GGB Bearing Technology (Suzhou) Co., Ltd. v. United StatesGGB Bearing Technology (Suzhou) Co., Ltd. v. United States
OPINION AND ORDER
[Sustaining in part, and remanding in part, a final determination in a new shipper review conducted under an antidumping duty order on tapered roller bearings, and parts thereof, from the People‘s Republic of China]
Dated: December 12, 2017
Tara K. Hogan, Senior Trial Counsel, Civil Division, U.S. Department of Justice, of Washington, D.C, for defendant United States. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and
William A. Fennell, Stewart and Stewart, of Washington, D.C., for defendant-intervenor The Timken Company. With him on the brief was Terence P. Stewart.
Stanceu, Chief Judge: This action arose from a “new shipper” review that the International Trade Administration, U.S. Department of Commerce (“Commerce” or the “Department“) conducted under an antidumping duty order on tapered roller bearings (“TRBs“) and parts thereof (collectively, the “subject merchandise“), from the People‘s Republic of China (“China” or the “PRC“). Plaintiff GGB Bearing Technology (Suzhou) Co., Ltd. (“GGB“) is a Chinese TRB producer and exporter, and plaintiff Stemco LP is its affiliated U.S. importer. In the review, Commerce assigned GGB‘s merchandise a 12.64% weighted average antidumping duty margin.
Before the court is plaintiffs’ motion for judgment on the agency record, in which plaintiffs raise challenges to two decisions Commerce made in the administrative determination by which it concluded the new shipper review. Defendant United States and defendant-intervenor The Timken Company (“Timken“), the petitioner in the antidumping duty investigation culminating in the antidumping duty order, oppose plaintiffs’ motion.
The court sustains one of the challenged decisions Commerce made, which was the choice of record information with which to calculate “surrogate” values for manufacturing (“factory“) overhead, for selling, general, and administrative (“SG&A“) expenses, and for profit. The court does not sustain the other challenged decision, which was the Department‘s choice of a surrogate value for labor hours used in producing the subject merchandise.
I. BACKGROUND
Commerce published the antidumping duty order on TRBs from China in 1987.
On June 1, 2012, Commerce preliminarily determined that GGB‘s sales during the POR had not been made at less than normal value and preliminarily assigned GGB a weighted average antidumping duty margin of zero.
On May 22, 2013, plaintiffs filed their motion for judgment on the agency record. Br. in Supp. of Pls.’ Rule 56.2 Mot. for J. upon the Agency R. (May 22, 2013), ECF No. 26 (“Pls.’ Br.“). Defendant and defendant-intervenor
II. DISCUSSION
A. Jurisdiction and Standard of Review
The court exercises jurisdiction pursuant to section 201 of the Customs Courts Act of 1980,
B. “New Shipper” Reviews under an Antidumping Duty Order
Under section 751(a)(2)(B) of the Tariff Act, an exporter or producer of merchandise subject to an antidumping duty order may request a new shipper review to obtain an individually-determined weighted average dumping margin, i.e., a margin based on its own U.S. sales of merchandise subject to the order, provided the exporter or producer did not export merchandise subject to the order during the antidumping duty investigation and is not affiliated with a party who did.
C. Determination of the Normal Value of Merchandise Subject to an Antidumping Duty Order that is Produced in a Non-market Economy Country
Because GGB‘s merchandise is produced in the PRC, a country Commerce considers to be a non-market economy (“NME“) country, Commerce determined GGB‘s margin by comparing the U.S. prices of merchandise produced and exported by GGB with what it determined to be the “normal value” of that merchandise, which it calculated according to the special procedures of section 773(c) of the Tariff Act,
D. Plaintiffs’ Claims before the Court
Plaintiffs challenge the choice of record information Commerce used in valuing two general categories of costs that are components of the normal value calculation: (1) GGB‘s manufacturing overhead, selling, general, and administrative expenses, and profit; and (2) labor hours. For each cost category, Commerce used data pertaining to its chosen substitute (“surrogate“) market economy country, Thailand, which Commerce determined to be economically comparable to China and a significant producer of merchandise comparable to the merchandise subject to the antidumping duty order, i.e., TRBs. Final Results, 77 Fed. Reg. at 65,668-69.
