Court Opinion

ID: 2713626
Source: CourtListenerOpinion
Date Created: 2014-08-05 20:51:39.928148+00
Date Added: 2024-06-11T11:56:41.006836
License: Public Domain

Slip Op. 14-86

                UNITED STATES COURT OF INTERNATIONAL TRADE

 DUPONT TEIJIN FILMS, MITSUBISHI
 POLYESTER FILM, INC., SKC, INC., and
 TORAY PLASTICS (AMERICA), INC.,

                       Plaintiffs,

                v.                                   Before: Jane A. Restani, Judge

 UNITED STATES,                                      Court No. 12-00088

                       Defendant,

 TIANJIN WANHUA CO., LTD., FUWEI
 FILMS (SHANDONG) CO., LTD., and
 SICHUAN DONGFANG INSULATING
 MATERIAL CO., LTD.,

                       Defendant-Intervenors.

                                          OPINION

[Commerce’s second redetermination regarding calculation of normal value in non-market
economy antidumping duty case sustained.]

                                                                            Dated: July 22, 2014

              Jeffrey I. Kessler, Ronald I. Meltzer, Patrick J. McLain, and David M. Horn,
Wilmer, Cutler, Pickering, Hale & Dorr, LLP, of Washington, DC, for plaintiffs.

               David F. D’Alessandris, Trial Attorney, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice, of Washington D.C., for defendant. With him on the brief
were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M.
McCarthy, Assistant Director. Of counsel on the brief was Whitney M. Rolig, Attorney, Office
of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of
Washington D.C.

               David J. Craven and Saichang Xu, Riggle and Craven, of Chicago, IL, for
defendant-intervenors.
Court No. 12-00088                                                                           Page 2

               Restani, Judge: This matter is before the court following a remand to the United

States Department of Commerce (“Commerce”) in Dupont Teijin Films v. United States, 931 F.

Supp. 2d 1297 (CIT 2013) (“Dupont Teijin Films II”). Plaintiffs Mitsubishi Polyester Film, Inc.

and SKC, Inc. (collectively, “Plaintiffs”) and Defendant-Intervenors Tianjin Wanhua Co., Ltd.,

Sichuan Dongfang Insulating Material Co., Ltd., and Fuwei Films (Shandong) Co., Ltd.

(collectively, “Defendant-Intervenors”) challenge various aspects of the Final Results of

Redetermination Pursuant to Court Order, ECF No. 70-1 (“Second Remand Results”). For the

reasons set forth below, Commerce’s Second Remand Results are sustained.

                                       INTRODUCTION

               The court assumes familiarity with the facts of this case as set out in the previous

opinion. See generally Dupont Teijin Films II, 931 F. Supp. 2d at 1299–1307. For ease of

understanding, however, a brief summary is provided below.

               This case involves challenges to Commerce’s final results of redetermination in

the second administrative review of the antidumping duty order of polyethylene terephthalate

film, sheet, and strip (“PET film”) from the People’s Republic of China (“PRC”). See

Polyethylene Terephthalate Film, Sheet, and Strip from the People’s Republic of China: Final

Results of the 2009–2010 Antidumping Duty Administrative Review of the Antidumping Duty

Order, 77 Fed. Reg. 14,493 (Dep’t Commerce Mar. 12, 2012). Initially, Commerce calculated

the dumping margins using India as the primary surrogate country. Id. at 14,494. Commerce

calculated weighted-average dumping margins of 8.42% for Tianjin Wanhua Co., Ltd, 10.87%

for Sichuan Dongfang Insulating Material Co., Ltd., and 8.48% for both Fuwei Films

(Shandong) Co., Ltd. and Shaoxing Xiangyu Green Packing Co., Ltd. Id.
Court No. 12-00088                                                                          Page 3

               In its previous order in this case, the court instructed Commerce to reconsider its

surrogate country selection using 2009 Gross National Income (“GNI”) data. Dupont Teijin

Films II, 931 F. Supp. 2d at 1307. Commerce ignored 2009 GNI data indicating that India was

no longer economically comparable to the PRC, despite the data being on the record, claiming,

very belatedly, that the data were not filed early enough in the proceedings. Id. at 1299, 1301,

1307. The court held that Commerce must consider record evidence and that the parties were not

given a meaningful opportunity to comment on economic comparability. Id. at 1305.

