Court Opinion

ID: 4207355
Source: CourtListenerOpinion
Date Created: 2017-09-28 22:02:48.233797+00
Date Added: 2024-06-11T14:41:02.936561
License: Public Domain

Slip Op 17-132

                  UNITED STATES COURT OF INTERNATIONAL TRADE

ARISTOCRAFT OF AMERICA, LLC, SHANGHAI
WELLS HANGER CO., LTD, HONG KONG
WELLS LTD., HONG KONG) WELLS LTD.
(USA), BEST FOR LESS DRY CLEANERS
SUPPLY LLC, IDEAL CHEMICAL & SUPPLY
                                                          Before: Leo M. Gordon, Judge
COMPANY,     LAUNDRY   &    CLEANERS
SUPPLY INC., ROCKY MOUNTAIN HANGER
MFG CO., ROSENBERG SUPPLY CO., LTD.,                      Consol. Court No. 15-00307
and ZTN MANAGEMENT COMPANY, LLC,

                           Plaintiffs,

             v.

UNITED STATES,

                           Defendant.

                                 OPINION and ORDER
 
[Final results sustained in part, and remanded in part to Commerce.]

                                                            Dated: September 28, 2017

     Douglas J. Heffner and Richard P. Ferrin, Drinker Biddle & Reath LLP of
Washington, DC for Plaintiff Aristocraft of America LLC.

       Jonathan M. Freed, Trade Pacific PLLC of Washington, DC argued for
Consolidated Plaintiffs Shanghai Wells Hanger Co., Ltd., Hong Kong Wells Ltd., Hong
Kong Wells Ltd. (USA), Best For Less Dry Cleaners Supply LLC, Ideal Chemical & Supply
Company, Laundry & Cleaners Supply Inc., Rocky Mountain Hanger MFG Co.,
Rosenberg Supply Co., Ltd., and ZTN Management Company, LLC. With him on the
briefs were Robert G. Gosselink and Jarrod M. Goldfeder.

       Courtney D. Enlow, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice of Washington, DC argued for Defendant United States. With
her on the briefs were Chad A. Readler, Acting Assistant Attorney General, Jeanne E.
Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel was Henry
J. Loyer, on the brief, and Jessica R. DiPietro, Attorneys, U.S. Department of Commerce,
Office of the Chief Counsel for Trade Enforcement and Compliance of Washington, DC.
Consol. Court No. 15-00307                                                      Page 2
 
 
      Gordon, Judge: This action involves the sixth administrative review conducted by

the U.S. Department of Commerce (“Commerce”) of the antidumping duty order covering

steel wire garment hangers from the People’s Republic of China (“PRC”). See Steel Wire

Garment Hangers from the PRC, 80 Fed. Reg. 69,942 (Dep’t of Commerce

Nov. 12, 2015) (final results admin. rev.) (“Final Results”); see also Issues & Decision

Memorandum for Steel Wire Garment Hangers from the PRC, A–570–918 (Dep’t of

Commerce             Mar.           6,           2015),           available           at

http://enforcement.trade.gov/frn/2015/1511frn/2015-28757.txt (last visited this date)

(“Decision Memorandum”).

      Before the court are the USCIT Rule 56.2 motions for judgment on the agency

record of Plaintiffs Shanghai Wells Hanger Co., Ltd., Hong Kong Wells Ltd., and Hong

Kong Wells Ltd. (USA), (collectively “Shanghai Wells”); Best For Less Dry Cleaners

Supply LLC, Ideal Chemical & Supply Company, Laundry & Cleaners Supply Inc., Rocky

Mountain Hanger MFG Co., Rosenberg Supply Co., Ltd., and ZTN Management

Company, LLC (collectively, “U.S. Distributors”); and Aristocraft of America LLC

(“Aristocraft”), (together with Shanghai Wells and U.S. Distributors, “Plaintiffs”).

See Rule 56.2 Mem. Supp. Mot. J. Agency R. of Pls. Shanghai Wells Hanger Co., Ltd.,

Hong Kong Wells Ltd., Hong Kong Wells Ltd. (USA), Best For Less Dry Cleaners Supply

LLC, Ideal Chemical & Supply Company, Laundry & Cleaners Supply Inc., Rocky

Mountain Hanger MFG Co., Rosenberg Supply Co., Ltd., and ZTN Management

Company, LLC, ECF No. 30 (“Shanghai Wells’ Br.”); see also Rule 56.2 Mem. Supp. Mot.

J. Agency R. of Pl. Aristocraft of America LLC, ECF No. 32 (“Aristocraft’s Br.”);
 
Consol. Court No. 15-00307                                                                                           Page 3
 
 
Def.’s Mem. Opp’n Pls.’ Rule 56.2 Mot. J. Agency R., ECF No. 42 (“Def.’s Opp’n”);

Pl. Aristocraft’s Reply Br., ECF No. 51 (“Aristocraft’s Reply”); Shanghai Wells’ Reply Br.,

ECF No. 53 (“Shanghai Wells’ Reply”). The court has jurisdiction pursuant to

Section 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).

              Plaintiffs challenge (1) Commerce’s deductions of Chinese un-refunded value-

added tax (“VAT”) as “export tax” from the starting prices used to establish the export

price and constructed export price of Shanghai Wells’ subject merchandise;

(2) Commerce’s                          valuation              of    Shanghai     Wells’   corrugated   paperboard    input;

(3) Commerce’s valuation of Shanghai Wells’ brokerage and handling costs; and

(4) Commerce’s calculation of surrogate financial ratios. The court remands the

Final Results to Commerce with respect to its VAT deductions and calculation of

surrogate financial ratios, and sustains the Final Results on Plaintiffs’ other challenges.

                                                                    I. Standard of Review

              For administrative reviews of antidumping duty orders, the court sustains

Commerce’s “determinations, findings, or conclusions” unless they are “unsupported by

substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C.

§ 1516a(b)(1)(B)(i). More specifically, when reviewing agency determinations, findings,

or conclusions for substantial evidence, the court assesses whether the agency action is

reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458 F.3d

                                                            
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. 
 
Consol. Court No. 15-00307                                                          Page 4
 
 
1345, 1350-51 (Fed. Cir. 2006); see also Universal Camera Corp. v. NLRB, 340 U.S. 474,

488 (1951) (“The substantiality of evidence must take into account whatever in the record

fairly detracts from its weight.”). Substantial evidence has been described as

“such relevant evidence as a reasonable mind might accept as adequate to support a

conclusion.” DuPont 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 administrative agency’s finding from being supported by substantial evidence.”

Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966). Fundamentally, though,

“substantial evidence” is best understood as a word formula connoting reasonableness

review. 3 Charles 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

presented by the whole record.” 8A West’s Fed. Forms, National Courts § 3.6 (5th ed.

2017).

         Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural

Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984), governs judicial review of

Commerce’s interpretation of the Tariff Act. See United States v. Eurodif S.A., 555 U.S.
305, 316 (2009) (An agency's “interpretation governs in the absence of unambiguous

statutory language to the contrary or unreasonable resolution of language that is

 
Consol. Court No. 15-00307                                                         Page 5
 
 
ambiguous.”); see generally Harry T. Edwards & Linda A. Elliott, Federal Standards of

Review 137-161 (2007).

                                     II. Discussion

                                  A. Value Added Tax

       Plaintiffs contend that Commerce erred in calculating Shanghai Wells’ export price

(“EP”) and constructed export price (“CEP”). The statute directs Commerce to reduce EP

or CEP by “the amount, if included in such price, of any export tax, duty, or other charge

imposed by the exporting country on the exportation of the subject merchandise to the

United States . . . .” 19 U.S.C. § 1677a(c)(2)(B). Plaintiffs argue that the plain language

of the term “export tax” leaves no room for agency interpretation under Chevron.

See Aristocraft’s Br. 2-8. Defendant responds that Commerce properly interpreted this

statutory language to allow for deductions from Shanghai Wells’ EP and CEP for Chinese

un-refunded value-added tax (“irrecoverable VAT”) incurred on the subject wire hangers

exported to the United States. Def.’s Opp’n 39-46.  Plaintiffs alternatively argue that

Commerce’s application of its methodology was unreasonable given the administrative

record (unsupported by substantial evidence). See Aristocraft’s Br. 8-13.

       As noted above, the court reviews Commerce’s interpretation of the antidumping

statute “within the framework established by Chevron, U.S.A., Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984).” Maverick Tube Corp. v. United States, 861
F.3d 1269, 1272 (Fed. Cir. 2017) (quoting Agro Dutch Indus. v. United States, 508 F.3d
1024, 1029-30 (Fed. Cir. 2007)). Pursuant to this framework, the court must first

determine if the statute, 19 U.S.C. § 1677a(c)(2)(B), unambiguously addresses whether
 
Consol. Court No. 15-00307                                                          Page 6
 
 
partially un-refunded VAT may be deducted from a respondent’s EP or CEP as a “tax,

duty, or other charge” that is imposed on the exportation of the subject merchandise.

Congress has not expressed an unambiguous intent on how Commerce should resolve

this issue.

       Several recent cases in the U.S. Court of International Trade have addressed the

issue of this particular Chinese VAT within the Chevron framework: Juancheng Kangtai

Chem. Co. v. United States, 41 CIT ___, ___, 2017 WL 218910, at *11-13 (Jan. 19, 2017)

(“Juancheng”); China Mfrs. Alliance, LLC v. United States, 41 CIT ___, ___, 205 F.

Supp. 3d 1325, 1344-51 (2017) (“China Mfrs. Alliance”); and Jacobi Carbons AB v. United

States, 41 CIT ___, ___, 222 F. Supp. 3d 1159, 1186-94 (2017) (“Jacobi Carbons”). This

Court is persuaded by the Chevron analysis of Jacobi Carbons and Juancheng. The court

also finds persuasive Jacobi Carbons’ questioning of the reasonableness of Commerce’s

methodology applied to the facts in that case, and believes those same misgivings are

applicable here.

       To explain in more detail, Juancheng reviewed Commerce’s deduction, pursuant

to § 1677a(c)(2)(B), for Chinese “irrecoverable VAT” as a “charge imposed by” China

“on the exportation of the subject merchandise to the United States.” Juancheng, 41 CIT

at ___, 2017 WL 218910, at *11. Juancheng observed that the statute does not define

the phrase “export tax, duty, or other charge imposed” and concluded that because

Congress had not spoken to the precise question at issue, Chevron step one was

inapplicable. Id. Under the second prong of Chevron the court analyzed whether the

statutory language “‘export tax, duty, or other charges’ [could permissibly include] ‘a cost
 
Consol. Court No. 15-00307                                                           Page 7
 
 
that arises as the result of export sales.’” Id. (citing Final Results of Redetermination

Pursuant to Court Remand, Consol. Court No. 14–00056, ECF No. 81–1 (Apr. 15, 2016)

regarding Chlorinated Isocyanurates from the PRC, 79 Fed. Reg. 4875 (Dep’t of

Commerce Jan. 30, 2014), and accompanying issues and decision memorandum (Jan.

22, 2014), available at http://enforcement.trade.gov/frn/summary/prc/2014-01898-1.pdf

(“Juancheng Remand Results”)).

       Specifically, the court in Juancheng noted that the statute included the broad

catchall term “other charges” that could reasonably include an irrecoverable VAT, and

further explained that Commerce’s interpretation was in accord with precedent from the

U.S. Court of Appeals for the Federal Circuit interpreting the term “charges.” Juancheng,

41 CIT at ___, 2017 WL 218910, at *11 (citing Shell Oil Co. v. United States, 751 F.3d
1282, 1291-92 (Fed. Cir. 2014)). The court also observed that when Commerce found

irrecoverable VAT to “arise as the result of export sales, Commerce also reasonably

interpreted the requirement that the cost be ‘imposed . . . on the exportation of the subject

merchandise to the United States,’ [such that the cost] ‘arises solely from, and is specific

to, exports.’” Id. (citing Juancheng Remand Results as well as § 1677a(c)(2)(B) (internal

citations omitted)). Having determined that Commerce reasonably interpreted

§ 1677a(c)(2)(B) to deduct an amount for irrecoverable VAT as a “charge imposed by the

exporting country on the exportation of the subject merchandise to the United States,”

the court in Juancheng ultimately concluded that Commerce had not, on that

administrative record, unreasonably overstated the amount of irrecoverable VAT given its

calculation of a fixed eight percent rate for the subject merchandise. Juancheng therefore
 
Consol. Court No. 15-00307                                                           Page 8
 
 
sustained Commerce’s remand determination for the deduction of irrecoverable VAT.

Id., 41 CIT at ___, 2017 WL 218910, at *13-14.

       In China Manufacturers Alliance the court reviewed Commerce’s deduction

pursuant to § 1677a(c)(2)(B) for respondent Guizhou Tyre Co., Ltd. (“GTC”) “for what it

considered to be Chinese un-refunded value-added tax (‘VAT’) incurred on the subject

tires that GTC exported to the United States.” China Mfrs. Alliance, 41 CIT at ___, 205 F.

Supp. 3d at 1344. Commerce characterized the irrecoverable VAT as “‘a net VAT burden

that arises solely from, and is specific to, exports’ and ‘is VAT paid on inputs and raw

materials (used in the production of exports) that is nonrefundable and, therefore, a cost.’”

Id. (quoting Issues and Decision Memorandum for Final Results of Antidumping Duty

Administrative Review: Certain New Pneumatic Off-the-Road Tires from the People’s

Republic of China, A–570–912 (Dep’t of Commerce Apr. 8, 2015), at 28).

