Jiaxing Brother Fastener Co., Ltd. et al v. United States

Slip Op. 20-102
UNITED STATES COURT OF INTERNATIONAL TRADE
OPINION AND ORDER
[Sustaining the U.S. Department of Commerce’s remand redetermination in the
fourth administrative review of the antidumping duty order on certain steel threaded
rod from the People’s Republic of China.]
Dated: July 22, 2020
Gregory S. Menegaz and Alexandra H. Salzman, deKieffer & Horgan, PLLC, of
Washington, D.C., for plaintiffs Jiaxing Brother Standard Parts Co., Ltd., IFI &
Morgan Ltd., and RMB Fasteners Ltd.
Joseph H. Hunt, Assistant Attorney General, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice, of Washington, D.C., for defendant. With him
on the brief were Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant
Director, and Elizabeth A. Speck, Senior Trial Counsel. Of Counsel was W. Mitchell
Purdy, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance,
U.S. Department of Commerce, of Washington, D.C.
JIAXING BROTHER FASTENER CO.,
LTD. ET AL.,
Plaintiffs,
v.
UNITED STATES,
Defendant,
and
VULCAN 	THREADED 	PRODUCTS
INC.,
Defendant-Intervenor.
Before: Claire R. Kelly, Judge
Court No. 14-00316
PUBLIC VERSION
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Roger B. Schagrin and Paul W. Jameson, Schagrin Associates, of Washington, D.C.,
for defendant-intervenor Vulcan Threaded Products Inc.
Kelly, 	Judge: 	Before 	the 	court 	is 	the 	U.S. 	Department 	of 	Commerce’s
(“Department” or “Commerce”) remand redetermination filed pursuant to the court’s
order in Jiaxing Brother Fastener Co. v. United States, 44 CIT __, 425 F. Supp. 3d
1338 (2020) (“Jiaxing II”). 	See also Final Results of Redetermination Pursuant to
Court Remand Order in [Jiaxing II], Apr. 17, 2020, ECF No. 119 (“Second Remand
Results”). 	In 	Jiaxing 	II, 	the 	court 	sustained 	in 	part 	and 	remanded 	in 	part
Commerce’s 	final 	determination 	in 	the 	fourth 	administrative 	review 	of 	the
antidumping duty (“ADD”) order on certain steel threaded rod (“STR”) from the
People’s Republic of China (“PRC”). 	See [STR] from the [PRC], 79 Fed. Reg. 71,743
(Dep’t Commerce Dec. 3, 2014) (final results of [ADD] admin. review; 2012-2013)
(“Final Results”), and accompanying Issues & Decision Memo. for the Final Results
of the Fourth Admin. Review of the [ADD] Order on [STR] from the [PRC], A-570-
932, (Nov. 21, 2014), ECF No. 23-2 (“Final Decision Memo.”); Certain [STR] from the
[PRC], 74 Fed. Reg. 17,154 (Dep’t Commerce Apr. 14, 2009) (notice of [ADD] order).
In Jiaxing II, the court remanded for further explanation or reconsideration
Commerce’s 	decision 	to 	apply 	a 	10,000 	kilogram 	weight 	assigned 	to 	shipping
containers in the calculation of brokerage and handling (“B&H”) costs. Id., 44 CIT at
__, 425 F. Supp. 3d at 1351–52. On remand, Commerce continues to assign a 10,000
kilogram weight to shipping containers in its B&H cost surrogate value calculation.
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See Second Remand Results at 1, 5–16. Plaintiffs Jiaxing Brother Fastener Co., Ltd.,
a/k/a Jiaxing Brother Standard Parts Co., Ltd., IFI & Morgan Ltd., and RMB
Fasteners 	Ltd. 	(collectively, 	“Jiaxing”) 	challenge 	Commerce’s 	remand
redetermination as unsupported by substantial evidence. 	See [Pls.’] Cmts. Opp’n
Second Remand Results at 1–5, May 18, 2020, ECF No. 122 (“Pls.’ Br.”). Defendant
and Defendant-Intervenor Vulcan Threaded Products Inc. (“Vulcan”) request the
court to uphold the Second Remand Results. 	See Def.’s Resp. Cmts. Remand
Redetermination at 1–2, 5–11, June 17, 2020, ECF No. 125 (“Def.’s Br.”); Def.-
Intervenor’s Cmts. Supp. Second Remand Results at 1–4, May 21, 2020, ECF No. 124
(“Def.-Intervenor’s Br.”). 	For the following reasons, the court sustains Commerce’s
surrogate value calculation of B&H costs.
