CIT Allows Commerce to Review Use of Another Respondent's Data to Value Exporter's CV Profit
The Court of International Trade granted the Commerce Department's request for a remand to reconsider its calculations of constructed value, CV profit cap and constructed export price profit for countervailing duty respondent Hyundai Steel in the 2019-20 review of the CVD order on oil country tubular goods from South Korea. Hyundai claimed that Commerce's use of exporter SeAH Steel Corp.'s third-country sales data for calculating these figures unreasonably used data that failed to represent Hyundai's actual experience.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Elsewhere in the court's order, Judge Jennifer Choe-Groves sustained Commerce's adjustment to Hyundai's reported general and administrative expenses ratio for the company's U.S. affiliate, Hyundai Steel USA, "to account for the cost of rejected pipe sold to unaffiliated customers." The agency raised the numerator and lowered the denominator in a bid to account for the cost of pipes rejected by the U.S. affiliate and sold to a non-affiliated firm for processing into scrap. Hyundai claimed at CIT that the record showed that the rejected pipes were a type of non-subject good.
Commerce said the scrap taken from the subject pipes was not sold as a distinct good and Hyundai Steel USA's classification of the scrap as a non-subject product did not reflect the production costs of the goods under consideration. Hyundai claimed that once a defect was identified in the subject pipes, it was transformed into a different good and could've been used in other ways.
Choe-Groves did not buy this explanation, finding that Hyundai Steel USA did not sell the defective pipe "as anything other than scrap." The judge added that "Commerce’s determinations that the rejected pipe was not a distinct non-subject product and that the cost associated with the rejected pipe was covered generally by Hyundai Steel USA were reasonable and supported by substantial evidence."
The court also upheld the agency's neutral facts otherwise available adjustment to Hyundai Steel USA's further manufacturing costs to account for the affiliate's yield loss based on the costs of the rejected pipes. Hyundai said the use of neutral facts available in this adjustment was unwarranted given evidence showing that the company accounted for further manufacturing yield loss. Since the exporter reported theoretical weight for goods at the time of import before further manufacturing, theoretical weights and further manufacturing costs were not affected by later yield losses during further manufacturing processes, Hyundai said.
On the other hand, Commerce said it offered evidence showing that the affiliate contracted with third-parties to turn the rejected pipe into scrap, adding that the record "did not explain how scrap generated through this further processing impacted the fees related to the further manufacturing process." The use of theoretical weights at the time of import did not scrap the need for Hyundai to account for the value of pipe lost during further processing, Commerce said. Choe-Groves sustained this finding as reasonable.
Related to the use of SeAH's third-country sales, Hyundai also argued that public version of SeAH's business proprietary information used in Commerce's preliminary CV profit memorandum and analysis did not give enough detail for review. Choe-Groves rejected this claim, declaring that there is "no statutory or regulatory requirement that Commerce allow a party access to business proprietary information other than through counsel or that Commerce limit its use of business proprietary information to only information reviewed by opposing parties." Doing so would negate the point of the administrative protective order system, which was used in this review.
(Hyundai Steel Co. v. United States, Slip Op. 23-87, CIT Consol. # 22-00138, dated 06/09/23; Judge: Jennifer Choe-Groves; Attorneys: Jarrod Goldfeder of Trade Pacific for plaintiff Hyundai; Brady Mills of Morris Manning for consolidated plaintiff Husteel Co.; Henry Almond of Arnold & Porter for consolidated plaintiff Nexteel Co.; Jeffrey Winton of Winton & Chapman for plaintiff-intervenor SeAH; Hardeep Josan for defendant U.S. government; Roger Schagrin of Schagrin Associates for defendant-intervenors Vallourec Star and Welded Tube USA; and James Ransdell of Cassidy Levy for defendant-intervenor U.S. Steel Corp.)