       China Manufacturers Alliance held that Commerce’s determination was unlawful

under Chevron step one because Commerce failed to find that a specific “amount” of an

“export tax, duty, or other charge” was “imposed” by China. China Mfrs. Alliance, 41 CIT

at ___, 205 F. Supp. 3d at 1346. The court explained:

       Instead of finding as a fact that the PRC imposed a tax, duty, or charge—of
       whatever character—in an amount equivalent to 8% of the FOB value of
       GTC’s subject merchandise, Commerce applied a presumption that goods
       exported from China are subject to “irrecoverable VAT” in the amount of 8%
       of the FOB value of the exported good.

Id. The court further explained that “Commerce substituted a presumption—whether

rebuttable or irrebuttable—for an actual finding” and in so doing violated § 1677a(c)(2)(B).

Id., 41 CIT at ___, 205 F. Supp. 3d at 1351. The court opined that “[g]eneralized
 
Consol. Court No. 15-00307                                                        Page 9
 
 
conclusions about China’s VAT scheme do not suffice. Commerce may not reduce the

starting price by a fixed percentage—no matter how derived—that is not the actual

amount of a tax, duty, or other charge that the exporting country is found in fact to have

imposed.” Id.

      The court, in effect, read §  1677a(c)(2)(B) as forbidding approximations derived

from percentages, and requiring Commerce to make a distinct finding of a specific

“amount” in each case in which Commerce assesses irrecoverable VAT as a deductible

export tax. This differed from Juancheng, as well as an earlier decision, Fushun Jinly

Petrochemical Carbon Co. v. United States, 40 CIT ___, 2016 WL 1170876 (Mar. 23,

2016), which did not interpret the statute to require such an express obligation.

Fushun Jinly and Juancheng instead held that §  1677a(c)(2)(B) broadly affords

Commerce discretion to calculate deductions for an “export tax, duty, or other charge,”

and sustained Commerce’s deductions for irrecoverable VAT.

      In Jacobi Carbons the court reviewed Commerce’s adjustments for irrevocable

VAT pursuant to § 1677a(c)(2)(B) for respondents Jacobi Carbons AB and Jacobi

Carbons, Inc. (together, “Jacobi”). See Jacobi Carbons, 41 CIT at ___, 222 F. Supp. 3d

at 1186-88. The court in Jacobi Carbons meticulously explained Commerce’s formula for

calculating irrecoverable VAT and addressed Jacobi’s arguments that irrecoverable VAT

could not be interpreted as an “export tax or other charge” under the statute. Id.

Jacobi Carbons followed Fushun Jinly’s legal analysis (offering a somewhat more

expansive explanation of § 1677a(c)(2)(B) than Juancheng), and concluded that

Commerce reasonably interpreted the vague language of § 1677a(c)(2)(B) to deduct
 
Consol. Court No. 15-00307                                                         Page 10
 
 
irrecoverable VAT from respondents’ CEP as a charge “imposed by the exporting country

on the exportation of merchandise.” Id.

              To provide some additional context and background, the court notes that

Commerce announced it would begin making § 1677a(c)(2)(B) deductions from EP or

CEP for goods exported from non-market economy countries in its Methodological

Change for Implementation of Section 772(c)(2)(B)2 of the Tariff Act of 1930, as amended,

In Certain Non–Market Economy Antidumping Proceedings, 77 Fed. Reg. 36,481,

36,482-83 (Dep’t of Commerce June 19, 2012) (“Methodological Change”). The Decision

Memorandum states that “[w]here the irrecoverable VAT is a fixed percentage of U.S.

price, the Department explained [in the Methodological Change] that the final step in

arriving at a tax-neutral dumping comparison is to reduce the U.S. price downward by this

same percentage.” Decision Memorandum at 12. Jacobi Carbons explained how this

methodology reasonably interpreted vague language in § 1677a(c)(2)(B), including the

requirement that such taxes or other charges be “imposed” by the exporting country.

See Jacobi Carbons, 41 CIT at ___, 222 F. Supp. 3d at 1187-88 (determining that

Commerce’s interpretation as implemented through the Methodological Change was

reasonable given the plain meaning of the term “imposed” used in the statute).

              Aristocraft challenges Commerce’s interpretation of the statutory language by

arguing that Commerce’s definition of “irrecoverable VAT” is simply a tautology to meet

the statutory requirements for a price deduction and not a real cost imposed under

                                                            
2
    19 U.S.C. § 1677a(c)(2)(B).
 
Consol. Court No. 15-00307                                                          Page 11
 
 
Chinese law. See Aristocraft’s Br. 6-8. Aristocraft argues that Commerce invented the

term “irrecoverable VAT” that is found nowhere in Chinese law. Aristocraft does, however,

acknowledge that Shanghai Wells “pays [VAT] for its domestic purchases of inputs used

to produce the hangers” on export sales, and this VAT would ordinarily be refunded if the

same subject merchandise was sold in a domestic sale. Id. at 8. Aristocraft recognizes

that this is a cost, but characterizes it as an “internal tax” that cannot reasonably be

described as being “imposed” on exportation. Id.

        The court disagrees. It is reasonable to describe an input VAT not fully recouped

on export sales as a cost imposed on the exportation of the subject merchandise.

See Jacobi Carbons, 41 CIT at ___, 222 F. Supp. 3d at 1186-88. Commerce identified

this cost-in-fact resulting from the operation of Chinese law under the term “irrecoverable

VAT.” See Decision Memorandum at 12-13. Commerce defines irrecoverable VAT as

“a cost that arises as the result of export sales.” Id. at 13. “Because the Chinese VAT is

refunded in the context of domestic sales but not exports, it constitutes a ‘penalty’ that is

‘applied,’ and with which [respondent] is forever ‘burdened,’ at the time of exportation.”

See Jacobi Carbons, 41 CIT at ___, 222 F. Supp. 3d at 1188. Commerce reasonably

concluded that the phrase “export tax, duty, or other charge imposed by the exporting

country on the exportation,” 19 U.S.C. § 1677a(c)(2)(B), could be read to include such a

cost.

        There remains the issue of whether Commerce’s calculation of the amount of

irrecoverable VAT to deduct is reasonable given the administrative record (supported by

substantial evidence). See Aristocraft’s Br. 8-12. The court concludes that here, as in
 
Consol. Court No. 15-00307                                                       Page 12
 
 
Jacobi Carbons, 41 CIT at ___, 222 F. Supp. 3d at 1188-94, Commerce has failed to

demonstrate that its calculation of an eight percent irrecoverable VAT deduction from the

Shanghai Wells’ EP and CEP was reasonable (supported by substantial evidence).

