Shanghai Wells Hanger Co., Ltd. v. United States
2017 CIT 24
| Ct. Intl. Trade | 2017Background
- This case is a challenge by Shanghai Wells and related companies to the Department of Commerce's final results in the fifth administrative review of the antidumping duty order on steel wire garment hangers from the PRC. The court has jurisdiction under 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c).
- In NME proceedings Commerce uses surrogate-market-economy countries to value respondents’ factors of production (FOPs) and must use the "best available" information from countries at comparable economic development that are significant producers of comparable merchandise.
- Commerce issued a list of six potential surrogate countries and narrowed the choice effectively to Thailand and the Philippines based on comparable economic level and production; the ultimate decision turned on data quality.
- Commerce concluded Thailand was the primary surrogate because Thai import and labor data were superior and because Thai financial statements were "usable," invoking a regulatory preference to value all factors from a single surrogate country.
- Plaintiffs argued Commerce failed to compare Thai and Philippine financial statements and that the Philippine statements were superior because Philippine firms produced merchandise and used wire-drawing processes more comparable to Shanghai Wells’ operations.
- The Court remanded the final results for Commerce to reconsider its surrogate-country selection, holding Commerce unreasonably skipped a required comparison of available financial statements; other issues were reserved as potentially moot on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Selection of primary surrogate country | Commerce failed to compare Philippine and Thai financial statements; Philippine statements are superior because producers engage in wire drawing comparable to Shanghai Wells | Commerce relied on superior Thai import and labor data and used Thai financial statements as "usable," preferring a single surrogate country | Remanded: Commerce unreasonably skipped comparing financial statements and must reconsider surrogate-country selection |
| Valuation of labor FOP | (raised; specifics reserved) Shanghai Wells contests Commerce's labor valuation methodology | Commerce used its chosen surrogate data for labor valuation | Reserved — court did not decide pending remand (may be moot) |
| Calculation of surrogate financial ratios | Plaintiffs contend Commerce erred in using Thai statements; ratios should reflect best available data | Commerce used Thai financial statements to compute ratios under single-country preference | Reserved — tied to surrogate-country issue; remand may resolve |
| Valuation of corrugated paperboard and brokerage/handling | Plaintiffs challenge specific SV choices for these inputs | Commerce selected surrogate values from its record sources | Reserved — may be moot after remand |
Key Cases Cited
- Nippon Steel Corp. v. United States, 458 F.3d 1345 (Fed. Cir. 2006) (standard for reviewing Commerce determinations under substantial evidence)
- Universal Camera Corp. v. NLRB, 340 U.S. 474 (1951) (substantial-evidence review must account for record evidence that detracts from agency conclusions)
- DuPont Teijin Films USA v. United States, 407 F.3d 1211 (Fed. Cir. 2005) (definition of substantial evidence)
- Consol. Edison Co. v. NLRB, 305 U.S. 197 (1938) (discussion of substantial evidence standard)
- Consolo v. Federal Maritime Commission, 383 U.S. 607 (1966) (possibility of two inconsistent conclusions does not preclude substantial-evidence support)
- Qingdao Sea-Line Trading Co. v. United States, 766 F.3d 1378 (Fed. Cir. 2014) (Commerce’s preference for publicly available, product-specific, contemporaneous surrogate data)
- Vinh Hoan Corp. v. United States, 49 F. Supp. 3d 1285 (Ct. Int’l Trade 2015) (summarizing Commerce’s four-step surrogate-country selection process)