This is a trade case involving the Department of Commerce’s (“Commerce’s”) practice of “zeroing” certain negative values when calculating duties in antidumping investigations and administrative reviews. Specifically, this case concerns Commerce’s use of zeroing in administrative reviews. Commerce has previously argued that the relevant statutory provision
*1365
compels zeroing. This court has opined that the statutory text applicable to both investigations and administrative reviews — namely the term “exceeds” in 19 U.S.C. § 1677(35)(A) — is sufficiently ambiguous to defer to Commerce’s decision of whether or not to use zeroing in both stages of its antidumping procedures.
Corus Staal BV v. Dep’t of Commerce,
Under the facts of this case, we have come full circle as Commerce has now decided to stop using zeroing in investigations to comply with international treaty obligations while continuing to use it in administrative reviews. Surely, under appropriate circumstances, Commerce may change its position as to whether to apply zeroing.
See, e.g., SKF USA Inc. v. United States,
Background
I
Dumping occurs when a foreign producer sells a product in the United States at a price that is below that producer’s sales price in the country of origin. If a United States industry believes that it is being injured by unfair competition through dumping, it may request the imposition of antidumping duties. Commerce conducts an investigation to determine whether and to what extent dumping is occurring. If the final determination is affirmative and the U.S. International Trade Commission determines that the domestic industry is being injured, an antidumping order is issued and antidumping duties are assessed. Foreign producers subject to antidumping orders may request a subsequent administrative review to determine (1) whether the extent of dumping has changed since the order went into effect or since the prior review period, and (2) the actual amount of antidumping to be assessed on the imports of subject merchandise from each producer being reviewed.
In antidumping proceedings, Commerce determines antidumping duties for a particular product by comparing the product’s “normal value” (the price a producer charges in its home market) with the export price of comparable merchandise. 19 U.S.C. § 1677(35)(A). We have previously recognized that Commerce uses different
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comparisons at the investigation stage than at the administrative review stage.
Corns I,
This determination of dumping margins as provided in 19 U.S.C. § 1677(35)(A) is at the heart of the zeroing debate. Domestic industries and the government have previously argued that the use of the word “exceeds” in 19 U.S.C. § 1677(35)(A) limits the definition of “dumping margin” to positive numbers. In other words, they read the statute to require zeroing.
Timken,
We first considered Commerce’s zeroing policy in the context of administrative reviews in
Timken.
Applying
Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
In
Corus I,
an appeal involving Commerce’s use of zeroing in investigations, the question posed by appellants was whether investigations were sufficiently different from administrative reviews to draw a distinction between these proceedings. Corus argued that zeroing is inconsistent with the statutory scheme for investigations and that
Timken
should not apply to investigations. Commerce acknowledged that the proceeding at issue in
Timken
was an administrative review rather than an investigation, but it argued that this distinction is not dispositive because
both
proceedings implicate Commerce’s interpretation of 19 U.S.C. § 1677(35)(A). Brief for Defendant-Appellee, Department of Commerce at 18, 23-24,
Corns I,
Although Commerce’s practice of zeroing was upheld by this court, Commerce’s use of zeroing in investigations was challenged by the European Communities before the World Trade Organization’s (“WTO’s”) Dispute Settlement Body.
See U.S. Steel,
In
U.S. Steel,
domestic producers challenged this policy change as applied to specific investigations, arguing that the antidumping statute requires Commerce to use zeroing in investigations.
At the same time domestic producers were attacking Commerce’s new offsetting methodology for investigations in domestic courts, foreign producers were using the WTO dispute process to attack Commerce’s continued use of zeroing methodology in administrative reviews. In at least four separate decisions, the WTO Appellate Body has found the United States’ use of zeroing in administrative reviews to be inconsistent with Article 9.3 of the Anti-dumping Agreement and Article VI:2 of the General Agreement on Tariffs and Trade 1994.
See
75 Fed.Reg. 81534 (discussing WTO dispute findings of noneompliance). Foreign producers have pointed to these WTO decisions in proceedings
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before this court, arguing that Commerce’s use of zeroing in administrative reviews is unreasonable because the practice is inconsistent with the United States’ international obligations.
