Apex Frozen Foods Private Limited et al v. United States

Slip Op. 14-
UNITED STATES COURT OF INTERNATIONAL TRADE
OPINION
[Sustaining the final results of an administrative review of an antidumping duty order on certain
frozen warmwater shrimp from India.]
Dated:'HFHPEHU
Robert L. LaFrankie, Hughes Hubbard & Reed LLP, of Washington, DC, argued for
plaintiffs. With him on the brief was Matthew R. Nicely.
Joshua E. Kurland, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, argued for defendant. With him on the brief were
Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M.
McCarthy, Assistant Director. Of counsel on the brief was Scott D. McBride, Senior Attorney,
Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of
Commerce, of Washington, DC.
Jordan C. Kahn, Picard Kentz & Rowe LLP, of Washington, DC, argued for defendant-
intervenor Ad Hoc Shrimp Trade Action Committee. With him on the brief were Andrew W.
Kentz, David A. Yocis, and Nathaniel Maandig Rickard.
APEX FROZEN FOODS PRIVATE LTD.,
et al.,
Plaintiffs,
v.
UNITED STATES,
Defendant,
and
AD HOC SHRIMP TRADE ACTION
COMMITTEE and AMERICAN SHRIMP
PROCESSORS ASSOCIATION,
Defendant-Intervenors.
Before: Richard W. Goldberg, Senior Judge
Court No. 13-00283
PUBLIC VERSION
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Elizabeth J. Drake, Stewart and Stewart, of Washington, DC, argued for defendant-
intervenor American Shrimp Processors Association. With her on the brief were Terence P.
Stewart and Philip A. Butler, Stewart and Stewart, of Washington, DC, and Edward T. Hayes,
Leake & Andersson, LLP, of New Orleans, LA.
Goldberg, Senior Judge: Plaintiffs challenge the final results of an administrative review
of an antidumping duty order on frozen warmwater shrimp from India. Certain Frozen
Warmwater Shrimp from India, 78 Fed. Reg. 42,492 (Dep’t Commerce July 16, 2013) (final
admin. review) (“Final Results”). During the review, the U.S. Department of Commerce
(“Commerce” or “the agency”) assigned mandatory respondent Apex Frozen Foods Private Ltd.
(“Apex”) a 3.49 percent antidumping duty rate for entries between February 1, 2011, and
January 31, 2012. Id. at 42,492í93. The agency assigned the same 3.49 percent rate to non-
mandatory respondents, including the other plaintiffs on appeal. Id. at 42,494í96. Commerce
fixed the rates using an exceptional method to remedy “targeted dumping,” which occurs when
foreign exporters sell their goods in the United States for prices that differ significantly by
customer, region, or time period.
Apex and others (collectively “Plaintiffs” or “Apex”) claim that Commerce incorrectly
applied the targeted dumping method to calculate their antidumping rate. Apex first argues that
the agency lacks authority to use the targeting dumping exception in reviews. Next, assuming
Commerce could use the targeting dumping method in reviews, Apex contends that the agency
misapplied the method to its detriment. Plaintiffs especially oppose the agency’s use of
“zeroing”—a hotly debated technique used to calculate antidumping rates—when deploying the
targeted dumping exception. But the court rejects these claims and sustains the Final Results in
full.
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BACKGROUND
For all of its intricacy, this case concerns just one core issue: Commerce’s calculation of
Plaintiffs’ weighted-average dumping margin. A weighted-average dumping margin, more
commonly known as an antidumping rate, is the amount of duty levied on foreign imports sold in
the United States for less than their fair value. See 19 U.S.C. §§ 1677(35)(B), 1675(a)(1)(B)
(2006). In this section, the court outlines the agency’s formula for finding antidumping rates
generally, then discusses the two variations of the formula at issue here. The court next
describes the statutory inquiry used to choose between these two variations when targeted
dumping has occurred. And finally, the court recounts how Commerce applied the antidumping
formula, its two variations, and the targeted dumping inquiry to find Apex’s 3.49 percent rate.
The court begins by outlining the general formula for calculating antidumping rates. The
analysis proceeds in four steps. First, Commerce gathers a foreign exporter’s normal values (or
sales prices of the subject goods in the exporter’s home country) and export prices (or sales
prices of the subject goods in the United States). See id. §§ 1677b(a)(1)(A)í(B), 1677a(a).
Second, the agency subtracts the exporter’s export prices from its normal values, yielding a
series of “dumping margins.” The court refers to this step as the “comparison step.” See id.
§ 1677(35)(A). Third, Commerce weight-averages or aggregates the dumping margins into a
single, composite margin. The court calls this the “aggregation step.” See id. § 1677(35)(B).
And fourth, the agency divides the combined margin by the good’s weight-averaged export
price. See id. The quotient is the foreign exporter’s ad valorem antidumping rate.
Over the years, Commerce has used two distinct variations of this process to set
antidumping rates in reviews. Before 2012, Commerce typically relied on a version of the
formula called the average-to-transactional method (“A-T”). See Calculation of the Weighted-
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Average Dumping Margin and Assessment Rate in Certain Antidumping Duty Proceedings, 77
Fed. Reg. 8101, 8101 (Dep’t Commerce Feb. 14, 2012) (final modification) (“Final Mod.”). The
A-T method differs from other versions of the antidumping formula in its approach to averaging
at the comparison step and its treatment of margins at the aggregation step. At the A-T
comparison step, the statute requires Commerce to subtract individual export prices from normal
values weight-averaged by month. 19 U.S.C. § 1677f-1(d)(1)(B), (d)(2). This yields a dumping
margin for each U.S. sale of the foreign good. The margins may be positive, and indicative of
dumping, if normal value exceeds the export price, or negative, and not indicative of dumping, if
the export price exceeds normal value.
Next, at the A-T aggregation step, Commerce assigns each negative margin a value of
zero, then weight-averages these margins together with positive margins. Final Mod. at 8101.
This method of aggregating margins, called “zeroing,” is not required by statute. Nonetheless,
Commerce claims that the ambiguous definition of “dumping margin” in 19 U.S.C.
§ 1677(35)(A) permits it to exclude negative margins from the weighted-average dumping
margin. See Timken Co. v. United States, 354 F.3d 1334, 1342 (Fed. Cir. 2004). The Federal
Circuit has approved zeroing as a reasonable way to aggregate margins under A-T. See id.
The A-T method would not always be Commerce’s favored approach in reviews,
however. Between 2007 and 2009, the World Trade Organization (“WTO”) Appellate Body
ruled that the United States could not use zeroing in reviews as a default policy.1 In response to
the WTO rulings, Commerce decided it would no longer apply A-T with zeroing in each review
1 As listed in the Final Modification, these decisions include Appellate Body Report, United States—Laws,
Regulations and Methodology for Calculating Dumping Margins (“Zeroing”), WT/DS294/AB/R (May 14, 2009);
Appellate Body Report, United States—Continued Existence and Application of Zeroing Methodology,
WT/DS350/AB/R (Feb. 4, 2009); Appellate Body Report, United States—Final Anti-Dumping Measures on
Stainless Steel from Mexico, WT/DS344/AB/R (Apr. 30, 2008); and Appellate Body Report, United States—
Measures Related to Zeroing and Sunset Reviews, WT/DS322/AB/R (Jan. 9, 2007). See Final Mod. at 8101 n.4.