               On remand, Commerce utilized the 2009 GNI data to create a new list of potential

surrogate countries and selected South Africa as the primary surrogate country to use in this

administrative review because South Africa is at a similar level of economic development as the

PRC, it is a significant producer of comparable merchandise, and there were reliable data that

could be used to value the factors of production. Second Remand Results at 1–2.1 The change in

the primary surrogate country resulted in higher margins of 19.49% for Tianjin Wanhua Co.,

Ltd, 14.25% for Sichuan Dongfang Insulating Material Co., Ltd., and 19.35% for both Fuwei

Films (Shandong) Co., Ltd. and Shaoxing Xiangyu Green Packing Co., Ltd. Id. at 34.

               Plaintiffs challenge Commerce’s decision to use South Africa as the primary

surrogate country for calculating the normal value of PET film, contending that South Africa is

not a significant producer of comparable merchandise and that Commerce should instead use

data from Thailand and/or Indonesia. Pls.’ Cmts. on Commerce’s Second Remand

Determination 1–2, ECF No. 79 (“Pls.’ Br.”). Plaintiffs argue that South Africa is not a

       1
          Commerce disagrees with the court’s instruction to reconsider its surrogate country
selection using the 2009 GNI data. Commerce completed its redetermination under protest on
this issue. Second Remand Results at 2–3.
Court No. 12-00088                                                                            Page 4

significant producer of comparable merchandise due to its relatively low volume of exports

under Harmonized Tariff Schedule (“HTS”) 3920.62, which covers PET film.2 Id. at 3–4.

Additionally, Plaintiffs contend that Commerce acted unreasonably in relying on the financial

statement of South African producer Astrapak to determine that South Africa is a significant

producer of comparable merchandise. Pls.’ Br. 5–8.

               Defendant-Intervenors agree with Commerce’s rejection of Thailand as the

primary surrogate country.3 Cmts. of Def.-Intvnrs. on Second Remand Results 2, ECF No. 77

(“Def.-Intvnrs.’ Br.”). Defendant-Intervenors also agree that Commerce properly selected South

Africa as the primary surrogate country, but they argue that Commerce failed to use all of the

South African financial statements on the record in calculating the financial ratios. Id. at 3–4.

               Defendant United States (“the government”) responds that Commerce reasonably

selected South Africa as the primary surrogate country and calculated the surrogate financial

ratios in accordance with its policies and the law. Def.’s Resp. to Pls.’ Cmts. Regarding the

Remand Redetermination 4, ECF No. 82 (“Def.’s Br.”).

       2
         HTS 3920.62 covers “[o]ther plates, sheets, film, foil and strip, of plastics, non-cellular
and not reinforced, laminated, supported or similarly combined with other materials: [o]f
polycarbonates, alkyd resins, polyallyl esters or other polyesters: [o]f poly(ethylene
terephthalate).”
       3
         Defendant-Intervenors believe that Commerce should have continued to use India as a
surrogate country. Def.-Intvnrs.’ Br. 2–3. Defendant-Intervenors, however, acknowledge that
Commerce’s decision not to use India as a surrogate country is based upon the court’s prior
decisions in this matter directing Commerce to consider the 2009 GNI data of record. Id. In
doing so, Commerce found India was no longer “economically comparable” to the PRC and no
longer qualified as a potential surrogate country. Second Remand Results at 7. Based on the
court’s prior decisions instructing Commerce to consider the 2009 GNI data, Defendant-
Intervenors recognize that it is inappropriate to challenge Commerce’s rejection of India at this
time. Def.-Intvnrs.’ Br. 2. Accordingly, the court does not address this argument.
Court No. 12-00088                                                                           Page 5

                      JURISDICTION AND STANDARD OF REVIEW

               The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2012). The court

will not uphold any determination by Commerce that is “unsupported by substantial evidence on

the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).