      Commerce prefaces its analysis by explaining that under Chinese law

irrecoverable VAT is comprised of “some portion of the input VAT that a company pays

on purchases of inputs used in the production of exports [that] is not refunded.” Decision

Memorandum at 12; see also id. at 13 (irrecoverable VAT “is VAT paid on inputs and raw

materials (used in the production of exports)”). Commerce also concludes that under

Chinese law “the standard VAT levy is 17 percent and the rebate rate for subject

merchandise is nine percent.” Id. at 14. Commerce though fails to explain how in light of

its definition of “irrecoverable VAT” a reasonable mind could find that Shanghai Wells

incurred an irrecoverable VAT charge in the amount of eight percent of the value of the

subject exports.

      A simplified example illustrates the problem. Starting with Commerce's two

conclusions about Chinese VAT, a subject wire hanger exported from China to the United

States with an FOB export value of $1 (to take a round number) would contain “inputs and

raw materials” that were subject to VAT at the rate of 17% applicable to those inputs and

raw materials, and the exportation of the hanger would have qualified Shanghai Wells for

a VAT rebate of $0.09. For Shanghai Wells to have incurred a “tax, duty, or other charge,”

of un-refunded VAT, of $0.08 (in accordance with Commerce's conclusion that the

irrecoverable VAT was eight percent of export value), the actual VAT imposed on the

“inputs and raw materials” used in the production of the hanger would have to have been
 
Consol. Court No. 15-00307                                                         Page 13
 
 
$0.17, i.e., the $0.09 in refunded VAT plus the $0.08 in un-refunded VAT. But for the VAT

on the inputs and raw materials to have been $0.17, those VAT-subject inputs and raw

materials would have had to have been valued at $1, which was the entire FOB value of

the exported hanger. The FOB export values could have included no other costs

(for example, no cost of labor, no factory overhead, no selling, general, administrative, or

any other expenses), and no profit. See generally Aristocraft’s Br. 10-11 (citing a similar

simplified example provided in its administrative case brief that Commerce did not directly

address).

       Commerce's conclusion that Shanghai Wells incurred a net VAT charge of eight

percent on the value of its subject exported hangers implies that the 17% standard VAT

levy was applied to the entire FOB export value of the hanger, and not to the VAT-subject

inputs and raw materials used in production. Cf. Def.’s Opp’n 44-45 (arguing, for what

appears to be the first time, that the 17 percent VAT rate used in Commerce’s calculation

was applied to the “total export sales value”). This breakdown of the formula contradicts

Commerce’s conclusion that the VAT was “paid on inputs and raw materials (used in the

production of exports).” Decision Memorandum at 13.

       As in Jacobi Carbons, the Decision Memorandum in this case offers no explanation

to resolve the apparent contradiction, and the court cannot understand how a reasonable

mind could follow Commerce’s stated methodology and arrive at the net VAT charge of

eight percent. See Jacobi Carbons, 41 CIT at ___, 222 F. Supp. 3d at 1193-94 (noting that

Commerce could not explain its reasoning for the same contradiction, and remanding for

 
Consol. Court No. 15-00307                                                           Page 14
 
 
further explanation). The court therefore remands this issue to Commerce for further

explanation and, if appropriate, reconsideration.

                                   B. Corrugated Paper

       Plaintiffs challenge Commerce’s surrogate valuation of Shanghai Wells’

corrugated paper input, arguing that Commerce’s use of average unit values (“AUV”) from

Global Trade Atlas (“GTA”) Thai import statistics for HTS code 4808.10 (“Corrugated

Paper and Paperboard, Whether or Not Perforated”) for the period of review resulted in

the selection of an aberrationally high surrogate value that significantly distorted the final

antidumping duty margin calculated for Plaintiffs. See Shanghai Wells’ Br. 18-19. For the

reasons explained below, the court sustains Commerce’s use of this surrogate dataset.

       The statute “directs Commerce to value the factors of production ‘based on

the best available information regarding the values of such factors in a market economy

country.’ 19 U.S.C. § 1677b(c)(1)(B) (emphasis added).” Downhole Pipe & Equipment,

L.P. v. United States, 776 F.3d 1369, 1375 (Fed. Cir. 2015). “The term ‘best available’ is

one of comparison, i.e., the statute requires Commerce to select, from the information

before it, the best data for calculating an accurate dumping margin. . . . This ‘best’ choice

is ascertained by examining and comparing the advantages and disadvantages of using

certain data as opposed to other data.” Dorbest Ltd. v. United States, 30 CIT 1671, 1675,

462 F. Supp. 2d 1262, 1268 (2006). The “burden of creating an adequate record lies with

[interested parties] and not with Commerce.” QVD Food Co. v. United States, 658 F.3d
1318, 1324 (Fed. Cir. 2011); see also Nan Ya Plastics Corp. v. United States, 810 F.3d
1333, 1337-38 (Fed. Cir. 2016) (same); Jacobi Carbons AB v. United States, 619 F. App’x
 
Consol. Court No. 15-00307                                                       Page 15
 
 
992, 996 (Fed. Cir. 2015) (same).

      During the administrative proceeding Plaintiffs argued that the Thai AUV were

aberrational. Commerce, in turn, explained that it analyzes whether surrogate data are

aberrational by comparing “the GTA import data at issue [with] GTA data from the other

potential surrogate countries at a comparable level of economic development to that of

the NME for a given case.” Decision Memorandum at 16. Commerce also noted that

neither Plaintiffs nor any other party “placed GTA import data for comparable countries

on the record of this review.” Id. As a consequence, Commerce did not evaluate whether

the Thai dataset might be aberrational in some other sense. Importantly, Plaintiffs do not

challenge Commerce’s practice of measuring possible aberrations in a dataset only

against other surrogate data from economically comparable countries. Plaintiffs instead

lodge a facial attack on the quality of the Thai dataset Commerce used, arguing to the

court that Commerce should have independently sought out better data. See Shanghai

Wells’ Br. 20-21. This is a risky litigation position because, as noted, although Commerce

may help develop the administrative record, the burden to develop it ultimately rests with

interested parties like Plaintiffs. See QVD Food Co., 658 F.3d at 1324 (“Although

Commerce has authority to place documents in the administrative record that it deems

relevant, the burden of creating an adequate record lies with [interested parties] and not

with Commerce.” (internal quotations omitted)). Also, when an interested party had the

opportunity during the administrative proceeding to develop the record and submit data,

the court may not subsequently order Commerce to open the record to allow that

interested party a second chance to submit data. See Essar Steel Ltd. v. United States,
 
Consol. Court No. 15-00307                                                              Page 16
 
 
678 F.3d 1268, 1278 (Fed. Cir. 2012) (explaining that it is plaintiffs’ burden to timely

submit relevant information to the record and holding that the courts may not order

Commerce to reopen the record to admit evidence that plaintiffs failed to submit during

the administrative proceeding). When Plaintiffs argue that Commerce should have done

more, they unwittingly concede that they did too little. It is too easy to sit back and criticize

the quality of a particular surrogate dataset in isolation; it is more difficult to have to defend

the merits of one’s own proffered surrogate dataset as the only dataset that a reasonable

mind would choose as the best available on the record.