See e.g., SKF III,
While we have repeatedly addressed whether Commerce’s use of zeroing in administrative reviews is unreasonable in light of the adverse WTO decisions, we have not yet considered the issue presented by Plaintiff-Appellant Union Steel Manufacturing Co., Ltd. (“Union”) in the present case. Union argues that it is unreasonable under Chevron for Commerce to construe the identical statutory provision — 19 U.S.C. § 1677(35) — to have opposite meanings in investigations and administrative reviews where (1) nothing in the statutory language indicates that different interpretations were intended and (2) this court has rejected the claim that the meaning of § 1677(35) depends on the stage of the antidumping proceeding.
II
In 2005, Commerce initiated the twelfth administrative review of certain corrosion-resistant carbon steel flat products from the Republic of Korea. Initiation of Anti-dumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 70 Fed.Reg. 56,631 (Sept. 28, 2005). The administrative review covered the period between August 1, 2004 and July 31, 2005. Id. In September 2006, Commerce published the preliminary results. Certain Corrosiorir-Resistant Carbon Steel Flat Products from the Republic of Korea, 71 Fed.Reg. 53,370 (Sept. 11, 2006). On March 20, 2007, Commerce published the final determination. Notice of Final Results of the Twelfth Administrative Review of the Antidumping Duty Order on Certain CorrosiomResistant Carbon Steel Flat Products from the Republic of Korea, 72 Fed.Reg. 13,086 (March 20, 2007). In its administrative case briefs, Union did not raise the issue of zeroing, and at the time Commerce issued the preliminary results, Commerce’s policy was to use zeroing in both investigations and administrative reviews. After the preliminary results but before issuance of the final results, Commerce changed its zeroing policy with respect to investigations. Union submitted a letter to Commerce on January 11, 2007 challenging Commerce’s decision to continue using zeroing in administrative reviews after abandoning its use in investigations. Commerce rejected the letter as untimely. Despite the policy change with respect to investigations, Commerce continued to use zeroing methodology in the final results at issue in this *1369 case. 3
Union contested Commerce’s final results, asserting that the agency’s use of zeroing methodology in the administrative review was impermissible. The Court of International Trade sustained Commerce’s final results.
Dongbu Steel Co. v. United States,
Discussion
I
We review the Court of International Trade’s decision de novo, applying the same standard of review applied by the Court of International Trade in its review of the administrative record. U.S.
Steel,
We review questions of statutory interpretation without deference.
SKF USA Inc. v. United States,
II
The central question here is whether it is reasonable for Commerce to use zeroing in administrative reviews even though it no longer uses this methodology in investigations. We have repeatedly held that the pertinent statute — 19 U.S.C. § 1677(35}— is ambiguous with respect to zeroing.
Timken,
Citing
Clark v. Martinez,
The government responds that this court has already considered and affirmed Commerce’s conflicting statutory interpretations in Corns II. As further support for the reasonableness of Commerce’s interpretation in the case at hand, the government points to the long line of cases discussed above in which we have upheld Commerce’s use of zeroing in administrative reviews. Finally, it argues that Commerce’s interpretation is reasonable because the inconsistency has been caused by Commerce’s Section 123 Determination implementing a change in methodology in response to an adverse WTO decision regarding zeroing in investigations.
We first address whether our prior case law has resolved the Chevron step two question presented in this case. We then consider whether Commerce’s use of inconsistent interpretations is reasonable.
Ill
The government contends that this court has previously addressed the issue presented here. We disagree. Citing Timken, Corus II, NSK, and Koyo Seiko, the government argues that “this court has squarely addressed the reasonableness of Commerce’s zeroing methodology in administrative reviews time and again and has unequivocally held that zeroing is reasonable.” Defendant-Appellee’s Br. 9. Although Timken squarely addressed the reasonableness of zeroing in administrative reviews, Commerce was using zeroing methodology in both investigations and administrative reviews at that time. In Corus II, NSK, and Koyo Seiko, we refused to use adverse WTO decisions as a basis for determining that Commerce’s use of zeroing in administrative reviews was unreasonable. Thus, while we have repeatedly upheld Commerce’s use of zeroing in administrative reviews, we have never considered the reasonableness of interpreting 19 U.S.C. § 1677(35) in different ways depending on whether the proceeding is an investigation or an administrative review.