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proceeding. The agency would instead apply the average-to-average method (“A-A”), a version
of the antidumping formula prescribed as the default approach in investigations, as its new
default method in reviews. See Final Mod. at 8102; 19 C.F.R. § 351.414(c)(1) (2014) (requiring
A-A in reviews unless another method is more appropriate).
The A-A method differs from A-T in two ways. First, the law requires Commerce to
subtract weight-averaged export prices from weight-averaged normal values at the A-A
comparison step. 19 U.S.C. § 1677f-1(d)(1)(A)(i). Commerce calculates the averages by month,
producing twelve separate dumping margins. 19 C.F.R. § 351.414(d)(3). Second, at the A-A
aggregation step, Commerce combines the twelve margins into one weighted average, including
both positive and negative margins in the equation. See Final Mod. at 8102. By computing a net
average, A-A cancels out dumped margins to the extent there are nondumped margins to offset
them. See U.S. Steel Corp. v. United States, 621 F.3d 1351, 1354í55 (Fed. Cir. 2010). This
offsetting technique, while not required by statute, has been upheld as a reasonable way to
aggregate margins under A-A. Id. at 1361í63. Thus A-A produces rates that reflect average
dumping over the course of a review period, but not the amount of dumping effected by
individual U.S. sales. See U.S. Steel Corp. v. United States, 33 CIT 984, 986, 637 F. Supp. 2d
1199, 1205 (2009).
Yet Commerce did not wholly abandon zeroing when it adopted A-A with offsets as its
default method in reviews. As explained earlier, the law provides A-A as a default methodology
in investigations. See 19 U.S.C. § 1677f-1(d)(1)(A)(i). But the statute also allows Commerce to
use A-T as an exception to A-A to counteract “targeted dumping.” See id. § 1677f-1(d)(1)(B);
Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Doc. No. 103-316,
vol. 1, at 842í43 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4177í78 (“SAA”). Targeted
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dumping occurs when exporters sell their goods in the United States at dumped prices “to
particular customers or regions, while selling at higher prices to other customers or regions.”
SAA at 842. When an exporter’s sales are structured this way, A-A can understate dumping by
measuring average dumping over the entire review period, while masking dumping from discrete
targeted sales. In contrast, A-T remedies more dumping from targeting by computing a margin
for each targeted sale and by disregarding negative values when combining margins into a final
rate.
When it adopted A-A as its new default method in reviews, Commerce grafted the
targeted dumping exception from investigations into its review procedure. Final Mod. at
8106í07. Now, before applying A-T instead of A-A in reviews, the agency completes a two-
step test outlined in statute. The statutory inquiry (the “TD inquiry”) reads as follows:
(B) Exception
The administering authority may determine whether the subject merchandise is
being sold in the United States at less than fair value by comparing the weighted
average of the normal values to the export prices (or constructed export prices) of
individual transactions for comparable merchandise, if—
(i) 	there is a pattern of export prices (or constructed export prices) for
comparable merchandise that differ significantly among purchasers,
regions, or periods of time, and
(ii) 	the administering authority explains why such differences cannot be taken
into account using a method described in paragraph (1)(A)(i) or (ii) [i.e.,
A-A and T-T].
19 U.S.C. § 1677f-1(d)(1)(B).2 To paraphrase, Commerce must first decide whether the exporter
actually targeted sales by customer, region, or time period. If the exporter targeted sales, then
2 Commerce rarely uses the transaction-to-transaction or “T-T” method to calculate antidumping rates.
Final Mod. at 8102. The agency did not appear to consider whether T-T could not account for Apex’s targeted sales
in this case, but Apex does not contest this omission.
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the agency must explain why A-A cannot account for dumping from those sales. Commerce
may use A-T to calculate the exporter’s rate if it provides the explanation required.
In this case, Commerce conducted a TD inquiry, then used A-T to set Apex’s rate. At the
TD inquiry’s first step, the agency found Apex had targeted some of its sales by time period and
customer. See Issues & Decision Mem. (“I&D Memo”) at 10, 14, PD 279 (July 10, 2013).
Commerce used the Nails test, a court-approved method for pinpointing targeted sales, to reach
this conclusion. See id.; Mid Continent Nail Corp. v. United States, 34 CIT __, __, 712 F. Supp.
2d 1370, 1376í79 (2010). No one disputes the finding that Apex targeted some of its sales
during the review period.
Next, Commerce analyzed whether A-A could account for the dumping from Apex’s
targeted transactions. I&D Memo at 15. The agency first found that Apex’s A-A rate was 0.0
percent. Then Commerce found that Apex’s A-T rate was 3.49 percent. After comparing the
two rates, the agency declared that the difference between the rates was “meaningful because it
crosses the de minimis threshold,” and that A-A could not adequately account for Apex’s
targeting. Id. Commerce then used A-T to calculate the rate, applying the method uniformly to
Apex’s targeted and untargeted sales to yield a 3.49 percent result.
In its administrative briefing, Apex contested the agency’s decision to apply A-T to
calculate its antidumping rate. See Apex Case Br., PD 265 (Apr. 18, 2013). Apex’s claims were
fourfold: (1) Commerce could not use the TD inquiry to decide whether to use A-T instead of A-
A, because the statute bars the TD inquiry from reviews, id. at 8í12; (2) the agency failed to
explain why A-A could not account for dumping from Apex’s targeted sales, id. at 14í23; (3)
Commerce could not apply A-T to all of Apex’s sales, both targeted and untargeted, to calculate
Apex’s rate, id. at 25í26; and (4) the agency failed to explain why it zeroed when using A-T, but
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not when using A-A, id. at 12í14. Commerce rejected all of these claims in the Final Results,
and Apex appealed. See Summons, ECF No. 1.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction to hear this appeal under 28 U.S.C. § 1581(c). The court will
sustain the agency’s decisions unless they are “unsupported by substantial evidence on the
record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).
DISCUSSION
In light of these standards, and after carefully studying each of Apex’s claims, the court
sustains Commerce on all points. To begin, Apex has not shown that the statute barred
Commerce from conducting a TD inquiry below. Nor has Apex proven that Commerce
mishandled the inquiry by inadequately explaining its reliance on A-T, by applying A-T to all
sales, or by failing to justify its inconsistent use of zeroing. The court addresses each of these
topics in turn.
I. 	Commerce Had Authority to Conduct the TD Inquiry Below
Plaintiffs first claim that Commerce lacked authority to conduct a TD inquiry in the
review below. Pls.’ Mot. for J. on Agency R. 13í19, ECF No. 37 (“Pls.’ Br.”). They note that
the statute expressly provides for TD inquiries in investigations, 19 U.S.C. § 1677f-1(d)(1)(B),
but is silent regarding targeting in reviews, see id. § 1677f-1(d)(2). In Apex’s view, this silence
reveals an intent by Congress to withhold the TD inquiry from reviews. See Pls.’ Br. 13í19.
