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INTRODUCTION I. ZEROING AND GRANTING OFFSETS FOR NON-DUMPED COMPARISONS II. ADVERSE FACTS AVAILABLE III. RESPONDENT SELECTION IV. DATE OF SALE V. MODEL-MATCH METHODOLOGY VI. CONSTRUCTED EXPORT PRICE (CEP) OFFSET AND CEP PROFIT VII. SELLING, GENERAL & ADMINISTRATIVE (SG&A) EXPENSES VIII. SELECTION OF SURROGATE COMPANIES FOR SG&A RATIOS IX. POR AVERAGE COSTS X. FOREIGN EXCHANGE GAINS AND INTEREST INCOME XI. DUTY DRAWBACK XII. PROCEDURAL ISSUES CONCLUSION
In 2009, the United States Court of International Trade ("CIT") issued 152 slip opinions, many of which involved the court's jurisdictional grant under 28 U.S.C. [section] 1581 (c). Title 28 of the United States Code [section] 1581(c) vests the court with jurisdiction to review civil actions arising pursuant to section 516A of the Tariff Act of 1930, i.e., actions challenging determinations made by the U.S. Department of Commerce ("Commerce") administering the unfair trade laws. Individually, each of the 152 cases is important to its litigants, but for purposes of this article the authors have addressed those antidumping cases that may or should be significant to the trade bar, generally.
The article is structured so that it addresses substantive antidumping issues first before surveying calculation and procedural issues. We begin with a brief discussion of zeroing, an issue that has been addressed in prior years by both the CIT and the U.S. Court of Appeals for the Federal Circuit ("Federal Circuit"), but notwithstanding the settled law on this issue, in 2009 parties continued to challenge the methodology alleging that it was not permitted by the statute. Ironically, parties also challenged Commerce's decision not to zero in certain investigations on the same basis, i.e., that such action similarly was precluded by the statute. As discussed below, the CIT recognized that Commerce properly had exercised its discretion in both types of cases. Another hotly contested substantive issue in 2009 was Commerce's application of adverse facts available ("AFA") when responding parties failed to cooperate to the best of their ability in the underlying administrative proceeding. AFA certainly is not a new issue before the court, yet its parameters continue to be explored by the court, the agency, and the parties. The court's response to Commerce's selection of mandatory respondents was another important area that the CIT addressed in 2009, as was selecting the date of sale and Commerce's model-matching criteria. Finally, we address opinions that examined certain calculation and procedural issues including constructed export price ("CEP") offset, CEP profit, duty drawback, selection of surrogate countries for purposes of Selling, General and Administrative ("SG&A") expense ratios, calculation of the SG&A ratio, the importance of deadlines for submission of information to the agency, and revocation.
I. ZEROING AND GRANTING OFFSETS FOR NON-DUMPED COMPARISONS
Commerce's continued application of its zeroing methodology in administrative reviews and its implementation of an adverse World Trade Organization ("WTO") dispute settlement report which was narrowly crafted to apply only with respect to calculations of average-to-average margins in investigations continued to be hotly contested at the court in 2009. With respect to zeroing in administrative reviews, notwithstanding the Federal Circuit's consistent and repeated affirmance of Commerce's longstanding methodology, i.e., in which Commerce calculates average dumping margins using only positive margins, declining to offset such margins with any so-called "negative margins" for non-dumped sales, the court was still faced with the issue in 2009. As evidenced below, in light of the statements in the courts' opinions, one wonders what advantage parties gained through their continued disregard of appellate precedent and CIT jurisprudence.
In addition to upholding Commerce's zeroing methodology in administrative reviews, the court also decided two cases in which Commerce applied its recently implemented approach to come into compliance with a WTO dispute settlement report and calculate dumping margins in investigations by including so-called "negative dumping margins" in the calculation of the average dumping margin. (1) As discussed below, this granting of offsets for non-dumped comparisons in investigations represented a departure from the Department's zeroing methodology.
Trade practitioners are well aware that Commerce continues to apply its zeroing methodology in administrative reviews despite the fact that it abandoned the use of zeroing in investigations involving comparisons between weighted average export prices (or CEP) and weighted average normal values when the U.S. government implemented an adverse WTO dispute settlement report a few years ago. (2) That implementation was effective February 22, 2007. (3) Current zeroing litigation, consequently, involves Commerce's refusal to abandon its zeroing methodology in administrative reviews.
