Cross-Appellants
              ______________________

                 2018-1229, 2018-1251
                ______________________

   Appeals from the United States Court of International
Trade in Nos. 1:15-cv-00213-CRK, 1:15-cv-00220-CRK,
Judge Claire R. Kelly.
                 ______________________

                Decided: October 3, 2019
                ______________________

    ADAM H. GORDON, The Bristol Group PLLC, Washing-
ton, DC, argued for plaintiff-appellant. Also represented
by PING GONG.
2             MID CONTINENT STEEL & WIRE v. UNITED STATES

    MIKKI COTTET, Appellate Staff, Civil Division, United
States Department of Justice, Washington, DC, argued for
defendant-appellee.    Also represented by JEANNE
DAVIDSON, JOSEPH H. HUNT, PATRICIA M. MCCARTHY.

    ANDREW THOMAS SCHUTZ, Grunfeld, Desiderio, Le-
bowitz, Silverman & Klestadt LLP, Washington, DC, ar-
gued for defendants-cross-appellants. Also argued by NED
H. MARSHAK, New York, NY. Also represented by MAX
FRED SCHUTZMAN, New York, NY; KAVITA MOHAN, Wash-
ington, DC.
                ______________________

Before NEWMAN, O’MALLEY, and TARANTO, Circuit Judges.
TARANTO, Circuit Judge.
    The United States Department of Commerce found
that certain foreign producers and exporters were dumping
certain products into the United States market, and it im-
posed a small antidumping duty on their imports. A do-
mestic company argues that Commerce should have
imposed a higher duty. The foreign producers and export-
ers argue that Commerce made methodological errors, the
correction of which would reduce any dumping margin to a
de minimis level, so that no duty would be imposed. We
reject the domestic firm’s challenge. We partly reject the
foreign firms’ challenge, and we remand to secure further
explanation from Commerce about one issue.
                            I
    Based on a petition from appellant Mid Continent Steel
& Wire, Inc., Commerce initiated an antidumping duty in-
vestigation into steel nail products from Taiwan and cer-
tain other places. Certain Steel Nails from India, the
Republic of Korea, Malaysia, the Sultanate of Oman, Tai-
wan, the Republic of Turkey, and the Socialist Republic of
Vietnam, 79 Fed. Reg. 36,019 (Dep’t of Commerce June 25,
2014). Commerce separated the Taiwanese investigation
MID CONTINENT STEEL & WIRE v. UNITED STATES                 3

into its own proceeding and named Taiwanese exporter PT
Enterprise Inc. and its affiliated nail producer Pro-Team
Coil Nail Enterprise Inc. as mandatory respondents. See
Certain Steel Nails from Taiwan: Negative Preliminary De-
termination of Sales at Less Than Fair Value and Postpone-
ment of Final Determination, 79 Fed. Reg. 78,053, 78,054
(Dep’t of Commerce Dec. 29, 2014) (Preliminary Determi-
nation). Those firms are the cross-appellants before us,
along with other Taiwanese producers of nails. We hereaf-
ter use “PT” to refer sometimes to the cross-appellants col-
lectively, sometimes just to PT Enterprise and Pro-Team.
      The statute directs Commerce to determine whether
the merchandise at issue is being sold or is likely to be sold
in the United States “at less than its fair value,” 19 U.S.C.
§ 1673, which the statute identifies as “dumping,” id.,
§ 1677(34) (defining “dumping” to mean “the sale or likely
sale of goods at less than fair value”). To make the required
determination, Commerce must assess the difference be-
tween the “normal value” of the goods at issue (reflecting
the home-market value) and the “export price or con-
structed export price” of those goods (reflecting the price at
which they are sold into the United States). See id.,
§ 1677b(a) (stating that the determination of the existence
of sales “at less than fair value” is to be based on a compar-
ison of “the export price or constructed export price and
normal value”); id., § 1677a (addressing “export price” and
“constructed export price”); id., § 1677b (addressing “nor-
mal value”). That difference is the “dumping margin.” Id.,
§ 1677(35)(A) (defining “dumping margin”). If Commerce
finds the specified less-than-fair-value sales, and the Inter-
national Trade Commission makes certain findings about
effects on domestic industry, “there shall be imposed upon
such merchandise an antidumping duty, in addition to any
other duty imposed, in an amount equal to the amount by
which the normal value exceeds the export price (or the
constructed export price) for the merchandise,” id., § 1673,
i.e., in the amount of the dumping margin.
4              MID CONTINENT STEEL & WIRE v. UNITED STATES