For factory overhead, SG&A expenses, and profit, plaintiffs do not challenge the choice of Thailand as the surrogate country. Instead, plaintiffs take issue with the particular data pertaining to Thailand Commerce used to value these cost elements, which Commerce obtained from the financial statements of two Thai bearing producers, NSK Bearing Manufacturing (Thailand) Co., Ltd. (“NSK“) and JTEKT (Thailand) Co. Ltd. (“JTEKT“). Plaintiffs claim that the Department‘s decision to use the NSK financial data was unlawful because the record does not support a finding that these data were the best available information on the record. Pls.’ Br. 2, 11-24. Specifically, they point to record evidence that they believe shows the NSK financial data to have been distorted by NSK‘s receiving countervailable government subsidies in Thailand. Id. at 11, 16-24. Plaintiffs argue that in its place, Commerce should have used the financial information for a different Thai company, NMB-Minebea Thai Company Limited (“Minebea“). Id. at 24-27. Plaintiffs maintain that Commerce impermissibly rejected the use of Minebea‘s statement on an invalid finding that this statement lacks sufficient detail to allow Commerce to calculate manufacturing overhead costs. Id.
For the valuation of hours of labor, plaintiffs argue that Commerce erred in its choice of certain labor rate data from Thailand and instead should have used available record data on labor costs pertaining to the Philippines or Ukraine that it argues are contemporaneous with the period of review and more specific to the production of the subject merchandise than are the Thai data. Id. at 8, 28-40.
E. Commerce Permissibly Chose to Base its Financial Ratios, in Part, on the NSK Financial Statement
To determine surrogate values for factory overhead, SG&A expenses, and profit, Commerce calculates “financial ratios,” using cost of goods sold as the denominator, based on data contained in financial statements of one or more producers in a market economy country or countries. At issue is whether Commerce, in choosing the NSK financial statement as one of the sources of information for this purpose, reached one or more findings challenged
According to the Department‘s regulations, when calculating surrogate values “[f]or manufacturing overhead, general expenses, and profit, the Secretary normally will use non-proprietary information gathered from producers of identical or comparable merchandise in the surrogate country.”
In the new shipper review, Commerce considered the financial statements of four manufacturing companies in Thailand: JTEKT, NSK, Minebea, and Koyo Joint (Thailand) Co. Ltd. (“Koyo“). Commerce found that “[a]ll four of the financial statements are publicly available, contemporaneous with the POR, and from the Department‘s primary surrogate country, Thailand.” Id. Commerce decided against using Koyo‘s financial statement, concluding that it did not establish that Koyo produced bearings. Id. at 7 (“Koyo‘s financial statements do not indicate that it produced merchandise that is identical or comparable to the subject merchandise.“). Plaintiffs do not challenge this decision. The Department found, further, that “there is no evidence that any of the four companies have received countervailable subsidies during the period in question.” Id. at 8. Plaintiffs challenge this finding as it pertains to NSK.
1. Plaintiffs’ Arguments in Support of their Claim that Commerce Erred in Finding that the NSK Statement Was Not Distorted by a Countervailable Subsidy
Plaintiffs make, essentially, four arguments in support of their claim that Commerce erred in determining that the NSK statement was not distorted by NSK‘s receipt of a countervailable subsidy. They argue, first, that in using the NSK statement Commerce departed from its “standard practice,” under which it rejects a financial statement as surrogate information when there is reason to believe or suspect distortion of the statement by a countervailable subsidy occurred. Pls.’ Br. 11-15. According to plaintiffs, in the new shipper review Commerce applied a standard (which they characterize as a “beyond a reasonable doubt” standard) more stringent than the “reason to believe or suspect” standard that Commerce has followed in its practice and that has support in the legislative history of the statute. Id. at 11-15, 23. Second, they argue that Commerce previously has determined that subsidies under Thailand‘s “Investment Promotion Act” (“IPA“) program administered by the Thai Board of Investments (“BOI“), in which NSK participated, are countervailable. Pls.’ Br. 16-20. Third, they argue that Commerce disregarded the record evidence showing that NSK realized revenue from export sales that were promoted under two provisions of the IPA program, specifically, “section 28” and “section 36(1).” Pls.’ Br. 20-22. Finally, they argue that Commerce erred in choosing the NSK statement over the Minebea statement. Pls.’ Br. 22-24.