The court disagrees and holds that Commerce has authority to use the TD inquiry in
reviews. Although the statute mentions the inquiry only in the context of investigations, the
court has declared, in a swelling chorus of cases, that Commerce may apply the TD inquiry in
review proceedings. See DuPont Teijin Films China Ltd. v. United States, 38 CIT __, __, 7 F.
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Supp. 3d 1338, 1355í56 (2014) (sustaining TD inquiry in reviews); JBF RAK LLC v. United
States, 38 CIT __, __, 991 F. Supp. 2d 1343, 1347í49 (2014) (same); CP Kelco Oy v. United
States, 38 CIT __, __, 978 F. Supp. 2d 1315, 1321í24 (2014) (same); Timken Co. v. United
States, 38 CIT __, __, 968 F. Supp. 2d 1279, 1286í87 n.7 (2014) (same). These cases address
each of the statutory arguments made in the briefs, and the court need not repeat their reasoning.
In addition to making statutory arguments, Plaintiffs vie that the legislative history of the
Uruguay Round Agreements Act (“URAA”) shows Congress’s intent to limit the TD inquiry to
investigations. Pls.’ Br. 17í18. Like the statute, the Statement of Administrative Action
mentions the inquiry in the context of investigations, but not in the context of reviews. SAA at
843. But the court finds Apex’s argument unpersuasive. When the SAA was drafted, Congress
had no reason to consider extending the TD inquiry to reviews. The Uruguay Round
agreements, signed by participating countries in 1994, required the United States to use A-A
instead of A-T as its default method in investigations. Agreement on Implementation of Article
VI of the General Agreement on Tariffs and Trade 1994, art. 2.4.2, Apr. 15, 1994, 1868 U.N.T.S.
201. The agreements did not bar the use of A-T in reviews, however. See SAA at 843. And so,
when Congress passed the URAA to comply with the agreements, it had no need to enact a
method for choosing between A-A and A-T in reviews, because A-T remained the default there.
See id. at 842í43. Thus the legislature’s silence does not manifest an intent to withhold the TD
inquiry from reviews. The silence just as readily betokens Congress’s benign inattention to the
matter.
II. 	Commerce Reasonably Explained Why A-A Could Not Account for Targeting
Even assuming the agency had authority to conduct a TD inquiry below, Apex claims
that Commerce mishandled the inquiry. To be clear, the Plaintiffs do not argue that Commerce
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erred at the first step of the inquiry. The agency found [[ 	]] percent of Apex’s U.S. sales
were targeted by customer or time period, and Apex has no direct quarrel with this finding. See
Pls.’ Reply Br. 5, ECF No. 53 (“Reply Br.”) (calling irrelevant the question of whether targeted
dumping occurred); Apex Prelim. Results Calculations (“Prelim. Calcs.”) at 3, CD 228 (Mar. 4,
2013). But Plaintiffs do contest the agency’s analysis at the second step of the TD inquiry,
calling it “arbitrary, capricious, and inconsistent.” Pls.’ Br. 19. More specifically, Apex alleges
that Commerce inadequately explained why A-A could not account for dumping from targeted
sales, or why Commerce had to apply A-T instead.
In the I&D Memo, Commerce gave its rationale for applying A-T instead of A-A. It
began by finding the difference between Apex’s antidumping rate under A-A and the rate under
A-T. The agency explained,
[T]he Department evaluated the difference between the weighted-average
dumping margin calculated using the A-to-A method and the weighted-average
dumping margin calculated using the A-to-T method. Where there is a
meaningful difference between the results of the A-to-A method and the A-to-T
method, the A-to-A method would not be able to take into account the observed
price differences, and the A-to-T method would be used to calculate the weighted-
average margin of dumping for the respondent in question.
I&D Memo at 15. When generating the rates, Commerce zeroed when using A-T, but not when
using A-A. Then, after finding the antidumping rate under each method, Commerce explained
why it found A-A could not account for Apex’s targeted sales:
In this case, Apex’s margin is zero using the A-to-A method and 3.49 percent
using the A-to-T method. The Department has concluded that for the purposes of
this case, such a difference is meaningful because it crosses the de minimis
threshold and warrants the application of the A-to-T method.
Id. In short, Commerce chose A-T to calculate Apex’s rate because A-A yielded a zero margin,
and A-T revealed dumping that A-A masked.
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Apex challenges four facets of this analysis. First, they argue that the statute required
Commerce to compare A-A and A-T on an “apples-to-apples” basis, without zeroing under either
method. By zeroing under A-T but not A-A, Commerce ensured that the A-T rate would exceed
the A-A rate by a considerable amount. The agency thus perverted step two of the TD inquiry
into a useless formality, and guaranteed the use of A-T to set Apex’s rate. See Pls.’ Br. 22í24.
Second, Apex alleges that Commerce failed to explain why the difference between the A-
A and A-T rates was “meaningful.” In its analysis, Commerce concluded that the difference was
meaningful because it was more than de minimis, or 0.5 percent. I&D Memo at 15. Yet
Plaintiffs argue that this 0.5 percent cut-off was “results-oriented” and arbitrary. See Pls.’ Br. 23.
As Apex interprets the test, the agency would find a difference of just 0.1 percent to be
“meaningful” if the A-T rate was slightly higher than 0.5 percent, and the A-A rate was slightly
lower than 0.5 percent. Such a hair-trigger distinction ensured that Commerce would find A-A
could not account for Apex’s targeting. Id. at 23í24.
Third, Apex contends that Commerce had to explain whether A-A with monthly
averaging could remedy targeting as well as A-T. Agency regulations hint that A-A with
monthly averaging accounts for price anomalies better than A-A with annual averaging.
Consequently, Apex alleges that Commerce had to explore the merits of A-A with monthly
averaging before choosing A-T to remedy Apex’s targeting. Id. at 24–27.
Finally, Plaintiffs argue that Commerce should have considered seasonal price changes
when deciding whether to depart from A-A. Apex suggests it was unnecessary to use the A-T
remedy because involuntary variations in demand for shrimp caused the targeting. Id. at 27í28.
The court considers these arguments in turn and finds that each lacks merit.
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A. 	Apex Has Not Shown that the Meaningful Difference Analysis Was Unlawful
At the outset, the court makes one point plain: Apex does not challenge Commerce’s
authority to conduct a meaningful difference analysis under § 1677f-1(d)(1)(B)(ii). Plaintiffs
concede that significant differences between the A-A and A-T rates may prove that A-A cannot
account for targeting. Pls.’ Br. 22í23 (suggesting that statute requires Commerce to contrast
different comparison methodologies at TD inquiry’s second step).
Apex’s argument is more subtle than that. As explained previously, the A-A and A-T
methods differ in two ways, one statutory, and the other discretionary. By statute, A-A and A-T
determine margins at the comparison step using distinct approaches. A-A compares average
export prices and normal values to set margins, but A-T compares individual export prices to
average normal values to set margins. See 19 U.S.C. § 1677f-1(d)(1)(A)í(B). The A-A and A-T
methods also differ in a second way, but this difference is not ensconced in statute. Under A-T,
Commerce has chosen to zero negative margins at the aggregation step to remedy transaction-
specific dumping, Final Mod. at 8101; but under A-A, the agency offsets positive and negative
margins to find average dumping over the course of a review period, see id. at 8102. Apex
argues that Commerce erred to compare rates made using A-T with zeroing and A-A without
zeroing, because the only statutory difference between the methods concerns averaging at the
comparison step. By comparing a zeroed rate to a nonzeroed rate, Apex continues, Commerce
ensured that the A-T rate would exceed the A-A rate, thus guaranteeing the use of the A-T
remedy. Pls.’ Br. 22í23.