    Addressing the fact that a foreign producer or exporter
often makes many sales, the statute provides certain rules
and authorizations that govern Commerce’s required de-
terminations. Id., § 1677f-1. It defines “weighted average
dumping margin” to mean “the percentage determined by
dividing the aggregate dumping margins determined for a
specific exporter or producer by the aggregate export prices
and constructed export prices of such exporter or pro-
ducer.” Id., § 1677(35)(B). The statute provides, as a gen-
eral rule, that Commerce must “determine whether the
subject merchandise is being sold in the United States at
less than fair value” by “comparing the weighted average
of the normal values to the weighted average of the export
prices (and constructed export prices) for comparable mer-
chandise” or by making the value/price comparison for each
individual transaction. Id., § 1677f-1(d)(1)(A)(i), (ii). But
the statute also directs Commerce to disregard weighted
average dumping margins if they are de minimis, id.,
§ 1673b(b)(3); and of relevance here, it provides authority
to Commerce to compare average values (on the foreign
side) to individual export prices or constructed export
prices (on the U.S. side) in specified circumstances involv-
ing disparities among the U.S. side prices for the foreign
exporter or producer. Id., § 1677f-1(d)(1)(B).
    Certain aspects of the method adopted by Commerce
for calculating the dumping margin in the present matter
are unchallenged. On the U.S. side of the required compar-
ison, Commerce used the export price, rather than a con-
structed export price. On the foreign side, Commerce
determined the Taiwanese normal value by determining a
“constructed value,” which required determinations about,
among other things, amounts PT paid for various inputs.
19 U.S.C. § 1677b(a)(4), (e).
    Although those basic choices are not in dispute, there
is a dispute about how Commerce carried out its “con-
structed value” calculation. Among the inputs PT pur-
chased were services from many “toll” manufacturers (or
MID CONTINENT STEEL & WIRE v. UNITED STATES                5

“tollers”)—firms that provide limited manufacturing ser-
vices using materials or other contributions supplied or
owned by its customers. Mid Continent has contended that
certain of PT’s tollers should be excluded from this input
calculation because those tollers were affiliated with PT.
The evident concern with a “transaction between affiliated
entities” is that it might not “adequately represent the true
amount,” SKF USA Inc. v. United States, 630 F.3d 1365,
1372 (Fed. Cir. 2011)—here, that PT’s payments for tolling
to an affiliate might be artificially low, with the conse-
quence that the constructed value might be too low, thus
shrinking the gap between the constructed value and the
U.S. price and, in turn, reducing the dumping margin and
antidumping duty.

    In its Preliminary Determination, Commerce rejected
Mid Continent’s affiliation claim as to a number of PT’s tol-
lers and found no dumping. Preliminary Determination,
79 Fed. Reg. at 78,054–78,055; Decision Memorandum for
the Preliminary Determination in the Antidumping Duty
Investigation of Certain Steel Nails from Taiwan, 79
ITADOC 78053 (issued Dec. 17, 2014) (Preliminary Deci-
sion Mem.). Commerce then conducted its full investiga-
tion and analysis, including verification of key factual
submissions.
    In its Final Determination, Commerce continued to
find non-affiliation of certain PT tollers, contrary to Mid
Continent’s contentions. See Certain Steel Nails from Tai-
wan: Final Determination of Sales at Less Than Fair Value,
80 Fed. Reg. 28,959, 28,960–62 (Dep’t of Commerce May
20, 2015) (Final Determination); Issues and Decision Mem-
orandum for the Affirmative Final Determination in the
Less than Fair Value Investigation of Certain Nails from
Taiwan, 80 ITADOC 28959, at 47–53 (issued May 13, 2015)
(Issues and Decision Mem.). But, based on some adjust-
ments of earlier information, Commerce now found a posi-
tive dumping margin above (though not far above) the level
6              MID CONTINENT STEEL & WIRE v. UNITED STATES

