Hyundai Steel Decision Allows for PMS Adjustment When Normal Value Based on CV, Petitioner Argues
Ruling against the Commerce Department's use of a particular market situation adjustment when normal value is based on constructed value "could render the provisions Congress enacted to empower Commerce to address distortive" PMS adjustments "a dead letter in most" AD proceedings, petitioner Wheatland Tube argued in a Nov. 14 reply brief. Responding to the appellee Saha Thai Steel Pipe Public Co.'s arguments for summary affirmance in the case, given the U.S. Court of Appeals for the Federal Circuit's key opinion in Hyundai Steel v. U.S., Wheatland said that Commerce's PMS adjustment actually squares with Hyundai Steel (Saha Tahi Steel Pipe Public Co. v. United States, Fed. Cir. #22-1175).
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The case concerns the 2017-2018 administrative review of the antidumping duty order on circular welded pipe from Thailand. In the review, Commerce said that a PMS existed in Thailand so that the cost of production of the subject merchandise was distorted and did not reflect sales made in the ordinary course of trade. The agency then made a PMS adjustment to the sales-below-cost test. The case was taken to the trade court, where CIT held that Commerce did not have the statutory authority to make this adjustment.
On remand, Commerce said that conducting a sales-below-cost test without the PMS adjustment was meaningless and then based normal value on constructed value while still making the adjustment. The court again struck this down, finding that Commerce did not follow the statutory framework and that the agency could not exclude home market sales based on a cost-based PMS.
The trade court's position over Commerce's lack of authority to make a PMS adjustment to the sales-below-cost test was upheld in Hyundai Steel (see 2112100039). However, the court pointed out scenarios in which a cost-based PMS could be addressed by Commerce. Wheatland argued that during the first remand period at CIT in its case, Commerce sought one of these exceptions (see 2209130070). In seeking to differentiate its case from Hyundai Steel, Wheatland argued that the CV part of the statute allows Commerce "to use any other methodology when calculating constructed value to account for the cost-based PMS found to exist."
Saha Thai, in response, vied for summary affirmance of the case given Hyundai Steel, arguing that the decision clearly resolves the issues in the case. Wheatland disagreed, telling the Federal Circuit that the appeal presents a "substantial question: If Commerce is not permitted to adjust PMS-distorted costs for the purposes of the sales-below-cost test, may Commerce disregard the home market sales that pass that test in favor of constructed value as the basis of normal value?" The petitioner said it believes that the appellate court answered in the affirmative in Hyundai Steel, and the fact that Saha Thai disagrees "warrants a reasoned opinion from this Court to guide the agency and the CIT in future proceedings."
The appellee also claimed that the court should issue summary affirmance due to the "procedural posture" of the case. The case was stayed pending Hyundai Steel, and now that that case is resolved, its conclusion should dictate the end of Wheatland's appeal. The petitioner, though, says that this is untrue given that the appellate court denied the petition for en banc rehearing of Hyundai Steel, and that a rehearing could have resolved the present case.
Wheatland railed against Saha Thai's arguments that assumed that Commerce solely relied on section 1677(15)(C) to reject home market sales and "adopt a highly restrictive reading of section 1677(15)(C)." The petitioner said that Commerce also relied on "19 U.S.C. § 1677b(a)(1)(B)(i) for the proposition that 'home market sale prices used as normal value must be sold in the ordinary course of trade.'" Wheatland characterized Saha Thai as being "so eager to minimize this part of Commerce's determination" because it closely follows the path laid out in Hyundai Steel.