       The problem here is that Plaintiffs did too little, and their arguments to the court

facially attacking the Thai surrogate dataset in an absolute, as opposed to relative, sense,

misunderstand the “best available” statutory requirement. The court does not evaluate

whether the information Commerce used was the best available in some absolute sense,

“‘but rather whether a reasonable mind could conclude that Commerce chose the best

available information.’” Zhejiang DunAn Hetian Metal Co. v. United States, 652 F.3d 1333,

1341 (Fed. Cir. 2011) (quoting Goldlink Indus. Co. v. United States, 30 CIT 616, 619, 431
F. Supp. 2d 1323, 1327 (2006) (emphasis added)).

       Plaintiffs below argued that Commerce should have used fourth administrative

review Thai data with a multiplier to account for inflation. See U.S. Distributors’ Case Brief

at 17-19, 28-29, PD 166 at bar code 3300332-01 (Aug. 24, 2015) (suggesting Commerce

inflate the surrogate value for corrugated paper from the fourth review for the sixth

review); Shanghai Wells’ Br. 17-27 (challenging Commerce’s selected Thai AUV for

corrugated paper without suggesting any reasonable alternatives, arguing that
 
Consol. Court No. 15-00307                                                            Page 17
 
 
Commerce should have provided comparable GTA import data on the record or used

benchmark data from the U.S. to “corroborate” the aberrational nature of the selected

data). Now before the court Plaintiffs have abandoned their proffered dataset, choosing

not to argue at all about the relative merits of their proffered alternative against the dataset

Commerce used. What they do instead is attempt a simple facial attack on the Thai data

Commerce used, coupled with a request that the court order Commerce to obtain better

data. That argument is ultimately not responsive to the “best available” statutory standard,

and accordingly the court sustains Commerce’s use of the Thai surrogate dataset to value

the corrugated paper input. 

                                 C. Brokerage & Handling

       Plaintiffs challenge Commerce’s surrogate value determination of Shanghai Wells’

brokerage and handling (“B&H”) costs, asserting that Commerce inappropriately relied

upon the World Bank’s “Doing Business 2015: Thailand” publication (“Doing Business”)

instead of using allegedly more specific and accurate brokerage rate information from two

global shipping companies that Shanghai Wells placed on the record. See Shanghai

Wells’ Br. at 17. Separately, Plaintiffs contend that Commerce overstated the numerator

and understated the denominator in its calculation of the B&H surrogate value. Id.

       The court has repeatedly affirmed Commerce's use of World Bank data as a

reliable and accurate source to value B&H, and does so again here. See, e.g., Yingqing

v. United States, 40 CIT ___, ___, 195 F. Supp. 3d 1299, 1311-12 (2016) (detailing prior

affirmations of Commerce’s use of the World Bank Doing Business report, and again

affirming its use as a more “suitable surrogate data source for steel wire garment hangers”
 
Consol. Court No. 15-00307                                                       Page 18
 
 
than the alternative posed by plaintiffs);         Foshan Shunde Yongjian Housewares &

Hardwares Co. v. United States, 40 CIT ___, 172 F. Supp. 3d 1353 (2016) (affirming

Commerce's use of World Bank Doing Business report to value B & H); Since Hardware

(Guangzhou) Co. v. United States, 37 CIT ___, ___, 911 F. Supp. 2d 1362, 1377 (2013)

(affirming Commerce's reliance on World Bank Doing Business report and noting that the

report is a “reliable and accurate source”).

       Plaintiffs argue that instead of relying on the broad and unspecific information in

the Doing Business report, Commerce should have used the average of actual export

brokerage rates from two Thai shipping container lines that were placed on the record.

See Decision Memorandum at 18; Shanghai Wells’ Br. 31-33. Commerce rejected these

alternative sources, finding that they provided only price quotes instead of actual

expenses. Decision Memorandum at 19-20. Moreover, Commerce noted its express

preference for using “broad market averages” over such individualized price quotes,

reasonably explaining that reliance on limited data from only two Thai shipping companies

would be inferior to using the “broad market averages” provided by the wealth of data

relating to various Thai businesses’ B&H information available in the Doing Business

report. Id. at 20. Commerce’s explanation and determination are reasonable given its

stated preference to use “broad market averages” for B&H surrogate value calculations.

Decision Memorandum at 20. The court therefore sustains Commerce’s selection of the

Doing Business data as the “best available information” on the record to value Shanghai

Wells’ B&H costs. 19 U.S.C. § 1677b(c).

 
Consol. Court No. 15-00307                                                           Page 19
 
 
              Commerce calculated surrogate B&H costs from the Doing Business report as

follows:

                             Documents preparation                    US $175
                             +Customs clearance and technical control US $50
                             +Ports and terminal handling             US $160
                             -Letter of credit fee (excluded)        (US $60)
                             TOTAL                                    US $325

See Shanghai Wells’ Br. 28. During the administrative proceeding, Shanghai Wells placed

on the record information to confirm that the specific amount ($60) of the costs of

obtaining a letter of credit in Thailand assumed in the 2015 Doing Business report.

See Decision Memorandum at 21 & n.155 (citing Ningbo Dasheng’s Surrogate Value

Submission, Ex. SV-9, PD3 115 at barcode 3274160-02 (May 4, 2015)). Commerce

accordingly deducted out this fee upon Shanghai Wells’ provision of proof that it did not

incur such expenses. Id. Plaintiffs argue that Commerce should have made further

adjustments to the total surrogate B&H calculation to include deductions for other

expenses not incurred by Shanghai Wells that remain in the “Documents preparation”

category of the Doing Business report. See Shanghai Wells’ Br. 28-31. Plaintiffs note that

Shanghai Wells provided record evidence that it did not incur the full amount of fees

included in the “Documents preparation,” and thus should have had this amount reduced

for expenses relating to the creation of commercial invoices, bills of lading, or certificates

of origin. Id. Commerce does not dispute this information, but maintains that it properly

assessed B&H expenses in the full amount (minus the letter of credit fee previously

                                                            
3
    “PD ___” refers to a document contained in the public administrative record.
 
Consol. Court No. 15-00307                                                            Page 20
 
 
addressed) because the Doing Business report did not clearly identify or break-down

which costs were associated with which documents in the “Documents preparation”

category. See Def.’s Resp. 35. Commerce maintains that it may reasonably rely on the

Doing Business reported B&H values without “going behind the data” unless Shanghai

Wells can establish a precise breakdown of which costs they did not incur and what

segment of the $115 document preparation cost is attributable to those specific costs. Id.

at 35-36. The court agrees.

       As explained in Foshan Shunde Yongjian Housewares & Hardwares Co., “[t]he

document preparation component of the Doing Business data point is an aggregate figure

that includes costs for the preparation of numerous documents.” 40 CIT at ___, 172 F.