More specifically, the government characterizes our opinion in Corns II as holding that Commerce’s continued use of zeroing in administrative reviews is reasonable despite Commerce’s change in methodology for investigations. Id. at 1359. This is an overbroad reading of *1371 Corns II. We framed the issue in that case as follows:
Corus does not directly challenge our decisions upholding Commerce’s use of zeroing. Rather, Corus notes that Commerce issued its final determination for the second administrative review in April 2005, and it argues that subsequent events [i.e., Commerce’s announcement of its intent to abandon zeroing in investigations] show that Commerce has adopted a new policy with regard to zeroing and that the new policy should be applied to the second administrative review.
Corus II,
Although we have considered Commerce’s zeroing policy in administrative reviews on numerous occasions —see, e.g., Timken, Koyo Seiko, SKF II, NSK and Corus II — we agree with Union that this court has never addressed the reasonableness of Commerce’s interpretation of 19 U.S.C. § 1677(35) with respect to administrative reviews now that Commerce is no longer using a consistent interpretation. Accordingly, we are not bound by the prior cases and apply the Chevron step two analysis anew.
IV
We now turn to the reasonableness of interpreting the same statutory provision to have opposite meanings depending on the nature of the antidumping proceeding. The government asserts that inconsistent interpretations are permissible and contemplated by Congress. Defendant-Appellee’s Br. 14, 16, 18; Oral Argument at 20:14-20:58. However, this court has expressly adopted the position taken by the government in earlier cases that there is no statutory basis for interpreting 19 U.S.C. § 1677(35) differently in investigations than in administrative reviews. Corus I,
We have indicated that an agency action is arbitrary when the agency offers insufficient reasons for treating similar situations differently.
See, e.g., Nat’l Org. of Veterans’ Advocates, Inc. v. Sec’y of Veterans Affairs,
Commerce’s final determination does not contain any rationale for its inconsistent interpretations due to the procedural way in which the issue was raised. Oral Argument at 15:13-15:33. Recognizing this deficiency in the record, the government proffers a single explanation for Commerce’s inconsistent interpretation: The methodology for investigations was changed in response to an adverse WTO report though the Section 123 Determination. Basically, the government concedes that “it’s the same statute, the same provision, the same issue to be determined in both initial investigations and administrative reviews,” but the government has made the determination to implement a WTO decision with respect to investigations. Id. at 23:30-24:47. The government further contends that the reasonableness of this policy change for investigations is not before the court. Defendant-Appellee’s Br. 18.
To the extent that the government is arguing that it is permissible and contemplated by Congress that Commerce may change its interpretation of gaps in the antidumping statute, we agree. Commerce is entitled to change its interpretation to respond to an adverse WTO decision though a Section 123 proceeding or may change its interpretation for other reasonable reasons. Indeed, we recently upheld Commerce’s methodological change with respect to investigations because Commerce supplied a reasonable explanation for its new interpretation.
U.S. Steel,
The government argues, without explanation, that Congress contemplated that inconsistent interpretations might occur through the process of complying with adverse WTO decisions. We are not persuaded that Congress’s intent is so clear. In addition, the government has not pointed to any basis in the statute for reading 19 U.S.C. § 1677(35) differently in administrative reviews than in investigations. Indeed, as noted above, it has previously argued the opposite. In the absence of sufficient reasons for interpreting the *1373 same statutory provision inconsistently, Commerce’s action is arbitrary.
In sum, our prior case law does not address the situation at hand where Commerce has decided to interpret 19 U.S.C. § 1677(35) differently based on the nature of the antidumping proceeding at issue. Applying
Chevron
step two to this ambiguous statute, we conclude that the agency has not provided a reasonable explanation for why the statute supports such inconsistent interpretations.
See also National Organization of Veterans’ Advocates,
Conclusion
We vacate the judgment of the Court of International Trade sustaining the twelfth administrative review of certain corrosion-resistant carbon steel flat products from the Republic of Korea and remand this case for further proceedings consistent with this opinion.
Costs
Each party shall bear its own costs.
VACATED AND REMANDED
Notes
.
SKF USA Inc. v. United States,
. Commerce is in the process of determining whether and how to modify its zeroing practice to address these WTO decisions. See 75 Fed.Reg. 81533-36. The government has represented to this court that this potential policy change is not relevant to the present appeal or its disposition.
. The parties agree that it does not matter that Commerce used zeroing in the investigations underlying the antidumping order in the present case. Oral Argument at 00:44-3:03; 27:16-31:58, available at http://www.cafc. uscourts.gov/oral-argument-recordings/20101271/all.