BACKGROUND
The court assumes familiarity with the facts of this case, as set out in the two
previous opinions ordering remand, see Jiaxing Brother Fastener Co. v. United
States, 43 CIT __, 380 F. Supp. 3d 1343, 1349–50 (2019) (“Jiaxing I”); Jiaxing II, 44
CIT at __, 425 F. Supp. 3d at 1342–44, and recounts those facts relevant to the court’s
review of the Second Remand Results. 	In this fourth administrative review of the
ADD order on STR, 1 Commerce selected Thailand as the primary surrogate country,
1 The fourth administrative review covers the period April 1, 2012 through March 31,
2013. 	See Initiation of Antidumping and Countervailing Duty Admin. Reviews and
Request for Revocation in Part, 78 Fed. Reg. 33,052, 33,056 (Dep’t Commerce June 3,
2013).
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see Final Decision Memo. at 14, and used the World Bank’s “Doing Business 2014:
Thailand” report (“Doing Business report”)2 to calculate a surrogate value for
Jiaxing’s B&H costs. 	Id. at 22-26. 	Relevant here, Commerce generated B&H costs
on a per-kilogram basis by assigning each shipping container of Jiaxing’s STR a
weight of 10,000 kilograms. Id. at 27–28.
In Jiaxing I, the court ordered Commerce to reconsider or further explain its
decision to calculate B&H with an assumption that each 20-foot shipping container
weighs 10,000 kilograms. 	See id., 44 CIT at __, 380 F. Supp. 3d at 1367–68. 	The
court noted that the Doing Business report provided B&H costs on a “per container”
basis yet did not expressly state that the B&H costs are dependent on a specific 20-
foot shipping container weight. 	Id., 44 CIT at __, 380 F. Supp. 3d at 1366–67. 	The
court determined that Commerce failed to consider record evidence that indicated
2 The “Doing Business 2014: Thailand” report is one of a series of annual reports
prepared by the World Bank for various countries which “measures and tracks
changes in regulations affecting 11 areas in the life cycle of a business” to show “how
easy or difficult it is for a local entrepreneur to open and run a small to medium-size
business when complying with relevant regulations.” 	Surrogate Values for the
Prelim. Results at Ex. 15 at 4, PD 104–05, bar codes 3202737-01–02 (May 16, 2014)
(“Prelim. SV Memo”). 	The relevant “Trading Across Borders” section employed by
Commerce to prepare Jiaxing’s surrogate B&H costs measures the “cost (excluding
tariffs and the time and cost for sea transport) associated with exporting and
importing a standard shipment of goods by sea transport.” 	Id. at Ex. 15 at 72. 	For
exports, such costs include (1) customs clearance and technical control, (2) ports and
terminal handling, (3) inland transportation and handling, (4) bills of lading, (5)
certificates of origin, (6) commercial invoices, (7) customs export declaration, and (8)
terminal handling receipts. 	Id. at Ex. 15 at 78–79. 	These costs are derived from
questionnaires concerning a standardized case scenario and refer to business in
Thailand’s largest business city. Id. at Ex. 15 at 102–03.
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that B&H costs—such as costs of document preparation, customs clearance and
technical control, and ports and terminal handling—are not affected by the weight of
a particular shipping container. 	See id. 	On remand, Commerce continued to use a
10,000-kilogram denominator in the calculation of the B&H surrogate value, because
surveyed respondents of the Doing Business report were asked to provide B&H costs
based upon a 20-foot shipping container weighing 10,000 kilograms. 	See Final
Results of Redetermination Pursuant to Court Remand [Jiaxing I] at 5–7, Aug. 27,
2019, ECF No. 105 (“First Remand Results”).
In Jiaxing II, the court again ordered Commerce to reconsider or further
explain its decision to apply a 10,000-kilogram denominator in its calculation of B&H
costs, because Commerce failed to elaborate why a 10,000-kilogram container weight
relates to B&H costs, when those costs were specifically catalogued “per container” in
the Doing Business report, i.e., based on the broader assumption that the goods are
“transported in a dry-cargo, 20-foot full container load.” See id., 44 CIT at __, 425 F.