Supp. 3d at 1360. Where Plaintiffs fail to identify an “exact breakdown of the data included

in the World Bank report, and how the business practices of this broad pool of companies

relate to the business practices of [Plaintiffs], [Commerce] can no more deduct a letter of

credit expense, or remove elements of document and preparation charges, than it can

add extra expenses which [Plaintiffs] incurred but which are not reflected by the World

Bank data.” Id. (citation omitted). Given that Plaintiffs in this action did not make such

specific identifications (other than the $60 value for the letter of credit fee), the court will

sustain as reasonable Commerce’s refusal to make further adjustments to the B&H

“documents preparation” line item from the Doing Business report.

       Beyond challenging the source of the surrogate value figures Commerce used to

calculate B&H, Plaintiffs also maintain that Commerce improperly applied a methodology

that assumed that B&H charges would vary depending on the weight of the shipments of
 
Consol. Court No. 15-00307                                                           Page 21
 
 
the subject merchandise. See Shanghai Wells’ Br. 33-35. In calculating Shanghai Wells’

B&H surrogate value, Commerce divided the B&H of $325 costs per shipment by an

assumed denominator of 10,000 kg for a 20-foot container to obtain a per kilogram value

for surrogate B&H costs. See Decision Memorandum at 17-21 (discussing comments on

Commerce’s B&H calculation). Plaintiffs assert that Commerce failed to reasonably

explain its assumed denominator, specifically, why B&H expenses would change

depending on shipment weight. See Shanghai Wells’ Br. 33-35. Plaintiffs contend that

Commerce’s adjustments to Shanghai Wells’ calculated B&H costs based upon assumed

shipment weights inappropriately overstated the calculated surrogate value for B&H,

using an assumed shipment weight of 10,000 kg per container rather than Shanghai

Wells’ actual average weight of shipments on the record. Id.

       Plaintiffs’ argument has some superficial appeal given that the Doing Business

report does contain language suggesting that B&H costs are not directly tied to container

weight. Plaintiffs, nevertheless, undercut their argument by failing to propose a

reasonable alternative calculation that does not depend on container weight.

They propose only that Commerce use more specific weight figures in the existing B&H

calculation methodology. See id. The court surmises that this may be because the record

evidence indicates that Shanghai Wells did in fact ship single 20-foot containers, which

both the Doing Business publication and Commerce’s methodology presume. See, e.g.,

U.S. Distributors’ Case Brief at 34, PD 166 at bar code 3300332-01 (Aug. 24, 2015).

This fact (that Plaintiffs ship in 20 foot containers) distinguishes the cases Plaintiffs rely

upon because those cases involved challenges to Commerce’s underlying assumptions
 
Consol. Court No. 15-00307                                                       Page 22
 
 
about how the respondents shipped their goods. See, e.g., DuPont Teijin Films China

Ltd. v. United States, 38 CIT ___, ___, 7 F. Supp. 3d 1338, 1351-52 (2014) (remanding

B&H issue to Commerce where plaintiff’s method of shipping multiple containers per

shipment rendered illogical Commerce’s assumption that B&H costs increased

proportionally to shipment weight or size); CS Wind Vietnam Co. v. United States, 38 CIT

___, ___, 971 F. Supp. 2d 1271, 1294 (2014) (remanding same issue where record

indicated that plaintiff shipped its goods in segments in a “pyramid fashion” on the ship,

without containers).

      Commerce reasonably explained that it selected the denominator of 10,000 kg per

container to preserve the internal consistency of a surrogate B&H calculation using Doing

Business figures that were calculated using 10,000 kg as the assumed container weight.

See Decision Memorandum at 20. Rather than argue that Commerce’s practice of

harmonizing its surrogate B&H calculation with the assumptions underlying the Doing

Business figures was unreasonable, Plaintiffs challenge the more fundamental

assumption that B&H costs and container weight have any connection. As noted,

however, Plaintiffs provide no explanation as to why such an assumption is unreasonable

nor do they propose any reasonable alternative. Nor do Plaintiffs argue that Shanghai

Wells’ shipments involve anything other than the shipment of single 20-foot containers,

weighing in excess of 10 tons, upon which B&H costs are assessed. As Commerce has

reasonably explained its methodology for assessing a surrogate value for B&H costs from

the best available record data, and Plaintiffs have failed to demonstrate that Commerce’s

 
Consol. Court No. 15-00307                                                         Page 23
 
 
methodology was unreasonable as applied to its shipping practices, the court sustains

Commerce’s determinations with respect to the surrogate value for B&H.

                             D. Surrogate Financial Ratios

       In the sixth administrative review, Commerce selected financial statements for

calculating surrogate financial ratios from three Thai companies: LS Industries Co. (“LS”),

Sahasilp Rivet Industrial Co. Ltd. (“Sahasilp”), and Thai Mongkol Fasteners Co., Ltd.

(“Mongkol”). See Decision Memorandum at 7-10. Commerce uses financial ratios in non-

market economy antidumping cases to calculate a respondent’s factory overhead, selling,

general and administrative expenses, and profit, which represent some of the

respondent’s factors of production. See Dorbest Ltd. v. United States, 30 CIT 1671, 1715

462 F. Supp. 2d 1262, 1300 (2006). Commerce must value the factors of production on

“the best available information regarding the values of such factors in a market economy

country or countries considered to be appropriate.” 19 U.S.C. § 1677b(c)(1). Commerce

calculates surrogate financial ratios under 19 C.F.R. § 351.408(c)(4), using “non-

proprietary information gathered from producers of identical or comparable merchandise

in the surrogate country.” Plaintiffs challenge Commerce’s selection on various grounds.

See Shanghai Wells’ Br. 3-17.

       Plaintiffs argue: (1) Commerce erred in using Mongkol’s financial statement as it

included an alleged distortive and improperly translated line cost item; (2) Commerce

should have additionally used financial statements from Bangkok Fastening Co., Ltd.

(“Bangkok Fastening”) in place of, or at least in addition to, the other financial data; and

(3) Commerce erred in using financial data from Sahasilp and Mongkol, as these
 
Consol. Court No. 15-00307                                                          Page 24
 
 
companies did not produce “identical or comparable merchandise.” See id.

       Plaintiffs challenge Commerce’s use of Mongkol’s financial statement for

calculation of the surrogate financial ratio because the Mongkol financial statement

included a line-item, translated in petitioner’s submission as “Article making cost” that

Plaintiffs contend improperly inflated the company’s overhead costs and distorted

Commerce’s financial ratio calculation. See Shanghai Wells’ Br. 13-15. Plaintiffs assert

that Commerce should have accepted their alternative translation of the line-item as “hire

of work,” according to an unnamed Thai consultant and an online Thai-to-English

dictionary. Id. at 14.

