Dorbest Ltd. v. United States

789 F.Supp.2d 1364

DORBEST LTD., et al., Plaintiffs,

v.UNITED STATES, Defendant.

Slip Op. 11–95.Court No. 05–00003.

United States Court of International Trade.

Aug. 3, 2011.

Mowry & Grimson PLLC (Kristin H. Mowry, Jeffrey S. Grimson, Jill A. Cramer, Susan E. Lehman, and Sarah M. Wyss), for Plaintiffs Dorbest Limited et al.King & Spalding LLP (Joseph W. Dorn, Stephen A. Jones, Jeffrey M. Telep, J. Michael Taylor, Daniel L. Schneiderman, and Ashley C. Parrish), Washington, DC, for Defendant–Intervenors American Furniture Manufacturers Committee for Legal Trade, et al.Tony West, Assistant Attorney General; Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, DC, (Stephen C. Tosini, Carrie A. Dunsmore, and Brian A. Mizoguchi); Rachael E. Wenthold, Senior Attorney, Of Counsel, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, for the United States Department of Commerce; andTrade Pacific PLLC (Robert G. Gosselink), on behalf of Defendant–Intervenors Dongguan Lung Dong/Dong He, et al.

OPINION

POGUE, Chief Judge:

This matter concerns the selection of “surrogate” countries as a source for data with which to calculate the labor wage rate in an antidumping investigation involving wooden bedroom furniture from China, a non-market economy (“NME”). The case now returns to the court after the Department of Commerce's (“Commerce”) redetermination, Final Results of Redetermination Pursuant to Remand, (Apr. 27, 2011) (“ 2011 Redetermination ”), following a partial remand order in Dorbest Ltd. v. United States, –––CIT ––––, 755 F.Supp.2d 1291 (CIT 2011) (“ Dorbest V ”).¹

Plaintiff/Respondent, Dorbest Ltd. (“Dorbest”), seeks review of Commerce's data choices in the 2011 Redetermination. Dorbest claims that Commerce's methodology for selecting the endpoint or “bookend” countries, which form the range of countries available for consideration as a data source, was contrary to established agency precedent and unsupported by substantial evidence, and that Commerce should have used absolute numerical differences in per-capita Gross National Income (“GNI”) for the identification of “bookend” countries. Dorbest Comments on Fifth Remand Redetermination 2–4, (May 18, 2011) (“ Dorbest Comments ”). Dorbest further asserts that Commerce's inclusion of Equatorial Guinea in the initial list of countries available for consideration, and Commerce's determination that Guinea was a significant producer of the subject merchandise, are unsupported by substantial evidence.² Id. at 5.

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2006). After a brief review of the agency's methodology and the applicable standard of review, the court will explain why it concludes that Commerce's methodology for selecting its initial bookend countries, as adopted in the 2011 Redetermination, is reasonable in the context here, and supported by a reasonable reading of the record evidence. The court also concludes that Dorbest has waived its other arguments. Commerce's final redetermination pursuant to remand is therefore affirmed.

BACKGROUND

When determining surrogate labor rates, Commerce is required by statute to use data from countries that are both “economically comparable” to the nonmarket economy at issue, and “significant producers” of comparable merchandise. 19 U.S.C. § 1677b(c)(4); Dorbest Ltd. v. United States, 604 F.3d 1363, 1372–73 (Fed.Cir.2010) (“ Dorbest IV ”).

In its 2010 Redetermination, following the Court of Appeals for the Federal Circuit's (“Federal Circuit” or “CAFC”) invalidation of the regulation which previously governed surrogate labor rate calculation, Commerce created a new methodology to calculate surrogate labor rates. 2010 Redetermination 1–2. Under this new methodology, to select economically comparable countries, Commerce first chose a pair of countries to act as endpoint or “bookend” countries. In making this “bookend” selection, Commerce turned to the surrogate country memorandum from the original 2003 investigation and chose the two countries listed therein that had the highest and lowest GNI.³Id. at 12–13. Commerce then identified the countries with GNIs in the range between the GNI of the two bookend countries, including those two bookend countries. Id. at 13. These identified countries then became the universe or “basket” of countries available for consideration as a source of surrogate labor wage rate data.⁴

The result in the 2010 Redetermination was a group of countries with GNIs which were largely skewed toward a spectrum below China's GNI. Upon review of that decision, in Dorbest V, the court held that Commerce must either reconsider its selection of that significantly unbalanced pair of endpoint or “bookend” countries, or provide a reasonable explanation as to why it selected these countries as its starting point. Dorbest V, 755 F.Supp.2d at 1299.

