Jiaxing Brother Fastener Co. v. United States

461 F.Supp.3d 1346

JIAXING BROTHER FASTENER CO., LTD., a/k/a Jiaxing Brother Standard Part Co., Ltd., IFI & Morgan Ltd., and RMB Fasteners Ltd., Plaintiffs,

v. UNITED STATES, Defendant,andVulcan Threaded Products, Inc., Defendant-Intervenor.

Slip Op. 20-86

Court No. 15-00313

United States Court of International Trade.

June 22, 2020

Gregory S. Menegaz, J. Kevin Horgan, and Alexandra H. Salzman, deKieffer & Horgan, PLLC, of Washington, D.C., for plaintiffs Jiaxing Brother Fastener Co., Ltd., a/k/a Jiaxing Brother Standard Parts Co., Ltd., IFI & Morgan Ltd., and RMB Fasteners Ltd.

Joseph H. Hunt, Assistant Attorney General, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendant. With him on the brief were Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, and Elizabeth Anne Speck, Senior Trial Counsel. Of counsel was W. Mitch Purdy, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, D.C.

OPINION AND ORDER

Kelly, Judge:

Before the court is the U.S. Department of Commerce's ("Department" or "Commerce") remand redetermination filed pursuant to the court's order in Jiaxing Brother Fastener Co. v. United States, 44 CIT ––––, 428 F. Supp. 3d 1364 (2020) (" Jiaxing I"). See also Final Results of Redetermination Pursuant to Court Remand Order in [ Jiaxing I ], Apr. 24, 2020, ECF No. 62 ("Remand Results"). In Jiaxing I, the court sustained in part and remanded in part Commerce's final determination in the fifth administrative review of the antidumping duty ("ADD") order covering certain steel threaded rod ("STR") from the People's Republic of China ("PRC"). See Certain [STR] from the [PRC], 80 Fed. Reg. 69,938 (Dep't Commerce Nov. 12, 2015) (final results of [ADD] admin. review; 2013–2014) ("Final Results") and accompanying Issues and Decision Memo. for the Final Results of the Fifth Administrative Review of the [ADD] Order on Certain [STR] from the [PRC], A-570-932, (Nov. 3, 2015), ECF No. 18-4 ("Final Decision Memo."). Relevant here, the court remanded Commerce's determination regarding the calculation of surrogate financial ratios for further explanation or consideration. See Jiaxing I, 44 CIT at ––––, 428 F. Supp. 3d at 1381–82. On remand, Commerce reopened the record and provided further explanation as to its calculation of surrogate financial ratios. See Remand Results at 1–2, 4. No party filed comments on Commerce's remand redetermination. Defendant requests the court sustain the Remand Results in their entirety. See Def.’s Mot. Sustain Results of Remand Redetermination, June 4, 2020, ECF No. 64 ("Def.’s Mot."). For the reasons that follow, the court sustains the Remand Results.

BACKGROUND

The court presumes familiarity with the facts of this case as set out in its previous opinion ordering remand to Commerce, and now recounts those relevant to the court's review of the Remand Results. See Jiaxing I, 44 CIT at ––––, 428 F. Supp. 3d at 1369–70. Relevant here, in the fifth administrative review of the ADD order covering certain STR from the PRC, Commerce selected Thailand as the primary surrogate country to value Jiaxing Brother Fastener Co., Ltd. (a/k/a Jiaxing Brother Standard Parts, Co., Ltd.), IFI & Morgan Ltd., and RMB Fasteners Ltd.’s (collectively, "Jiaxing") factors of production ("FOPs") and to calculate surrogate financial ratios.¹ See Final Decision Memo. at 45–66. Commerce, specifically, valued the FOP "hours of labor" with data from the Statistical Office of Thailand's Labor Force Survey of the Whole Kingdom ("NSO data" or "NSO reports").² In addition, Commerce derived surrogate financial ratios, which are used to capture "an amount for general expenses and profit" that is added to normal value,³ 19 U.S.C. § 1677b(c)(1) (2012),⁴ from the financial statements of three Thai companies.⁵ Final Decision Memo. at 56. Each company's financial statements itemized production labor costs separately from non-production labor, which were categorized under "selling and administration costs." See Final Surrogate Value Memo. at Ex. 13, PD 275–79, bar codes 3414832-01–05 (Nov. 3, 2015) ("Final SV Memo.").⁶ In the calculation of surrogate financial ratios, Commerce categorized selling, general, and administrative ("SG&A") labor-related line items as SG&A expenses; it did not, as Jiaxing urged during the administrative proceeding to avoid double-counting labor costs, reclassify the SG&A labor-related line items—such as salary, welfare, and social security—as labor.⁷ See Final Decision Memo. at 64–66. As a result, in Commerce's calculation, the SG&A surrogate financial ratio numerators included these labor-related line items’ values, along with other SG&A expenses; and, the denominators contained, inter alia, other labor costs.⁸ See Final SV Memo. at 9 & Ex. 13.

