Hangzhou Yingqing Material Co. v. United States
195 F. Supp. 3d 1299
| Ct. Intl. Trade | 2016Background
- This case challenges Commerce's final results in the fourth administrative review (and aligned new shipper review) of the antidumping order on steel wire garment hangers from the PRC. Plaintiffs: Hangzhou Yingqing Material Co. and Hangzhou Qingqing Mechanical Co. Defendant: United States (Commerce). Court: U.S. Court of International Trade (Judge Leo M. Gordon).
- Commerce selected Thailand as the primary surrogate country to value factors of production (FOPs) for these non-market-economy proceedings and used Thai import HS subheadings to value specific inputs (steel wire rod, paint, thinner, corrugated paperboard) and the World Bank Doing Business data to value brokerage & handling (B&H).
- Plaintiffs submitted a mill certificate showing the carbon content of the steel wire rod they used and argued alternative surrogate countries (Ukraine or the Philippines) or different HS subheadings would better match their inputs or financial data.
- Commerce rejected as untimely factual information submitted by Plaintiffs after the statutory/regulatory deadline and declined to accept or adjust certain data based on the late submission.
- Commerce used Thailand labor data (2007 NSO) to value labor and Thai company financial statements (LS Industry 2012) to calculate surrogate financial ratios; Commerce did not adjust those ratios for possible double-counting of labor-related items. Commerce valued B&H with the World Bank Doing Business (Thailand 2013) data and declined to deduct the identified cost of obtaining a letter of credit.
- The Court sustained Commerce on surrogate-country selection, valuations of paint/thinner/paperboard, and rejection of Plaintiffs’ late submission; the Court remanded two issues back to Commerce: allocation/adjustment for labor in surrogate financial ratios and deduction for letter-of-credit cost from B&H.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Primary surrogate-country selection (Thailand) | Thailand unreliable; Ukraine or Philippines provide data more specific to Plaintiffs (steel carbon content,/or better financials) | Thailand is on OP list, produced more specific HS-level import data matching Plaintiffs' mill certificate; USTR reports do not render Thai data unusable | Sustained: Thailand was a reasonable choice; Thai HS subheadings better matched mill certificate; concerns over Thai customs did not compel rejecting Thai data |
| Valuation of FOPs: paint, thinner, corrugated paperboard | Commerce chose overly broad/basket HS codes instead of more specific subheadings proposed by Plaintiffs | Plaintiffs failed to place clear, consistent evidence on the record to support more specific subheadings; basket provisions reasonably cover inputs | Sustained: Commerce reasonably selected basket HS codes given Plaintiffs’ inconsistent/insufficient record evidence |
| Rejection of Plaintiffs' late factual submission | Good cause existed because Thailand was newly selected and preliminary results identified Thai HS classifications; Commerce should have issued supplemental questionnaire | Submission was ~8 months late beyond the regulatory deadline; Commerce acted within its regulations and discretion to reject untimely factual information | Sustained: Commerce did not abuse discretion in rejecting the untimely submission; no duty to issue supplemental questionnaire based on Plaintiffs’ belated concerns |
| Allocation of labor costs in surrogate financial ratios | LS Industry financial statements itemize labor-related costs (employee welfare, social security subsidies) that overlap with the Thai labor rate (2007 NSO); Commerce should adjust ratios to avoid double-counting | Commerce found nothing on the record showing labor costs were overstated and therefore did not adjust ratios | Remanded: Court found Commerce’s conclusory statement unreasonable given LS Industry’s itemized labor-like expenses and prior Commerce practice (Nails); Commerce must reconsider and explain any adjustment or decision not to adjust |
| Valuation of Brokerage & Handling (B&H) — deduction for letter-of-credit cost | World Bank Doing Business data embed letter-of-credit costs; record (email with Doing Business unit) identifies Thailand letter-of-credit cost (~\60) and shows it’s included in the Doing Business B&H subcategory, so Commerce should deduct it | Doing Business summary data are aggregated; Commerce could not identify and separate letter-of-credit cost from the summary to deduct it reliably | Remanded: Court found record evidence indicating the Doing Business figures include letter-of-credit cost and that Commerce unreasonably refused to deduct it without considering that information; remand for reconsideration |
Key Cases Cited
- Nippon Steel Corp. v. United States, 458 F.3d 1345 (Fed. Cir.) (standard for substantial-evidence review of agency determinations)
- DuPont Teijin Films USA v. United States, 407 F.3d 1211 (Fed. Cir.) (definition of substantial evidence)
- Consolo v. Federal Maritime Comm'n, 383 U.S. 607 (U.S.) (substantial evidence doctrine and administrative findings)
- Universal Camera Corp. v. NLRB, 340 U.S. 474 (U.S.) (consideration of detracting evidence in substantial-evidence review)
- Qingdao Sea-Line Trading Co. v. United States, 766 F.3d 1378 (Fed. Cir.) (surrogate data must be chosen case-by-case and be product-specific, contemporaneous, and publicly available)
- Jiaxing Bro. Fastener Co. v. United States, 822 F.3d 1289 (Fed. Cir.) (Commerce may select surrogate data that more closely match the main input)