Yet neither the statute nor logic prohibited the agency’s approach in the review below. It
was reasonable, as a legal matter, for Commerce to compare a zeroed A-T rate to a nonzeroed A-
A rate to decide whether A-A could account for Apex’s targeting.
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To begin, the statute does not require that the disparity between rates stem solely from the
way A-A and A-T average export prices and normal values. In fact, § 1677f-1(d)(1)(B)(ii) does
not compel Commerce to conduct a meaningful difference analysis at all. Rather, the statute
simply states that Commerce may apply A-T if “the administering authority explains why such
differences [i.e., significant differences in export prices by customer, region, or time period]
cannot be taken into account using a method described in paragraph (1)(A)(i) or (ii) [i.e., A-A or
T-T].” 19 U.S.C. § 1677f-1(d)(1)(B)(ii). This language leaves the form of the explanation to the
agency’s discretion, and here, Commerce chose to explain the A-A method’s shortcomings by
contrasting Apex’s A-A and A-T rates. The statute does not dictate whether the agency needed
to zero one of these rates, both of the rates, or neither. As a consequence, Commerce could
compare a zeroed A-T rate to a nonzeroed A-A rate, as long as the comparison demonstrated
whether the A-A method could account for targeting. See Chevron, U.S.A., Inc. v. Natural Res.
Def. Council, Inc., 467 U.S. 837, 842í43 (1984) (giving deference where statute is ambiguous
and interpretation is reasonable).
The court holds that the agency’s comparison reasonably achieved the statute’s purpose.
As mentioned above, Congress enacted § 1677f-1(d)(1)(B) to combat a type of dumping that is
difficult to remedy. When exporters target their sales, those sales may disproportionately affect
U.S. producers who sell to particular customers or regions or in specific time periods. See SAA
at 842. Nonetheless, if exporters counterweight their targeting with above-fair-value sales, then
A-A, which averages export prices and offsets negative margins, could yield an understated
antidumping rate. See Union Steel v. United States, 713 F.3d 1101, 1108 (Fed. Cir. 2013)
(holding A-A with offsets “masks individual transaction prices below normal value”). Yet A-T
neither averages export prices nor offsets. This approach ensures that the final rate reflects every
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instance of dumping, even if an exporter balanced its targeting with above-fair-value sales. Id. at
1108í09 (holding A-T with zeroing “reveals individual dumping”). Hence, by comparing
Apex’s nonzeroed A-A rate to its zeroed A-T rate, the agency found the precise amount of
dumping—including dumping from targeted sales—that A-A masked. Commerce could then
decide whether that dumping was great enough to merit an exceptional remedy. This method
fulfills the statute’s aim and deserves deference. See Chevron, 467 U.S. at 842í43.
Apex also argues that zeroing magnifies the difference between the A-T and A-A rates,
thereby guaranteeing the finding that A-A cannot account for targeting. Pls.’ Br. 22í23. But the
agency’s approach to zeroing, in itself, did not foreordain the A-T remedy or undermine
Commerce’s explanation under § 1677f-1(d)(1)(B)(ii). It is true that A-T rates sometimes
exceed A-A rates, because A-T zeroes negative margins that would otherwise offset positive
margins under A-A. See, e.g., Union Steel v. United States, 36 CIT __, __, 823 F. Supp. 2d
1346, 1361í64 (2012) (appendices showing rates made with zeroing higher than rates made with
offsets). Nonetheless, Commerce does not discard its default method whenever the A-T rate
exceeds the A-A rate. The agency instead examines whether the rates differ meaningfully before
concluding that A-A cannot account for targeting. I&D Memo at 15.3 So even if zeroing widens
the gap between the A-A and A-T rates, it does not predestine the A-T remedy or render
superfluous the explanation mandated in the statute. The court continues, as before, to uphold
Commerce’s reasonable interpretation of § 1677f-1(d)(1)(B)(ii).
Before moving to Apex’s next argument, however, there is another matter the court must
confront. Besides arguing that Commerce’s explanation was contrary to law, Apex challenges
the conclusion that A-A could not account for targeting as unfounded in substantial evidence.
3 Apex argues that Commerce’s measure of the “meaningful difference” between the rates was arbitrary.
The court considers and rejects this argument in the next section. See infra Discussion II.B.
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Under the statute, Commerce must explain “why such differences cannot be taken into
account” using A-A before it applies the alternative A-T method. 19 U.S.C. § 1677f-
1(d)(1)(B)(ii) (emphasis added). The “differences” mentioned here are the significant
differences in export prices “among purchasers, regions, or periods of time” noted in § 1677f-
1(d)(1)(B)(i). In other words, Commerce must explain why A-A cannot account for dumping
from targeted sales before it deploys the A-T remedy. But as Apex observed in its reply brief,
[[ 	]] percent of its sales were not targeted. Reply Br. 10. Apex also furnished a document at
oral argument showing that [[ 	]] percent of its sales were dumped but not targeted. Prelim.
Calcs. at Attach. 2; Oral Argument at 28:40. Plaintiffs infer from these data that the difference
between the 0.0 percent A-A rate and 3.49 percent A-T rate stems mainly from ordinary
dumping, not targeted dumping. See Reply Br. 9í10. If this were true, then the finding that A-A
could not account for Apex’s targeting might be untethered from substantial evidence. While the
difference between rates would prove that A-A accounts for less dumping than A-T in general,
the difference would not necessarily show that A-A cannot account for targeted dumping in
particular, as required by statute. See 19 U.S.C. § 1677f-1(d)(1)(B)(ii).
The court declines to consider this argument, however, because it was not exhausted
before the agency. By regulation, Apex had to present in its administrative case brief “all
arguments that continue in the submitter’s view to be relevant to the Secretary’s . . . final
results.” 19 C.F.R. § 351.309(c)(2). And by statute, if Apex failed to brief an argument before
Commerce, the court need not consider the argument on appeal. See 28 U.S.C. § 2637(d). This
rule gives the agency the “opportunity to correct its own mistakes,” including fact-specific
shortfalls in its analysis, “before it is haled into federal court.” McCarthy v. Madigan, 503 U.S.
140, 145 (1992); see also Blue Field (Sichuan) Food Indus. Co. v. United States, 37 CIT __, __,
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949 F. Supp. 2d 1311, 1324 (2013) (finding argument regarding reliability of surrogate data not
exhausted where party failed to make argument in case brief and to cite relevant evidence).