                                          DISCUSSION

I.     South Africa as the Surrogate Country

               A.      Background

               Because the PRC is considered by Commerce to be a non-market economy4

(“NME”), much of the antidumping investigation and subsequent administrative reviews have

focused on selecting surrogates for valuing the various factors of production used in

manufacturing PET film in order to calculate normal value. See 19 U.S.C. § 1677b(c)(1). The

statute requires that surrogate values be based, “to the extent possible,” on data from an

economically comparable market economy country that is a “significant producer[] of

comparable merchandise.” Id. § 1677b(c)(4).

               “Comparable merchandise,” however, is not defined in the relevant statute or

regulations, and Commerce asserts that it defines comparable merchandise on a case-by-case

basis. Letter from Import Administration to All Interested Parties Attach II., SRPD 2 at barcode

3154951-01 (Sept. 17, 2013), ECF No. 80 (Apr. 7, 2014) (“Policy Bulletin 04.1”). Commerce

considers factors such as physical differences in products, major inputs of production, whether

the product is of low or high value added, and the production process. Id. In cases where the

       4
         A nonmarket economy country is “any foreign country that [Commerce] determines
does not operate on market principles of cost or pricing structures, so that sales of merchandise
in such country do not reflect the fair value of the merchandise.” 19 U.S.C. § 1677(18)(A).
Court No. 12-00088                                                                           Page 6

subject merchandise contains a major input that is specialized or used intensively in the

production of the subject merchandise, comparable merchandise should be identified on the basis

of a comparison of such major input. Id.

               “Significant producer” also is not defined in the relevant statute or regulations.

Id. Commerce alleges that it determines whether a country is a significant producer on a case-

by-case basis as well. Id. A significant producer could be a top world producer of comparable

merchandise or a country that is a net exporter of comparable merchandise, even if the country is

not a top world producer. Id. Commerce, however, avoids assessing significant production

relative to the NME country’s production or the production of other potential surrogate

countries, but instead Commerce assesses the output of the potential surrogate country in relation

to world production and trade in comparable merchandise. Id. Commerce prefers to use world

production data, but in many cases such data are not available and Commerce often will turn to

export data. See Second Remand Results at 7–8; Def.’s Br. 12. Thus, the specific factual data

relied on to make the determination of significant production will vary from case to case. Policy

Bulletin 04.1; Second Remand Results at 10.

               The surrogate values selected from an economically comparable significant

producer are then used to compute the normal value, in this case the cost of production for a

particular PET film producer from the PRC, as if that producer had operated in a hypothetical

market economy. See 19 U.S.C. § 1677b(c)(1).

               In the case at hand, Commerce selected South Africa as the primary surrogate

country after determining that South Africa was economically comparable to the PRC, was a

significant producer of comparable merchandise, and had adequate data available, as explained.
Court No. 12-00088                                                                           Page 7

Second Remand Results at 2.

               First, Commerce considered comparable merchandise to be products covered by

HTS 3920.62 and other PET- and polymer-based products, and Commerce found that all six

potential surrogate countries exported products falling under HTS 3920.62. Id. at 7–11. In

addition to export data, Commerce also looked at the financial statement of Astrapak, a South

African producer of packaging materials. Id. at 8, 10–11. Astrapak’s Flexibles Division

manufactures high-density polyethylene films, low density single- and multi-layered films, plain

and printed films, co-extruded film, blown film, film for pallet stretch wrap, and industrial pallet

shrink shroud. Id. at 10. All of these films are produced by melting and extruding plastics that

are used for food packing. Id. Commerce determined that because these products are produced

in a similar way and with similar inputs for PET film, the products were comparable to the

subject merchandise. Id. at 10. Next, Commerce concluded that both Thailand and South Africa

were significant producers of comparable merchandise because they manufactured and exported

merchandise comparable to PET film. Id. at 12. Finally, Commerce selected South Africa as

the primary surrogate country due to concerns over the reliability of the data from Thailand.5 Id.

at 2, 13.