that Commerce deems de minimis, and it imposed a duty
in that amount. See Final Determination, 80 Fed. Reg. at
28,961. In reaching that result, Commerce found so-called
“differential pricing” by PT among its export prices, and it
rejected certain of PT’s challenges to the method for ana-
lyzing differential pricing that Commerce had set out in its
preliminary decision memorandum. Issues and Decision
Mem. at 15–31.
    Mid Continent filed an action in the Court of Interna-
tional Trade (Trade Court), seeking a higher duty by chal-
lenging Commerce’s finding of no affiliation between PT
and certain of its tollers. PT also sued in the Trade Court,
seeking a lower or zero duty by challenging certain aspects
of Commerce’s calculation methodology. The Trade Court
sustained the relevant Commerce conclusions and re-
manded on an unrelated issue. Mid Continent Steel &
Wire, Inc. v. United States, 219 F. Supp. 3d 1326 (Ct. Int’l
Trade 2017). The Trade Court subsequently entered judg-
ment sustaining Commerce’s Final Determination after
the remand was complete. J.A. 72–73.
    Both Mid Continent and PT have timely appealed to
this court, and we have jurisdiction pursuant to 28 U.S.C.
§§ 1295(a)(5) and 2645(c). Mid Continent appeals Com-
merce’s determination of non-affiliation between PT and
certain of its tollers. PT cross-appeals three aspects of
Commerce’s method of calculating the dumping margin.
    We review Commerce’s decision using the same stand-
ard of review applied by the Trade Court, while carefully
considering that court’s analysis. Diamond Sawblades
Mfrs. Coal. v. United States, 866 F.3d 1304, 1310 (Fed. Cir.
2017). We decide legal issues de novo and uphold factual
determinations if they are supported by substantial evi-
dence. 19 U.S.C. § 1516a(b)(1)(B)(i); see Diamond Saw-
blades, 866 F.3d at 1310; Dupont Teijin Films USA, LP v.
United States, 407 F.3d 1211, 1215 (Fed. Cir. 2005). “A
finding is supported by substantial evidence if a reasonable
MID CONTINENT STEEL & WIRE v. UNITED STATES                  7

mind might accept the evidence to support the finding.”
Nobel Biocare Services AG v. Instradent USA, Inc., 903
F.3d 1365, 1374 (Fed. Cir. 2018); see Consol. Edison Co. v.
NLRB, 305 U.S. 197, 229 (1938). In carrying out its statu-
torily assigned tasks, Commerce has discretion to make
reasonable choices within statutory constraints. See, e.g.,
Nucor Corp. v. United States, 927 F.3d 1243, 1248–49 (Fed.
Cir. 2019); Apex Frozen Foods Private Ltd. v. United States,
862 F.3d 1322, 1329 (Fed. Cir. 2017); see also Utility Air
Regulatory Group v. EPA, 573 U.S. 302, 321 (2014); City of
Arlington v. FCC, 569 U.S. 290, 297 (2013). But Commerce
must provide an explanation that is adequate to enable the
court to determine whether the choices are in fact reason-
able, including as to calculation methodologies. See CS
Wind Vietnam Co., Ltd. v. United States, 832 F.3d 1367,
1376–77 (Fed. Cir. 2016).
    We address Mid-Continent’s challenge and PT’s chal-
lenges in turn. We reject Mid Continent’s challenge. We
reject two of PT’s challenges, but we vacate the decision of
the Trade Court on the third challenge and remand for that
court to remand to Commerce for further explanation.
                              II
    The statute directs Commerce, when determining a
constructed value of the merchandise at issue, to examine
certain transactions to gauge the costs of various inputs.
19 U.S.C. § 1677b(e). The statute provides, however, that
“[a] transaction directly or indirectly between affiliated
persons may be disregarded” in certain circumstances—
specifically, “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.” Id., § 1677b(f)(2). Mid Continent’s chal-
lenge focuses on the threshold question of what it means
for a transaction to be between “affiliated persons.”
    Congress has provided a definition:
8              MID CONTINENT STEEL & WIRE v. UNITED STATES

    The following persons shall be considered to be “af-
    filiated” or “affiliated persons”:
        (A) Members of a family, including brothers
        and sisters (whether by the whole or half
        blood), spouse, ancestors, and lineal de-
        scendants.
        (B) Any officer or director of an organiza-
        tion and such organization.
        (C) Partners.
        (D) Employer and employee.
        (E) Any person directly or indirectly own-
        ing, controlling, or holding with power to
        vote, 5 percent or more of the outstanding
        voting stock or shares of any organization
        and such organization.
        (F) Two or more persons directly or indi-
        rectly controlling, controlled by, or under
        common control with, any person.
        (G) Any person who controls any other per-
        son and such other person.
    For purposes of this paragraph, a person shall be
    considered to control another person if the person is
    legally or operationally in a position to exercise re-
    straint or direction over the other person.
Id., § 1677(33) (emphasis added to the “control” portions
that are at issue here). Commerce, for its part, has adopted
an implementing rule for antidumping duty investigations:
    “Affiliated persons” and “affiliated parties” have
    the same meaning as in [§ 1677(33)]. In determin-
    ing whether control over another person exists,
    within the meaning of [§ 1677(33)], the Secretary
    will consider the following factors, among others:
    Corporate or family groupings; franchise or joint
MID CONTINENT STEEL & WIRE v. UNITED STATES                 9