Commerce had no such opportunity to correct the alleged flaw in its meaningful
difference finding. In its case brief, Apex remarked that “[r]ather than measuring the effect of
targeted dumping,” Commerce’s test “in fact measure[ed] mostly the impact of zeroing.” Apex
Case Br. 23. But this argument was framed as a legal challenge, not as a substantial evidence
challenge. Nowhere in the case brief did Apex cite data to show that most of the dumping in the
3.49 percent rate was untargeted. Instead, Apex illustrated that its A-A and A-T rates would be
nearly identical if Commerce zeroed both measures. Id. While this demonstrative proved that
zeroing one rate but not the other was the main reason the rates differed, the illustration did not
reveal whether the A-T rate captured dumping mainly from untargeted sales. Because the case
brief gave Commerce no notice of Apex’s substantial evidence argument, the argument was not
exhausted. See Trust Chem Co. v. United States, 35 CIT __, __, 791 F. Supp. 2d 1257, 1268
n.27 (2011).4
Even if Apex exhausted its substantial evidence argument, the court still would not
consider it. The Court’s rules require plaintiffs to raise any argument on appeal in their lead
briefs. See USCIT Rule 81(l) (“A reply brief or memorandum must be confined to rebutting
matters contained in the brief of a responding party.”). This requirement gives defendants a
chance to respond to plaintiffs’ arguments, and ensures that any matters raised are sufficiently
developed to permit the court to rule. See Novosteel SA v. United States, 284 F.3d 1261,
1273í74 (Fed. Cir. 2002). But here, Apex’s briefing afforded neither of these benefits to the
defendant or the court. In its initial brief, Apex argued (as it did below) that Commerce unfairly
4 None of the traditional exceptions to the exhaustion requirement apply here. See Ta Chen Stainless Steel
Pipe, Ltd. v. United States, 28 CIT 627, 645 n.18, 342 F. Supp. 2d 1191, 1206 n.18 (2004) (listing exceptions).
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compared zeroed to nonzeroed rates. Pls.’ Br. 22í23. It was not until the reply brief, however,
that Apex explicitly alleged that the A-T rate reflected mostly dumping from untargeted sales.
Reply Br. 9í10. And even then, Plaintiffs did not offer clear evidence to prove the point.
Although Apex argued that [[ 	]] percent of its sales were not targeted, these data merely
implied, but did not show, that the A-T rate embraced other than targeted dumping. Id. Only at
oral argument did Apex supply record evidence to suggest that most of the dumping was not
targeted—and this over an objection that the evidence had not been cited in the briefs. Oral
Argument 32:20. Because Apex raised its substantial evidence argument at the eleventh hour,
the argument was waived.
Plaintiffs rejoin that their fact-specific argument was implicit in their submissions both to
Commerce and to the court. According to Plaintiffs, their claim against the application of the A-
T method to all sales—both targeted and untargeted—makes sense only if some untargeted sales
were dumped. See Pls.’ Supp. Br. 6í7, ECF No. 65; see also Pls.’ Br. 28í34. 5 Were there no
dumping among Apex’s untargeted sales, then A-A and A-T would yield the same null rate for
those sales. This would have left Apex without an incentive to dispute the global application of
A-T. Yet because Apex did dump some of its untargeted sales, Plaintiffs reason that A-T yielded
a higher rate than A-A for those sales; thus Apex had cause to restrict the A-T method to targeted
sales only. Apex concludes that its argument to limit A-T to targeted sales put Commerce on
notice that some of its dumped sales were not targeted. Id.
The court is not convinced. Even if Apex’s argument hinted that some untargeted sales
were dumped, this would not have alerted Commerce to a flaw in its meaningful difference
results. Apex moved to limit A-T to targeted sales at the TD inquiry’s remedy phase, but the
meaningful difference test comes a step earlier, when Commerce considers whether A-A can
5 The court addresses the merits of this claim below. See infra Discussion III.
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account for targeting. See Pls.’ Br. 21í24 (meaningful difference argument), 28í34 (TD remedy
argument); see also I&D Memo at 15 (describing sequence of the TD inquiry). The agency
would not naturally infer from an argument made at the remedy step that a conclusion made at an
earlier step was wrong. And furthermore, even if Apex had implied its substantial evidence
challenge more overtly, Commerce need not respond to arguments that are merely implicit in the
briefing. To exhaust the argument below and to preserve the argument on appeal, Apex had to
state its challenge in reasonably explicit terms and provide some evidence in support. See Nat’l
Ass’n of Clean Air Agencies v. EPA, 489 F.3d 1221, 1231 (D.C. Cir. 2007) (holding agency need
not answer arguments merely implied in submissions). Because Apex did neither of these things
until its reply brief, the court cannot consider the argument now.
Based on the record and arguments before it, the court holds that the comparison of a
zeroed A-T rate to a nonzeroed A-A rate under § 1677f-1(d)(1)(B)(ii) complies with law.
B. 	Commerce’s Meaningful Difference Threshold Was Not Arbitrary
Next, and in a similar vein, Apex challenges Commerce’s evaluation of the difference
between the A-A and A-T rates. In the I&D Memo, the agency noted that Apex’s A-A rate was
0.0 percent, and that the A-T rate was 3.49 percent. The agency then “concluded that for
purposes of this case,” the difference between rates was “meaningful because it crosses the de
minimis threshold and warrants the application of the A-to-T method.” I&D Memo at 15.
Apex argues that it was arbitrary for Commerce to apply the A-T remedy simply because
the A-T rate was more than de minimis. Pls.’ Br. 23í24. As Plaintiffs interpret the test,
Commerce would apply A-T if an exporter’s rate were 0.45 percent under A-A and 0.55 percent
under A-T, because in this hypothetical, the A-T rate exceeds the de minimis threshold of 0.5
percent. But to apply A-T based on a 0.1 percentage-point difference in rates might be
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unreasonable. Hence, in Plaintiffs’ view, for Commerce to use A-T, simply because Apex’s 3.49
percent rate exceeds 0.5 percent, was “arbitrary and results-oriented.” Id. at 23.
The court finds Commerce’s reliance on the de minimis standard was not arbitrary, as
Apex alleges. Defined as 0.5 percent in 19 C.F.R. § 351.106(c)(2), the de minimis threshold
represents the minimum weighted-average dumping margin needed to levy antidumping duties in
reviews. That is, the agency does not impose duties at all if it finds that an exporter’s rate is less
than or equal to 0.5 percent. The threshold is small by design, because reviews aim “to
counteract as much dumping behavior” as possible. Union Steel, 36 CIT at __, 823 F. Supp. 2d
at 1359.
Using this regulation as a guide, Commerce reasonably concluded that A-A could not
account for dumping from targeted sales. When it calculated Apex’s rate using A-A, Commerce
found no dumping. I&D Memo at 15. Had the agency relied strictly on A-A to fix Apex’s rate,
§ 351.106(c)(2) would have precluded Commerce from imposing antidumping duties. Yet when
Commerce calculated the rate using A-T, it found a rate of 3.49 percent. Id. This figure is
nearly seven times greater than the minimum threshold needed to impose duties. The rates thus
offered a stark choice. Commerce could fully counteract Apex’s targeted dumping by applying
A-T, or it could counteract none of Apex’s targeted dumping by applying A-A. Because A-T
would yield some duties but A-A would yield none, Commerce reasonably decided that the
difference between the rates was “meaningful,” and that A-A could not account for dumping
from targeted sales. Cf. Beijing Tianhai Indus. Co. v. United States, 38 CIT __, __, 7 F. Supp. 3d
1318, 1331í32 (2014) (holding explanation invalid where Commerce provided no basis to
conclude that A-A could not account for targeting).6
6 Perhaps it would be arbitrary if Commerce found a “meaningful difference” between a 0.45 percent A-A
rate and a 0.55 percent A-T rate. See Pls.’ Br. 23. But as the Government correctly notes, this (footnote continued)
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Even so, Apex argues that this case mirrors Kelco, which was remanded for Commerce to
explain a different, ill-defined de minimis test. See Reply Br. 7. In Kelco, Commerce examined
whether plaintiff had targeted its sales under § 1677f-1(d)(1)(B)(i). Kelco, 38 CIT at __, 978 F.