In Jiaxing I, the court held Commerce's determination not to adjust the surrogate financial statements to be inadequately explained and unsupported by record evidence. See id., 44 CIT at ––––, 428 F. Supp. 3d at 1379. The court explained that it was unclear on what basis Commerce found that the NSO data do not include SG&A labor, because the NSO data identify individual line items for "manufacturing" activities, and do not refer to "administrative and support activities." Id., 44 CIT at ––––, 428 F. Supp. 3d at 1379 (citing Final SV Memo. at Exs. 8–9; Final Decision Memo. at 65). Further, the court noted that even though Commerce stated that it relies on the same NSO data to calculate labor hours as in the previous administrative review, the records of the two proceedings are not the same, because this record contains only excerpted data, not the full NSO reports.⁹

Id., 44 CIT at ––––, 428 F. Supp. 3d at 1379–80 (citing Final Decision Memo. at 65–66). Therefore, the court held that Commerce's determination that the NSO data does not cover SG&A labor, and as a consequence, that no adjustment of the surrogate financial ratios is warranted, was not supported by the record. Id., 44 CIT at ––––, 428 F. Supp. 3d at 1380.¹⁰ The court remanded Commerce's determination for further explanation or reconsideration, specifically directing Commerce to explain "the basis for finding record evidence that allows it to conclude that it could capture, and not overstate, labor costs by applying the [NSO data] and, as a result, decline to adjust the surrogate financial ratios." Id., 44 CIT at ––––, 428 F. Supp. 3d at 1381.

On remand, Commerce offers further explanation as to why it continues to decline to adjust the surrogate financial ratios.¹¹ See Remand Results at 6–12. Specifically, Commerce reopened the record, placing the full versions of the NSO reports on the record, which it finds do not provide the information necessary to accurately adjust the surrogate financial ratios to account for any potential overstatement in labor costs. See Remand Results at 4, 8–12.¹² Commerce explains that based on Table 8 of the NSO data, which lists occupations in the "manufacturing" sector, including occupations related to SG&A activities, it cannot determine whether there was a relationship between those occupational groupings and the average wages reported in Table 15 that it uses to derive labor hours. Id. at 8–9.¹³ Commerce finds that the record lacks evidence to support a finding as to what extent, or by what percentage, the NSO data also covered SG&A labor. Id. at 8–10. Moreover, given that Jiaxing did not report labor hours associated with SG&A staff, Commerce declines to assume that the NSO data would accurately compensate for, and not overstate, respondents’ unreported SG&A labor hours. Id. at 8, 10–11 (noting that its approach is consistent with Jiaxing Brother Fastener Co. v. United States, 44 CIT ––––, 425 F. Supp. 3d 1338 (2020) ). As a result, Commerce does not transfer the surrogate financial statements’ SG&A labor-related line items to the denominator in the surrogate financial ratio calculation, because doing so could distort the calculation and result in an undervaluation of labor-related SG&A expenses. Id. at 11–12. Commerce makes no further adjustments to Jiaxing's margin of 39.53 percent. Id. at 13.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to section 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) and 28 U.S.C. § 1581(c) (2012), which grant the court authority to review actions contesting the final determination in a review of an antidumping duty order. The court will uphold Commerce's determination unless 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). "The results of a redetermination pursuant to court remand are also reviewed ‘for compliance with the court's remand order.’ " Xinjiamei Furniture (Zhangzhou) Co. v. United States, 38 CIT ––––, ––––, 968 F. Supp. 2d 1255, 1259 (2014) (quoting Nakornthai Strip Mill Public Co. v. United States, 32 C.I.T. 1272, 1274, 587 F. Supp. 2d 1303, 1306 (2008) ).

DISCUSSION

No party filed comments on Commerce's remand redetermination, and it is therefore uncontested. Defendant moved for the court to sustain the Remand Results and enter judgment. See Def.’s Mot. at 1–2. Upon review of Commerce's remand redetermination, Commerce's decision to reopen the record to place the full versions of the NSO reports on the record and its additional explanation of its calculation of the surrogate financial ratios complies with the court's order in Jiaxing I and is in accordance with the statute and regulations governing the valuation of labor. Therefore, the court sustains the Remand Results.

CONCLUSION

There being no challenges to the Remand Results, and those results being otherwise lawful and supported by substantial evidence, the court sustains Commerce's Remand Results. Judgment will enter accordingly.

1 In an antidumping proceeding, if Commerce considers an...