US Steel Says Commerce Erred in Not Using AFA for Exporter's Nonstandard Product Codes
The Commerce Department erred in not applying adverse facts available to antidumping duty respondent Tenaris Mexico for its failure to properly explain its "nonstandard basket category Threading codes" in the 2022-23 administrative review of the AD order on oil country tubular goods from Mexico, petitioner U.S. Steel argued in a Dec. 4 complaint at the Court of International Trade (United States Steel v. United States, CIT # 25-00243).
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Per Commerce's practice, oil country tubular goods have 10 separate fields that make up the control number assigned to each of the respondent's U.S. sales. For each of these fields, a respondent will pick from a list of numerical codes, and each code represents a "commercially significant physical distinction within that field's overarching category."
One of these fields for oil country tubular goods is for threading "that establishes whether or not the ends of the OCTG pipe are threaded and, if so, the type of threading applied," U.S. Steel explained. Commerce has established five default codes for threading. The first one represents unthreaded OCTG, while the other four "each represent a different type of American Petrolium Institute (API) standard threading."
Crucially, U.S. Steel said it's "theoretically possible to introduce additional numerical codes within the Threading field, but any nonstandard numerical code must be supported by factual information on the administrative record."
During the review, Tenaris Mexico, which is a conglomeration of affiliated exporters Tubos de Acero de Mexico and Tenaris Global Services, "coded some of its home market and U.S. OCTG sales using default Threading codes," though it also created two additional nonstandard codes. However, in its initial questionnaire response, the respondent didn't "describe what physically distinguished the thread types falling within each basket category from each of the five default Threading codes," the complaint said. Nor did the respondent explain the differences between the two nonstandard codes as instructed by Commerce.
Commerce twice issued supplemental questionnaires to the respondent asking for more information about the nonstandard codes. In response to the first supplemental questionnaire, Tenaris Mexico offered a "narrative explanation" on why its additional codes were both physically different than the goods assigned all other numerical codes and similar to goods assigned the same numerical code. The narrative explanation said the respondent wanted to "code together 'all proprietary connections from third (i.e., unaffiliated) parties.'"
Tenaris Mexico said the connections falling under the nonstandard codes aren't threaded within the respondent's facilities "and are sent to thread at a third party and when finished invoiced to the customer." U.S. Steel argued that "this quirk of Tenaris Mexico’s production flow is not a characteristic that is physically discernible in the final product." And while Tenaris Mexico said its approach was verified by Commerce in the underlying investigation, the petitioner said the respondent "did not provide the information repeatedly requested by Commerce in this review."
U.S. Steel argued that there's a gap in the record regarding the justification for Tenaris Mexico's nonstandard threading codes, warranting the use of AFA. Even if no such gap existed, Commerce "summarily accepted" the respondent's new codes "without meaningfully addressing" U.S. Steel's factual claims or explaining the rationale underlying the agency's conclusion. "The absence of reasoned decision-making renders Commerce’s decision arbitrary and unlawful," the complaint said.