Supp. 2d at 1319í20. The agency found targeting, and concluded that because targeted sales
comprised more than a de minimis share of total sales, it would consider whether A-A accounted
for targeting under § 1677f-1(d)(1)(B)(ii). Id. Yet Commerce never defined how many sales
must be targeted to qualify as more than de minimis. The court held that it was arbitrary to omit
this explanation from the analysis. Id. at __, 978 F. Supp. 2d at 1327í29.
Here, Apex challenges a different test and on different grounds. Unlike Kelco, which
considered a de minimis test at the TD inquiry’s first step, this case examines the use of a de
minimis threshold at the TD inquiry’s second step, § 1677f-1(d)(1)(B)(ii). Furthermore, unlike
Kelco’s plaintiff, Apex does not claim that Commerce failed to define the de minimis threshold
used here. As shown by their brief, Plaintiffs clearly understood that antidumping rates are more
than de minimis if they exceed 0.5 percent. See Pls.’ Br. 23í24 (equating de minimis standard
with 0.5 percent threshold from regulation). Apex instead argues that Commerce could not apply
A-T simply because the difference between its A-A and A-T rates was greater than 0.5 percent.
Id. But this argument faults Commerce for the analysis it rendered, not for analysis that it
neglected to give. Kelco is inapposite, and the court sustains Commerce’s use of the de minimis
threshold to decide whether A-A could account for targeted sales.
illustration does not mean the analysis below was similarly absurd. Def.’s Resp. in Opp. to Pls.’ R. 56.2 Mot. for J.
on Agency R. 28í29, ECF No. 49. In this case, the difference between the A-A and A-T rates was 3.49 percentage
points, a disparity nearly thirty-five times greater than Apex’s hypothesized 0.1 percentage point difference. It was
not arbitrary, given this difference between rates, to conclude that A-A could not account for targeting.
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C. Commerce Did Not Need to Explain the Impact of Monthly Averaging in Reviews
Plaintiffs do not only dispute Commerce’s affirmative findings, however. They also fault
the agency for perceived omissions in its § 1677f-1(d)(1)(B)(ii) analysis. Apex argues, for
instance, that Commerce had to explain whether A-A with monthly averages could account for
targeting before selecting the A-T remedy. See Pls.’ Br. 24í27. A regulation allows Commerce
to use A-A with monthly instead of annual averages if normal values and export prices differ
significantly over a period of investigation or review. 19 C.F.R. § 351.414(d)(3). To Apex, this
means A-A with monthly averages might unmask “distortions and fluctuations” from targeted
sales just as well as A-T. Pls.’ Br. 26.
The court rejects this argument. By comparing Apex’s A-A and A-T rates, Commerce
already showed that A-A with monthly averages could not account for targeted dumping. The
agency’s default method for setting antidumping rates in reviews, as mentioned before, is A-A
with offsets and monthly averaging of export prices. Final Mod. at 8102. Commerce found a
0.0 percent rate when it applied this method to Apex’s sales. See I&D Memo at 15. Then
Commerce applied A-T, a method that neither averages export prices nor offsets negative
margins, and this yielded a 3.49 percent rate. See id. The disparity between the rates
demonstrated that A-A with monthly averaging accounted for none of the dumping from Apex’s
targeting. See supra Discussion II.B. This comparison and explanation sufficed to carry
Commerce’s burden under § 1677f-1(d)(1)(B)(ii). Whether A-A with monthly averages
generally captures more dumping than A-A with annual averages was irrelevant to the matter.
D. Commerce Did Not Need to Account for Seasonality in Its Targeting Analysis
Apex next challenges another perceived omission in Commerce’s § 1677f-1(d)(1)(B)
analysis. According to Plaintiffs, Commerce had to consider seasonal changes in demand for
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frozen shrimp before imposing the A-T remedy. Pls.’ Br. 27í28. In an agency hearing, Apex
noted that demand for shrimp falls in the fourth quarter of each calendar year, depressing U.S.
prices below normal levels and creating a false image of targeting. See Hr’g Tr. at 19í20, PD
275 (June 17, 2013). Plaintiffs imply that Commerce could not use A-T to remedy targeting
caused by natural moves in supply and demand, and not by intentional acts.
The court again disagrees, because the statute does not require Commerce to decide why
sales were targeted before imposing the A-T remedy. Two recent cases note that the statute is
silent regarding exporters’ intent to target their U.S. sales. JBF RAK, 38 CIT at __, 991 F. Supp.
2d at 1355; Borusan Mannesmann Boru Sanayi Ticaret A.S. v. United States, 38 CIT __, __, 990
F. Supp. 2d 1384, 1389 (2014). The agency thus had discretion to examine intent and
seasonality—or not—in its § 1677f-1(d)(1)(B) analysis. And furthermore, though it may seem
fair to impose the A-T remedy only when exporters intentionally target their sales, the court must
not lay an analytical “burden on Commerce that is not required or suggested by the statute.”
Borusan, 38 CIT at __, 990 F. Supp. 2d at 1389 (quoting Viraj Grp. v. United States, 476 F.3d
1349, 1358 (Fed. Cir. 2007)). The court would breach this rule if it forced Commerce to
consider seasonality where the law does not demand it.
Apex also suggests that Commerce was bound to consider seasonality as a matter of
agency practice. Pls.’ Br. 27í28. This argument fails too, because Apex has not shown that
Commerce uniformly considers seasonality in its TD inquiry. See Ranchers-Cattlemen Action
Legal Found. v. United States, 23 CIT 861, 884í85, 74 F. Supp. 2d 1353, 1374 (1999) (holding
agency actions become binding when practice produces reasonable reliance). Indeed, Apex cites
just one seventeen-year-old proceeding where Commerce considered seasonality, and this in the
context of determining normal values. See Certain Fresh Cut Flowers from Colombia, 62 Fed.
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Reg. 53,287, 53,295í97 (Dep’t Commerce Oct. 14, 1997) (final admin. review). This single
proceeding, which did not concern targeted dumping, did not form a binding practice.
Commerce did not act arbitrarily by refusing to consider seasonality below.
III. 	Commerce Reasonably Applied the A-T Remedy to All Sales
After finding targeting among Apex’s sales, and after deciding that A-A could not
account for the targeting, Commerce used the A-T method to calculate Apex’s antidumping rate.
In doing so, Commerce applied A-T not only to targeted sales, but also to Apex’s untargeted
sales. See I&D Memo at 15. Plaintiffs claim this was error. In their view, the statute clearly
requires Commerce to deploy A-T only against targeted sales. Pls.’ Br. 29. Apex also contends
that the agency promised to limit A-T to targeted sales when it adopted its investigation
procedures in reviews. Id. at 29í34.