       Commerce explained its practice with respect to translated documents in the

Decision Memorandum:

       . . . when the Department receives a translated document, it assumes it is
       correct unless there is a discrepancy or alternate translation. Here,
       respondents provided another translation for what was originally translated
       as “Article making cost.” U.S. Distributors and Aristocraft argued that the
       proper translation is “Hire of work” and therefore the item should not be
       classified as overhead. U.S. Distributors did not provide the name or the
       qualifications of the person providing the translation or an affidavit from the
       person providing the alternate translation. U.S. Distributors stated a “local
       consultant” used a website to produce the translation of “Hire of work.” It is
       not known who the local consultant is, whether that person speaks Thai, the
       person’s qualifications, or the reliability of the website used. Therefore,
       because we do not have enough information to consider the alternate
       translation and because the other costs of sales were fully enumerated,
       we determine that the “Article making cost” line item is not ambiguous, and
       find it appropriate to continue to classify the entire line item of
       “Article making cost” as MOH in the surrogate financial ratio calculation.

See Decision Memorandum at 10. This is reasonable. Plaintiffs have not challenged

Commerce’s practice of assuming the correctness of a translated document unless a

 
Consol. Court No. 15-00307                                                           Page 25
 
 
party provides an alternate translation. And here, Plaintiffs could have better

substantiated their claimed translation superiority. For example, Plaintiffs could have

obtained the opinion of a Thai language expert, who could have prepared an affidavit,

with authoritative Thai to English translations. The court could then more readily throw its

weight behind such a translation as the only reasonable translation on the record. More

likely though, Commerce would have simply acknowledged the alternate translation as

correct. The court is somewhat confused that Plaintiffs believed there was any merit to

this issue, after all, they are requesting the court to trust an unnamed “consultant” and

random online dictionary to override the original translation. As explained, there is a better

way to establish that the proffered translation is the one and only reasonable translation

of the disputed term. Commerce’s determination is therefore sustained.

       Plaintiffs also challenge Commerce’s refusal to select Bangkok Fastening’s

financial statement for use in calculating surrogate financial ratios. See Shanghai Wells’

Br. 15-17. Commerce found that Bangkok Fastening’s financial statement was

insufficiently detailed to use for reliable calculation of surrogate financial ratios. See

Decision Memorandum at 9. A comparison of Bangkok Fastening’s financial statement

with that of Sahasilp, the latter of which Commerce found sufficiently detailed for use in

the surrogate financial ratio calculations, demonstrates the reasonableness of

Commerce’s conclusion. Compare M&B’s Surrogate Value Submission at Exhibit 4 at p.2,

PD 121 at bar code 3275954-03 (May 13, 2015), with FabriClean’s Surrogate Value

Submission at Exhibit SV-12 at p. 34, PD 124 at bar code 3275968-02 (May 13, 2015).

The Sahasilp statement provides detailed breakdowns of the components of energy,
 
Consol. Court No. 15-00307                                                          Page 26
 
 
labor, and material costs, whereas the Bangkok Fastening statement provides no such

comparable specificity. Id. Accordingly, the court sustains Commerce’s decision to reject

the Bangkok Fastening financial statement.

       Plaintiffs’ most persuasive argument challenges Commerce’s selection of financial

data from Sahasilp and Mongkol as unreasonable. Plaintiffs argue that Commerce has,

in prior reviews, equated production of “comparable merchandise” with drawing wire from

wire rod. Id. at 3-13. Defendant disagrees with Plaintiffs’ assertion that an agency practice

of relying only on data from surrogate companies that draw wire rod as part of their

production practice exists. Alternatively, Defendant contends that even if such a practice

existed Commerce was either not bound to follow such a practice, or that departure from

such a practice occurred in the fourth administrative review and should not be reviewed

in this challenge to the sixth administrative review. See Def.’s Resp. 4-16. The court

agrees with Plaintiffs that Commerce failed to reasonably explain in this review its change

in emphasis for a criterion it previously determined to be criticalthat surrogate

companies must have drawn wire from wire rod in the production process. Accordingly,

the court remands the issue of surrogate financial ratio calculation to Commerce.

       During the investigation Commerce concluded that “only those companies which

clearly identify wire rod as a raw material can be considered adequate surrogates to

calculate the surrogate financial ratios because any of these more accurately reflect the

production experience of the respondents.” See Steel Wire Garment Hangers from the

People’s Republic of China, 73 Fed. Reg. 47,587 (Dep’t of Commerce Aug. 14, 2008)

 
Consol. Court No. 15-00307                                                        Page 27
 
 
(“Final Results-Investigation”), and accompanying Issues and Decision Memorandum, A-

570-918 (Aug. 7, 2008) (“Decision Mem.-Investigation”), at cmt. 3, available at

http://enforcement.trade.gov/frn/summary/PRC/E8-18851-1.pdf (last visited on this date).

That is a clear and direct statement of the importance of drawing wire rod in analyzing

potential surrogate companies. And in the following three administrative reviews,

Commerce solidified its stance that potential surrogate companies use wire rod in their

production process. See Shanghai Wells’ Br. 4-7 (citing the final results of Commerce’s

first three administrative reviews of the antidumping duty order covering steel wire

garment hangers).

       The fourth administrative review was different, with more limited options for

surrogate financial statement selection, with several financial statements unusable.

See Steel Wire Garment Hangers from the People’s Republic of China, 79 Fed. Reg.

31,298 (Dep’t of Commerce June 2, 2014) (“Final Results-AR4”), and accompanying

Issues and Decision Memorandum, A-570-918 (May 27, 2014) (“Decision Mem.-AR4”),

at cmt. 2, available at http://enforcement.trade.gov/frn/summary/prc/2014-12730-1.pdf

(last visited on this date). As a result, Commerce selected the financial statements of one

company, LS, which were the only statements with enough detailed information for

Commerce to calculate financial ratios. Id. Notably, Commerce acknowledged that the

record did not indicate whether LS drew wire rod or what inputs it used in its production

process of nails. Id. Commerce explained that “where information as to inputs and

production is on the record for a producer of comparable merchandise, such information

may be useful in determining whether it is appropriate to use. However, the absence of
 
Consol. Court No. 15-00307                                                              Page 28
 
 
such information does not exclude a producer of comparable merchandise from

consideration.” Id. The fourth review, therefore, appears not to have afforded an

“available” surrogate company that drew wire from wire rod in its production process.

              In the fifth administrative review, Commerce appears to have selectively quoted its

rationale from the fourth administrative review to justify selecting financial statements

without regard to whether they drew wire from wire rod.4 In the sixth administrative review

here, Commerce mimicked its approach in the fifth administrative review, selecting

financial statements from LS, Sahasilp, and Mongkol despite the fact that the record

indicates that Sahasilp and Mongkol do not draw wire from wire rod in their production

processes. See  Decision Memorandum at 8-9. Unlike the fourth administrative review,

however, here the record demonstrates that LS draws wire from wire rod in its production

process, and like the fourth administrative review, Commerce could have simply used that

one company to calculate its financial ratios. See U.S. Distributors’ Case Brief at 15,

PD 166 at bar code 3300332-01 (Aug. 24, 2015) (citing undisputed record evidence that

LS draws wire rod in its production process as support for argument that LS’s financial

statement was the “best information on the record to calculate surrogate financial ratios”).