        5
         Specifically, Commerce found that Polyplex Thailand received countervailable
subsidies and therefore its data were not the best available information. Second Remand Results
at 13–15; see 19 U.S.C. § 1677b(c)(1). It is Commerce’s practice to reject financial statements
of a company that Commerce has reason to believe has benefitted from countervailable
subsidies, especially when other acceptable data are available. See Second Remand Results at
14. Commerce’s rejection of Thailand as a surrogate country, due to the suspected
countervailable subsidies in Polyplex Thailand’s financial statements, appears to be supported by
substantial evidence and in accordance with law, and the parties do not challenge directly
Commerce’s justification for rejecting the Thai data.
Court No. 12-00088                                                                           Page 8

               B.      South Africa Is a Significant Producer of Comparable Merchandise

               Plaintiffs argue that South Africa is not a significant producer of comparable

merchandise due to its relatively low volume of exports under HTS 3920.62 and contend that

Commerce’s reliance on Astrapak’s financial statement to determine that South Africa is a

significant producer of comparable merchandise in the light of the export data was unreasonable.

Pls.’ Br. at 2–8. This challenge rests on two grounds. First, Plaintiffs argue that because there is

no evidence that Astrapak produces any goods falling under HTS 3920.62, the export data are

corroborated and show that South Africa is not a significant producer of comparable

merchandise. Id. at 7. Second, Plaintiffs argue that Commerce acted unreasonably and

inconsistent with its stated policy by comparing Astrapak’s production to the exports of other

surrogate countries in finding that South Africa is a significant producer of comparable

merchandise. Id. at 5–6.

               The government responds that Commerce reasonably selected South Africa as the

primary surrogate country in accordance with its policies and the law. Def.’s Br. 6–15. The

government emphasizes that when making a comparable product finding, Commerce does not

limit its analysis to identical merchandise—it also considers the production of comparable

merchandise. Id. at 7 (citing Policy Bulletin 04.1). Commerce found products under HTS

3920.62 to be comparable because that classification covers the subject merchandise. Second

Remand Results at 8. Commerce also found products with polymers as the only major input,

such as flexible films or rigid product containers that specifically require PET, to be comparable

merchandise. Id. at 10–11, 18–20. The government argues that Commerce, in deciding that

Astrapak produces comparable merchandise, appropriately considered products falling under the
Court No. 12-00088                                                                          Page 9

HTS heading of the subject merchandise as well as products with the same major inputs and uses

as the subject merchandise to be comparable, consistent with Policy Bulletin 04.1. Def.’s Br.

7–8. The government also argues that Astrapak’s production level shows that South Africa is a

significant producer of merchandise comparable to PET film. Id. at 12–13.

               1.     Commerce Reasonably Considered Astrapak’s Merchandise to be
                      Comparable to PET Film.

               Plaintiffs argue that South Africa’s low ranking among exporters of goods falling

under HTS 3920.62 (52nd out of 80 countries) shows that is it not a significant producer of

comparable merchandise and contend that the data contained in Astrapak’s financial statement

corroborate, rather than rebut, the minimal production of comparable merchandise. Pls.’ Br. 3–4,

7. Plaintiffs argue that Astrapak is not a producer of comparable merchandise because there is

no evidence that Astrapak produces any goods falling under HTS 3920.62. Id. at 7. Thus, the

only record evidence relevant to South Africa’s production of comparable merchandise is the

export data, which indicate that South Africa is not a significant producer. See id. This claim

lacks merit.

               Plaintiffs incorrectly assume that because Astrapak’s products would not fall

under HTS 3920.62, they are not comparable. Id.; Def.’s Br. 9–11. Aside from arguing that

Astrapak’s products do not fall under HTS 3920.62, plaintiffs do not actually specify why

Astrapak’s products are not comparable to PET film. Pls.’ Br. 7. Commerce, however, is not

restricted to looking at export data and the merchandise falling under the exact HTS heading

covering the subject merchandise when determining if merchandise is comparable. Commerce

should consider the record as a whole, including financial statements, to makes its findings,

especially when the export data alone may not give an accurate picture of production. See
Court No. 12-00088                                                                       Page 10

Dorbest Ltd. v. United States, 30 CIT 1671, 1683; 462 F. Supp. 2d 1262, 1274 (2006) (using

financial statements to determine that India was a significant producer of wooden bedroom

furniture based on the totality of the circumstances).