    venture agreements; debt financing; and close sup-
    plier relationships. The Secretary will not find that
    control exists on the basis of these factors unless
    the relationship has the potential to impact deci-
    sions concerning the production, pricing, or cost of
    the subject merchandise or foreign like product.
    The Secretary will consider the temporal aspect of
    a relationship in determining whether control ex-
    ists; normally, temporary circumstances will not
    suffice as evidence of control.
19 C.F.R. § 351.102(b)(3) (emphasis added).
     In the present matter, Mid-Continent contends that
Commerce mistakenly rejected its argument that PT was
affiliated with certain tolling companies. We reject the con-
tention.
    Commerce made detailed findings to support its overall
finding that PT lacked the ability to exercise control over
those tollers—which, therefore, were not affiliated with PT.
Commerce prominently found that there are many compa-
nies other than PT to whom the relevant tollers “could pro-
vide their services” if exploited by PT. Issues & Decision
Mem. at 51, 52; see Mid Continent, 219 F. Supp. 3d at 1334
n.11. Commerce also found that many tollers sold to others
as well as PT and had existed before selling to PT, and that
the tollers that had all or most of their sales to PT were
profitable, indicating lack of exploitation. Issues & Deci-
sion Mem. at 51–52; Mid Continent, 219 F. Supp. 3d at
1334 & n.12. Commerce further found that PT and the tol-
lers had no stock ownership in each other, no shared offic-
ers or managers, and no other relationships, such as
common familial ownership, that might suggest ability to
control; no toller had a long-term contract with PT or a
debt-financing agreement with PT. Issues & Decision
Mem. at 50–52; Mid Continent, 219 F. Supp. 3d at 1334.
    We see no lack of substantial evidence to support those
findings. And those findings permit a reasonable mind to
10             MID CONTINENT STEEL & WIRE v. UNITED STATES

find, and so are sufficient to support the overall finding,
that PT, while working closely with the tollers at issue, did
not have the ability to control them. To the extent that Mid
Continent argues that the evidence could support a con-
trary finding, it misidentifies the relevant question, which
is only whether the evidence supports the finding that
Commerce made. “[T]he possibility of drawing two incon-
sistent conclusions from the evidence does not prevent an
administrative agency’s finding from being supported by
substantial evidence.”      Consolo v. Federal Maritime
Comm’n, 383 U.S. 607, 620 (1966); see American Textile
Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490, 523 (1981); Nobel
Biocare Services, 903 F.3d at 1375.
     Mid Continent suggests that Commerce used the
wrong standard in answering the affiliation question. Spe-
cifically, it suggests that Commerce did not determine
whether PT had the ability to control the tollers at issue,
but only whether PT had in fact exercised control. We dis-
agree. That suggestion is contrary to what Commerce did:
notably, it is contrary to Commerce’s reliance on the num-
ber of other buyers available to the tollers at issue, a fact
that directly bears on ability to control. The suggestion
also is contrary to what Commerce said it was deciding—
namely, whether PT “was able to exert restraint or direc-
tion over” the tollers at issue, whether the tollers became
“‘reliant upon’” PT, whether PT was “‘in a position to exer-
cise restraint or direction,’” whether PT had “the ability to
control” the tollers, and whether there was “dependence on”
PT by the tollers. Issues & Decision Mem. at 50–52 (em-
phases added). Because evidence of actual control is highly
relevant to whether the ability to control exists, Com-
merce’s consideration of such evidence does not show that
Commerce failed to apply an ability-to-control standard.
     Finally, we see no merit in Mid Continent’s suggestion
that Commerce made an affiliation determination for the
tollers only on a collective basis and failed to make an in-
dividual determination for each toller. As Mid Continent
MID CONTINENT STEEL & WIRE v. UNITED STATES              11

itself has stated, Commerce’s decisions themselves provide
no support for such a conclusion. A failure to analyze each
element of a group cannot be inferred from the fact that the
ultimate summary employs generalizations to recount
shared facts where appropriate. And we see no basis for
finding a concession to the contrary in a single remark by
government counsel before the Trade Court, a remark eas-
ily understood as simply indicating that Commerce consid-
ered all the tollers, not just some.
    We therefore affirm Commerce’s determination that
PT and the toll manufacturers at issue in the appeal are
not affiliated.
                            III
    In its cross-appeal, PT renews challenges that it
pressed before Commerce and the Trade Court to the meth-
ods Commerce used in calculating the dumping margin.
The challenges now at issue focus on Commerce’s treat-
ment of the U.S. side of the comparison required for calcu-
lating the dumping margin—that is, on Commerce’s
treatment of export prices. Specifically, PT challenges
three aspects of how Commerce implemented its statutory
authority to address situations in which there are certain
disparities among the export prices charged for the mer-
chandise at issue.
                             A
    Congress recognized that the comparison required by
the statute typically requires consideration of multiple
transactions, necessitating choices about treating them in
the aggregate, one at a time, or in some other way. See 19
U.S.C. § 1677f-1. Congress provided that, “[i]n general,”
Commerce “shall” proceed either “(i) by comparing the
weighted average of the normal values to the weighted av-
erage of the export prices . . . for comparable merchan-
dise”—the “average-to-average” (A-to-A) method—or “(ii)
by comparing the normal values of individual transactions
12              MID CONTINENT STEEL & WIRE v. UNITED STATES