Neither argument persuades. First, the statute does not restrict the A-T method to
targeted sales once targeting is found. It is true, as a general matter, that the agency must use A-
A to calculate exporters’ antidumping rates in investigations: 19 U.S.C. § 1677f-1(d)(1)(A)
invokes the unequivocal “shall” when ordering Commerce to use A-A or T-T in ordinary cases.
But even so, if the agency identifies targeting that default methods cannot explain, the statute
permits Commerce to “determine whether the subject merchandise is being sold in the United
States at less than fair value” using A-T. 19 U.S.C. § 1677f-1(d)(1)(B) (emphasis added).
Notice the statute does not expressly confine A-T to targeted sales. Instead, it permits
Commerce to apply A-T to “the subject merchandise,” regardless of whether the merchandise
was sold in a pattern of targeting. Given this ambiguous language, Commerce could apply A-T
to all sales or to targeted sales only, provided that the choice was reasonable. See Chevron, 467
U.S. at 842í43.
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The agency’s decision to apply A-T to all sales was reasonable here. Commerce
explained in the I&D Memo that applying A-T to all sales was “more consistent with the
Department’s approach to selection of the appropriate comparison method” than applying A-T
only to targeted sales. I&D Memo at 18. Because Commerce applies A-A to all sales under
§ 1677f-1(d)(1)(A), the agency found it equally fair to apply A-T to all sales under § 1677f-
1(d)(1)(B). But more importantly, Commerce noted that applying A-T to all sales
eliminates the masked dumping by exposing 1) any implicit masking within the
weighted-average U.S. sales price by basing the comparison on the transaction-
specific U.S. sales price rather than the weighted-average U.S. sales price, and 2)
any explicit masking between individual comparison results by not providing
offsets for negative comparison results.
Id. at 19. More succinctly, Commerce applied A-T across the board to reveal dumping hidden
by sales that were neither targeted nor dumped. This approach served the statute’s purpose and
warrants appropriate deference.7
Second, and notwithstanding any ambiguity in the statute, Apex argues that the law still
bound Commerce to limit A-T to targeted sales. Pls.’ Br. 29í34. Pursuant to a regulation called
the “Limiting Rule,” Commerce long restricted A-T to targeted sales when it used the TD
exception in investigations. See 19 C.F.R. § 351.414(f)(2) (2008). And although the agency
withdrew the Limiting Rule in 2008, see Withdrawal of the Regulatory Provisions Governing
Targeted Dumping in Antidumping Duty Investigations, 73 Fed. Reg. 74,930í31 (Dep’t
7 Apex notes that Commerce now applies A-T uniformly only if targeted sales comprise more than a certain
fraction of the total value of an exporter’s sales. See Pls.’ Br. 33í34 (citing Xanthan Gum from the People’s
Republic of China, 78 Fed. Reg. 33,351 (Dep’t Commerce June 4, 2013) (final admin. review) and accompanying
I&D Memo at cmt. 3). This change of course does not invalidate the policy disputed here, however. If an agency
practice reasonably complies with statute, that practice is not rendered invalid simply because the agency replaces it
with an equally defensible policy. Cf. Nat’l Cable & Telecomm. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 981
(2005) (holding new policy not invalid simply because policy is inconsistent with past practice).
Apex also contends that it was “unduly punitive” to apply A-T to all sales “regardless of the amount of
targeting that may have occurred.” Pls.’ Br. 30; see also Antidumping Duties; Countervailing Duties, 61 Fed. Reg.
7308, 7350 (Dep’t Commerce Feb. 27, 1996) (req. for cmts.). Yet Plaintiffs did not explain why the ratio of targeted
to untargeted sales mattered until the reply brief, where Apex first argued that its A-T rate reflected mainly
untargeted sales. See Reply Br. 9í10. Because Apex neither exhausted this argument below nor raised it properly
on appeal, the court does not consider it. See supra Discussion II.A.
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Commerce Dec. 10, 2008), a series of cases later invalidated the withdrawal, see Mid Continent
Nail Corp. v. United States, 38 CIT __, __, 999 F. Supp. 2d 1307, 1321í23 (2014); Gold East
Paper (Jiangsu) Co. v. United States, 37 CIT __, __, 918 F. Supp. 2d 1317, 1327í28 (2013).
Consequently, Apex argues that Commerce had to confine A-T to targeted sales below, because
the agency adopted its investigation procedures in reviews at a time when the Limiting Rule still
controlled in investigations. See Pls.’ Br. 31í32; Reply Br. 13í14.
The court rejects these arguments. By its own terms, the Limiting Rule applies only to
investigations. See 19 C.F.R. § 351.414(f)(1)í(2) (2008) (stating agency must limit scope of A-
T remedy under paragraph (f)(1), which permits A-T in “antidumping investigation[s]”).
“Commerce, like other agencies, must follow its own regulations,” Torrington Co. v. United
States, 82 F.3d 1039, 1049 (Fed. Cir. 1996), but it need not extend those regulations beyond their
terms.
Furthermore, although the Limiting Rule technically applied to investigations in 2012,
Commerce did not believe that the Rule bound its conduct when it grafted its investigation
procedures into reviews. The initial decision invalidating the Limiting Rule’s withdrawal, Gold
East Paper, was not decided until June 17, 2013, over a year after Commerce published the
Final Modification. 37 CIT at __, 918 F. Supp. 2d at 1317; Final Mod. at 8101. And Apex has
identified not one instance between 2012 and the Final Results when Commerce limited A-T to
targeted sales in a review. See Pls.’ Br. 29í34. Because it had never before recognized the
Limiting Rule in reviews, Commerce was not bound to apply the Rule as a matter of agency
practice. See Ranchers-Cattlemen, 23 CIT at 884í85, 74 F. Supp. 2d at 1374.
This holding renders moot Apex’s citation to Chang Chun Petrochemical Co. v. United
States, 37 CIT __, __, 906 F. Supp. 2d 1369, 1378í81 (2013). In Chang Chun, Commerce
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refused to follow the Limiting Rule in an investigation, even though the agency was bound by
regulation to observe it. The court held that Commerce could not apply A-T to all sales unless it
explained why plaintiff’s case justified an exception from the Rule. Id. at __, 906 F. Supp. 2d at
1380í81. In a similar vein, Apex argues that Commerce failed to justify applying A-T
universally, for instance, by showing that segregating Apex’s targeted and untargeted sales
would be unduly burdensome. See Pls.’ Br. 32í33; see also Chang Chun Petrochem. Co. v.
United States, 37 CIT __, __, 953 F. Supp. 2d 1300, 1305 (2013) (approving limitation of A-T to
targeted sales where Commerce found it could segregate targeted and untargeted sales). Yet
here, the Limiting Rule never controlled Commerce’s conduct in reviews. Commerce had no
need to explain why Apex’s case merited an exception from the Limiting Rule, because the
agency was not bound to observe the Rule in the first place.
