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Commerce Remand Reverses PMS Adjustment for Below Cost Test, but Says Issue Still Unsettled

The Commerce Department will reverse course on a particular market situation adjustment to production costs for the purposes of a sales-below-cost test in an antidumping review on circular welded carbon steel standard pipe and tube products from Turkey, it said in a final remand redetermination filed with the Court of International Trade April 19. But it will only do so under protest, it said, noting the Federal Circuit has yet to weigh in with binding precedent on the issue.

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Commerce had applied the PMS adjustment in a below cost test for Borusan Mannesmann during its 2017-18 review on Turkish circular welded pipe, the final results of which it issued in March 2020 (see 2001210013). CIT in February remanded the final results, telling Commerce that it can’t apply PMS adjustments in that situation; PMS adjustments are only permissible when calculating normal value based on constructed value, as opposed to when calculating normal value based on home market sales, CIT said, according to Commerce.

In its remand redetermination, Commerce continued to argue that PMS adjustments can be applied to home market prices. The statute on PMS says Commerce can “remedy the cost-based PMS through ‘any other calculation methodology,’” the agency said. “Although the CIT has held that Commerce may not adjust for purposes of the sales-below-cost test, Commerce observes that if a PMS exists, that PMS by definition results in distorted costs to the producer of the merchandise at issue.”

“Respectfully, we do not believe that such an outcome was intended by Congress when it amended the statute to: (1) allow Commerce to determine if a PMS which distorts the costs of production exists; and then (2) provide a remedy to that PMS,” Commerce said.

Commerce disagreed with comments from Borusan that it should refrain from applying PMS to sales-below-cost tests moving forward. “Commerce has consistently explained, and the Federal Circuit has agreed, that each administrative review results in a separate determination based upon the administrative record in that review,” it said. “Thus, Commerce could reach a different conclusion from one administrative review to the next based upon different facts on the record. Moreover, the Court’s decision in this litigation is not yet final and conclusive, and the Federal Circuit has not issued binding judicial precedent regarding Commerce’s interpretation of the statute with respect to PMS adjustments for purposes of the sales-below cost test.”

In the remand redetermination, Commerce also reversed its decision to apply an adjustment to Borusan’s export prices for Section 232 duties paid by Borusan. While CIT had upheld Commerce’s ability to adjust for Section 232 tariffs in its February decision, the trade court took exception with Commerce’s application of adverse facts available (AFA) in applying the adjustment for Borusan. After another look at evidence provided by Borusan, Commerce determined that the single shipment on which Section 232 tariffs were paid had not been sold by the end of the period of review.

Together, the changes would result in Borusan's AD rate from the 2017-18 review falling to 8.48% (4.06% adjusted for export subsidies). Commerce had set a 9.99% rate for Borusan in the final results.