to the export prices . . . of individual transactions for com-
parable merchandise”—the “transaction-to-transaction”
(T-to-T) method. Id., § 1677f-1(d)(1)(A). But Congress also
provided an “exception”:
     [Commerce] may determine whether the subject
     merchandise is being sold in the United States at
     less than fair value by comparing the weighted av-
     erage of the normal values to the export prices (or
     constructed export prices) of individual transac-
     tions for comparable merchandise, if—
     (i) there is a pattern of export prices (or constructed
     export prices) for comparable merchandise that dif-
     fer significantly among purchasers, regions, or pe-
     riods of time, and
     (ii) [Commerce] explains why such differences can-
     not be taken into account using a method described
     in paragraph (1)(A)(i) or (ii)[, i.e., the A-to-A or T-
     to-T methods].
Id., § 1677f-1(d)(1)(B). Thus, Commerce “may” use a mixed
method—the “average-to-transaction” (A-to-T) method—if
the two conditions are met. See Apex, 862 F.3d at 1326–27,
1334.
     A regulation adopted by Commerce gives the identified
names to the three methods. 19 C.F.R. § 351.414(b). It also
states that Commerce will use the A-to-A method “unless
[it] determines another method is appropriate in a partic-
ular case,” id., § 351.414(c)(1), and that it will use the T-to-
T method “only in unusual situations, such as when there
are very few sales of subject merchandise and the merchan-
dise sold in each market is identical or very similar or is
custom-made,” id., § 351.414(c)(2). The regulation does not
specify details for implementing the A-to-T method except
in a respect not at issue here (concerning use of “the con-
temporaneous month” for normal-value averaging). Id.,
§ 351.414(e), (f).
MID CONTINENT STEEL & WIRE v. UNITED STATES                 13

                              B
    In the present matter, Commerce adopted the A-to-T
method by determining that the statutory conditions for its
use were met. Specifically, it determined that there was a
“pattern of export prices” for “comparable merchandise
that differ[ed] significantly among purchasers, regions, or
periods of time”—i.e., that there was so-called “differential
pricing”—and that those differences could not be “taken
into account” by using the other two methods. See Issues
and Decision Mem. at 19–20; J.A. 2179. In so finding, Com-
merce relied on a method using the “Cohen’s d test” bor-
rowed from statistics literature, which it had only recently
adopted. See Issues & Decision Mem. at 25 & n.111 (citing
Issues and Decision Memorandum for the Final Determina-
tion of the Antidumping Duty Investigation of Xanthan
Gum from the People’s Republic of China, 78 ITADOC
33351 (June 4, 2013), and that ruling’s reliance on Robert
Coe, It’s the Effect Size, Stupid: What Effect Size Is and
Why It Is Important, Paper presented at the Annual Con-
ference of the British Educ. Research Ass’n (Sept. 2002),
www.leeds.ac.uk/educol/documents/00002182.htm)). Com-
merce explained aspects of its overall method in the Pre-
liminary Decision Mem. at 10–12, and it elaborated on
certain details in the Issues & Decision Mem. at 15–31. See
Mid Continent, 219 F. Supp. 3d at 1337–44.
     To determine whether the required “pattern” existed,
Commerce applied what it identified as “a generally recog-
nized” statistical test called the “Cohen’s d test” for testing
differences among subsets within an overall set of data—
here, for testing subsets of PT’s export prices defined by
purchasers, regions, or periods of time (each a “test group”)
by comparing them to the export prices outside the test
group (the “comparison group”) to see if they differed sig-
nificantly. See Preliminary Decision Mem. at 11. It calcu-
lated a ratio called a “Cohen’s d coefficient” for each
comparison. The numerator of that ratio is the difference
between the mean of the test group’s prices and the mean
14             MID CONTINENT STEEL & WIRE v. UNITED STATES