In support of its finding that the NSK financial statement was not distorted by a countervailable subsidy in the new shipper review, Commerce explained that “the Department‘s determination of whether to use the financial statements of a producer that potentially received a countervailable subsidy cannot be, nor is it intended to be, a full investigation of the subsidy program in question.” Final I&D Mem. at 7 (citing H.R. Rep. No. 100-576, at 590-91 (1988) (Conf. Rep.), as reprinted in 1988 U.S.C.C.A.N. 1547, 1623-24).2 Commerce further explained that “[i]nstead, the Department‘s practice is to review the financial statements to determine
whether the evidence indicates that the company received a countervailable subsidy during the relevant period from a program previously investigated by the Department.” Id.
3. The IPA Benefits as Shown in the NSK Financial Statement
The IPA (formally, the Thai Investment Promotion Act, B.E. 2520) was enacted in 1977 and amended in 2001. GGB Bearing Tech. Post-Prelim. Surrogate Value Submission: Tapered Roller Bearings from the People‘s Republic of China (New Shipper Review: 6/1/2010-5/31/2011) Ex. 2 (June 21, 2012) (Admin.R.Doc. Nos. 92-95) (“GGB Post-Prelim. SV Submission“) (placing onto the record the Investment Promotion Act). Both sections of the IPA relied upon by plaintiffs, i.e., sections 28 and 36(1), provide for exemptions from import duties. Section 28 grants an exemption to a “promoted person” from “payment of import duties on machinery as be approved by the Board, providing that such machinery comparable in quality is not being produced or assembled within the Kingdom in sufficient quantity to be acquired for use in such activity.” Id. Ex. 2 at 9. Section 36(1) grants an “exemption of import duties on the raw and essential materials imported for use specifically in producing, mixing, or assembling products or commodities for export” for qualified recipients. Id. Ex. 2 at 11.
Plaintiffs point to four IPA benefits as stated in the NSK financial statement, several of which it identifies as section 28 benefits and one of which it identifies as a section 36(1) benefit. Pls.’ Br. 16-17. The benefits plaintiffs specifically identify as section 28 benefits, as set forth in the financial statement, are the following:
- (1) 50% reduction in import duties on machines produced in or after 1991 and approved by the BOI, except those subject to import duties below 10%, for Promotion Certificate No. 1730(1)/2544;
. . .
- (4) 50% reduction in import duties on machines approved by the BOI, except those subject to import duties below 10%, for Promotion Certificate No. 1223(2)/2547;
- (5) exemption from import duties on machines approved by the BOI, for Promotion Certificates Nos. 1597(2)/2548, 1914(2)/2548, and 1079(2)/2550; . . . .
New Shipper Review: Tapered Roller Bearings and Parts Thereof, Finished and
- (7) 1-year exemption from import duties on raw or essential materials imported for use in production for export, from the first day of import.
Id.
Plaintiffs do not challenge the Department‘s following a practice under which Commerce declines to conduct “a full investigation of the subsidy program in question” and instead will “review the financial statements to determine whether the evidence indicates that the company received a countervailable subsidy during the relevant period from a program previously investigated by the Department.” Final I&D Mem. at 7. Their argument instead is that “record evidence reveals that the benefits availed by NSK pursuant to IPA subsidy programs were specific to and contingent upon the company‘s exports, as required under the statute,” Pls.’ Br. 16 (citing
4. IPA Section 28
As provided in
Section 28. The promoted person shall be granted exemption from payment of import duties on machinery as be approved by the Board, providing that such machinery comparable in quality is not being produced or assembled within the Kingdom in sufficient quantity to be acquired for use in such activity.
GGB Post-Prelim. SV Submission Ex. 2 at 9. In maintaining that “record evidence reveals that the benefits availed by NSK” under section 28 were “specific to and contingent upon the company‘s exports,” plaintiffs fail to direct the court‘s attention to record evidence that NSK made an export commitment in order to obtain thereunder an exemption from, or a reduction in, import duties on machinery. Pls.’ Br. 16. While it is possible that one or more of the five Promotion Certificates identified in the NSK financial statement that appear to relate to section 28 could constitute such evidence, the NSK Promotion Certificates are not in the administrative record of the new shipper review. Plaintiffs challenge the Department‘s finding that the record lacked evidence showing that approval of NSK‘s promotional privileges was based on an export commitment, but the finding as stated by Commerce is supported by the record. That is not to suggest Commerce permissibly could have found on this record that NSK‘s use of the section 28 program was not based on an export commitment. But under the Department‘s practice, under which Commerce does not conduct a full investigation to determine whether a financial statement is distorted by a countervailable subsidy and instead relies in part on its past countervailing duty (“CVD“) determinations and record information (here, the NSK financial statement), such a finding was not necessary to support the ultimate determination to use that statement.