               Here, the record as a whole demonstrates that South Africa manufactured

products falling under the relevant HTS heading as well as products comparable to the subject

merchandise based on major inputs and uses. The export data showed only products that were

exported, and they captured only a subset of all comparable merchandise, namely the products

falling under HTS 3920.62. Although Astrapak’s financial statement corroborates the fact that

South Africa exports relatively small amounts of PET film classified under HTS 3920.62, the

statement shows that Astrapak produces significant amounts of merchandise comparable to PET

film that does not fall under HTS 3920.62. Commerce’s decision to give little weight to South

Africa’s fairly low ranking in exports under HTS 3920.62 in the light of Astrapak’s financial

statement showing production of comparable merchandise was reasonable, supported by

substantial evidence, and in accordance with law.

               2.      Commerce Did Not Act Unreasonably in Comparing Astrapak’s
                       Production to the Export Levels of Other Surrogate Countries in Finding
                       that South Africa Was a Significant Producer of Comparable
                       Merchandise.

               Based on the data on the record, Commerce determined that both South Africa

and Thailand were significant producers of comparable merchandise. Second Remand Results at

9. First, Commerce looked at the export data and found that because Thailand exported over 44

million kilograms of PET film, it was a significant producer. Id. Second, Commerce found that

Astrapak’s Flexibles Division alone, which manufactures products comparable to PET film, as

explained above, produced merchandise of greater value than the PET film exports of any
Court No. 12-00088                                                                       Page 11

potential surrogate country.6 Id. at 10. On this basis, Commerce determined that South Africa

was a significant producer of comparable merchandise. Id. at 12.

               Plaintiffs argue that Commerce was unreasonable in comparing the value of

Astrapak’s merchandise to the value of the PET film exports of the other potential surrogates, as

doing this compares production of two potential surrogate countries, which is inconsistent with

Commerce’s policy. Pls.’ Br. 5–6. The court need not decide whether comparison of potential

surrogates in this manner is somehow prohibited. Here, the government supports Commerce’s

comparison of Astrapak’s production to other countries by explaining that the comparison was

not a means of ranking the countries, but was reflecting Commerce’s position that the export

data alone were not sufficient to determine whether South Africa was a significant producer, as

South Africa is not an export-focused country with regard to this product.7 Def.’s Br. 13–15.

               Commerce properly considered all record evidence in determining South Africa

was a significant producer. Because world production data were not available, Commerce

reasonably looked to other sources of data on the record, including export data and Astrapak’s

financial statement. See Dorbest, 30 CIT at 1683; 462 F. Supp. 2d at 1274. In stating that

Astrapak’s Flexibles Division’s production value was greater than the value of other potential

       6
         Astrapak’s Flexibles Division produced merchandise valued at 182,805,481.42 USD.
Second Remand Results at 10. The value of Thailand’s PET film exports was 103,690,241 USD.
Memorandum from Jonathan Hill to Director of AD/CVD Operations re: Selection of a
Surrogate Country Attach. II, PD 34 at barcode 3037997-01 (Oct. 28, 2011), ECF No. 80 (Apr.
7, 2014).
       7
       Commerce noted that only 10% of Astrapak’s merchandise is exported and 90% is
consumed domestically. Second Remand Results at 22. Because of the high amount of domestic
consumption, South Africa’s export data likely do not capture a significant amount of the
comparable merchandise actually produced. See id.
Court No. 12-00088                                                                          Page 12

surrogate countries’ exports, Commerce was not defining “significant” solely in relation to other

surrogate countries. Rather, Commerce was using Thailand as a benchmark to determine

whether South Africa’s production levels would qualify it as a significant producer. If Thailand

is a significant producer—and the parties do not argue that it is not—and the record showed even

greater production in South Africa, then South Africa logically would be a significant producer

as well. Reading the record as a whole, rather than focusing solely on the export data for HTS

3920.62, Commerce reasonably could conclude that South Africa was a significant producer of

comparable merchandise. Commerce’s determination that South Africa was a significant

producer of comparable merchandise thus was consistent with Policy Bulletin 04.1, is supported

by substantial evidence, and is in accordance with the law.