of the comparison group’s prices; the denominator is a
measure of dispersion when pooling the test and compari-
son groups—here, Commerce used the “pooled” variance
(the square of the standard deviation). If the mean-to-
mean difference in the numerator was at least four fifths of
the pooled figure, i.e., the Cohen’s d coefficient was 0.8 or
greater, Commerce deemed the test group’s pricing signifi-
cantly different from the comparison group’s pricing for
purposes of meeting the “pattern” condition. Id. at 11. Of
significance to the issues presented on appeal, in arriving
at the pooled dispersion figure used as the denominator of
the ratio forming the d coefficient, Commerce used a “sim-
ple average” of the variance of the test group and the vari-
ance of the comparison group, disregarding the
comparative sizes of the two groups; it did not weight the
variances being pooled by the volume (or value or other
characteristic) of goods sold within each group. See Issues
& Decision Mem. at 28–29; Mid Continent, 219 F. Supp. 3d
at 1338–39.
    Based on its calculation of Cohen’s d coefficients for
sales by customer, region, or time segment, Commerce pro-
ceeded to decide whether it would use an A-to-T compari-
son rather than an A-to-A comparison, for some or all of the
PT’s sales, as it “may” do under the statute if the specified
pattern is present and an A-to-A (or T-to-T) comparison
cannot account for that pattern. To make this decision,
Commerce applied a “ratio test”—examining the percent of
sales (by value) that have coefficients of at least 0.8—com-
bined with a “meaningful differences” test.
    Thus, Commerce said that, in cases where the percent
is less than 33, it would use the A-to-A method in toto,
whereas in cases where the percent is above 66, Commerce
would use the A-to-T method in toto. But if, as in this mat-
ter, the percent is from 33 to 66, Commerce said, its ap-
proach was the following: (a) use the A-to-T method to
calculate a dumping margin for the sales having coeffi-
cients of at least 0.8, but do so by zeroing out the non-
MID CONTINENT STEEL & WIRE v. UNITED STATES                15

dumped sales so that they do not offset dumping margins
from the dumped sales; (b) use the A-to-A method to calcu-
late a dumping margin for the other sales, with no zeroing
of non-dumped sales; and (c) arrive at an overall weighted-
average dumping margin for all of the respondent’s sales
by combining the two results in a way that zeroes out neg-
ative dumping margins among the A-to-A group so that
they do not offset positive margins among the A-to-T group.
See Issues & Decision Mem. at 26. 1 Finally, Commerce
stated that it uses the resulting aggregate figure if there is
a meaningful difference between doing so and simply using
the A-to-A method, which, Commerce said, includes
(though is not limited to) a situation in which the former
moves the dumping margin above the de minimis thresh-
old, as it did here. Preliminary Decision Mem. at 12. See
generally Mid-Continent, 219 F. Supp. 3d at 1343–44.
                              C
    We now address PT’s three challenges.
                              1
    PT first challenges an aspect of Commerce’s method at
the aggregation stage—specifically, its zeroing of negative

    1    The parties have not provided us with or pointed to
a clear statement of the specific arithmetic steps that Com-
merce used for the combination. Such a clear statement is
commonly necessary to enable us to understand, and hence
to review, an action taken by Commerce; when there is no
such clear statement, a remand for further explanation be-
comes more likely. In this matter, however, it is undis-
puted that Commerce used some kind of zeroing of the
negative-margin sales in the group to which it applied an
A-to-A method when taking the next step of arriving at an
overall dumping margin. That is enough for review of the
limited (statutory) challenge presented to us concerning
this stage of Commerce’s calculation.
16             MID CONTINENT STEEL & WIRE v. UNITED STATES

