AD Respondents Rail Against AFA Rate Over Cost Reconciliation at Federal Circuit
The Commerce Department illegally hit antidumping respondent Unicatch Industrial Co. with adverse facts available over the fact that the company did not submit a complete cost reconciliation, Unicatch and other appellants argued in a Dec. 19 opening brief at the U.S. Court of Appeals for the Federal Circuit. Unicatch, along with TC International, Hor Liang Industrial Corp. and Romp Coil Nails Industries, argued that all the data needed to complete the cost reconciliation was on the record, meaning the respondent "could have easily completed the reconciliation in a manner required if it had realized that Commerce was not satisfied with its response" (Pro-Team Coil Nail Enterprise v. United States, Fed. Cir. # 22-2241).
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The case challenges the first administrative review of the antidumping duty order on certain steel nails from Taiwan in which Pro-Team Coil Nail and Bonuts Hardware Logistics were selected as mandatory respondents. After Bonuts said it wouldn't participate, Unicatch was tapped as a respondent.
Following a remand order from the Court of International Trade, Commerce calculated a company-specific dumping margin of zero percent for Pro-Team but continued to hit Unicatch with a total AFA rate of 78.17%, the highest rate in the petition. The agency then took a simple average of all three respondents' rates, including Bonuts' AFA rate, to derive the non-individually examined respondents' rate. In the case's second opinion at the trade court, CIT instructed Commerce to corroborate the petition rate, which the agency did using Pro-Team's transaction-specific margins. When Commerce simply averaged the three mandatory respondents' rates again, it gave the non-individually examined respondents a 52.11% rate.
In the case's second opinion, the trade court upheld Commerce's corroboration of the petition rate but remanded Commerce's departure from the expected method for finding the all-others rate (see 2108090026), the expected method being a weighted average of the respondents' rates, while Commerce used a simple average. The agency said it declined to use the expected method because it didn't have sales value data from Bonuts. CIT said that while that would normally be grounds to depart from the expected method, in this case Commerce has CBP import volume data that can be substituted for the missing sales value data (see 2108090026).
Again on remand, Commerce then used a weighted average, using CBP entry data for one of the respondents and landing on a 35.50% rate for non-selected companies. In a July opinion, the court sustained this position. Appealing to the Federal Circuit, the appellants argue that the calculation of the all-others rate was illegal since the agency is "required to consider economic reality in calculating ADD rates for co-operating respondents, and a rate of 35.30% has no reasonable relationship to rates calculated for co-operating Taiwan respondents" in the periods right before and after the review period.
The appellants further railed against the use of AFA for Unicatch, taking particular exception to Commerce's failure to tell the respondent that it had an issue with its cost reconciliation. The agency used Unicatch's cost data in its preliminary determination and did not tell Unicatch it would use AFA "for failure to complete a chart which previously had been accepted." The respondent tried to correct the deficiencies via a supplemental questionnaire, and the agency failed to "tread carefully when faced with a respondent ... whose errors did not constitute willful or deliberate noncompliance," the respondent argued.
"Commerce also committed reversible error by calculating Unicatch’s ADD margin at 78.17 percent," the brief said. "This rate was not properly corroborated and constitutes a draconian one size fits all penalty. In selecting this rate, Commerce failed to consider the totality of facts and circumstances, including all of the reasons why Commerce should not have relied on total facts available and total AFA."