II.    Surrogate Financial Ratios

               The court now turns to Defendant-Intervenors’ challenge to Commerce’s

calculation of the surrogate financial ratios. Commerce usually relies on public information

gathered from producers of identical or comparable merchandise in the surrogate country in

calculating surrogate financial ratios. 19 C.F.R. § 351.408(c)(4) (2013). When the record

contains multiple contemporaneous financial statements from different producers, Commerce’s

practice is to average the financial statements to eliminate any potential distortions that may

arise from any one producer’s statement. See Dorbest Ltd. v. United States, 604 F.3d 1363,

1368, 1374 (Fed. Cir. 2010). When only a single producer’s financial statements are available,

however, this rationale does not apply. Under its current practice, “when considering multiple

financial statements from a single company [Commerce] considers the financial statements

overlapping more months of the POR to be more contemporaneous, and thus, preferable.” See
Court No. 12-00088                                                                        Page 13
Certain Frozen Warmwater Shrimp from the Socialist Republic of Vietnam: Issues and Decision

Memorandum for the Final Results of 2008–2009 Administrative Review, A-552-802, at 14 n.78

(July 30, 2010), available at

http://enforcement.trade.gov/frn/summary/vietnam/2010-19577-1.pdf (last visited July 15,

2014).

               Two financial statements from Astrapak were placed on the record here. The first

financial statement was for the period of March 1, 2009, to February 28, 2010 (“2010

Statement”). See Second Remand Results at 29. The second financial statement covered the

period from March 1, 2010, to February 28, 2011 (“2011 Statement”). Id. Commerce used the

2011 Statement in calculating the surrogate financial ratios, because it overlapped most with the

period of review. Id.

               Defendant-Intervenors argue that Commerce should have used a simple or

weighted average of both financial statements. Def.-Intvnrs.’ Br. 3. Defendant-Intervenors

assert that the failure to average the two financial statements was unreasonable because both of

Astrapak’s statements are contemporaneous, no flaws have been discovered that would

disqualify the use of either statement, and both statements overlap with the POR by a substantial

period, four months for the 2010 Statement and eight months for the 2011 Statement. Id. at 3.

Defendant-Intervenor’s also rely upon Certain New Pneumatic Off-the-Road Tires from the

People’s Republic of China: Preliminary Results of the 2009–2010 Antidumping Duty

Administrative Review and Intent to Rescind, in Part, 76 Fed. Reg. 62,356 (Dep’t Commerce

Oct. 7, 2011), and Folding Metal Tables and Chairs from the People’s Republic of China: Final

Results of Antidumping Duty Administrative Review, 77 Fed. Reg. 39,680 (Dep’t Commerce
Court No. 12-00088                                                                        Page 14
July 5, 2012), to argue that Commerce’s practice is to average multiple financial statements.

Def.-Intvnrs.’ Br. 3–4. The government argues that Commerce’s use of only the 2011 Statement

in calculating the financial ratios was proper. Id. at 15–17.

               The record here contains two financial statements from a single company,

Astrapak, and does not contain financial statements from any other South African producer of

comparable merchandise. Because the record contains the statements of only one company,

Commerce’s use of the financial statement that most overlapped with the POR (i.e., was the most

contemporaneous) is both reasonable and consistent with its current practice. There was no need

to average the financial statements because distortions caused by relying on only one company’s

financial statement are not a concern when only one producer’s financial statements are

available. Unless distortions are involved, Commerce may choose a simpler approach. The

court thus holds that Commerce’s use of the 2011 Statement in the remand determination is

supported by substantial evidence and is in accordance with law.

                                         CONCLUSION

               For the foregoing reasons, Commerce’s Second Remand Results are

SUSTAINED. Judgement will enter accordingly.

                                                                /s/ Jane A. Restani
                                                                  Jane A. Restani
                                                                      Judge

Dated: July 22, 2014
       New York, New York