Trade Court Judge Remands Cost Calculation in Brazilian Paper Case to Commerce
The Court of International Trade on Aug. 16 remanded the Commerce Department's cost calculations for a Brazilian paper manufacturer during the third administrative review of the antidumping duty order on uncoated paper from Brazil (Suzano S.A. v. United States, CIT #21-00069).
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The case concerns the review of an AD order covering certain uncoated paper from Brazil issued by Commerce in 2016. In March 2018, the first month of the review period, Suzano announced plans to acquire Fibria Celulose S.A. As part of its submissions to Commerce during the review, Suzano calculated its combined financial expense ratio based on consolidated 2018 financial statements for both Suzano and Fibria
In 2020, Commerce instructed Suzano to recalculate its financial expense ratio based on the audited 2018 consolidated financial statements of Suzano alone. Suzano submitted two revised calculations of its financial expense ratio and requested that Commerce adopt the second calculation, which included its derivative losses.
Commerce published the final results of its administrative review in January 2021. In its final results, Commerce relied upon Suzano’s first revised expense ratio, noting that it was obligated to “rely on the findings of Suzano’s auditors and not exclude a portion of Suzano’s financial expenses from [its] calculations.” Commerce similarly declined to exclude the derivative losses, or to include Fibria’s cost of sales. Suzano argued that Commerce’s failure to exclude certain of its derivative losses from its calculation of the financial expense ratio was unsupported by evidence (see 2109290054)
CIT Judge Gary Katzmann noted that the central issue was whether the 2018 audited consolidated financial statements constituted "substantial evidence" that Suzano’s derivative expenses were neither investment-related nor extraordinary. In his ruling, the judge concluded that Commerce did not adequately address the question and so did not support its determination with substantial evidence. "While there is no statutory requirement that ... [Commerce] explicitly discuss every piece of record evidence that is put before it," Katzmann said, "Commerce is nevertheless required to discuss issues material to its determination." He remanded to Commerce the issue of its inclusion of Suzano’s derivative expenses in its cost of production.
(Suzano S.A. v. United States, Slip Op. 22-95, CIT #21-00069, dated 06/08/22, Judge Gary Katzmann. Attorneys: Craig Lewis of Hogan Lovells for plaintiff Suzano; Antonia Soares for defendant U.S. government; Daniel Schneiderman of King & Spalding for defendant-intervenor Domtar Corporation.)