Supp. 3d at 1349 (citing Surrogate Values for the Prelim. Results at at Ex. 15 at 72,
78, PD 104–05, bar codes 3202737-01–02 (May 16, 2014) (“Prelim. SV Memo”)).3 	In
3 On January 26, 2015, Defendant filed on the docket the indices to the public and
confidential administrative records at ECF Nos. 23-4–5. 	Subsequently, on August
29, 2019, Defendant filed indices to the public and confidential record underlying
Commerce’s first remand redetermination at ECF Nos. 106-2–3. 	On May 1, 2020,
Defendant filed indices to the public and confidential record underlying Commerce’s
second remand redetermination at ECF Nos. 121-1–2. 	All further references to
documents from the administrative records are identified by the numbers assigned
by Commerce in these indices.
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addition, the court noted that Commerce did not address detracting evidence that
indicate B&H fees are established by container size and load, rather than by weight.
See id., 44 CIT at __, 425 F. Supp. 3d at 1349–51. 	On second remand, Commerce
offers further explanation as to why, based on review of the record evidence, it relies
on a 10,000-kilogram denominator to calculate the surrogate value for B&H costs.
See Second Remand Results at 1, 4–16.
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction pursuant to section 516A(a)(2)(B)(iii) of the Tariff
Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii), and 28 U.S.C. § 1581(c)
(2012), 4 which grant the court authority to review actions contesting the final
determination in a review of an antidumping duty order. 	The court will uphold
Commerce’s determination unless it is “unsupported by substantial evidence on the
record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). “The
results of a redetermination pursuant to court remand are also reviewed ‘for
compliance with the court’s remand order.’” Xinjiamei Furniture (Zhangzhou) Co. v.
United States, 38 CIT __, __, 968 F. Supp. 2d 1255, 1259 (2014) (quoting Nakornthai
Strip Mill Public Co. v. United States, 32 CIT 1272, 1274, 587 F. Supp. 2d 1303, 1306
(2008)).
4 Further citations to the Tariff Act of 1930, as amended, are to the relevant
provisions of Title 19 of the U.S. Code, 2012 edition.
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DISCUSSION
Jiaxing 	challenges 	as 	unsupported 	by 	substantial 	evidence 	Commerce’s
continued 	reliance 	on 	a 	10,000-kilogram 	denominator 	in 	the 	surrogate 	value
calculation of B&H costs, because the figure is not grounded in commercial reality
and does not relate to Jiaxing’s experience. 	See Pls.’ Br. at 1–5. 	Further, Jiaxing
argues that Commerce has not addressed record evidence indicating that alternative
container weights of 16,000 or 28,200 kilograms are the best available information to
use as the denominator in the valuation of B&H costs. 	Id. 	Defendant and Vulcan
disagree and request the court to sustain the Second Remand Results. See Def.’s Br.
at 1–2, 5–11; Def.-Intervenor’s Br. at 1–4. 	Specifically, Defendant contends that
Commerce 	reconsidered 	record 	evidence 	and 	reasonably 	determined 	that 	a
denominator of 10,000 kilograms is generally supported by the record, unlike the
proposed alternative weights. 	See Def.’s Br. at 5–11. 	Defendant-Intervenor argues
that, as a matter of law, Jiaxing’s own commercial experience does not factor into
Commerce’s surrogate value selection. 	See Def.-Intervenor’s Br. at 1–4. 	For the
reasons that follow, Commerce’s reliance on a 10,000-kilogram container weight to
calculate B&H costs is reasonable on this record.
In an antidumping proceeding, if Commerce considers an exporting country to
be a non-market economy (“NME”), like the PRC, it will identify one or more market
economy countries to serve as a “surrogate” for that NME country in the calculation
of normal value. See 19 U.S.C. § 1677b(c)(1), (4). Normal value is determined on the
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basis of factors of production (“FOPs”) from the surrogate country or countries used
to produce subject merchandise. 	See id. at § 1677b(c)(1). 	FOPs to be valued in the
surrogate market economy include “hours of labor required,” “quantities of raw
materials 	employed,” 	“amounts 	of 	energy 	and 	other 	utilities 	consumed,” 	and
“representative capital cost, including depreciation.” 	Id. at § 1677b(c)(3). 	This
analysis is designed to determine a producer’s costs of production in an NME as if
that producer operated in a hypothetical market economy. See, e.g., Downhole Pipe
& Equipment, L.P. v. United States, 776 F.3d 1369, 1375 (Fed. Cir. 2015); Nation
Ford Chemical Co. v. United States, 166 F.3d 1373, 1375 (Fed. Cir. 1999); see also 19
U.S.C. § 1677b(c)(1).