The court is also unconvinced by plaintiffs’ argument that Commerce has found programs under IPA section 28 to be countervailable export subsidies. Commerce explained that it “has found that the IPA is not per se countervailable; instead the program has been found countervailable when the approval of promotional privileges was determined to be based on an export commitment or the company‘s location in a regional investment zone.” Final I&D Mem. at 7-8 (footnote omitted). In support of this point, Commerce cited its prior decision in Final Negative Countervailing Duty Determination: Bottle-Grade Polyethylene Terephthalate (PET) Resin From Thailand, 70 Fed. Reg. 13,462 (Int‘l Trade Admin. Mar. 21, 2005) (“Bottle Grade PET Resin“) and accompanying Issues and Decision Memorandum at II.D, Comment 3. Id. at 8. Plaintiffs cite this same decision in support of their contention that Commerce previously has found countervailable the import duty relief on imported machinery under IPA section 28. Pls.’ Br. 18. The Issues and Decision Memorandum for Bottle Grade PET Resin confirms that Commerce required a finding that the promoted status under the IPA was contingent upon export performance before concluding that a benefit thereunder was countervailable. See Bottle-Grade Polyethylene Terephthalate (PET) Resin from Thailand: Issues and Decision Memorandum in the Final Negative Countervailing Duty Determination at 5 (Int‘l Trade Admin. Mar. 14, 2005), available at https://enforcement.trade.gov/frn/summary/thailand/E5-1221-1.pdf (last visited Dec. 7, 2017) (“Bottle Grade PET Resin I&D Mem.“).
5. IPA Section 36(1)
IPA section 36(1) states:
Section 36. For the purpose of promoting exports, the Board may grant the promoted person one or more of the special rights and benefits as follows:
- (1) exemption from import duties on the raw and essential materials imported for use specifically in producing, mixing, or assembling products or commodities for export; . . . .
GGB Post-Prelim. SV Submission Ex. 2 at 11. Commerce has analyzed section 36(1) in past countervailing duty cases by applying
(ii) Exemption of import charges. In the case of an exemption of import charges upon export, a benefit exists to the extent that the exemption extends to inputs that are not consumed in the production of the exported product, making normal allowances for waste, or if the exemption covers charges other than import charges that are imposed on the input.
Plaintiffs argue that “record evidence demonstrates that section 36(1) of the IPA is a statutory provision specially tailored for promoting exports of goods[] and grants special benefits in the form of exemption of import duties on imported raw materials, contingent upon their utilization specifically in producing goods for exports.” Pls.’ Br. 17. They continue, “[i]n view of this, Commerce‘s findings that NSK‘s financial statement did not show that the company was provided any IPA promotional privileges by the BOI which were specific to its exports, i.e., contingent upon its export performance, is clearly contradicted by substantial record evidence.” Id. Plaintiffs add that “[m]oreover, the Department‘s countervailable subsidy database provides citations and references to several CVD proceedings” in which Commerce concluded that Thailand‘s IPA section 36(1) program was countervailable. Id. at 18.
The court does not find merit in plaintiffs’ argument that Commerce should have rejected the NSK financial statement on the basis of IPA section 36(1) promotional benefits. On its face, section 36(1) limits the exemption to “import duties,” GGB Post-Prelim. SV Submission Ex. 2 at 11, and it limits the exemption to those import duties that are paid on inputs “imported for use specifically” in the production of the exported product,
6. The Department‘s Adherence to its “Standard Practice”
In summary, Commerce did not err when stating in the Issues and Decision Memorandum for the new shipper review that in past CVD proceedings it has not found promotional privileges under the
7. Realization of Revenue from IPA-Promoted Business Activities
Plaintiffs argue that “NSK‘s financial statement not only demonstrated the company‘s stated policy of accounting for the benefits availed under BOI promoted IPA subsidy programs, but the statement also evidenced receipt of countervailable subsidies gained pursuant to such subsidy programs.” Pls.’ Br. 22. They argue that Commerce “ignored the facts that NSK actually received benefits under those IPA promotional programs through and based upon its export performance.” Id. at 24. These arguments fail to convince the court that Commerce erred in using the NSK financial statement. Part 12 of the statement addresses investment promotion as approved by the BOI and breaks down sales revenue between domestic sales and export sales, and it also breaks down sales revenue between “Promoted Activities” and “Non-promoted Activities.” Timken‘s Corrected SV Info. Attach. 10 at 14. There is record evidence to support a finding that NSK received sales revenue from export activities promoted by the BOI, including those qualifying NSK for benefits under IPA sections 28 and 36(1). But for the reasons the court has outlined, and contrary to plaintiffs’ contention, such a finding is not equivalent to a finding that NSK received countervailable benefits under the IPA.
