US, Petitioner Say Commerce Properly 'Smoothed' Steel Plate Costs in AD Case on Korean Wind Towers
The Commerce Department legally weight-averaged or "smoothed" antidumping duty respondent Dongkuk S&C Co.'s "disparate" steel plate costs in the AD investigation on utility scale wind towers from South Korea, the government and petitioner Wind Tower Trade Coalition argued in a pair of reply briefs at the U.S. Court of Appeals for the Federal Circuit (Dongkuk S&C Co. v. U.S., Fed. Cir. # 23-1419).
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The U.S. said record evidence supported Commerce's finding that "significant differences" in Dongkuk's steel plate costs among control numbers (CONNUMs) were mainly due to factors unrelated to differences in the physical characteristics of the wind towers linked to the CONNUMs. As a result, Commerce reasonably said the timing of the purchases was the "significant factor" driving the differences between the finished wind towers and weight-averaging the costs was appropriate under the agency's practice, the briefs said. Both the U.S. and the coalition also argued for Commerce's calculations of Dongkuk's constructed value profit and selling expenses based on the consolidated 2018 financial statement of Korean manufacturer SSHC.
In the investigation, Commerce found that Dongkuk's reported steel plate costs were significantly different from costs of its CONNUMs sold in the Japanese and the U.S. markets. The agency decided to account for the timing of the steel plate purchases, instead of the towers' physical characteristics, given this was the "overwhelming factor" causing the differences in the steel plate costs. Commerce did so by weight-averaging the reported steel plate costs for all reported CONNUMs. Dongkuk unsuccessfully challenged Commerce's final determination at the Court of International Trade (see 2211170084).
At the Federal Circuit, Dongkuk said the trade court was wrong in upholding the decision to weight-average the steel plate costs since CIT ignored that the agency focused on the steel inputs' physical characteristics and not the finished wind towers' physical characteristics (see 2304100045).
Commerce said that contrary to Dongkuk's claim, the "whole point of Commerce's analysis was to examine whether the significant differences that Commerce observed among the costs for DKSC’s different CONNUMS were related to the wind towers’ physical characteristics, which Commerce did by isolating the time period and analyzing whether costs varied based on the physical characteristics of either the wind towers or the steel input." This let the agency find that timing was the "main factor," the brief said.
The coalition called Dongkuk's argument a "red herring" that reads a limit into the law "that does not exist." The statute does not limit the agency's analysis to just the characteristics in the CONNUM or restrict the analysis to require a direct comparison of different types of finished merchandise. The agency is instead directed to "consider all available evidence on the proper allocation of costs," the coalition said, adding it would be "nonsensical to limit Commerce's analysis" to only costs linked to the physical characteristics listed in the CONNUM.
The CONNUM is just an "administrative construction" used to ensure a price comparison between two sales considers sales of similar types of merchandise. The agency often does not list inputs in the CONNUM, but this does not mean that those inputs "do not have costs that affect the subject product's cost or production or sale," the brief said. "DKSC's absurd approach would circumscribe Commerce's authority and prohibit Commerce from accounting for obvious cost distortions attributable to the key input in subject merchandise, contrary to the statute."