In calculating normal value, Commerce also subtracts “costs, charges, and
expenses incident to bringing the foreign like product from the original place of
shipment to the place of delivery to the purchaser.” 	19 U.S.C. § 1677b(a)(6)(B)(ii).
Among the deductions are amounts that represent the costs for B&H export costs and
cost of freight. The subtraction of these B&H costs from a respondent’s normal value
is intended to allow a fair comparison to net (or ex-factory) prices, which are not
affected by the extra costs experienced by an exporter in shipping products around
the world. 	For the Final Results, Commerce generated a surrogate B&H cost per
kilogram for each shipping container of STR shipped by Jiaxing to the United States
based 	on 	costs 	associated 	with 	exporting 	a 	20-foot, 	10,000-kilogram 	shipping
container in the Doing Business report. See Final Decision Memo. at 27–28; see also
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Prelim. SV Memo. at Ex. 12. 	First, Commerce added the costs reported “per
container” for document preparation ($175), customs clearance and technical control
($50), and ports and terminal handling ($160), totaling $385 as the numerator in its
calculation. See Prelim. SV Memo at Ex. 12, Ex. 15 at 72, 78; see also Final Decision
Memo at 27–28. 	Commerce then selected 10,000 kilograms to represent container
weight for the denominator from a stated assumption in the Doing Business report’s
methodology by which surveyed respondents provided costs, i.e., that “[t]he traded
product travels in a dry-cargo, 20-foot, full container load . . . [and] weighs 10 tons
and is valued at $20,000.” 5 	See Final Decision Memo. at 27; see also Ex. A Trading
Across Borders Methodology, Feb. 26, 2019, ECF No. 92-1. 	Commerce divided the
“costs per container” by 10,000 kilograms, resulting in a $0.0385 per kilogram value,
see Prelim. SV Memo. at Ex. 12, that Commerce applies to make a fair value
comparison based on Jiaxing’s sales and cost databases, which were reported on the
basis of kilograms. See Second Remand Results at 5–6.
On second remand, Commerce offers further explanation and reasonably
applies a 10,000-kilogram denominator to calculate B&H costs, in light of its
reexamination of record evidence indicating that the value represents the best
available information. 	Commerce explains that Jiaxing reported its B&H costs on
the basis of kilograms and did not propose a different unit of analysis or alternate
5 Ten tons is approximately 10,000 kilograms.
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means to allocate costs.6 	See Second Remand Results at 5–6, 6 n.25 (noting that
Jiaxing acknowledges Commerce requires a per kilogram cost to calculate B&H
costs); see also Letter from DeKieffer & Horgan to Sec of Commerce Pertaining to
Brother Cmts on Draft Remand Determination at 5, RPD 5, bar code 3876875-01
(Aug. 9, 2019) (“Plaintiffs understand that the Department needs a per kg cost for
B&H due to the nature of its antidumping margin calculation.”). 	Therefore, as
Commerce notes, its calculation of B&H costs must be denominated by weight.
Second Remand Results at 6. 	However, unlike the proposed alternative weights of
16,000 kilograms and 28,200 kilograms, Commerce explains that the use of a 10,000-
kilogram denominator is generally supported by the record.7 Id. at 6–8.
Although Jiaxing proposes 16,000 kilograms as reflective of its own commercial
experience, 	Commerce 	reasonably 	rejects 	that 	figure 	because 	Commerce, 	in
6 Commerce does not address whether the Doing Business report may be read as
reporting B&H costs on a per container basis rather than by container weight. 	Cf.
Jiaxing II, 44 CIT at __, 425 F. Supp. 3d at 1350–51. Nonetheless, given the record
and that weight was the only metric by which Commerce could calculate the B&H
SV, Commerce reasonably evaluates each alternative weight and concludes that the
10,000 kilogram figure reported in the Doing Business report is the best information
on the record to use as the denominator in its calculation of B&H costs.
7 Jiaxing suggests that “a large and growing body of case law reversing the
Department’s approach” of using a 10,000-kilogram denominator. 	Pls.’ Br. at 5.
Although the Court of Appeals recently reversed Commerce’s use of a 10,000-
kilogram denominator to calculate B&H costs in SeAH Steel VINA Corp. v. United
States, 950 F.3d 833 (Fed. Cir. 2020), the plaintiffs in that case, unlike Jiaxing here,
challenged Commerce’s methodology to use a weight-based denominator. 	Compare
id. at 845–46 with Second Remand Results at 6 n.25. The Court of Appeals held that
Commerce had not supported its methodology selection with substantial evidence.