8. The Department‘s Decision Not to Use the Minebea Statement
GGB placed the Minebea financial statement on the record in its post-preliminary surrogate value submission, GGB Post-Prelim. SV Submission Ex. 5 (placing onto the record Minebea‘s financial statement for the year ending 2011). Commerce decided against using the Minebea statement for its financial ratio calculations because “the financial statements do not break out raw material costs[,] which results in a large gap of unknown costs (i.e., the financial statements do not contain the total cost of goods sold from the financial statements less total expenses broken out by nature in the notes to the financial statements).” Final I&D Mem. at 5. Commerce considered the absence of this cost information from the statement significant because the absence prevented Commerce from reasonably segregating “the manufacturing overhead costs from the total costs in order to calculate the surrogate overhead ratio.” Id.
Plaintiffs admit that Minebea‘s financial statement is “less detailed” than NSK‘s and “less than ideal” but still argue that the Minebea data are superior because NSK‘s financial statement is distorted by countervailable subsidies. Pls.’ Br. 25-26.
F. Commerce Must Reconsider its Use of Thai ILO Data for Valuing the Labor Input
Plaintiffs claim that Commerce erred by relying upon manufacturing wage data from Thailand in valuing the labor cost factor of production, as opposed to using record data from the Philippines or Ukraine (or, alternatively, an average from those two countries). Plaintiffs characterize the Department‘s decision to use the Thai labor rate data as “not supported by . . . substantial record evidence” and “contrary to law,” contending that the Philippine and Ukrainian labor cost data, being more specific to the type of labor used, represent the “best available information.” Pls.’ Br. 29. For the reasons that follow, the court rules that Commerce must reconsider its use of the Thai data for valuing the labor input.
1. Commerce Relied upon ILO Chapter 6A “Total Manufacturing” Labor Cost Data for Thailand to Value GGB‘s Labor Cost Factor of Production in the New Shipper Review
Commerce announced in a 2011 “Statement of Policy” that, in non-market economy country antidumping proceedings, it “will base labor cost on [International Labor Organization (“ILO“)] Chapter 6A data applicable to the primary surrogate country.”
In the Preliminary Results, Commerce, citing Labor Methodologies, noted its policy of using labor cost data specific to the industry being examined. See Prelim. Results at 32,525 (“In Labor Methodologies, the Department determined that the best methodology to value the labor input is to
To value the respondent‘s labor input, the Department relied on data reported by Thailand to the ILO in Chapter 6A of the [ILO] Yearbook. Although the Department further finds the two-digit description under ISIC [International Standard Industrial Classification of all Economic Activities]-Revision 3.1 (‘‘Manufacture of Machinery and Equipment NEC‘‘)3 to be the best available information on the record because it is specific to the industry being examined, and is therefore derived from industries that produce comparable merchandise, Thailand has not reported data specific to the two-digit description since 2000. However, Thailand did report total manufacturing wage data in 2005. Accordingly, relying on Chapter 6A of the Yearbook, the Department calculated the labor input using total labor data reported by Thailand to the ILO in 2005, in accordance with section 773(c)(4) of the Act.
Prelim. Results at 32,526.
After publication of the Preliminary Results, GGB placed on the record ILO labor cost data from Ukraine, for 2006, and from the Philippines, for 2008. GGB Post-Prelim. SV Submission Ex. 4 (placing onto the record ILO labor cost data from Ukraine and from the Philippines). GGB argued that for the Final Results Commerce “should value labor using the industry-specific ILO data available from the Ukraine or, alternatively, the Philippines for
category 29, “Manufacture of Machinery and Equipment NEC,” which the Department determined as the industrial classification most specific to TRBs.” GGB Bearing Technology‘s Case Brief: Tapered Roller Bearings from the People‘s Republic of China (New Shipper Review: 6/1/2010-5/31/2011) at 1 (July 10, 2012) (Admin.R.Doc. No. 103) (“GGB‘s Case Br.“) (footnote omitted). GGB argued that in Labor Methodologies Commerce “unequivocally established that industry-specific data is the single most important determining factor.” Id. at 5. Referring to the Ukrainian and Philippine data, GGB argued to Commerce that “[f]or the Final Results, the Department may consider applying either one of the two data sources or, in the alternative, an average of the two.” Id. at 6.