dumping margins for sales in the A-to-A group when arriv-
ing at the overall weighted-average dumping margin. PT
states that the zeroing at that stage of the calculation ap-
plies, within the broad class of merchandise at issue, to at
least some control-number subcategories (CONNUMs)
that contain no sales having a d coefficient of at least 0.8.
PT objects to such zeroing.
    Commerce justified such zeroing on the ground that it
served to avoid “reduc[ing] or completely negat[ing] the re-
sults of the A-to-T method” and “continu[ing] to mask
dumping.” Issues & Decision Mem. at 26–27. The Trade
Court upheld that choice as reasonable. Mid Continent,
219 F. Supp. 3d at 1344 (“Commerce’s decision to effectuate
the statute by applying the mixed methodology, without
offsets during the aggregation stage, to both preserve the
masked dumping uncovered with A-to-T and achieve a pro-
portionate remedy is reasonable.”). In this court, PT ex-
pressly disclaims any challenge to that rationale as failing
“a reasonable or arbitrary/capricious standard.” PT Br. at
30. PT’s sole contention is that this zeroing is “contrary to
the statutory language.” Id. We reject that contention.
    The statute prescribes preconditions for Commerce to
use an A-to-T method in making the less-than-fair-value
determination, but it does not specify the implementation
choice at issue here. It says that, if the preconditions are
met, Commerce “may determine whether the subject mer-
chandise is being sold in the United States at less than fair
value by comparing the weighted average of the normal
values to the export prices (or constructed export prices) of
individual transactions for comparable merchandise.” 19
U.S.C. § 1677f-1(d)(1)(B). That language does not tell Com-
merce that, if it finds the preconditions present, it must use
an A-to-T comparison for all of the exporter’s/producer’s
transactions or, if not, how it may relate the results for
transactions to which it applies the A-to-T method to trans-
actions to which it applies another (here, A-to-A) method.
MID CONTINENT STEEL & WIRE v. UNITED STATES                  17

The statute leaves a choice for Commerce to make reason-
ably.
     Our precedents support this conclusion. In Apex, we
concluded that § 1677f-1(d)(1)(B) “defines the precondi-
tions for applying the A-T methodology, but it does not
limit in any way the application of the A-T methodology,
should the preconditions be met.” 862 F.3d at 1334. And
we upheld application of the A-to-T method even to sales
outside the pattern establishing the statutory “pattern”
precondition. Id. at 1334–36. In an earlier case, we ex-
plained that “[o]ur case law has repeatedly examined the
antidumping statute and found it to be ‘silent or ambigu-
ous’ as to zeroing methodology,” and we held that § 1677f-
1(d)(1)(B) does not require zeroing. U.S. Steel Corp. v.
United States, 621 F.3d 1351, 1361 (Fed. Cir. 2010). We
see no better basis for a statutory answer to the specific
question presented here. We therefore reject the only chal-
lenge PT makes to Commerce’s use of zeroing in the iden-
tified part of its calculation.
                               2
     PT next challenges Commerce’s reliance on a d ratio of
at least 0.8 as a rigid measure of significance of the differ-
ence measured by the Cohen’s d test. PT argues that Com-
merce must instead use a “flexible” threshold to deem
insignificant certain above-0.8 differences that reflect price
differences that are small in dollar value—such as, PT
says, one difference in this matter that is less than half a
penny per kilogram (the unit for pricing the nails at issue).
This is a challenge to the reasonableness of Commerce’s
choice of one part of the overall analysis of differential pric-
ing, explained by Commerce in the Issues & Decision Mem.
at 24–26.
     The Trade Court described Commerce’s rationale for
adhering to the 0.8 line and explained why that rationale
is reasonable. Mid Continent, 219 F. Supp. 3d at 1337–40.
In particular, Commerce reasoned that even a small
18             MID CONTINENT STEEL & WIRE v. UNITED STATES

absolute difference in the means of the two groups can be
significant (for the present statutory purpose) if there is a
small enough dispersion of prices within the overall pool as
measured by a proper pooled variance or standard devia-
tion; the 0.8 standard is “widely adopted” as part of a “com-
monly used measure” of the difference relative to such
overall price dispersion; and it is reasonable to adopt that
measure where there is no better, objective measure of ef-
fect size. Issues & Decision Mem. at 25–26 (internal quo-
tation marks omitted). We agree with the Trade Court that
this rationale adequately supports Commerce’s exercise of
the wide discretion left to it under 19 U.S.C. § 1677f-
1(d)(1)(B). We therefore reject PT’s challenge.
                             3
    Finally, PT challenges Commerce’s use of a simple av-
erage, rather than a weighted average, to calculate the
pooled variance used in the Cohen’s d calculation. On this
issue, we agree with PT that Commerce’s explanation is
wanting. And we remand for further explanation.
     Commerce adopted the Cohen’s d test as a “generally
recognized” test, Preliminary Decision Mem. at 11, and it
later cited the 2002 Coe article as a source for that test,
Issues & Decision Mem. at 25 n.111. In this court, the gov-
ernment reiterates, citing Coe, that “the Cohen’s d coeffi-
cient is a prominent and widely-accepted statistical
measure that has been developed to evaluate practical sig-
nificance.” U.S. Br. at 55–56 (footnote at end of sentence
relying on Coe). Before Commerce, PT relied directly on
Coe, which clearly shows weighted averaging in calculating
the pooled standard deviation where test and comparison
groups are different in quantity and non-overlapping. J.A.
2097 (giving formula taken from Coe, with variable names
different); Coe, supra (question 7 and equation 4). There
has been no dispute in this matter that the argument about
using simple averages or weighted averages is the same
MID CONTINENT STEEL & WIRE v. UNITED STATES               19