SeAH Steel VINA Corp., 950 F.3d at 846.
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determining SVs, has no obligation to exactly replicate Jiaxing’s shipping experience
and, further, Commerce identifies flaws related to the derivation of the weight. 	Id.
at 5–16. As Commerce observes, the Court of Appeals has held that Commerce is not
required to duplicate an NME producer’s exact experience in determining SVs. 	See
id. at 5 (citing Nation Ford, 166 F.3d at 1373); see also id. at 8. 	Nonetheless,
Commerce evaluates Jiaxing’s proposed value of 16,000 kilograms yet finds that it
does not appear to reflect the overall experience of Jiaxing. Id. at 7–8. Specifically,
Jiaxing proposed the 16,000-kilogram figure based on the weight of sample shipments
associated with three of 127 invoices on the record. 	See id. at 7 (citing Resp. from
DeKeiffer & Horgan to Sec of Commerce Pertaining to [Jiaxing] Supp A Q/R, Pt. 1 at
Ex. SA-9, CD 28, bar code 3184546-01 (Feb. 27, 2014); Data from DeKeiffer & Horgan
to Sec of Commerce Pertaining to [Jiaxing] Ex. SC-6, CD 44, bar code 3190495-01
(Mar. 25, 2015)). 	Commerce notes that the three invoices do not average 16,000
kilograms but rather a slightly lower weight and, in addition, finds that Jiaxing’s
representation of this figure as the company’s “average container weight” to be
misleading. 	Id. at 11–14. 8 	Commerce explains that, in reviewing all 127 invoices,
8 Jiaxing avers that the remaining invoices should not be included in the calculation
of average container weight, because the other invoices reflect amounts for less than
full container load. 	See Pls.’ Br. at 1–2. 	However, as Commerce observes, Jiaxing
does not substantiate its claim that shipments are consolidated such that shipments
at less than container load are not reasonably reflective of Jiaxing’s shipping. 	See
Second Remand Results at 12–13.
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Jiaxing’s average invoice weight9 was a value similar to the 10,000-kilogram figure
from the Doing Business report. 	Id. at 8 (citing Memo From USDOC to File
Pertaining to [Jiaxing] STR Remand Weight Analysis Memo at Attach. I, RCD 2–3,
bar codes 3955340-01–02 (Mar. 18, 2020)). Commerce also observes that even though
Jiaxing presented a B&H figure from a Thai exporter, Pakfood Company Limited, of
12,365 kilograms as an entity with a “similar” shipping experience to Jiaxing, that
shipping weight is closer to the 10,000-kilogram figure than its proposed 16,000-
kilogram weight. 	Id. at 15 n.45 (citing Brief from Vorys, Sater, Seymour and Pease
LLP to Sec of Commerce Pertaining to Petitioner Case Brief at 38–39, PD 120, bar
code 3219780-01 (Aug. 4, 2014)). Thus, Commerce reasonably determines that the
16,000-kilogram weight is neither supported by record evidence nor reasonably
reflective of the shipping experience in the NME country. Cf. Nation Ford, 166 F.3d
at 1373.
Likewise, 	Commerce 	rejects 	Jiaxing’s 	proposal 	that 	Commerce 	adopt 	a
maximum shipping container weight of 28,200 kilograms as unsupported by record
evidence. Id. at 8. Jiaxing, as Commerce explains, does not substantiate the figure
with record evidence or explanation. 	Id. 	Therefore, given the deficiencies in the
9 Commerce calculates Jiaxing’s average invoice rate to be 	kilograms. See
Second Remand Results at 8. In doing so, Commerce acknowledges that one invoice
may not correspond to one shipment, and that there may be invoices that reflect
shipment in one container or that are split across multiple containers. See id. at 13–
14. The resultant average, according to Commerce, is a “proxy” for Jiaxing’s shipping
experience, given the data on the record. Id. at 14.
[[ 	]]
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proposed alternatives and that Jiaxing failed to propose a different approach to
calculate B&H costs than by weight, Commerce, on review of the record evidence,
reasonably concludes that 10,000 kilograms is the best available information on the
record to use in the denominator of its B&H cost calculation. Id. at 15–16.
CONCLUSION
For the foregoing reasons, the Second Remand Results are supported by
substantial evidence and comply with the court’s order in Jiaxing I, and, therefore,
are sustained. Judgment will enter accordingly.
/s/ Claire R. Kelly
Claire R. Kelly, Judge
Dated: 	July 22, 2020
New York, New York
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