In the Final Results, Commerce continued to find that the ILO Chapter 6A data on total manufacturing wages in Thailand was the best available source of information for valuing GGB‘s labor cost. Final I&D Mem. at 9. In brief summary, the Department‘s reasons for its decision were that: (1) Commerce chose Thailand as the primary surrogate country; (2) the only ILO Chapter 6A data for Thailand that Commerce considered sufficiently contemporaneous were national labor cost data, not industry-specific data;4 and (3) the Department‘s practice, as stated in Labor Methodologies, is to use ILO Chapter 6A national labor cost data in a situation in which ILO Chapter 6A industry-specific labor cost data from the primary surrogate country is not available.
In further response to GGB‘s argument concerning other potential surrogate countries, Commerce stated that “in accordance with
2. Plaintiffs’ Arguments before the Court
Plaintiffs argue that “the Department‘s decision to value labor based on an admittedly inferior data source[], i.e., Thai manufacturing sector wage data, due to the Department‘s self-imposed limitation of its choices within Thailand merely because it was the primary surrogate country, was contrary to law.” Pls.’ Br. 34-35. Plaintiffs specifically take issue with the Department‘s applying its “policy of limiting its selection of surrogate values to data from the primary surrogate country,” which they argue “has already been rejected by the Court of International Trade in prior cases, and also should be rejected in the instant case.” Id. at 32. They submit that “the record is clear that labor cost rates for Ukraine and the Philippines were industry specific, and that labor cost rates for Thailand were not.” Id. at 31. They conclude that the Department‘s decision to use the Thai labor cost data was contrary to the statutory mandate to use the best available information, judicial precedent, and the evidence of record. Id. at 29.
Plaintiffs address a separate argument to the Department‘s statement in the Issues and Decision Memorandum that Commerce had not determined that the Philippines and Ukraine were significant producers of comparable merchandise. Id. at 35 (citing Final I&D Mem. at 9). Citing
Plaintiffs’ final argument is that “by limiting its data choices to ILO data available from within the primary surrogate country, the Department not only did not select the best available information available on the record but also discouraged the interested parties from submitting more specific non-ILO data.” Id. at 40. Citing certain decisions of this Court, plaintiffs argue that the court should direct Commerce “to reopen the record for the limited purpose of admitting new product-specific information for valuing labor cost in Thailand.” Id.
3. Response of Defendant and Defendant-Intervenor
Defendant advocates affirmance of the Department‘s surrogate labor cost on the grounds that the Department‘s practice, as outlined in Labor Methodologies, has been approved by this Court and that this application of Labor Methodologies is supported by substantial record evidence. Def.‘s Br. 24. Defendant also argues, inter alia, that the data sets from the Philippines and Ukraine are “unusable” because “neither the Philippines nor Ukraine are significant producers of comparable merchandise as required by the statute.” Def.‘s Br. 25 (citing
4. Plaintiffs Did Not Argue Below that Commerce Should Have Found the Philippines and Ukraine to Be “Significant Producers of Comparable Merchandise” and therefore Did Not Exhaust their Administrative Remedies as to this Argument
“[T]he Court of International Trade shall, where appropriate, require the exhaustion of administrative remedies.”
The exhaustion of administrative remedies issue, about which the parties have engaged in an additional round of briefing, concerns plaintiffs’ argument before the court that “[t]he record . . . reveals that both the Philippines and Ukraine exported significant amounts of comparable merchandise and absent any contrary information in the record, should have been determined to be significant producers of comparable merchandise.” Pls.’ Br. 36. In summary, defendant and defendant-intervenor maintain that because this argument was not made in GGB‘s case brief before Commerce during the review, plaintiffs should not be permitted to raise it here. The court agrees, but with a caveat.