Commerce, therefore, acted unreasonably by failing to adhere to its announced selection

criterion without explaining why that criterion suddenly has no relevance. Commerce is in

                                                            
4
  The court notes that the fifth administrative review is pending before the court, and also
includes a challenge to Commerce’s financial statement selection of the same companies
chosen in the sixth administrative review. See Shanghai Wells Hanger Co. v. United
States, 41 CIT ___, 211 F. Supp. 3d 1377 (2017) (remanding final results of fifth
administrative review on surrogate country selection, and reserving decision on Plaintiffs’
remaining arguments, including surrogate financial statement selection). 
 
Consol. Court No. 15-00307                                                           Page 29
 
 
a tight spot. That important criterion underpinned surrogate value selections in prior

proceedings.

      Defendant has great difficulty grappling with Commerce’s unmistakable, consistent

emphasis of the importance of wire drawing in its surrogate data selection in prior

proceedings under this Antidumping Duty Order. See Def.’s Resp. 13-16. None of

Defendant’s arguments is persuasive. Defendant argues that Commerce was not

obligated to continue emphasizing the importance of drawing wire from wire rod. Id. at 14.

Defendant is correct in the abstract that Commerce may change its mind, and adopt a

new practice or policy, but Commerce must provide a reasonable basis for the change.

In F.C.C. v. Fox Television Stations, Inc., 1556 U.S. 502, 515–16 (2009), Justice Scalia

explained:

      [T]he requirement that an agency provide reasoned explanation for its
      action would ordinarily demand that it display awareness that it is changing
      position. An agency may not, for example, depart from a prior policy sub
      silentio . . . the agency need not always provide a more detailed justification
      than what would suffice for a new policy created on a blank slate.
      Sometimes it must—when, for example, its new policy rests upon factual
      findings that contradict those which underlay its prior policy; or when its prior
      policy has engendered serious reliance interests that must be taken into
      account. . . . It would be arbitrary or capricious to ignore such matters. In
      such cases it is not that further justification is demanded by the mere fact of
      policy change; but that a reasoned explanation is needed for disregarding
      facts and circumstances that underlay or were engendered by the prior
      policy.

Id. (emphasis added).

      In the fourth administrative review Commerce adhered to its selection criterion,

and noted and explained that it could not satisfy that criterion in that particular review

 
Consol. Court No. 15-00307                                                        Page 30
 
 
because of the limits of the administrative record. See Decision Mem.-AR4, at cmt. 2.

Commerce did not all of a sudden abandon the criterion as incorrect or wrong. Id.

Commerce has yet to explain in the sixth administrative review why that selection criterion

established in the investigation and three subsequent administrative reviews was

incorrect or wrong. Suffice it to say that Commerce has yet to provide a reasonable basis

for its change in emphasis in the selection criterion, and its reliance on the fourth

administrative review is inapplicable to the sixth administrative review, given the noted

factual differences in the administrative records. See Final Results-AR4, and Decision

Mem.-AR4, at cmt. 2.

       Defendant also argues that even if Commerce unreasonably departed from its

criterion that a surrogate company draw wire from wire rod, any such departure was

harmless error as Commerce reasonably found that Sahasilp and Mongkol produced

comparable merchandise given other record information. See Def.’s Resp. 14-16.

Defendant fashions a weak circular argument predicated on Commerce’s conclusions in

previous reviews that fasteners, which are produced by Sahasilp and Mongkol, are

comparable merchandise to wire hangers. Id. This circular argument fails for the very

reason that underpins Plaintiffs’ challenge on this issue: it was the process of creating

fasteners by drawing wire from wire rod that reasonably led Commerce to conclude that

fasteners and wire hangers are comparable merchandise. See, e.g., Final Results-

Investigation and Decision Mem.-Investigation at cmt. 3, (discussing why wire fasteners

are comparable merchandise to wire hangers primarily because both products require the

drawing of wire from wire rod in their production process); Steel Wire Garment Hangers
 
Consol. Court No. 15-00307                                                        Page 31
 
 
from the People’s Republic of China, 76 Fed. Reg. 27,994 (Dep’t of Commerce May 13,

2011), and accompanying Issues and Decision Memorandum, A-570-918 (May 9, 2011),

at cmt. 2, available at http://enforcement.trade.gov/frn/summary/PRC/2011-11871-1.pdf

(last visited on this date) (explaining rejection of potential surrogate countries that

produced fasteners where record did not include evidence that these companies

consumed wire rod in their production process); Steel Wire Garment Hangers from the

People's Republic of China, 77 Fed. Reg. 12,553 (Dep’t of Commerce Mar. 1, 2012), and

accompanying Issues and Decision Memorandum, A-570-918 (Feb. 23, 2012), at cmt. 4,

available at http://enforcement.trade.gov/frn/summary/PRC/2012-4875-1.pdf (last visited

on this date) (“We find that the various fasteners produced by the surrogate companies

are comparable to steel wire garment hangers, the subject merchandise, because

fasteners, like steel wire garment hangers, are a downstream product of wire requiring

additional manufacturing processes.” (emphasis added)); Steel Wire Garment Hangers

from the People’s Republic of China, 78 Fed. Reg. 28,803 (Dep’t of Commerce May 16,

2013), and accompanying Issues and Decision Memorandum, A-570-918 (May 7, 2013),

at cmt. I.D, available at http://enforcement.trade.gov/frn/summary/prc/2013-11682-1.pdf

(last visited on this date) (supporting selection of financial statements from companies in

the Philippines, noting that the companies produced comparable merchandise of nails

and hangers because each company “produces its products by drawing its own steel wire

rods”).

          The court remands this issue to Commerce to address reasonably the importance

of drawing wire from wire rod as a surrogate company selection criterion. The most direct
 
Consol. Court No. 15-00307                                                         Page 32
 
 
and efficient way forward would appear to simply use the one company’s statements (LS)

that drew wire from wire rod, as Commerce did in the fourth administrative review.

                                      III. Conclusion

       For the foregoing reasons, it is hereby

       ORDERED that the Final Results are sustained, with the exception of Commerce’s

value-added tax deductions and calculation of surrogate financial ratios; it is further

       ORDERED that the Final Results are remanded to Commerce to reconsider its

value-added tax deductions and calculation of surrogate financial ratios; it is further

       ORDERED the Commerce shall file its remand results on or before November 28,

2017; and it is further

       ORDERED that, if applicable, the parties shall file a proposed scheduling order

with page limits for comments on the remand results no later than seven days after

Commerce files it remand results with the court.

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

Dated: September 28, 2017
       New York, New York