whether the pooled figure is a pooled standard deviation or
a pooled variance.
     Yet Commerce rejected use of the weighted average.
Issues and Decision Mem. at 28–29. It said that the statute
does not answer the question, id. at 28, and PT does not
dispute that premise. It then stated that simple averaging
was “the best way to accomplish” the goal of having a “rea-
sonable approach that affords predictability.” Id. After
making the essentially definitional point that with simple
averaging “the respondent’s pricing practice to each group
will be weighted equally,” Commerce added that with sim-
ple averaging “the magnitude of the sales to one group will
not skew the outcome,” without elaborating on what
“skew[ing]” meant. Id. at 28–29. Commerce rejected PT’s
argument that simple averaging “distorts the results of the
Cohen’s d test” as resting on an assumption that test
groups are smaller and have lower variances than compar-
ison groups. Id. at 29. Finally, Commerce reasoned that
“by weighting the variances of the test and comparison
groups by the number of observations, this in itself would
open up the analysis to distortion since how the U.S. sales
data is reported, i.e., how each observation is determined,
is completely under the control of the respondent.” Id.
     Although the Trade Court upheld this explanation,
Mid Continent, 219 F. Supp. 3d at 1340–43, we do not find
the explanation sufficient, for several reasons. First, Com-
merce said that it was simply using a widely accepted sta-
tistical test; yet it did not acknowledge that the only cited
literature source for the relevant aspect of the test itself
calls for the use of weighted averages. Second, Commerce’s
language of “skew[ing]” is a mere conclusion where, as
here, it is unaccompanied by an explanation of why the
right result, consistent with the relevant statutory pur-
pose, should be different. Third, although Commerce de-
termined that PT’s charge that simple averaging “distorts”
the outcome rests on an assumption that is not always true,
that determination is both unsupported and, in any event,
20             MID CONTINENT STEEL & WIRE v. UNITED STATES

not itself an explanation of why weighted averaging is ac-
tually distortive in a relevant sense or, more affirmatively,
why simple averaging is preferable. Fourth, Commerce as-
serted that simple averaging was more “predictab[le]” than
weighted averaging, but the only expressed reason seems
to be a concern about manipulation in how sales are re-
ported, and that concern seems to assume that weighted
averaging must be done by counting numbers of transac-
tions, rather than quantity sold within transactions. The
Trade Court recognized that both types of weighted aver-
aging were legitimately in play in this matter. Mid Conti-
nent, 219 F. Supp. 3d at 1342. Yet Commerce gave no
explanation of why weighting should not be done by “quan-
tity” of units sold—here measured in kilograms—and what
if any manipulation/predictability concern there would be
if that path were followed. We note that, in this court, PT
set forth a numerical illustration of weighted averaging by
kilogram, reflecting the apparently undisputed fact that
quantity is measured in kilograms, and price is stated in
per-kilogram terms, when the nails at issue are sold.
     On the record before us, we cannot conclude that Com-
merce’s methodology was a reasonable exercise of its
agency discretion in light of the statutory constraints and
policies. We therefore vacate Commerce’s determination
and remand for further proceedings on this issue. In so
doing, we are not holding that Commerce cannot justify the
choice it has made. What is needed is a more thorough con-
sideration by Commerce of the issue than is given in the
current record and, upon such consideration, a clear expla-
nation of the choices that Commerce makes on the argu-
ments and evidence presented to it. See CS Wind Vietnam,
832 F.3d at 1380–81 (“Nor are we ruling that Commerce’s
current result is incorrect—that it cannot be properly jus-
tified. We are remanding because we conclude that Com-
merce has not explained its determination sufficiently to
allow us to conduct the judicial review to which CS Wind is
entitled to ensure that the agency’s exercise of power
MID CONTINENT STEEL & WIRE v. UNITED STATES              21

adheres to the authorizing law and respects the record ev-
idence.”).
                            IV
    For the reasons we have stated, we affirm the Trade
Court’s judgment as to the issues in Mid Continent’s ap-
peal. We also affirm the Trade Court’s judgment as to the
issues raised in PT’s cross-appeal, with one exception: we
vacate the Trade Court’s judgment upholding Commerce’s
choice of a simple averaging in calculating the pooled vari-
ance, and we remand the case to that court for it to remand
to Commerce for further proceedings on that issue.
   The parties shall bear their own costs.
AFFIRMED IN PART, VACATED AND REMANDED
                IN PART