Because plaintiffs did not argue at the agency level, in their case brief, that Commerce should have found, pursuant to substantial record evidence, the Philippines and Ukraine to be “significant producers” of merchandise comparable to the subject merchandise, i.e., TRBs, the court will not entertain that argument here. Therefore, the court will not decide whether substantial evidence does or does not support the finding plaintiffs advocate.5
Nevertheless, plaintiffs argued in their case brief, as they do here, that Commerce should have considered the labor cost data on the record that pertained to the Philippines and to Ukraine for use in valuing the labor input and should have chosen the data from one or both of these countries over the ILO labor cost data from Thailand. GGB‘s Case Br. at 6 (arguing that Philippine and Ukrainian industry-specific data are the best choices for the Final Results). Commerce rejected this argument during the new shipper review on various grounds. As noted previously, those grounds, as stated in the Final Issues and Decision Memorandum, were that Thailand was its chosen primary surrogate country, that the only ILO Chapter 6A data for Thailand that were timely were national labor cost data, not industry-specific data, that the Department‘s practice, as stated in Labor Methodologies, is to use ILO Chapter 6A national labor cost data in a situation in which ILO Chapter 6A industry-specific labor cost data from the primary surrogate country is not available, and that while it had found Thailand to be a significant producer of comparable merchandise,
5. Commerce Erred in Failing to Make a Finding as to Whether the Philippines or Ukraine, or Both, Were “Significant Producers of Comparable Merchandise”
According to the nonmarket economy country procedures of
In this case, Commerce had broad discretion in the selection of a surrogate
It could be contended that plaintiffs were required by the exhaustion doctrine to have argued in their case brief that Commerce, as it prepares the Final Results, must reach some finding on the issue of whether the Philippines, or Ukraine, or both, were “significant producers.” At first glance, this contention appears plausible, and GGB‘s including such an argument might well have been prudent for the sake of completeness. Nevertheless, in advocating that Commerce should consider the Philippine and Ukraine labor cost data as an alternative to the Thai data, GGB reasonably was entitled to presume that Commerce would follow the required statutory methodology in doing so. Moreover, even if the court were to conclude that the exhaustion doctrine required GGB to remind Commerce of its responsibility to determine the status of the Philippines and Ukraine under the two
In summary, Commerce, on the record before it, was required by the statute to decide whether the Philippines and Ukraine were, or were not, “significant producers of comparable merchandise” within the meaning of
The Department‘s practice as outlined in Labor Methodologies does not alter the court‘s conclusion. In the Final Issues & Decision Memorandum, Commerce cited the Labor Methodologies announcement for its practice of using labor cost data
6. Because it Did Not Follow the Statutory Methodology, Commerce Must Make a New Determination of What Constitutes the “Best Available Information” to Value the Labor Input after Making a “Significant Producer” Determination as to the Philippines and Ukraine
In preparing a redetermination in response to this Opinion and Order, Commerce must now make the finding it failed to make in the Final Results. The reason Commerce must do so is not because plaintiffs are arguing now that Commerce should find both countries to be “significant producers” (an argument that was not exhausted below) but because the statute required Commerce to consider whether these countries were significant producers when evaluating the Philippine and Ukraine labor cost data in response to GGB‘s case brief argument in favor of these data.
In summary, Commerce now must decide whether the Philippines or Ukraine, or both, were “significant” producers of merchandise comparable to TRBs and parts thereof, as required by
7. The Court Rejects Plaintiffs’ Argument that Commerce Must Reopen the Record
Plaintiffs argue that Commerce should be required to reopen the record and admit new information to allow interested parties to submit non-ILO data that is more specific to the labor input than the data from Thailand. Pls.’ Br. 36-40. Specifically, plaintiffs assert that, “by limiting its data choices to ILO data available from within the primary surrogate country, the Department not only did not select the best available information available on the record but also discouraged the interested parties from submitting more specific non-ILO data.” Id. at 40. The court rejects this argument.
The decision whether to reopen the record ordinarily is one for the agency to make, and the court sees no compelling circumstance that would cause it to conclude otherwise. GGB had ample opportunity to submit non-ILO labor information for the record (as well as data on potential surrogate countries). Moreover, the record already contains data relevant to the question of whether the Philippines or Ukraine, or both, met the “significant producer” criterion. Because Commerce must reach a determination on that question according to substantial evidence, the court reviews those record data below.