In its 2011 Redetermination, responding to Dorbest V, Commerce has amended its methodology by expanding the range of countries available for initial consideration as the source of surrogate labor rate data. Under this amended methodology, Commerce has selected a pair of “bookend” countries so that the range includes a number of countries with GNIs higher than China's GNI equal to the number of countries with GNIs lower than China's. 2011 Redetermination at 6.⁵

The next step in Commerce's methodology is to ascertain which countries in this “basket” are also significant producers of wooden bedroom furniture. ⁶ Commerce has defined “significant producer” as any country which “had exports of comparable merchandise between 2001 and 2003.” Id. at 8–9. From the resulting 30 countries, Commerce then determines which countries reported the necessary wage rate data. Id. at 9. In this case, only 17 countries reported “reliable wage data.” Id. at 9–10. Finally, as before, Commerce further refines its list by applying a filtering step to determine which countries reported industry-specific wage data under ISIC Rev. 2, Sub–Classification 33.⁷Id. at 12.

Based on this analysis, Commerce has identified Colombia, India, Indonesia, Pakistan and Macedonia as countries economically comparable to China which are significant producers of wooden bedroom furniture, and from which the preferred wage data is available. Using the data from these five countries, Commerce has calculated an average wage rate of 0.44 USD/hour. Using that average wage rate as a surrogate for the cost of labor in the production of Dorbest's merchandise, Commerce has determined that Dorbest has an antidumping margin of 2.40 percent. Id. at 24.

STANDARD OF REVIEW⁸

The court will find Commerce's remand redetermination unlawful if it is “unsupported by substantial evidence on the record, or otherwise not in accordance with law[.]” 19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence is that which, given the record as a whole, “ ‘a reasonable mind might accept as adequate to support a conclusion[,]’ ” when evaluating the agency's findings. Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 477, 491, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (quoting Consol. Edison Co. v. N.L.R.B., 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)).

The court notes further that, in presenting its findings, the agency must explain its standards and “rationally connect them to the conclusions drawn from the record.” U.S. Steel Corp. v. U.S., Slip Op. 10–104, 2010 WL 3564705 at *1 (CIT 2010)(citing Motor Vehicle Mfrs. Ass'n of the U.S., Inc. v. State Farm Mut. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983); Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed.Cir.1984)). The conclusion Commerce reaches need not be the best or only possible conclusion, merely a reasonable one. See Lifestyle Enterprise, Inc. v. United States, ––– CIT ––––, 768 F.Supp.2d 1286, 1305 (2011).

DISCUSSION

Commerce's country-count methodology.

Dorbest asserts that Commerce's determination was contrary to its established agency practice in counting upwards from China's per-capita GNI to ensure a more balanced set of bookends from which to select economically comparable countries. Dorbest Comments at 10–11. Dorbest further asserts that this method is results-oriented and arbitrary and that using a range based on numerical difference in GNI would have resulted in a more reasonable set of results. Specifically, Dorbest advocates placing Egypt (GNI 1,470 USD) as the upper bookend country. Id. at 17. Dorbest claims that because Egypt's GNI is USD 530 above China's and Pakistan's is USD 530 below China, this is a more appropriate way to achieve balanced bookends. Id. at 19. Accordingly, Dorbest claims, Commerce's bookend choices are unsupported by substantial evidence in the record.⁹ Id. at 21.

Where Commerce adopts a practice that substantially deviates from precedent, it must at least acknowledge the change and show that there are good reasons for the new policy.¹⁰ Pakfood Pub. Co. Ltd. v. United States, ––– CIT ––––, 753 F.Supp.2d 1334, 1341–42 (2011) (citations omitted). The new practice must also be within the scope of authority granted to Commerce by the relevant statute. Id. Commerce may depart from an established practice so long as it does so in the manner required by law. Id.

Here, Commerce clearly explains that the methodology employed is “appropriate only in this unique instance.” 2011 Redetermination at 8. Conceding that the set of bookends used in the 2010 redetermination resulted in a basket of countries that was “largely unbalanced,” Commerce has applied a methodology explicitly designed to address the problem as identified by the court in Dorbest V. Id. at 8, 16–17. Commerce further explains that, given the inherent imbalance in the first set of bookend countries and the “uniqueness of the data in this investigation,” this methodology constitutes the “best option in this instance.”...