IV. 	Commerce’s Explanation of Zeroing Accorded with Law
Finally, Plaintiffs allege that Commerce failed to justify its approach to zeroing when
calculating Apex’s rate. As the court discussed previously, Commerce does not use zeroing to
aggregate margins under A-A, the default method in reviews. The agency does use zeroing,
however, when applying the A-T method to remedy targeting. Plaintiffs allege that Commerce
had to explain why it interprets the statute to allow zeroing when targeted dumping is a concern,
but not otherwise. In their view, Commerce’s explanation on the record inadequately addressed
the inconsistency. See Pls.’ Br. 34í39. 8
The agency’s rationale for its zeroing policy withstands this assault. As mentioned
before, the statute does not say whether Commerce must zero or provide offsets at the
8 This appears to be an issue of first impression. Though courts have addressed whether Commerce may
zero inconsistently in investigations and reviews, none have decided whether the agency may apply zeroing
disparately in a single proceeding. See Beijing Tianhai, 38 CIT at __, 7 F. Supp. 3d at 1337 (reserving decision on
zeroing in TD context); Mid Continent Nail, 38 CIT at __, 999 F. Supp. 2d at 1320, 1323í24 (same).
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aggregation step of the antidumping formula. Accordingly, in its discretion, Commerce has long
zeroed when using A-T, and with the Federal Circuit’s blessing. See Timken, 354 F.3d at 1342.
Commerce has also provided offsets instead of zeroing when using A-A, and again with the
Federal Circuit’s approval. See U.S. Steel, 621 F.3d at 1361í62. Nevertheless, the agency
cannot apply zeroing inconsistently without justification. In Dongbu Steel Co. v. United States,
635 F.3d 1363, 1371í73 (Fed. Cir. 2011), the Federal Circuit found that Commerce behaved
arbitrarily when it failed to explain why it used A-T with zeroing in reviews and A-A with
offsets in investigations. The appellate court reached the same result in JTEKT Corp. v. United
States, 642 F.3d 1378, 1384í85 (Fed. Cir. 2011). Both cases remanded so Commerce could
provide the explanation required, if such an explanation were possible.
In Union Steel, 713 F.3d at 1101, Commerce provided the justification the Federal Circuit
sought. Union Steel, like its predecessors, confronted whether the agency adequately defended
its decision to use zeroing in reviews but not investigations. Commerce gave three reasons why
it interpreted the statute’s silence differently in each proceeding. First, Commerce explained that
it zeroed in reviews but not investigations because the two proceedings served different
purposes. Investigations assess whether to impose antidumping orders in the first place, thus
justifying the use of broad averages and offsets under A-A; reviews, by contrast, set “the final
rates to be used for actual assessment,” requiring greater accuracy and necessitating individual
dumping margins and zeroing. Union Steel, 36 CIT at __, 823 F. Supp. 2d at 1359. Second,
Commerce explained that A-A and A-T average normal values and export prices differently,
justifying zeroing under A-T but not A-A. Union Steel, 713 F.3d at 1108í09. And last,
Commerce offered that it had abandoned zeroing in investigations, but not reviews, pursuant to
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WTO law. Id. at 1109í10. The Federal Circuit found these reasons sufficient to sustain the
agency’s proceeding-specific approach to zeroing. Id. at 1109í10.
A three-part rationale similar to that in Union Steel explains why Commerce zeroes to
remedy targeting, but not otherwise. In the I&D Memo, the agency said that it uses zeroing
inconsistently to combat different types of dumping. See I&D Memo at 13. In general,
Commerce relies on A-A without zeroing in reviews to remedy ordinary dumping. See Final
Mod. at 8104. But when exporters engage in targeted dumping, A-A without zeroing may mask
less-than-fair-value sales by averaging export prices at the comparison step and offsetting at the
aggregation step. Commerce expanded on this concept when discussing why it applied A-T to
all of Apex’s sales at the remedy phase:
The [Federal Circuit] has explained that “masked” dumping occurs . . . when
“profitable sales serve to ‘mask’ sales at less than fair value.” An Indian exporter,
who competes with U.S. producers, could gain U.S. customers either by dumping
to all customers at once or by dumping to a specific customer (or customers). In
the latter scenario, the Indian exporter uses “profitable” (i.e., non-dumped) sales
to mask its dumped sales to a particular customer by compensating for its dumped
sales to one customer with its profitable sales to other customers.
I&D Memo at 19; see also Def.’s Resp. in Opp. to Pls.’ R. 56.2 Mot. for J. on Agency R. 31í32,
ECF No. 49. In other words, targeted dumping poses a challenge that ordinary dumping does
not: It disproportionately impacts specific segments of the market (i.e., regions, customers, or
time periods), but hides the effect with above-fair-value sales to other segments. To remedy this
problem, Commerce applies A-T with zeroing instead of A-A, which exposes “any implicit
masking . . . by basing the comparison [of normal values and export prices] on the transaction-
specific U.S. sales price rather than the weighted-average U.S. sales price.” I&D Memo at 19.
A-T also reveals “any explicit masking between individual comparison results by not providing
offsets for negative comparison results.” Id.; see also U.S. Steel, 621 F.3d at 1363 (recognizing
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use of zeroing for “alleviating concerns of targeted or masked dumping”). In light of the
differences between targeted and ordinary dumping, the court finds it was reasonable to deploy
zeroing to address one type of dumping but not the other.
Commerce did not rest its explanation on these grounds alone, however. It also noted
that differences inherent in the A-T and A-A methods justify zeroing under one method but not
the other. See I&D Memo at 13. As noted in Union Steel, the statute requires Commerce to
compare average export prices to average normal values when creating dumping margins under
A-A. By averaging export prices, A-A implicitly offsets low export prices against high export
prices. Thus it is also appropriate to offset positive and negative values when combining A-A
margins into a single rate. Union Steel, 713 F.3d at 1108í09. Under A-T, by contrast, the
agency creates margins by comparing average normal values to individual transaction prices.
This process yields a dumping margin for each sale of subject merchandise during a review
period. By refusing to offset positive and negative values when aggregating margins, A-T
ensures a remedy for each dumped transaction. See id. In sum, the agency’s approach to zeroing
under A-A and A-T is reasonable because “the comparison methodologies compute dumping
margins in different ways and are used for different reasons.” Id. at 1109.
Third and finally, Commerce justified its approach to zeroing as a prudent response to
WTO rulings. I&D Memo at 13í14. In the 2012 Final Modification, the agency abandoned A-T
with zeroing as its default method in reviews in favor of A-A without zeroing. Commerce made
the change pursuant to several WTO Appellate Body decisions, which found that zeroing as a
default in reviews was inconsistent with international law. See Final Mod. at 8101 n.4. Yet
these decisions did not outlaw zeroing entirely. Although it condemned zeroing as a default
approach in review proceedings, the WTO did not forbid zeroing for use in exceptional
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circumstances. See id. at 8106í07. As a result, Commerce chose to continue zeroing on a case-
by-case basis, and as needed to remedy targeted dumping. I&D Memo at 13í14. The court
finds it was reasonable, and within Commerce’s discretion, to discontinue zeroing only to the
extent required by WTO law. See Union Steel, 713 F.3d at 1110.
CONCLUSION
After carefully considering the parties’ briefs and the administrative record, the court
sustains Commerce’s Final Results in all respects. The court will enter judgment accordingly.
/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge
Dated:'HFHPEHU
New York, New York
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