Timken argued before Commerce that Thailand was a significant producer of comparable merchandise, supporting its argument by combining the Comtrade data under all three tariff headings. Id. at 3. However, the three tariff classifications under which the export data are presented are not equally probative on the issue of whether Commerce was required to identify the Philippines or Ukraine as a significant producer of comparable merchandise. HS heading 84.82 carries the article description “Ball or roller bearings.” TRBs and parts thereof are, as a general matter, classified under this heading, whether or not suitable for automotive applications; machinery parts incorporating TRBs, although they may fall within the scope of the Order, are classified in other headings. See World Customs Org., Harmonized Commodity Description and Coding Sys. Explanatory Notes, Explanatory Note 84.82 (“The heading covers all ball, roller or needle roller type bearings.“; “The heading does not cover machinery parts incorporating ball, roller or needle roller bearings; . . . .“). For this reason, and because roller bearings other than TRBs, and arguably ball bearings as well, reasonably might be regarded as “comparable” to TRBs, the export value data for heading 84.82 have a high degree of probative value on the issue presented. The export value
thereunder could have little if any probative value for the question presented here. In responding to this Opinion and Order, Commerce should consider the data under heading 84.82 and, if it considers it appropriate to do so, the data under heading 84.83. If Commerce decides to rely also upon data under HS subheading 8708.99, it will need to present a rational explanation of why such data are probative on the issue presented.
III. CONCLUSION AND ORDER
For the reasons discussed in the foregoing, the court remands the Final Results to Commerce for reconsideration. It is hereby:
ORDERED that plaintiffs’ motion for judgment on the agency record be, and hereby is, granted in part and denied in part; it is further
ORDERED that Commerce shall submit to the court a redetermination upon remand (the “Remand Redetermination“) in which it makes a “significant producer” determination as to the Philippines and Ukraine and, after doing so, makes a new determination on the selection of the “best available information” with which to value GGB‘s labor input; it is further
ORDERED that Commerce shall submit the Remand Redetermination within 90 days of the date of this Opinion and Order; it is further
ORDERED that plaintiffs and defendant-intervenor shall have 30 days from the date the Remand Redetermination is submitted to submit to the court comments thereon; and it is further
ORDERED that defendant may submit to the court a response to such comments within 15 days of the date the last comment is submitted.
/s/ Timothy C. Stanceu
Timothy C. Stanceu
Chief Judge
Dated: December 12, 2017
New York, New York
Notes
The cited report provides as follows:
In valuing such factors [of production], Commerce shall avoid using any prices which it has reason to believe or suspect may be dumped or subsidized prices. However, the conferees do not intend for Commerce to conduct a formal investigation to ensure that such prices are not dumped or subsidized, but rather intend that Commerce base its decision on information generally available to it at that time.
H.R. Rep. No. 100-576, at 590-91 (1988) (Conf. Rep.), as reprinted in 1988 U.S.C.C.A.N. 1547, 1623-24.
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished from the People‘s Republic of China: Final Results of Antidumping Duty New Shipper Review, 77 Fed. Reg. 65,668 (Int‘l Trade Admin. Oct. 30, 2012) (footnotes omitted).Imports covered by the order are shipments of tapered roller bearings and parts thereof, finished and unfinished, from the PRC; flange, take up cartridge, and hanger units incorporating tapered roller bearings; and tapered roller housings (except pillow blocks) incorporating tapered rollers, with or without spindles, whether or not for automotive use. These products are currently classifiable under Harmonized Tariff Schedule of the United States (“HTSUS“) item numbers 8482.20.00, 8482.91.00.50, 8482.99.15, 8482.99.45, 8483.20.40 [Housed bearings, incorporating ball or roller bearings: flange, take-up, cartridge and hanger units], 8483.20.80 [Other housed bearings, incorporating ball or roller bearings], 8483.30.80 [Bearing housings, plain shaft bearings: Other than flange, take-up, cartridge and hanger units], 8483.90.20 [Parts of flange, take-up, cartridge and hanger units], 8483.90.30 [Parts of bearing housings and plain shaft bearings, other than parts of flange, take-up, cartridge and hanger units], 8483.90.80, 8708.99.80.15 [now 8708.99.81.15, Double flanged wheel hub units not incorporating ball bearings], and 8708.99.80.80 [now 8708.99.81.80, parts and accessories of motor vehicles, other]. Although the HTSUS item numbers are provided for convenience and customs purposes, the written description of the scope of the order is dispositive.