A quick survey of the court's 2009 zeroing decisions demonstrates the futility of raising such claims and the futility of attempting to rely upon WTO dispute settlement reports that have not been implemented in U.S. law in seeking to overturn Commerce's final results in administrative reviews. In JTEKT Corp. v. United States, the court stated comprehensively: "In summary, Court of Appeals precedent entirely precludes the court from requiring Commerce to change its zeroing practice in administrative reviews based on the Section 123 determination, and it forecloses a remand under which Commerce would be directed or authorized to reconsider its practice in light of WTO decisions declaring unlawful the practice of zeroing in the context of administrative reviews." (4) Similar statements were made in SKF USA Inc. v. United States (5) in which the court affirmed zeroing because "Plaintiffs have failed to advance a new argument directed at Commerce's use of zeroing that is not foreclosed by the binding precedents of the Court of Appeals." (6) The Federal Circuit, no doubt exhausted by the continued drain on judicial resources on an issue that has been decided repeatedly in Commerce's favor, in its last case involving a challenge to zeroing did not author another opinion and instead issued what is known as a Rule 36 affirmance, i.e., a judgment of affirmance without opinion. (7)
Government implementation of an adverse WTO dispute settlement zeroing report which resulted in Commerce not using its zeroing methodology in investigations withstood challenges as well. Specifically, in 2009, the court continued to address Commerce's recently implemented methodology of granting offsets for non-dumped comparisons in investigations. As referenced above, in 2006, as a result of an adverse WTO zeroing report, the U.S. Trade Representative initiated proceedings under sections 123 and 129 of the Uruguay Round Agreements Act ("URAA") to bring Commerce's margin calculation methodology in investigations into conformity with the WTO dispute settlement report. (8) Through these proceedings, certain aspects of the WTO report were implemented as a matter of U.S. law. Commerce complied with the implementation by issuing a Section 123 Determination. The Section 123 Determination contained Commerce's new margin calculation approach which was to be applied in investigations and Section 129 determinations implementing the new methodology. (9) Although this year is not the first in which the court upheld Commerce's granting of offsets, the CIT again affirmed Commerce's practice in U.S. Steel v. United States and Searing Industries v. United States. (10)
In U.S. Steel, Commerce applied its new methodology to particular investigations addressed in the WTO zeroing report pursuant to section 129 of the URAA. In the investigation underlying this case, Commerce granted offsets in place of zeroing to recalculate respondents' weighted-average dumping margin. (11) U.S. Steel and others challenged Commerce's new approach, arguing that the antidumping laws require zeroing because the statute describes the dumping margin as that which "exceeds" the normal value of the merchandise and, as such, prohibits the use of so-called "negative margins" in calculating the overall average margin. (12) Domestic producers further challenged the validity of Commerce's statutory interpretation on grounds that the terra "exceeds" cannot be read to have different meanings within the same statute. (13)
Commerce disagreed, relying upon the Federal Circuit's seminal zeroing decision, Timken, which holds that the antidumping laws do not clearly require zeroing. (14) Commerce also emphasized that the change enunciated in its Section 123 Determination was crafted narrowly, such that granting offsets would apply only to future calculations of average-to-average margins in investigations and not to all margin calculations. (15)
The court's analysis centered on agency discretion interpreting ambiguous antidumping laws. (16) In Timken, the Federal Circuit already had held that the antidumping statute does not require zeroing. (17) Here, the court further explained that although the statute defines "dumping margin," it does not specify whether that definition may include only positive values, only negative values or both and, in fact, each may be referred to as "margins." (18) Thus pointing to the ambiguity of the statute, the court explained that Commerce's interpretation was reasonable under Chevron. (19) Accordingly, despite the presumption of statutory interpretation that a word used multiple times in a statute has but one meaning, Commerce adequately explained why "exceeds" may have different meanings in different parts of the statute. (20)
The CIT also rejected domestic producers' argument that Commerce's interpretation would nullify the statute because granting offsets would result in the same dumping margin under two distinct statutory methodologies. (21) The domestic producers argued that this result impermissibly nullified Congress's intent to have separate outcomes. The court disagreed, however, explaining that "Timken and its progeny make clear that the starting point for the debate in this issue lies in the text of [section] 1677(35)(A)-(B), which has unequivocally been held to be ambiguous." (22) The domestic producers' argument, therefore, was irrelevant because the court was required to look first at the reasonableness of Commerce's interpretation rather than inquire into Congressional intent. The court also explained the importance of the fact that Commerce's Section 123 Determination was "the result of a careful balancing act," issued specifically to bring U.S. practice into conformity with international obligations. (23)
II. ADVERSE FACTS AVAILABLE
In one of the more dynamic legal areas of 2009, the CIT (and the Federal Circuit) both examined Commerce's discretion to apply AFA in antidumping proceedings. Under 19 U.S.C. [section] 1677e(a), Commerce "shall" use "facts otherwise available" in making its determination when necessary information is not on the record (24) or one of four other triggering provisions occurs. (25) If a party fails to cooperate to the best of its ability in complying with a request for information, Commerce is statutorily authorized to use "adverse inferences" when selecting among these "facts otherwise available." (26) If Commerce chooses to rely on secondary information to make its adverse inferences, it is bound "to the extent practicable" to corroborate this information (27) for "reliability and relevance." (28) In 2009, corroboration of the adverse rates selected was once again a focal point of the court's opinions.
In KYD I, the respondent, King Pac Industrial Co., an exporter of plastic shopping bags, (29) failed to comply with Commerce's requests for information. (30) Commerce, applying adverse inferences pursuant to its statutory authority under 19 U.S.C. [section] 1677e(b), assigned King Pac an AFA dumping rate of 122.88%--the highest rate alleged in the original petition. (31) Similarly, in Gallant Ocean I, a Thai exporter of shrimp failed to comply …